My Four Years in Germany Part 15

The German courts have expressly said that if prices are so low that the manufacturers of a particular article see financial ruin ahead, a formation of a cartel by them must be looked upon as a justified means of self-preservation. The German laws are directed to the end to which it seems to be such laws should logically be directed; namely, to the prevention of unfair compet.i.tion.

So long as the question of monopoly is not involved, compet.i.tion can always be looked for when a combination is making too great profits; and the new and competing corporation and individuals should be protected by law against the danger of price cutting for the express purpose of driving the new compet.i.tor out of business. However, it must be remembered that a combination acting unfairly in compet.i.tion may be more oppressive than a monopoly.

I myself am not convinced by the arguments of either side. It is a matter for the most serious study.

The object of the American trust has been to destroy its compet.i.tors.

The object of the German cartel to force its compet.i.tors to join the cartel.

In fact the government in Germany becomes part of these cartels and takes an active hand in them, as witness the partic.i.p.ation of the German Government in the potash syndicate, when contracts made by certain American buyers with German mines were cancelled and all the potash producing mines of Germany and Austria forced into one confederation; and witness the attempt by the government, which I have described in another chapter, to take over and make a monopoly of the wholesale and retail oil business of the country.

The recent closer combination of dyestuff industries of Germany, with the express purpose of meeting and destroying American compet.i.tion after the war, is interesting as showing German methods.

For a number of years the dye-stuff industry of Germany was practically controlled by six great companies, some of these companies employing as high as five hundred chemists in research work. In 1916 these six companies made an agreement looking to a still closer alliance not only for the distribution of the product but also for the distribution of ideas and trade secrets. For years, these great commercial companies supplied all the countries of the world not only with dyestuffs and other chemical products but also with medicines discovered by their chemists and made from coal tar; which, although really nothing more than patent medicines, were put upon the market as new and great and beneficial discoveries in medicine. The Badische Anilin and Soda Fabrik, with a capital of fifty-four million marks has paid dividends in the ten years from 1903 to 1913, averaging over twenty-six per cent.

The Farbwerke Meister Lucius und Bruning at Hoeckst, near Frankfort, during the same period, with a capital of fifty million marks, has paid dividends averaging over twenty-seven per cent; and the chemical works of Bayer and Company, near Cologne, during the same period with a capital of fifty-four millions of marks has paid dividends averaging over thirty per cent.

Much of the commercial success of the Germans during the last forty years is due to the fact that each manufacturer, each discoverer in Germany, each exporter knew that the whole weight and power of the Government was behind him in his efforts to increase his business. On the other hand, in America, business men have been terrorized, almost into inaction, by constant prosecutions. What was a crime in one part of the United States, under one Circuit Court of Appeals, was a perfectly legitimate act in another.

If we have to meet the intense compet.i.tion of Germany after the war, we have got to view all these problems from new angles. For instance, there is the question of free ports. Representative Murray Hulbert has introduced, in the House of Representatives, a resolution directing the Secretary of the Treasury, the Secretary of War and the Secretary of Commerce to report to Congress as to the advisability of the establishment of free ports within the limits of the established customs of the United States.

Free ports exist in Germany and have existed for a long time, although Germany is a country with a protective tariff. In a free port raw goods are manufactured and then exported, of course to the advantage of the country permitting the establishment of free ports, because by this manufacture of raw materials and their re-export, without being subject to duty, money is earned by the manufacturers to the benefit of their own country and employment is given to many workingmen. This, of course, improves the condition of these workingmen and of all others in the country; as it is self-evident that the employment of each workingman in an industry, which would not exist except for the existence of the free port, withdraws that workingman from the general labour market and, therefore, benefits the position of his remaining fellow labourers.

Although free ports do not exist in the United States, an attempt has been made to give certain industries, by means of what are known as "drawbacks," the same benefit that they would enjoy were free ports existant in our country.

Thus the refiners of raw sugar from Cuba pay a duty on this sugar when it enters the United States, but receive this duty back when a corresponding amount of refined sugar is exported to other countries.

There has lately been an attack made upon this system in the case, however, of the sugar refiners only, and the question has been treated in some newspapers as if these refiners were obtaining some unfair advantage from the government, whereas, as a matter of fact, the allowance of these "drawbacks" enables the sugar refiners to carry on the refining of the sugar for export much as they would if their refineries existed in free ports modelled on the German system.

The repeal of the provision of allowing "drawbacks" in this and other industries will probably send the industries to Canada or some other territory where this system, equivalent to the free port, is permitted to exist.

A few days before I left Germany I had a conversation with a manufacturer of munitions who employs about eighteen thousand people in his factories, which, before the war, manufactured articles other than munitions. I asked him how the government treated the manufacturers of munitions, and he said that they were allowed to make good profits, although they had to pay out a great proportion of these profits in the form of taxes on their excess or war profits; that the government desired to encourage manufacturers to turn their factories into factories for the manufacture of all articles in the war and required by the nation in sustaining war; and that the manufacturers would do this provided that it were only a question as to how much of their profits they would be allowed to keep, but that if the Government had attempted to fix prices so low that there would have been a doubt as to whether the manufacturer could make a profit or not, the production of articles required for war would never have reached the high mark that it had in Germany.

As a matter of fact, about the only tax imposed in Germany since the outbreak of the war has been the tax upon cost or war profits.

It has been the policy of Germany to pay for the war by great loans raised by popular subscription, after authorisation by the Reichstag. I calculate that the amounts thus raised, together with the floating indebtedness, amount to date to about eighty billions of marks.

For a long time the Germans expected that the expenses of the war would be paid from the indemnities to be recovered by Germany from the nations at war with it.

Helfferich shadowed this forth in his speech in the Reichstag, on August 20, 1915, when he said: "If we wish to have the power to settle the terms of peace according to our interests and our requirements, then we must not forget the question of cost. We must have in view that the whole future activity of our people, so far as this is at all possible, shall be free from burdens.

The leaden weight of billions has been earned by the instigators of this war, and in the future they, rather than we, will drag it about after them."

Of course, by "instigators of the war" Helfferich meant the opponents of Germany, but I think that unconsciously he was a true prophet and that the "leaden weight of the billions" which this war has cost Germany will be dragged about after the war by Germany, the real instigator of this world calamity.

In December, 1915, Helfferich voiced the comfortable plea that, because the Germans were spending their money raised by the war loans in Germany, the weight of these loans was not a real weight upon the German people. He said: "We are paying the money almost exclusively to ourselves; while the enemy is paying its loans abroad--a guarantee that in the future we shall maintain the advantage."

This belief of the Germans and Helfferich is one of the notable fallacies of the war. The German war loans have been subscribed mainly by the great companies of Germany; by the Savings Banks, the Banks, the Life and Fire Insurance and Accident Insurance Companies, etc.

Furthermore, these loans have been pyramided; that is to say, a man who subscribed and paid for one hundred thousand marks of loan number one could, when loan number two was called for, take the bonds he had bought of loan number one to his bank and on his agreement to spend the proceeds in subscribing to loan number two, borrow from the bank eighty thousand marks on the security of his first loan bonds, and so on.

There is an annual increment, not easily ascertainable with exactness, but approximately ascertainable to the wealth of every country in the world. Just as when a man is working a farm there is in normal years an increment or accretion of wealth or income to him above the cost of the production of the products of the soil which he sells, there is such an annual increment to the wealth of each country taken as a whole. Some experts have told me they calculated that, at the outside, in prosperous peace times the annual increment of German wealth is ten billion marks.

Now when we have the annual interest to be paid by Germany exceeding the annual increment of the country, the social and even moral bankruptcy of the country must ensue. If repudiation of the loan or any part of it is then forced, the loss naturally falls upon those who have taken the loan. The working-man or small capitalist, who put all his savings in the war loan, is without support for his old age, and so with the man who took insurance in the Insurance Companies or put his savings in a bank. If that bank becomes bankrupt through repudiation of the war loan, you then have the country in a position where the able-bodied are all working to pay what they can towards the interest of the government loan, after earning enough to keep themselves and their families alive; and the old and the young, without support and deprived of their savings, become mere poor-house burdens on the community.

Already the mere interest of the war loan of Germany amounts to four billions of marks a year; to this must be added, of course, the interest of the previous indebtedness of the country and of each political subdivision thereof, including cities, all of which have added to their before-the-war debt, by incurring great debts to help the dest.i.tute in this war; and, of course, to all this must be added the expenses of the administration of the government and the maintenance of the army and navy.

It is the contemplation of this state of affairs, when he is convinced that indemnities are not to be exacted from other countries, that will do most to persuade the average intelligent German business man that peace must be had at any cost.

CHAPTER XIV

WORK FOR THE GERMANS

The interests of Germany in France, England and Russia were placed with our American Amba.s.sadors in these countries. This, of course, entailed much work upon our Emba.s.sy, because we were the medium of communication between the German Government and these Amba.s.sadors.

I found it necessary to establish a special department to look after these matters. At its head was Barclay Rives who had been for many years in our diplomatic service and who joined my Emba.s.sy at the beginning of the war. First Secretary of our Emba.s.sy in Vienna for ten or twelve years, he spoke German perfectly and was acquainted with many Germans and Austrians. Inquiries about Germans who were prisoners, negotiations relative to the treatment of German prisoners, and so on, came under this department.

One example will show the nature of this work. When the Germans invaded France, a German cavalry patrol with two officers, von Schierstaedt and Count Schwerin, and several men penetrated as far as the forest of Fontainebleau, south of Paris. There they got out of touch with the German forces and wandered about for days in the forest. In the course of their wanderings they requisitioned some food from the inhabitants, and took, I believe, an old coat for one of the officers who had lost his, and requisitioned a wagon to carry a wounded man. After their surrender to the French, the two officers were tried by a French court martial, charged with pillaging and sentenced to be degraded from their rank and transported to Cayenne (the Devil's Island of the Dreyfus case).

The Germans made strong representations, and our very skilled Amba.s.sador in Paris, the Honourable William C. Sharp, took up the matter with the Foreign Office and succeeded in preventing the transportation of the officers. The sending of the officers and men, however, into a military prison where they were treated as convicts caused great indignation throughout Germany. The officers had many and powerful connections in their own country who took up their cause. There were bitter articles in the German press and caricatures and cartoons were published.

I sent Mr. Rives to Paris and told him not to leave until he had seen these officers. He remained in Paris some weeks and finally through Mr. Sharp obtained permission to visit the officers in the military prison. Later the French showed a tendency to be lenient in this case, but it was hard to find a way for the French Government to back down gracefully. Schierstaedt having become insane in the meantime, a very clever way out of the difficulty was suggested, I believe by Mr. Sharp. Schierstaedt having been found to be insane was presumably insane at the time of the patrol's wandering in the forest of Fontainebleau. As he was the senior officer, the other officer and the men under him were not responsible for obeying his commands. The result was that Schwerin and the men of the patrol were put in a regular prison camp and Schierstaedt was very kindly sent by the French back to Germany, where he recovered his reason sufficiently to be able to come and thank me for the efforts made on his behalf.

I made every endeavour so far as it lay in my power to oblige the Germans. We helped them in the exchange of prisoners and the care of German property in enemy countries.

There were rumours in Berlin that Germans taken as prisoners in German African Colonies were forced to work in the sun, watched and beaten by coloured guards. This was taken up by one of the Grand Dukes of Mecklenburg who had been Governor of Togoland and who also took great interest in sending clothes, etc., to these prisoners. Germany demanded that the prisoners in Africa be sent to a more temperate climate.

Another royalty who was busied with prisoners' affairs was Prince Max of Baden. He is heir to the throne of Baden, although not a son of the reigning Duke. He is very popular and, for my part, I admire him greatly. He travels with Emerson's essays in his pocket and keeps up with the thought and progress of all countries.

Baden will be indeed happy in having such a ruler. Prince Max was a man so reasonable, so human, that I understand that von Jagow was in favour of putting him at the head of a central department for prisoners of war. I agreed with von Jagow that in such case all would go smoothly and humanely. Naturally, von Jagow could only mildly hint at the desirability of this appointment. A prince, heir to one of the thrones of Germany, with the rank of General in the army, he seemed ideally fitted for such a position, but unfortunately the opposition of the army and, particularly, of the representative corps commanders was so great that von Jagow told me the plan was impossible of realisation. I am sure if Prince Max had been at the head of such a department, Germany would not now be suffering from the odium of mistreating its prisoners and that the two million prisoners of war in Germany would not return to their homes imbued with an undying hate.

Prince Max was very helpful in connection with the American mission to Russia for German prisoners which I had organised and which I have described in the chapter on war charities.

All complaints made by the Imperial Government with reference to the treatment of German prisoners, and so forth, in enemy countries were first given to me and transmitted by our Emba.s.sy to the American Amba.s.sadors having charge of German interests in enemy countries. All this, with the correspondence ensuing, made a great amount of clerical work.

I think that every day I received one or more Germans, who were anxious about prisoner friends, making inquiries, and wis.h.i.+ng to consult me on business matters in the United States, etc.

All of these people showed grat.i.tude for what we were able to do for them, but their grat.i.tude was only a drop in the ocean of officially inspired hatred of America.

CHAPTER XV

WAR CHARITIES

As soon as the war was declared and millions of men marched forward intent upon killing, hundreds of men and women immediately took up the problem of helping the soldiers, the wounded and the prisoners and of caring for those left behind by the men who had gone to the front.

The first war charity to come under my observation was the American Red Cross. Two units containing three doctors and about twelve nurses, each, were sent to Germany by the American National Red Cross. Before their arrival I took up with the German authorities the questions as to whether these would be accepted and where they would be placed. The German authorities accepted the units and at first decided to send one to each front. The young man a.s.signed to the West front was Goldschmidt Rothschild, one of the last descendants of the great Frankfort family of Rothschild. He had been attached to the German Emba.s.sy in London before the war.

The one a.s.signed to the unit for the East front was Count Helie de Talleyrand. Both of these young men spoke English perfectly and were chosen for that reason, and both have many friends in England and America.

Talleyrand was of a branch of the celebrated Talleyrand family and possessed German citizens.h.i.+p. During the Napoleonic era the great Talleyrand married one of his nephews to a Princess of Courland who, with her sister, was joint heiress of the princ.i.p.ality of Sagan in Germany. The share of the other sister was bought by the sister who married young Talleyrand, and the descendants of that union became princes of Sagan and held the Italian t.i.tle of Duke de Dino and the French t.i.tle of Duke de Valencay.

Some of the descendants of this nephew of the great Talleyrand remained in Germany, and this young Talleyrand, a.s.signed to the Red Cross unit, belonged to that branch. Others settled in France, and among these was the last holder of the t.i.tle and the Duke de Dino, who married, successively, two Americans, Miss Curtis and Mrs. Sampson. It was a custom in this family that the holder of the princ.i.p.al t.i.tle, that of the Prince of Sagan, allowed the next two members in succession to bear the t.i.tles of Duke de Dino and Duke de Valencay. Before the last Prince of Sagan died in France, his son Helie married the American, Anna Gould, who had divorced the Count Castellane. On the death of his father and in accordance with the statutes of the House of Sagan the members of the family who were German citizens held a family council and, with the approval of the Emperor of Germany, pa.s.sed over the succession from Anna Gould's husband to her son, so that her son has now the right to the t.i.tle and not his father, but the son must become a German citizen at his majority.

The younger brother of the husband of Anna Gould bears the t.i.tle of Duke de Valencay and is the divorced husband of the daughter of Levi P. Morton, formerly Vice-President of the United States.