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[Illustration: Albert Ballin]




                             ALBERT BALLIN

                                   By
                          Bernhard Huldermann

                      _Translated from the German
                                   by
                      W. J. EGGERS, M.A. (London)_

                       [Illustration: decoration]

                      Cassell and Company, Limited
                London, New York, Toronto and Melbourne
                                  1922

                            To the Memory of
                             ALBERT BALLIN
               in true veneration and heartfelt gratitude

                 "_He was a man; take him for all in all,
                   I shall not look upon his like again._"

                          SHAKESPEARE, _Hamlet_ (_Act I, Scene 2_).




PREFACE


My principal reason for publishing the information contained in this
volume is to keep alive the memory of Albert Ballin. I particularly
desire to show what was his share in bringing about the economic advance
of Germany during the golden age of the Empire's modern history, and to
relate how he--unsuccessfully, alas!--strove to prevent the proud
structure which he had helped to raise, from falling to ruin in the time
of his country's distress. I believe that much that concerns the latter
aspect of his work will be new to most readers. In spite of all that has
been said and written concerning the political activities which Ballin
displayed (and is alleged to have displayed) both before and during the
war, their object--and, more important still, their intimate connexion
with his economic activities--is scarcely known. Eminently successful
though Ballin had been in creating an atmosphere of mutual understanding
between the various nations in the economic sphere, his attempts to
reconcile the contending ambitions of those same nations where politics
were concerned ended in failure. And yet it is impossible to understand
his failure in one respect without first understanding his success in
the other; indeed, the connexion between the two sides of his work forms
the key to the character of the man and to the historical significance
of his achievements.

It is possible that this volume may shed some new light on the causes of
Germany's collapse; this idea, at any rate, was before my mind when I
decided upon publication. Frederick the Great somewhere remarked that,
to the great loss of mankind, the experiences gained by one generation
are always useless to the next, and that each generation is fated to
make its own mistakes. If this is true, it is nevertheless to be hoped
that Germany, considering the magnitude of the disaster that has
overtaken her, will not allow the spirit of resignation implied by this
remark to determine her actions in the present case.

In thus submitting to the public the information contained in this book,
I am carrying out the behest of the deceased, who asked me to collect
his papers, and to make whatever use I thought fit of them. Moreover,
the fact that I had the privilege of being his collaborator for more
than ten years gives me perhaps a special right to undertake this task.

My best thanks are due to Director A. Storm for supplying me with
material illustrative of Ballin's early career; to Chief Inspector Emil
F. Kirchheim for assistance with the technical details, and to Professor
Francke, who was on intimate terms of friendship with Ballin during a
number of years, for information concerning many matters relative to
Ballin's personal character.

My constant endeavour has been to describe persons and events _sine ira
et studio_, and to refrain from stating as a fact anything for which no
documentary evidence is available.

THE AUTHOR.

_October, 1921._




CONTENTS


CHAPTER                                                             PAGE

1. MORRIS AND CO.                                                      1

2. GENERAL REPRESENTATIVE OF THE CARR LINE                            12

3. HEAD OF THE PACKETFAHRT'S PASSENGER DEPARTMENT                     21

4. THE POOL                                                           28

5. THE MORGAN TRUST                                                   40

6. THE EXPANSION OF THE HAMBURG-AMERIKA LINIE                         69

7. THE TECHNICAL REORGANIZATION OF THE HAMBURG-AMERIKA LINIE         121

8. POLITICS                                                          131

9. THE KAISER                                                        193

10. THE WAR                                                          213

11. PERSONAL CHARACTERISTICS                                         287

EXTRACT ANNOTATED BY WILLIAM II                                      316

INDEX                                                                317




ALBERT BALLIN




CHAPTER I

MORRIS AND CO.


Albert Ballin was a native of Hamburg. Before the large modern harbour
basins of the city were built, practically all the vessels which
frequented the port of Hamburg took up their berths along the northern
shore of the Elbe close to the western part of the town. A long road,
flanked on one side by houses of ancient architecture, extended--and
still extends--parallel to this predecessor of the modern harbour.
During its length the road goes under different names, and the house in
which Ballin was born and brought up stood in that portion known as
Steinhöft.

A seaport growing in importance from year to year is always a scene of
busy life, and the early days which the boy Ballin spent in his father's
house and its interesting surroundings near the river's edge left an
indelible impression on his plastic mind.

Those were the times when the private residence and the business
premises of the merchant and of the shipping man were still under the
same roof; when a short walk of a few minutes enabled the shipowner to
reach his vessel, and when the relations between him and the captain
were still dominated by that feeling of personal friendship and personal
trust the disappearance of which no man has ever more regretted than
Albert Ballin. Throughout his life he never failed to look upon as
ideal that era when every detail referring to the ship and to her
management was still a matter of personal concern to her owner. He
traced all his later successes back to the stimulating influence of
those times; and if it is remembered how enormous was then the capacity
for work, and how great the love of it for its own sake, it must be
admitted that this estimate was no exaggeration. True, it is beyond
doubt that the everyday surroundings in which his boyhood was spent, and
the impressions gained from them, powerfully influenced his imagination
both as boy and growing youth. It may, however, also be regarded as
certain that the element of heredity was largely instrumental in
moulding his character.

Ballin belonged to an old Jewish family, members of which--as is proved
by ancient tombstones and other evidence--lived at Frankfort-on-Main
centuries ago. Later on we find traces of them in Paris, and still later
in Central and North Germany, and in Denmark. Documents dating from the
seventeenth century show that the Ballins at that time were already
among the well-to-do and respected families of Hamburg and Altona. Some
of the earliest members of the family that can be traced were
distinguished for their learning and for the high reputation they
enjoyed among their co-religionists; others, in later times, were
remarkable for their artistic gifts which secured for them the favour of
several Kings of France. Those branches of the family which had settled
in Germany and Denmark were prominent again for their learning and also
for their business-like qualities. The intelligence and the artistic
imagination which characterized Albert Ballin may be said to be due to
hereditary influences. His versatile mind, the infallible discernment he
exercised in dealing with his fellow-men, his artistic tastes, and his
high appreciation of what was beautiful--all these are qualities which
may furnish the key to his successes as a man of business. His sense of
beauty especially made him extremely fastidious in all that concerned
his personal surroundings, and was reflected in the children of his
imagination, the large and beautifully appointed passenger steamers.

Ballin always disliked publicity. When the Literary Bureau of his
Company requested him to supply some personal information concerning
himself, he bluntly refused to do so. Hence there are but few
publications available dealing with his life and work which may claim to
be called authentic. Nevertheless--or perhaps for that very
reason--quite a number of legends have sprung up regarding his early
years. It is related, for instance, that he received a sound business
training first in his father's business and later during his stay in
England. The actual facts are anything but romantic. Being the youngest
of seven brothers and sisters, he was treated with especial tenderness
and affection by his mother, so much so, in fact, that he grew up rather
a delicate boy and was subject to all sorts of maladies and
constitutional weaknesses. He was educated, as was usual at that time,
at one of the private day-schools of his native city. In those days,
when Hamburg did not yet possess a university of her own, and when the
facilities which she provided for the intellectual needs of her citizens
were deplorably inadequate for the purpose, visitors from the other
parts of Germany could never understand why that section of the
population which appreciated the value of a complete course of higher
education--especially an education grounded on a classical
foundation--was so extremely small. The average Hamburg business man
certainly did not belong to that small section; and the result was that
a number of private schools sprang up which qualified their pupils for
the examination entitling them to one year's--instead of three
years'--military service, and provided them with a general education
which--without any reflection on their principals--it can only be said
would not bear comparison with that, for instance, which was looked upon
as essential by the members of the higher grades of the Prussian Civil
Service. Fortunately, the last few decades have brought about a great
improvement in this respect, just as they have revolutionized the
average citizen's appreciation of intellectual culture and refinement.

Albert Ballin did not stand out prominently for his achievements at
school, and he did not shine through his industry and application to his
studies. In later life he successfully made up for the deficiencies of
his school education by taking private lessons, especially in practical
mathematics and English, in which language he was able to converse with
remarkable fluency. His favourite pastime in his early years was music,
and his performances on the 'cello, for instance, are said to have been
quite excellent. None of his friends during his later years can furnish
authoritative evidence on this point, as at that time he no longer had
the leisure to devote himself to this hobby. Apart from music, he was a
great lover of literature, especially of books on _belles lettres_,
history, and politics. Thanks to his prodigious memory, he thus was able
to accumulate vast stores of knowledge. During his extended travels on
the business of his Company he gained a first-hand knowledge of foreign
countries, and thus learned to understand the essential characteristics
of foreign peoples as well as their customs and manners, which a mere
study of books would never have given him. So he became indeed a man of
true culture and refinement. He excelled as a speaker and as a writer;
although when he occasionally helped his adopted daughter with her
German composition, his work did not always meet with the approval of
the teacher, and was once even returned with the remark, "newspaper
German."

In 1874, at the age of seventeen, Ballin lost his father. The business,
which was carried on under the firm of Morris and Co., was an Emigration
Agency, and its work consisted in booking emigrants for the
transatlantic steamship lines on a commission basis. Office premises and
dwelling accommodation were both--as already indicated--located in the
same building, so that a sharp distinction between business matters and
household affairs was often quite impossible, and the children acquired
practical knowledge of everything connected with the business at an
early age. This was especially so in the case of young Albert, who loved
to do his home lessons in the office rooms. History does not divulge
whether he did so because he was interested in the affairs of the
office, or whether he obtained there some valuable assistance. The whole
primitiveness of those days is illustrated by the following episode
which Ballin once related to us in his own humorous way. The family
possessed--a rare thing in our modern days--a treasure of a servant who,
apart from doing all the hard work, was the good genius of the home, and
who had grown old as the children grew up. "Augusta" had not yet read
the modern books and pamphlets on women's rights, and she was content to
go out once a year, when she spent the day with her people at Barmbeck,
a suburb of Hamburg. One day, when the young head of Morris and Co. was
discussing some important business matters with some friends in his
private office, the door was suddenly thrust open, and the "treasure"
appeared on the scene and said: "Adjüs ook Albert, ick gah hüt ut!"
("Good-bye, Albert, I am going out to-day!") It was the occasion of her
annual holiday.

The firm of Morris and Co., of which Ballin's father had been one of the
original founders in 1852, had never been particularly successful up to
the time of his death. Albert, the youngest son, who was born on August
15th, 1857, joined the business when his father died. He had then just
finished his studies at school. The one partner who had remained a
member of the firm after Ballin's death left in 1877, and in 1879 Albert
Ballin became a partner himself. The task of providing for his widowed
mother and such of his brothers and sisters as were still dependent on
his help then devolved on him, and he succeeded in doing this in a very
short time. He applied himself to his work with the greatest diligence,
and he became a shining example to the few assistants employed by the
firm. On the days of the departure of the steamers the work of the
office lasted until far into the night, as was usually the case in
Hamburg in former years. An incident which took place in those early
days proves that the work carried on by Morris and Co. met with the
approval of their employers. One day the head of one of the foreign
lines for which the firm was doing business paid a personal visit to
Hamburg to see what his agents were doing. On entering the office young
Albert received him. He said he wanted to see Mr. Ballin, and when the
youthful owner replied that he was Mr. Ballin the visitor answered: "It
is not you I want to see, young man, but the head of the firm." The
misunderstanding was soon cleared up, and when Ballin anxiously asked if
the visitor had come to complain about anything connected with the
business, the reply was given that such was by no means the case, and
that the conduct of the business was considered much more satisfactory
than before.

To arrive at a proper understanding of the conditions ruling in Hamburg
at the end of the 'seventies, it is necessary to remember that the
shipping business was still in its infancy, and that it was far from
occupying the prominent position which it gained in later years and
which it has only lost again since the war. The present time, which also
is characterized by the prevalence of foreign companies and
foreign-owned tonnage in the shipping business of Hamburg, bears a
strong likeness to that period which lies now half a century back. The
"Hamburg-Amerikanische Packetfahrt-Actien-Gesellschaft," although only
running a few services to North and Central America, was even then the
most important shipping company domiciled in Hamburg; but it counted for
very little as an international factor, especially as it had just passed
through a fierce struggle against its competitor, the Adler Line, which
had greatly weakened it and had caused it to fall behind other lines
with regard to the status of its ships. Of the other Hamburg lines which
became important in later times, some did not then exist at all, and
others were just passing through the most critical period of their
infancy. The competitors of the Packetfahrt in the emigrant traffic were
the North German Lloyd, of Bremen; the Holland-America Line, of
Rotterdam, and the Red Star Line, of Antwerp. Apart from the direct
traffic from Hamburg to New York, there was also the so-called indirect
emigrant traffic _via_ England, which for the most part was in the hands
of the British lines. The passengers booked by the agents of the latter
were first conveyed from Hamburg to a British port, and thence, by a
different boat, to the United States. It was the time before the
industrialization of Germany had commenced, when there was not
sufficient employment going round for the country's increasing
population. The result was that large numbers of the inhabitants had to
emigrate to foreign countries. That period lasted until the 'nineties,
by which time the growth of industries required the services of all who
could work. Simultaneously, however, with the decrease of emigration
from Germany, that from Southern Europe, Austria-Hungary, and the
Slavonic countries was assuming huge proportions, although the
beginnings of this latter were already quite noticeable in the
'seventies and 'eighties. This foreign emigrant traffic was the mainstay
of the business carried on by the emigration agencies of the type of
Morris and Co., whereas the German emigrants formed the backbone of the
business on which the German steamship lines relied for their passenger
traffic. Either the companies themselves or their agencies were in
possession of the necessary Government licences entitling them to carry
on the emigration business. The agencies of the foreign lines, on the
other hand, either held no such licence at all, or only one which was
restricted to certain German federal states or Prussian provinces--such,
for instance, as Morris and Co. possessed for the two Mecklenburgs and
for Schleswig-Holstein. This circumstance naturally compelled them to
tap foreign districts rather than parts of Germany; and since the German
lines, in order to keep down their competition, refused to carry the
passengers they had booked, they were obliged to work in conjunction
with foreign ones. They generally provided the berths which the
sub-agencies required for their clientèle, and sometimes they would book
berths on their own account, afterwards placing them at the disposal of
the agencies. They were the connecting link between the shipping
companies and the emigrants, and the former had no dealings whatever
with the latter until these were on board their steamers. The Hamburg
emigration agents had therefore also to provide accommodation for the
intending emigrants during their stay in Hamburg and to find the means
for conveying them to the British port in question. A number of taverns
and hostelries in the parts near the harbour catered specially for such
emigrants, and the various agents found plenty of scope for a display of
their respective business capacities. A talent for organization, for
instance, and skill in dealing with the emigrants, could be the means of
gaining great successes.

This was the sphere in which the youthful Albert Ballin gave the first
proofs of his abilities and intelligence. Within a few years of his
entering the firm the latter acquired a prominent position in the
"indirect" emigration service _via_ England, a position which brought
its chief into personal contact with the firm of Richardson, Spence and
Co., of Liverpool, who were the general representatives for Great
Britain of the American Line (one of the lines to whose emigration
traffic Morris and Co. attended in Hamburg), and especially with the
head of that firm, Mr. Wilding. An intimate personal friendship sprang
up between these two men which lasted a lifetime. These close relations
gave him an excellent opportunity for studying the business methods of
the British shipping firms, and led to the establishment of valuable
personal intercourse with some other leading shipping people in England.
Thus it may be said that Ballin's connexions with England, strengthened
as they were by several short visits to that country, were of great
practical use to him and that, in a sense, they furnished him with such
business training as until then he had lacked.

How successfully the new chief of Morris and Co. operated the business
may be gauged from the fact that, a few years after his advent, the firm
had secured one-third of the volume of the "indirect" emigration traffic
_via_ England. At that time, in the early 'eighties, a period of grave
economic depression in the United States was succeeded by a trade boom
of considerable magnitude. Such a transition from bad business to good
was always preceded by the sale of a large number of "pre-paids," i.e.
steerage tickets which were bought and paid for by people in the United
States and sent by them to those among their friends or relatives in
Europe who, without possessing the necessary money, wished to emigrate
to the States. A few months after the booking of these "pre-paids" a
strong current of emigration always set in, and the time just referred
to proved to be no exception to the rule. The number of steerage
passengers leaving Hamburg for New York increased from 25,000 in 1879 to
69,000 in 1880, and 123,000 in 1881.

It was quite impossible for the biggest Hamburg shipping company--the
Packetfahrt--to carry successfully this huge number of emigrants. And
even if this had been possible, the Packetfahrt would not have
undertaken it, because it intentionally ignored the stream of non-German
emigrants. Besides, the Company had neglected for years to adapt its
vessels to the needs of the times, and had allowed its competitors to
gain so much that even the North German Lloyd, a much younger
undertaking, had far outstripped it. The latter, under its eminent
chairman, Mr. Lohmann, had not only outclassed the Packetfahrt by the
establishment of its service of fast steamers--"Bremen-New York in 9
days"--which was worked with admirable regularity and punctuality, but
had also increased the volume of its fleet to such an extent that, in
1882, 47 of the 107 transatlantic steamers flying the German flag
belonged to this Company, whereas the Packetfahrt possessed 24 only. For
all these reasons it would have been useless for Morris and Co. to
suggest to the Packetfahrt that they should secure for it a large
increase in its emigrant traffic; and even if they had tried to extend
their influence by working in co-operation with the Packetfahrt, such an
attempt would doubtless have provoked the liveliest opposition on the
part of the firm of August Bolten, the owner of which was one of the
founders of the Packetfahrt, and which, because they were acting as
general agents for the North American cargo and passenger business,
exercised a powerful influence over the management of the Packetfahrt.
The firm of August Bolten, moreover, had, like the line they
represented, always consistently refused to have any dealings with the
emigrant agencies.

Ballin, knowing that the next few years would lead to a considerable
increase in the emigrant traffic, therefore approached a newly
established Hamburg shipping firm--which intended to run a cargo service
from Hamburg to New York--with the proposal that it should also take up
the steerage business. His British friends, when they were informed of
this step, expressed the apprehension lest their own business with his
firm should suffer from it, but Ballin had no difficulty in allaying
their fears.




CHAPTER II

GENERAL REPRESENTATIVE OF THE CARR LINE


The new shipping line for which Morris and Co. contracted to act as
General Passenger Agents was the privately owned firm of Mr. Edward
Carr. The agreement concluded between the two firms shows distinct
traces of Ballin's enterprising spirit and of the largeness of his
outlook. Morris and Co. undertook to book for the two steamships of the
Carr Line then building, viz. the _Australia_ and the _America_, as many
passengers as they could carry, and guaranteed to pay the owners a
passage price of 82 marks per head, all the necessary expenses and
commissions, including those connected with the dispatch of the
passengers, to be paid by Morris and Co. The steerage rate charged by
the Packetfahrt at that time was 120 marks. It was agreed that, if this
rate should be increased, a corresponding increase should be made in the
rates of the Carr Line. The number of trips to be performed by each
steamer should be about eight or nine per annum. If a third boat were
added to the service, the agreement entered into should be extended so
as to cover this boat as well. For every passenger short of the total
capacity of each steamer Morris and Co. were to pay a compensation of 20
marks, if no arrangements had been made for the accommodation of the
passenger, and 35 marks in case such accommodation had been arranged. It
was expected that each boat would carry from 650 to 700 passengers. The
actual number carried, however, turned out to be slightly less, and
amounted to 581 when the first steamer left Hamburg on June 7th, 1881.
Morris and Co. also undertook to hand over to the Carr Line all the
through cargo they could secure. From the very start the work done by
Ballin seems to have met with the unqualified approval of the Carr Line
people; because the latter waived their claim to the compensation due to
them for the sixty passengers short of the total number which were to be
carried on the first trip, as Morris and Co. could prove that these
passengers had failed to arrive, although the firm had been advised from
Denmark that they were to come. On how small a scale the firm's business
was conducted may be gauged from the circumstance that the whole staff
consisted of nine employees only, who were paid salaries aggregating
20,302 marks.

In one essential feature the service of the new line differed from those
of its old-established competitors. The _Australia_ and the _America_
were ordinary cargo boats, but, in addition to a moderate amount of
cargo, they also carried steerage passengers. They thus had not much in
common with the usual passenger steamers by which both cabin and
steerage passengers were carried. The advantage of the new type to the
emigrants was that it gave them much more space than was at their
disposal on the older boats. Whereas on the cabin steamers they were
practically confined to a very small part of the boat, the Carr Line
steamers made no restriction whatever as to their movements on board;
all the available space, especially on deck, was thrown open to them.
This type was not entirely a novelty, the sailing vessels of the older
period used for the emigrant traffic being run on similar lines. The
advantages accruing to the owners from their new type of steamers were
obvious. The arrangements for the accommodation and provisioning of the
emigrants, compared with what was needed in the case of cabin
passengers, were of the simplest kind, and thus the cost price of the
steamers was considerably less than that of vessels of the usual type.
This also meant a saving in the wages bill, as it led to a reduction in
the number of hands on board; and since the speed of the new boats was
also less than that of the older ones, the working expenses were reduced
in proportion. The financial results of the service, therefore, were
better, in spite of the low rates charged to the steeragers, than those
obtainable by running cabin steamers with steerage accommodation, and
than those obtainable by running cargo steamers without any passenger
accommodation.

The new line soon made itself felt as a serious competitor to the
Packetfahrt, especially so as by 1885 its fleet had increased from two
to five steamers. The lower steerage rates charged by the Carr Line led
to a general decrease of rates in the New York service, which was not
confined to the lines running their services from Hamburg. The passage
prices charged from the various ports are naturally closely related to
each other, because each port tries to attract as much traffic as
possible to itself, and this can only be brought about by a carefully
thought-out differentiation. The struggle between the various lines
involved which had started in Hamburg quickly extended to other seaports
and affected a great many lines in addition to those of Hamburg. The
rate-cutting process began in May, 1882. In the following October the
Packetfahrt and the Lloyd had reduced their rates to 90 and in June,
1883, to 80 marks, whilst the British lines in February, 1884, charged
so little as 30s. The Carr Line, of course, had to follow suit. It not
only did so, but in proportion reduced its own rates even more than the
other lines. The rates were even lower in practice than they appeared to
be, owing to the constantly growing commissions payable to the agents.
The agents of the competing lines, by publishing controversial articles
in the newspapers, soon took the general public into their confidence;
and in order to prevent such publicity being given as to their internal
affairs, the managements of the various steamship lines entered into
some sort of mutual contact. The worst result of the rate-slashing was
that the agreements which the older lines had concluded amongst
themselves for the maintenance of remunerative prices soon became
unworkable. First those relating to the Westbound rates had to go down
before the new competitor; and in 1883, when this competition had really
commenced to make itself appreciably felt, the Packetfahrt found itself
compelled to declare its withdrawal from the New York Continental
Conference by which the Eastbound rate had been fixed at $30 for the
passage from New York to the Continent, a rate which was so high that
the Carr Line found it easy to go below it.

The Packetfahrt made great efforts to hold its own against the newcomer,
but, as the following figures show, its success was but slight. In 1883
the Packetfahrt carried 55,390 passengers on 76 voyages, against 16,471
passengers carried on 29 voyages by the Carr Line, so that the traffic
secured by the latter amounted to about 30 per cent. of that of the
former. The figures for 1884 show that 58,388 passengers were carried by
the Packetfahrt on 86 voyages, against 13,466 steeragers on 30 voyages
by the Carr Line. If the figures relative to the direct and the indirect
emigrant traffic from Hamburg are studied, it will be seen that a
considerable decrease had taken place in the volume of the latter kind
within a very few years, thus leading to an improvement in the position
of the German lines as compared with that of their British competitors.
These figures are as follows:

                    _Number of Emigrants carried_
         _Packetfahrt_    _Carr Line_    _via British ports_

  1880       47,000            --               20,000
  1881       68,000           4,000             47,600
  1882       68,000          11,000             31,000
  1883       55,000          16,000             13,000
  1884       58,000          13,000             16,000

At the same time the Packetfahrt, in order to prevent French competition
from becoming too dangerous on the Havre-New York route, had to reduce
its rates from Havre, and a little later it had to do likewise with
regard to the Eastbound freight rates and the steerage rates. The keen
competition going on between the lines concerned had led to a lowering
of the Eastbound rate to Hamburg from $30 to $18; and as the commission
payable to the agents had gone up to $5, the net rate amounted to $13
only. At last the shareholders of the Packetfahrt became restless, and
at the annual general meeting held in 1884 one of their representatives
moved that the Board of the Company should be asked to enter into an
agreement with the competing firm of Edward Carr. The motion, however,
was lost; and the further proposal that a pool should be established
among the Hamburg emigrant agents fared no better.

It was clear that the rate-war, which continued for a long period, would
considerably affect the prosperity of the Carr Line in common with the
other shipping companies. This circumstance prompted the proposal of
Edward Carr, when the discussions were renewed in the spring of 1885, to
carry them on upon a different basis altogether. He proposed, in fact,
that the Carr Line itself should be purchased by the Packetfahrt. In the
course of the ensuing negotiations Albert Ballin, as the representative
of Edward Carr, who was absent from Hamburg for a time, played a
prominent part. The Packetfahrt, in the meantime, had received advices
from its New York office to the effect that the latter had reconsidered
its attitude towards the claims of the Carr Line, that it looked upon a
successful termination of the struggle against this Line as hopeless,
and that it therefore recommended the granting of the differential rates
which formed the obstacle to peace. Nevertheless, it was not until July,
1885, that, at a conference held in Hamburg, an agreement was concluded
by the Packetfahrt, the Lloyd, the Carr Line, the Dutch, Belgian, and
French lines, and the representative of the British lines. All these
companies bound themselves to raise their rates to 100 marks, except
that the Carr Line should be entitled to fix theirs at 90 marks. Thus
the latter had at length received the recognition of its claim to a
differentiation, and of its right to exist side by side with the older
Company, although its steamers were not of an equal quality with those
of the latter. An agreement was also concluded by which the rates of
commission due to the Hamburg emigrant agents were fixed, and at the
continued negotiations with the other lines Albert Ballin, from that
time onward, in his capacity of representative of the Carr Line, was
looked upon as on an equal footing with the representatives of the other
lines.

The principal subject of the discussions was the question of
eliminating, as far as possible, British influence from the emigrant
traffic _via_ Hamburg. The competition of the British was, naturally,
very detrimental to the business of all the Continental, but more
especially the German lines, because the interests of the respective
sides were utterly at variance with each other. The firm foundations of
the business transacted by the British lines were laid in England, and
the Continental business was merely a source of additional profit; but
to the German lines it was the mainstay of their existence, and to make
it pay was of vital importance to them. The German lines, therefore,
did not rest until, as the result of the continued negotiations among
the Continental companies, it was agreed that the uniform rates just
fixed should not apply to the traffic which was carried on by the two
Hamburg lines from that city. Towards the end of 1885 the first object
aimed at by this step was realized: the conclusion of an agreement
between the two Hamburg lines and the representatives of the British
lines settling the rates and the commissions; but apart from this, no
changes of fundamental importance were made in this business until after
Albert Ballin, under an agreement proposed by the Packetfahrt, had
entered the service of the Packetfahrt, as head of their passenger
department. An important exception, however, was the amalgamation
suddenly announced in March, 1886, of the Carr Line and the Union Line,
which latter company was operated by Rob. M. Sloman and Co., of Hamburg.
The fact of this amalgamation considerably weakened the position of the
Packetfahrt in its dealings with the Carr Line, because it gave
additional strength to the latter.

The details of the five years' agreement between Ballin and the
Packetfahrt were approved by the Board of Trustees of that Company about
the middle of May, 1886. It was stipulated that, in conformity with the
pool agreement concluded between the two lines on May 22nd, the
Packetfahrt should appoint Mr. Albert Ballin sole and responsible head
of its North American passenger department (Westbound as well as
Eastbound services); that his work should include the booking of
steeragers for the Union Company's steamers (which, in accordance with
the pool agreement, the Packetfahrt had taken over), that he should
appoint and dismiss the clerks employed by his department; that he
should fix their salaries and commissions; that he should sign passage
agreements on behalf of the Company, and that he should issue the
necessary instructions to the agents and officers of the Company. All
letters and other documents were to be signed "by proxy of the
Hamburg-Amerikanische Packetfahrt-Actien-Gesellschaft," and he was
required annually to submit to the directors a draft estimate of the
expenses of his department. On how modest a scale the whole arrangement
was drawn up may be inferred from the figures given in the first year's
draft estimate, viz. Salaries, 35,000 marks; advertisements, 50,000
marks; posters and printed matter, 25,000 marks; travelling expenses,
6,000 marks; postage and telegrams, 10,000 marks; extras and sundries,
10,000 marks. Equally modest was the remuneration of the new head who
was to receive a fixed salary of 10,000 marks per annum, plus a
commission under the pool agreement, allowing the inference that the
total annual income of the newly appointed head of the department would
work out at something like 60,000 marks, which goes to show that the
Company had a high opinion of his capacity for attracting traffic to its
services. The conclusion of this agreement meant that the Packetfahrt
henceforth took entire control of its passenger business--which, until
then, had been looked after by the firm of Aug. Bolten--and that a
passenger department had to be specially created. Thus an important step
forward was made which could only be undertaken by the firm because such
a well-qualified man as Ballin happened to be at their service just
then.

If the course of the negotiations between the Packetfahrt and the Carr
Line had not already shown it, this agreement would prove without a
shadow of doubt that the then head of Morris and Co. had, at the age of
twenty-nine, and after twelve years of practical work, gained the
premier position in the emigrant business of his native city and also a
leading one in the general European emigrant business which in itself is
one of the most important branches of the shipping trade. The
correspondence between Edward Carr and Ballin furnishes no indication
that the latter himself had insisted upon his being taken over by the
Packetfahrt or that he had worked with this object.




CHAPTER III

HEAD OF THE PACKETFAHRT'S PASSENGER DEPARTMENT


On May 31st, 1886, Albert Ballin first took part in a joint meeting of
the Board of Trustees and the Board of Directors of the Packetfahrt. On
this occasion two proposals were put forward by him: one, to provide new
premises for the work connected with the booking of passengers at an
annual rent of 5,000 marks; the other, to start a direct service from
Stettin to New York _via_ Gothenburg. This latter proposal was prompted
by the desire to reduce the influence of the British lines competing for
the Hamburg business. Such a reduction could only be brought about if it
were proved to the British lines that their position was by no means
unassailable. The Scandinavian emigrant business to the United States
which for long had been a source of great profit to the British, lent
itself admirably to such purposes. Ballin's proposal was agreed to by
the Company's management, with the result that in July, 1886, a pool
agreement was concluded between the Packetfahrt (on behalf of a Stettin
Line of steamers) and the Danish Thingvalla Line. Steamers now began to
call at Gothenburg and Christiansand on their voyages from Stettin to
the United States. The new line was known as the "Scandia Line"; and in
later years, when a similar object was aimed at, it was called into
existence once more. The aim was not to establish a new steamer service
for its own sake, but rather to create an object for compensation which,
in the negotiations with the British lines, could be given up again in
exchange for concessions on the part of the latter regarding the
Hamburg business. If this plan failed, Ballin had another one mapped
out: he threatened to attack the British in their own country by
carrying steerage passengers either from Liverpool _via_ Havre, or from
Plymouth _via_ Hamburg. People in England laughed at this idea.
"Surely," they said, "no British emigrant will travel on a German
vessel." The British lines replied to Ballin's threat by declaring that
they would again reduce to 30s. their rates from Hamburg to New York
_via_ a British port. However, the negotiations which Ballin entered
into with them in England during the month of September, 1886, soon
cleared the air, and led to the conclusion of an agreement towards the
end of the year. The Packetfahrt promised to withdraw its Scandia Line,
and the British lines, in return, agreed to raise their steerage rates
from Hamburg to 85 marks gross, and those from Liverpool, Glasgow, and
London to £2 10s. net. A clearing house which should be under the
management of a representative of the British lines, and which was also
to include the business done by the Bremen agents of the latter, was to
be set up in Hamburg. This clearing house was kept on until other and
more far-reaching agreements with the British lines made its continued
existence superfluous.

The arrangements which Ballin made with the agents represented in the
clearing house show his skill in his dealings with other people. The
whole agreement, especially the fixing of the terms governing the share
to be assigned to the agents--which amounted to 55 per cent, of the
Hamburg business--was principally aimed at the realization of as high a
rate as possible. This policy proved to be a great success. Another step
forward was that the Packetfahrt now consented to accept passengers
booked by the agents, thus reversing their previous policy of ignoring
them altogether.

The agreement with the British lines also provided that the Union Line
should raise its rates to 90 marks, the Packetfahrt to 95 marks, and the
Lloyd those charged for its services to Baltimore and New York to 100
and 110 marks respectively. Henceforward both competing groups were
equally interested in obtaining as high a rate as possible.

The practical working of the agreement did not fail to give
satisfaction, and the Continental lines could, undisturbed by external
interference, put their own house in order. A few years later, in 1890,
the British lines complained that they did not succeed in getting the
percentage of business to which they were entitled. Negotiations were
carried on at Liverpool, during which Ballin was present. He pointed out
that, considering the whole Continental position, the British lines
would be ill-advised to withdraw from the agreement, and he stated that
he would be prepared to guarantee them their share (33 per cent.) of the
Hamburg business. The outcome was that the British lines declared
themselves satisfied with these new stipulations. A few years later,
when the British lines joined the Continental Pool, the Hamburg
agreement ceased to be necessary, and in 1893 the clearing house was
abolished.

The new Emigration Law of 1887--due to the exertions of the North German
Lloyd and the Packetfahrt--strengthened the position of the lines
running direct services from German ports. Another step forward was the
increase of the passage rates which was agreed upon after negotiations
had taken place at Antwerp and in England, and after the German, Dutch,
and Belgian lines had had a conference at Cologne. Contact was also
established with the chief French line concerned.

The improvement, however, was merely temporary. The termination of the
struggle for the Hamburg business did not mean that all the differences
between all the transatlantic lines had been settled. On the contrary,
all the parties concerned gradually realized that it would be necessary
to institute quite different arrangements; something to ensure a fairer
distribution of the traffic and a greater consolidation of their common
interests. A proposal to gain these advantages by the establishment of a
pool was submitted by the representative of the Red Star Line at a
conference held in the autumn of 1886, and a memorandum written by
Ballin, likewise dating from 1886, took up the same idea; but an
agreement was not concluded until the close of 1891.

That, in spite of Ballin's advocacy, five years had to elapse before
this agreement became perfect is perhaps to some extent due to the fact
that Ballin--who at that time, after all, was only the head of the
Passenger Department of his Company--could not always speak with its
full authority where his own personal views were concerned. Moreover,
the influence of his Company was by no means very considerable in those
early days. The only passenger boat of any importance which the Company
possessed in the early 'eighties, before Ballin had entered its
services, was the _Hammonia_, and she was anything but a success. She
was inferior both as regards her efficiency and her equipment. At last,
however, Ballin's desire to raise the prestige of the Company triumphed,
and the building of several fast boats was definitely decided upon. In
addition to a comparatively large number of passengers--especially those
of the first cabin--they were to carry a moderate amount of cargo. In
size they were subject to the restrictions imposed upon them by the
shortcomings of the technical knowledge of that time, and by the absence
of the necessary improvements in the fairway of the lower Elbe. Speed,
after all, was the main consideration; and it was the struggle for the
blue riband of the Atlantic which kept the attention of the travelling
public riveted on these boats.

A statement giving details of the financial results obtained by the
first four of the new fast steamers which were entered into the service
of the Company between 1889 and 1891 showed that the earnings up to and
including the year 1895 did not even cover the working expenses, and
that those up to 1899 were not sufficient to allow for an interest of 4
per cent, on the average book values of the steamers. It must be
remembered, however, that the first of these two periods included the
disastrous season of 1892-93, when Hamburg was visited by an epidemic of
cholera. And a different light is shed on the matter also if we further
remember that depreciation had been allowed for on a generous scale, no
less than 50 per cent, of the cost price plus the expenditure incurred
through an enlargement of the _Auguste Victoria_, the oldest of the
boats, having been deducted on that account. The Packetfahrt, like all
the other German shipping companies, has always been very liberal in
making ample provision for depreciation. When, therefore, these steamers
were sold again at the time of the Spanish-American and Russo-Japanese
wars, a considerable profit was realized on the transactions which
enabled the Company to replace them by a very high-grade type of vessel
(the _Deutschland_, _Amerika_, and _Kaiserin Auguste Victoria_). It must
be admitted in this connexion that perhaps no shipowner has ever been
more favoured by fortune than Ballin where the sale of such difficult
objects as obsolete express steamers was concerned. The value which
these boats had in relation to the prestige of the Company was very
considerable; for, as Ballin expressed it to me one day: "The possession
of the old express steamers of the Packetfahrt certainly proved to be
something like a white elephant; but just consider how greatly they
have enhanced the prestige of the Company." They attracted thousands of
passengers to the Line, and acted as feeders to its other services.

The orders for the first two of these steamers were given towards the
close of 1887 to the Vulkan yard, at Stettin, and to the firm of Laird
respectively, at a price of £210,000 each, and the boats were to be
completed early in 1889. They were the first twin-screw steamers, and
were provided with the system of "forced draught" for the engines. This
system had just been introduced in British yards, and Ballin's attention
had been drawn to it by his friend Wilding, who was always ready to give
him valuable advice on technical matters. In order to find the means for
the construction of these and of some other boats, the general meeting
of the shareholders, held on October 6th, 1887, voted a capital increase
of 5,000,000 marks and the issue of 6,250,000 marks of debentures.
Knowing that an improvement of the services was the great need of the
time, Ballin, since the time of joining the Company, had done all he
could to make the latter a paying concern again, and in this he
succeeded. For the year 1886 a dividend of 5 per cent. was paid, and
thus it became possible to sanction an increase of the joint-stock
capital.

Further foundations for later successes were laid by the reform of the
organization and of the technical services of the Company. His work in
connexion with the Carr Line had taught the youthful head of the
passenger department that careful attention to the material comfort of
the steerage passengers could be of great benefit to the Company. He
continued along lines such as these, and at his suggestion the steerage
accommodation on two of the Packetfahrt's steamers was equipped with
electric light, and provided with some single berths as well. This
latter provision was extended still further during the succeeding year.
In addition to the fast steamers, some ordinary ones were also ordered
to be built. In 1888 two steamers were ordered for the Company's West
Indies service, and shortly afterwards eight units of the Union Line
were bought at a price of 5,200,000 marks. All these new orders and
purchases of steamers led to the joint-stock capital being raised from
20 to 30 million marks. Two more boats were laid down in the Stettin
Vulkan yard, and a third with the firm of Laird. The express steamer
then building at the Vulkan yard was named _Auguste Victoria_ in honour
of the young Empress.

During the summer months of 1887 Ballin, together with Mr. Johannes
Witt, one of the members of the Board of Trustees, went to New York in
order to discuss with the agents a reorganization of the New York
representation, which was looked after by Edward Beck and Kunhardt. In
consequence of the negotiations which Ballin carried on to that end, the
agents undertook to submit their business for the Company to the control
of an officer specially appointed by the Packetfahrt. This small
beginning led, in later years, to the establishment in New York of the
Company's direct representation under its own management.

When Ballin joined the Packetfahrt, he did not strictly confine his
attention to matters connected with the passenger services. When, for
instance, the head of the freight department was prevented from
attending a meeting called by the Board of Trustees, Ballin put forward
a proposal for raising the rates on certain cargo. It was therefore only
but fit acknowledgment of his many-sided talents, and recognition that
his energetic character had been the guiding spirit in the Company's
affairs, that the Board of Trustees appointed Ballin in 1888 a member of
the Board of Directors after two years with the Packetfahrt. This
appointment really filled a long-felt gap.




CHAPTER FOUR

THE POOL


The term "pool" may be defined in a variety of ways, but, generally
speaking, the root idea underlying its meaning is always the same, both
in its application to business and to betting. A pool, in brief, is a
combination of a number of business concerns for their own mutual
interests, all partners having previously agreed upon certain principles
as to the distribution of the common profits. In other words, it is a
community of interests concluded upon the basis of dividing the profits
realized in a certain ratio. I have been unable to discover when and
where this kind of combination was first used in actual practice. Before
the transatlantic steamship companies did so, the big trunk lines of the
United States railway system are said to have used it in connexion with
the westbound emigrant traffic, and possibly for other purposes also.

When Ballin wrote his memorandum of February 5th, 1886, the steamship
lines must already have been familiar with the meaning of the term, for
the memorandum refers to it as something well known. Ballin begins by
stating that the "Conference of the Northern European Lines" might be
looked upon as having ceased to exist, seeing that two parties were
represented on it whose claims were diametrically opposed to each other.
Whereas the North German Lloyd insisted on the right to lower its rates,
the Red Star Line claimed that these rates should be raised, so that it
might obtain a better differential rate for itself. A reconciliation of
these mutually contradictory views, the memorandum went on to say,
appeared to be impossible, unless all parties agreed upon an
understanding which would radically alter the relations then existing
between their respective interests; and a way leading out of the
_impasse_ would be found by adopting the pooling system proposed by the
representative of the Red Star Line. If we take the number of steeragers
carried to New York from 1881 to 1885 by the six lines concerned as a
basis, the respective percentages of the total traffic are as follows:

                                      _Percentage_

  North German Lloyd                    33·45
  North German Lloyd (Baltimore Line)   14·80
  Packetfahrt                           27·00
  Union Line                             5·53
  Red Star Line                         12·26
  Holland American Line                  6·96

It was, however, justly pointed out at a meeting of the Conference that
the amount of tonnage must also be taken into account in laying down the
principles which were to govern the distribution of the profits. The
average figures of such tonnage employed by the six lines during the
same period were:

                                    _Tons_     _Percentage_

  North German Lloyd               275,520     33·91
  North German Lloyd (Baltimore
  Line)                             63,000      7·76
  Packetfahrt                      199,500     24·55
  Union Line                        42,840      5·27
  Red Star Line                    149,600     18·41
  Holland American Line             82,080     10·10
                                   -------     -----
  Total tonnage                    812,540

The average of both sets of percentage figures worked out as follows:

                                        _Percentage_

  North German Lloyd                      33·68
  North German Lloyd (Baltimore Line)     11·28
  Packetfahrt                             25·77-1/2
  Union Line                               5·40
  Red Star Line                           15·33-1/2
  Holland American Line                    8·53

"It would be necessary," the memorandum continued, "to calculate each
Company's share annually on the basis of the average figures obtained
for the five years immediately preceding, so that, for instance, the
calculation for 1887 would be based on the figures for the five years
from 1882 to 1886; that for 1888 on those for the period from 1883 to
1887, and so on. Uniform passage rates and uniform rates of commission
would have to be agreed upon. To those lines which, like the North
German Lloyd, maintained a service which was run by fast steamers
exclusively, would have to be conceded the right to charge in their
separate accounts passage money up to 10 marks in excess of the normal
rates, seeing that their expenses were heavier than those of the other
lines. Those Companies, however, claiming differential rates below the
general ones agreed upon would have to make up the difference
themselves, which was not to exceed the amount of 30 marks--i.e. they
would have to contribute to the common pool a sum equal to the general
rate without deduction."

The two cardinal principles lying at the root of this proposal were (1)
the assigning to each line of a definite percentage of the total traffic
on the basis of the average figures ascertained for a definite period of
time, and (2) the possibility of further grading these percentages by
taking into account the amount of tonnage which each line placed at the
disposal of the joint undertaking. This latter provision--which was
known during the early stages of the movement as the tonnage clause--was
intended to prevent any single line from stagnation, and to give scope
to the spirit of enterprise.

The tonnage clause was not maintained for the whole time during which
the pool agreement was in force. It was afterwards abolished at the
instance of the North German Lloyd. This event led, in the long run, to
the last big crisis which the pool had to pass through by the notice of
withdrawal given by the Hamburg-Amerika Linie. When this Company
proposed to considerably enlarge its steerage accommodation through the
addition to its service of the three big boats of the _Imperator_ class,
it demanded a corresponding increase of its percentage figure, and, when
this claim fell through owing to the opposition of the North German
Lloyd, it gave formal notice of its withdrawal from the pool.
Precautions taken to counteract this led to negotiations which had to be
discontinued when the war broke out. Nevertheless, the pool, which was
first proposed in 1886, and which came into existence in 1892, did a
great deal of good. More than once, however, the agreement ceased to be
effective for a time, and this was especially the case on the occasion
of the struggle with the Cunard Line which followed upon the
establishment of the Morgan Trust in 1903.

The secretary of the pool was Heinrich Peters, the former head of the
passenger department of the Lloyd. The choice of Mr. Peters is probably
not unconnected with the fact that it was he who, at a moment when the
negotiations for establishing a pool had reached a critical stage,
appeared on the scene with a clearly-defined proposal, so that he, with
justice, has been described as "the father of the pool." Shortly before
his death in the summer of 1921 Mr. Peters wrote to me concerning his
proposal and the circumstances of its adoption:--

"The history of the events leading up to the creation of the 'North
Atlantic Steamship Lines Association,'" he wrote in his letter, "was not
without complications. So much so that after the Conference at Cologne,
at which it had been found impossible to come to an understanding, I
went to bed feeling very worried about the future. Shortly afterwards--I
don't know whether I was half awake or dreaming--the outline of the plan
which was afterwards adopted stood out clearly before my mind's eye, its
main features being that each line should be granted a fixed percentage
of the traffic on the basis of 'Moore's Statistics' (reports issued
periodically and showing the number of passengers landed in New York at
regular intervals), and that the principle of compensation should be
applied to adjust differences. When I was fully awake I found this plan
so obviously right that, in order not to let it slip my memory, I jotted
down a note concerning it on my bedside table. Next morning, when
Ballin, Reuchlin (of the Holland American Line), Strasser (of the Red
Star Line), and myself met again in the smoking-room of the Hotel du
Nord, I told them of my inspiration, and my plan was looked upon by them
with so much favour that Ballin said to me: 'Well now, Peters, you have
discovered the philosopher's stone.' We then left, previously agreeing
amongst ourselves that we would think the matter over at our leisure,
and that we should refrain from taking any steps leading to a conflict,
at least for the time being. On my return to Bremen I went straight to
Lohmann (who was director general of the Lloyd at that time), but he
immediately threw a wet blanket over my enthusiasm. His objection was
that such an agreement would interfere with the progressive development
of the Lloyd. A few days later a meeting of the Board of Trustees was
held at which I entered into the details of my proposal; but I am sorry
to say that my oratorical gifts were not sufficient to defend it against
the objections that were raised, nor to prevent its rejection. I can
hardly imagine what the representatives of the other lines must have
felt on hearing that it was the Lloyd itself which refused to accept the
proposal which had been put forward by its own delegate, although the
share allotted to it was very generous. Thus the struggle went on for
another eighteen months, and it was not until January, 1892, that the
principal lines concerned definitely concluded a pool agreement closely
resembling the draft agreement I had originally proposed.

"The North Atlantic Steamship Lines Association was originally intended
to remain in existence for the period of five years; but as it was
recognized by all parties that it was necessarily a step in the dark,
people had become so doubtful as to the wisdom of what they had done
that a clause was added to the effect that it could be cancelled after
the first six months provided a fortnight's notice was given by any
partner to it. Nevertheless, the agreement successfully weathered a
severe crisis during the very first year of its existence, when the
disastrous cholera epidemic paralysed the Hamburg trade and shipping."

That this account is correct is confirmed by the minutes of the Cologne
meeting of February 6th, 1890.

The British lines definitely declined in March, 1892, to join the pool.
Thus the plan finally agreed upon in 1892 was subscribed to by the
Continental lines alone, with the exception of the French line. In
contrast with previous proposals, the eastbound traffic was also to be
parcelled out by the lines forming the pool.

This so-called North Atlantic Steamship Lines Association, the backbone
of the later and greater pool, was built up on the following
percentages:

                                  _Westbound_       _Eastbound_
                                  _traffic_ (_p.c._)  _traffic_ (_p.c._)

  North German Lloyd                46·16           44·53
  Packetfahrt (including the Union
  Line)                             28·84           18·47
  Red Star Line                     15·70           20·68
  Holland American Line              9·30           16·32

These percentages were subject to the effect of the tonnage clause by
which it was provided that 50 per cent. of the tonnage (expressed in
gross registered tons) which any line should possess at any time in
excess of that possessed in 1890 should entitle such line to an increase
of its percentage.

It has already been stated that Mr. Heinrich Peters was appointed
secretary of the pool. He, in compliance with the provision that the
secretariat should be domiciled at a "neutral" place, chose the small
university town of Jena for his residence. Thus this town, so famous in
the literary annals of Germany, became, for more than twenty years, the
centre of an international organization with which few, if any, other
places could vie in importance, especially since the four lines which
had just concluded the original pool were joined, in course of time, by
the British lines, the French line, the Austrian line, and some
Scandinavian and Russian lines as well. Later on a special pool was set
up for the Mediterranean business which, in addition to the German,
British, and Austro-Hungarian lines, also comprised the French
Mediterranean, the Italian, and the Greek lines, as well as one Spanish
line. The business of all these lines was centred at Jena.

Of considerable importance to the smooth working of the pool was the
court of arbitration attached to its organization. On account of the
prominent position occupied by the German companies, German law was
agreed to as binding for the decisions, and since at the time when the
pool was founded, Germany did not possess a uniform Code of Civil Law
for all parts of the Empire, the law ruling at Cologne was recognized to
be applicable to such purposes. Cologne was the city at which the
establishment of the pool was decided upon, and there all the important
meetings that became necessary in course of time were held. The chairman
of the Cologne Association of Solicitors was nominated president of the
arbitration court, but later on this office devolved on President
Hansen, a member of the Supreme Court for the Hanseatic cities, who
filled his post for a long term of years--surely a proof of the
confidence and esteem with which he was honoured by all parties
concerned. Numerous awards issued by him, and still more numerous
resolutions adopted at the many conferences, have supplemented the
original pool agreement, thus forming the nucleus of a real code of
legislation affecting all matters dealing with the pool in which a large
number of capable men drawn from the legal profession and from the world
of business have collaborated.

The knowledge of these regulations gradually developed into a science of
its own, and each line had to possess one or more specialists who were
experts in these questions among the members of its staff. I am sure
they will unanimously agree that Albert Ballin surpassed them all in his
knowledge of the intricate details. His wonderful memory enabled him,
after a lapse of more than twenty years, to recall every phase in the
history of the pool, so that he acquired an unrivalled mastery in the
conduct of pool conferences. This is abundantly borne out by the fact
that in 1908, when negotiations were started in London for the
establishment of a general pool--i.e. one comprising the whole of
Northern Europe, including Great Britain--Ballin, at the proposal of the
British lines, was selected chairman of the conference which, after
several critical phases had been passed through, led to a complete
success and an all-round understanding.

In 1892 the normal development of business was greatly handicapped by
the terrible epidemic of cholera then raging in Hamburg. For a time the
United States completely closed her doors to all emigrants from the
Continent, and it was not until the following year that conditions
became normal again. Nevertheless Ballin, in order to extend the various
understandings between the Northern European lines, took an important
step, even before the close of 1892, by falling back upon a measure
which he had already once employed in 1886. His object was to make the
British lines more favourably inclined towards an understanding, and to
this end he attacked them once more in the Scandinavian business. The
actual occasion which led to the conflict was that the British lines,
owing to differences of opinion among themselves, had given notice of
withdrawal from the Hamburg agreement and from the Hamburg clearing
house. This gave the Packetfahrt a free hand against its British
competitors, and enabled it to carry as many as 2,500 Scandinavian
passengers via Hamburg in 1892. The position of the Packetfahrt during
the ensuing rate war was considerably improved by the agreement which it
had concluded with the Hamburg agents of the British lines, who,
although their principals had declared their withdrawal from the pool,
undertook to maintain the rate which had been jointly agreed upon by
both parties.

Some time had to elapse before this move had its desired effect on the
British lines. Early in 1894 they declared themselves ready to come to
an understanding with the Continental lines on condition that they were
granted 7 per cent. of the Continental traffic (in 1891 they had been
offered 14 per cent.), and that the Packetfahrt was to discontinue its
Scandia Line.

This general readiness of the British companies, however, did not
preclude the hostility of some of their number against any such
agreement, and so the proposal fell through. The proposed understanding
came to grief owing to the refusal of the Cunard Line to join a
Continental pool at the very moment when the negotiations with the
British lines had, after a great deal of trouble, led to a preliminary
understanding with them. A letter which Ballin received from an English
friend in January, 1894, shows how difficult it was to make the British
come round to the idea of a pool. In this letter it was said that the
time was not ripe then for successfully persuading the British lines to
join any pool or any other form of understanding which would necessitate
agreement on a large number of details. All that could be expected to be
done at the time, the writer continued, was a rate agreement of the
simplest possible kind, and he thought that if such an understanding
were agreed to and loyally carried out, that would be an important step
forward towards arriving at a general agreement of much wider scope.

To such vague agreements, however, the Continental lines objected on
principle, and the opposition of the Cunard Line made it impossible to
agree upon anything more definite. Thus the struggle was chiefly waged
against this line. The Continental lines were assisted by the American
Line, which had sailings from British ports, and with the management of
which Ballin had been on very friendly terms ever since the time when
he, as the owner of the firm of Morris and Co., had worked for it. After
the conflict had been going on for several months, it terminated with a
victory of the Continental lines. Thus the road was at last clear for
an attempt to make the whole North Atlantic business pay.

The first step in that direction was the conclusion, in 1896, of an
agreement concerning the cabin business. The Packetfahrt's annual report
for that year states that the results obtained through the carrying of
cabin passengers could only be described as exceedingly unfavourable,
considering that the huge working expenses connected with that kind of
business had to be taken into account. Nevertheless, this traffic, which
had reached a total of more than 200,000 passengers during the preceding
year, could be made a source of great profit to the companies if they
could be persuaded to act in unison. The agreement then concluded was at
first restricted to the fixing of the rates on a uniform scale.

Both these agreements--the one dealing with the steerage and the one
dealing with the cabin business--were concluded, in 1895, for three
years in the first instance. In May, 1898, discussions were opened in
London, at which Ballin presided, with a view to extending the period of
their duration, and these proceedings, after a time, led to a successful
conclusion, but in June, Ballin again presiding, the desired
understanding was reached. A few weeks later an agreement concerning the
second cabin rates was also arrived at, and towards the close of the
year negotiations were started with a view to the extension of the
steerage agreement. In 1899 the pool was extended to run for a further
period of five years, under percentages:

                       _Westbound_        _Eastbound_
                       _traffic_ (_p.c._) _traffic_ (_p.c._)

  North German Lloyd       44·14           41·53
  Packetfahrt              30·71           26·47
  Red Star Line            15·37           18·68
  Holland American Line     9·78           13·32

To the Packetfahrt these new percentages meant a step forward, although
the omission of the tonnage clause was a decided hindrance to its
further progress.

The next important event in the development of the relations between the
transatlantic lines was the establishment of the so-called Morgan Trust
and the conclusion of a "community of interest" agreement between it and
the German lines.




CHAPTER V

THE MORGAN TRUST


Speaking generally, the transatlantic shipping business may be said to
consist of three great branches, viz. the cargo, the steerage, and the
cabin business. The pool agreements that were concluded between the
interested companies covered only the cargo business and the steerage
traffic. The condition which alone makes it possible for the owners to
work the shipping business on remunerative lines is that all needless
waste of material must be strictly banned. The great advantage which was
secured by concluding the pool agreement was that it satisfied this
condition during the more than twenty years of its existence, to the
mutual profit of the associated lines. Each company knew that the
addition of new steamers to its fleet would only pay if part of a
carefully considered plan, and if, in course of time, such an increase
of tonnage would give it a claim to an increase of the percentage of
traffic allotted to its services.

Much less satisfactory was the state of things with regard to the third
branch of the shipping business, viz. the cabin traffic. A regular
"cabin pool," with a _pro rata_ distribution of the traffic, was never
established, although the idea had frequently been discussed. All that
was achieved was an agreement as to the fares charged by each company
which were to be graded according to the quality of the boats it
employed in its services. Owing to the absence of any more far-reaching
understandings, and to the competition between the various
companies--each of which was constantly trying to outdo its competitors
as regards the speed and comfort of its boats, in order to attract to
its own services as many passengers as possible--the number of
first-class boats increased out of all proportion to the actual
requirements, and frequent and regular services were maintained by each
line throughout the year. There was hardly a day on which first-class
steamers did not enter upon voyages across the Atlantic from either
side, and the result was that the boats were fully booked during the
season only, i.e. in the spring and early part of summer on their
East-bound, and in the latter part of summer and in the autumn on their
Westbound, voyages. During the remaining months a number of berths were
empty, and the fares obtainable were correspondingly unprofitable.
Ballin, in 1902, estimated the unnecessary expenditure to which the
companies were put in any single year owing to this unbusinesslike state
of affairs at not less then 50 million marks. The desire to do away with
conditions such as these by extending the pool agreement so as to
develop it into a community-of-interest agreement of comprehensive scope
was one of the two principal reasons leading to the formation of the
Morgan Trust. The other reason was the wish to bring about a system of
co-operation between the European and the American interests.

This desire was prompted by the recognition of the cardinal importance
to the transatlantic shipping companies of the economic conditions
ruling in the United States. The cargo business depended very largely on
the importation of European goods into the United States, and on the
exportation of American agricultural produce to Europe which varied from
season to season according to the size of the crop and to the consuming
capacity of Europe. The steerage business, of course, relied in the main
on the capacity of the United States for absorbing European immigrants,
which capacity, though fluctuating, was practically unlimited. The
degree of prosperity of the cabin business, however, was determined by
the number of people who travelled from the States to Europe, either on
business, or on pleasure, or to recuperate their health at some European
watering-place, at the Riviera, etc. Social customs and the attractions
which the Paris houses of fashion exercised on the American ladies also
formed a considerable factor which had to be relied on for a prosperous
season. In the transatlantic shipping business, in fact, America is
pre-eminently the giving, and Europe the receiving, partner. Thus it was
natural to realize the advisability of entering into direct relations
with American business men.

To the Packetfahrt, and especially to Ballin, credit is due for having
attempted before anybody else to give practical shape to this idea. His
efforts in this direction date far back to the early years of his
business career. We possess evidence of this in the form of a letter
which he wrote in 1891 to Mr. B. N. Baker, who was at the head of one of
the few big American shipping companies, the Atlantic Transport Company,
the headquarters of which were at Baltimore, and which ran its services
chiefly to Great Britain. Mr. Baker was a personal friend of Ballin's.
The letter was written after some direct discussions had taken place
between the two men, and its contents were as follows:--

     "I replied a few days ago officially to your valued favour of the
     4th ult. to the effect that in consonance with your expressed
     suggestion one of the Directors will proceed to New York in
     September with a view to conferring with you about the matter at
     issue.

     "Having in the meantime made it a point to go more fully into your
     communication, I find that the opinions which I have been able to
     form on your propositions meet your expressed views to a much
     larger extent than you will probably have supposed. I have not yet
     had an opportunity of talking the matter over with my colleagues,
     and I therefore do not know how far they will be prepared to fall
     in with my views. But in order to enable me to frame and bring
     forward my ideas more forcibly here, I think it useful to write to
     you this strictly confidential letter, requesting you to inform
     me--if feasible by cable--what you think of the following project:

     "(1) You take charge of our New York Agency for the freight, and
     also for the passage business, etc.

     "(2) You engage those of our officials now attached to our New York
     branch whom we may desire to retain in the business.

     "(3) You take over half of our Baltimore Line in the manner that
     each party provides two suitable steamers fitted for the transport
     of emigrants. To this end I propose you should purchase at their
     cost price the two steamers which are in course of construction in
     Hamburg at present for our Baltimore Line (320 feet length, 40 feet
     beam, 27 feet moulded, steerage 8 feet, carrying 3,500 tons on 22
     feet and about 450 steeragers, guaranteed to steam 11 knots, ready
     in October this year), and we to provide two similar steamers for
     this service. The earnings to be divided under a pool system.

     "(4) Your concern takes up one million dollars of our shares with
     the obligation not to sell them so long as you control our American
     business. I may remark that just at present our shares are
     obtainable cheaply in consequence of the general depression
     prevailing in the European money market, and further, owing to the
     fact that only a small dividend is expected on account of the very
     poor return freight ruling from North America. I think you would be
     able to take the shares out of the market at an average of about 7
     per cent. above par. We have paid in the last years since we
     concluded the pool with the Union Line, viz. in 1886 4 per cent.,
     1887 6 per cent., 1888 8-1/2 per cent., 1889 11 per cent., 1890 8
     per cent. in the way of dividends, and during this time we wrote
     off for depreciation and added to the reserve funds about 60 per
     cent.

     "The position of our Company is an excellent one, our fleet
     consisting of modern ships (average age only about five years), and
     the book values of them being very low.

     "I should be obliged to you for thinking the matter over and
     informing me--if possible by cable--if you would be prepared to
     enter into negotiations on this basis. I myself start from the
     assumption that it might be good policy for our Company to obtain
     in the States a centre of interest and a position similar to that
     held by the Red Star Line and the Inman Lines in view of their
     connexion with the Pennsylvania Railroad, etc. It further strikes
     me that if this project is brought into effect one of your concern
     should become a member of our Board. I should thank you to return
     me this letter which, as I think it right expressly to point out to
     you, contains only what are purely my individual ideas."

It may be assumed that the writing of this letter was prompted not only
by the Packetfahrt's desire to strengthen its position in the United
States, but also by its wish to obtain a foothold in Great Britain. This
would enable it to exercise greater pressure on the competing British
lines, which--indirectly, at least--still did a considerable portion of
the Continental business. Ballin's suggestion did not lead to any
practical result at the time, but was taken up again eight years later,
in 1899, on the advice of Mr. (now Lord) Pirrie, of Messrs. Harland and
Wolff, of Belfast. Important interests, partly of a financial character,
linked his firm to British transatlantic shipping; and his special
reason for taking up Ballin's proposal was to prevent an alliance
between Mr. Baker's Atlantic Transport Company and the British Leyland
Line, a scheme which was pushed forward from another quarter. He induced
Mr. Baker to come to Europe so that the matter might be discussed
directly. The attractiveness of the idea to Ballin was still further
enhanced by the circumstance that the Atlantic Transport Line also
controlled the National Line which maintained a service between New
York and London, and was, indeed, the decisive factor on the New
York-London route. Ballin, accordingly, after obtaining permission from
the Board of Trustees, went to London, where he met Mr. Baker and Mr.
Pirrie.

It soon became clear, however, that the Board of Trustees did not wish
to sanction such far-reaching changes. When Ballin cabled the details of
the scheme to Hamburg, it was seen that 25 million marks--half the
amount in shares of the Packetfahrt--would be needed to carry it
through. Thus the discussions had to be broken off; but the attitude
which the Board had taken up was very much resented by Ballin.
Subsequent negotiations which were entered into in the early part of
1900 in Hamburg at the suggestion of Mr. Baker also failed to secure
agreement, and shortly afterwards the American company was bought up by
the Leyland Line.

At the same time a movement was being set on foot in the United States
which aimed at a strengthening of the American mercantile marine by
means of Government subsidies. This circumstance suggested to Mr. Baker
the possibility of setting up an American shipping concern consisting of
the combined Leyland and Atlantic Transport Company lines together with
the British White Star Line, which was to profit by the expected
legislation concerning shipping subsidies. Neither the latter idea,
however, nor Mr. Baker's project assumed practical shape; but the
Atlantic Transport-Leyland concern was enlarged by the addition of a
number of other British lines, viz. the National Line, the
Wilson-Furness-Leyland Line, and the West Indian and Pacific Line, all
of which were managed by the owner of the Leyland Line, Mr. Ellerman,
the well-known British shipping man of German descent. The tonnage
represented by these combined interests amounted to half a million tons,
and the new combine was looked upon as an undesirable competitor, by
both the Packetfahrt and the British lines. The dissatisfaction felt by
the latter showed itself, among other things, in their refusal to come
to any mutual understanding regarding the passenger business. In the
end, Mr. Baker himself was so little pleased with the way things turned
out in practice that he severed his connexion with the other lines
shortly afterwards, and once more the question became urgent whether it
would be advisable for the Packetfahrt--either alone, or in conjunction
with the White Star Line and the firm of Messrs. Harland and Wolff--to
purchase the Atlantic Transport Line.

That was the time when Mr. Pierpont Morgan's endeavours to create the
combine, which has since then become known as the Morgan Trust, first
attracted public attention. Ballin's notes give an exhaustive
description of the course of the negotiations which lasted nearly
eighteen months and were entered into in order to take precautions
against the danger threatening from America, whilst at the same time
they aimed at some understanding with Mr. Morgan, because the
opportunity thus presented of setting up an all-embracing organization
promoting the interests of all the transatlantic steamship concerns
seemed too good to be lost. Ballin's notes for August, 1901, contain the
following entry:

"The grave economic depression from which Germany is suffering is
assuming a more dangerous character every day. It is now spreading to
other countries as well, and only the United States seem to have escaped
so far. In addition to our other misfortunes, there is the
unsatisfactory maize-crop in the States which, together with the other
factors, has demoralized the whole freight business within an
incredibly short space of time. For a concern of the huge size of our
own such a situation is fraught with the greatest danger, and our
position is made still worse by another circumstance. In the States, a
country whose natural resources are wellnigh inexhaustible, and whose
enterprising population has immensely increased its wealth, the creation
of trusts is an event of everyday occurrence. The banker, Pierpont
Morgan--a man of whom it is said that he combines the possession of an
enormous fortune with an intelligence which is simply astounding--has
already created the Steel Trust, the biggest combination the world has
ever seen, and he has now set about to lay the foundations for an
American mercantile marine."

A short report on the position then existing which Ballin made for
Prince Henckell-Donnersmarck, who had himself called into being some big
industrial combinations, is of interest even now, although the situation
has entirely changed. But if we want to understand the position as it
then was we must try to appreciate the views held at that time, and this
the report helps us to do. Ballin had been referred to Prince
Henckell-Donnersmarck by the Kaiser, who had a high opinion of the
latter's business abilities, and who had watched with lively interest
the American shipping projects from the start, because he anticipated
that they would produce an adverse effect on the future development of
the German shipping companies. The report is given below:--

     "In 1830 about 90 per cent. of the United States sea-borne trade
     was still carried by vessels flying the American flag. By 1862 this
     percentage had gone down to 50 per cent., and it has shown a
     constant decrease ever since. In 1880 it had dwindled down to 16
     per cent., and in 1890 to as low a figure as 9 per cent. During
     recent years this falling off, which is a corollary of the customs
     policy pursued by the United States, has given rise to a number of
     legislative measures intended to promote the interests of American
     shipping by the granting of Government subsidies. No practical
     steps of importance, however, have been taken so far; all that has
     been done is that subsidies have been granted to run a North
     Atlantic mail service maintained by means of four steamers, but no
     success worth mentioning has been achieved until now.

     "Quite recently the well-known American banker, Mr. J. Pierpont
     Morgan, conjointly with some other big American capitalists, has
     taken an interest in the plan. The following facts have become
     known so far in connexion with his efforts:

     "Morgan has acquired the Leyland Line, of Liverpool, which,
     according to the latest register, owns a fleet of 54 vessels,
     totalling 155,489 gross register tons. This purchase includes the
     West India and Pacific Line, which was absorbed into the Leyland
     Line as recently as a twelvemonth ago. The Mediterranean service
     formerly carried on by the Leyland Line has not been acquired by
     Morgan. He has, however, added the Atlantic Transport Company.
     Morgan's evident intention is to form a big American shipping
     trust, and I have received absolutely reliable information to the
     effect that the American Line and the Red Star Line are also going
     to join the combine. The shares of the two last-named lines are
     already for the most part in American hands, and both companies are
     being managed from New York. Both lines together own 23 steamers
     representing 86,811 tons.

     "A correct estimate of the size of the undertaking can only be
     formed if the steamers now building for the various companies, and
     those that have been added to their fleets since the publication of
     the register from which the above figures are taken, are also taken
     into account. These vessels represent a total tonnage of about
     200,000 tons, so that the new American concern would possess a
     fleet representing 430,000 gross register tons. The corresponding
     figures for the Hamburg-Amerika Linie and for the Lloyd, including
     steamers building, are 650,000 and 600,000 tons respectively.

     "The proper method of rightly appreciating the importance of the
     American coalition is to restrict the comparison, as far as the two
     German companies are concerned, to the amount of tonnage which they
     employ in their services to and from United States ports. If this
     is borne in mind, we arrive at the following figures: German
     lines--390,000 G.R.T.; American concern--about 430,000 G.R.T. These
     figures show that, as regards the amount of tonnage employed, the
     Morgan Trust is superior to the two German companies on the North
     Atlantic route. It can also challenge comparison with the regular
     British lines--grand total, 438,566 G.R.T.

     "In all the steps he has taken, Morgan, no doubt, has been guided
     by his confidence in his ability to enforce the passing of a
     Subsidy Act by Congress in favour of his undertaking. So long as he
     does not succeed in these efforts of his he will, of course, be
     obliged to operate the lines of which he has secured control under
     foreign flags. Up to the present only four steamers of the American
     Line, viz. the _New York_, _Philadelphia_, _St. Louis_, and _St.
     Paul_, are flying the United States flag, whereas the remaining
     vessels of the American Line, and those of the Leyland, the West
     India and Pacific, the American Transport, the National, and the
     Furness-Boston lines, are sailing under the British, and those of
     the Red Star Line under the Belgian flag.

     "The organization which Mr. Morgan either has created, or is
     creating, is not in itself a danger to the two German shipping
     companies; neither can it be said that the Government
     subsidies--provided they do not exceed an amount that is justified
     by the conditions actually existing--are in themselves detrimental
     to the German interests. The real danger, however, threatens from
     the amalgamation of the American railway interests with those of
     American shipping.

     "It is no secret that Morgan is pursuing his far-reaching plans as
     the head of a syndicate which comprises a number of the most
     important and most enterprising business men in the United States,
     and that the railway interests are particularly well represented in
     it. Morgan himself, during his stay in London a few months ago,
     stated to some British shipping men that, according to his
     estimates, nearly 70 per cent. of the goods which are shipped to
     Europe from the North Atlantic ports are carried to the latter by
     the railroads on Through Bills of Lading, and that their further
     transport is entrusted to foreign shipping companies. He and his
     friends, Morgan added, did not see any reason why the railroad
     companies should leave it to foreign-owned companies to carry those
     American goods across the Atlantic. It would be much more logical
     to bring about an amalgamation of the American railroad and
     shipping interests for the purpose of securing the whole profits
     for American capital.

     "This projected combination of the railroad and sea-borne traffic
     is, as I have pointed out, a great source of danger to the foreign
     shipping companies, as it will expose them to the possibility of
     finding their supplies from the United States _hinterland_ cut off.
     This latter traffic is indispensable to the remunerative working of
     our North American services, and it is quite likely that Morgan's
     statement that they amount to about 70 per cent. of the total
     sea-borne traffic is essentially correct."

The negotiations which Ballin carried on in this connexion are described
as follows in his notes:--

     "When I was in London in July (1901), I had an opportunity of
     discussing this American business with Mr. Pirrie. Pirrie had
     already informed me some time ago that he would like to talk to me
     on this subject, but he had never indicated until then that Morgan
     had actually instructed him to discuss matters with me. A second
     meeting took place at which Ismay (the chairman of the White Star
     Line) was present in addition to Pirrie and myself, and it was
     agreed that Pirrie should go to New York and find out from Morgan
     himself what were his plans regarding the White Star Line and the
     Hamburg-Amerika Linie.

     "Shortly after Pirrie's return from the States I went to London to
     talk things over with him. He had already sent me a wire to say
     that he had also asked Mr. Wilding to take part in our meeting; and
     this circumstance induced me to call on Mr. Wilding when I passed
     through Southampton _en route_ for London. What he told me filled
     me with as much concern as surprise. He informed me that the
     syndicate intended to acquire the White Star Line, but that, owing
     to my relations with the Kaiser, the acquisition of the
     Hamburg-Amerika Linie was not contemplated. Morgan, he further told
     me, was willing to work on the most friendly terms with us, as far
     as this could be done without endangering the interests of the
     syndicate; but the fact was that the biggest American railroad
     companies had already approached the syndicate, and that they had
     offered terms of co-operation which were practically identical with
     a combination between themselves and the syndicate.

     "In the course of the discussions then proceeding between Pirrie,
     Wilding, and myself the situation changed to our advantage, and I
     was successful in seeing my own proposals accepted, the essence of
     which was that, on the one hand, our independence should be
     respected, that the nationality of our company should not be
     interfered with, and that no American members should be added to
     our Board of Trustees; whilst, on the other hand, a fairly close
     contact was to be established between the two concerns, and
     competition between them was to be eliminated."

The draft agreement, which was discussed at these meetings in London
(and which was considerably altered later on), provided that it should
run for ten years, and that a mutual interchange of shares between the
two concerns should be effected, the amount of shares thus exchanged to
represent a value of 20 million marks (equivalent to 25 per cent. of the
joint-stock capital of the Hamburg-Amerika Linie). Mutual participation
was provided for in case of any future increase in the capital of either
company; but the American concern was prohibited from purchasing any
additional shares of the Hamburg-Amerika Linie. The voting rights for
the Hamburg shares should be assigned to Ballin for life, and those for
the American shares to Morgan on the same terms. Instead of actually
parting with its shares, the Hamburg company was to have the option of
paying their equivalent in steamers. The agreement emphasized that,
whilst recognizing the desirability of as far-reaching a financial
participation as possible, Ballin did not believe that, with due regard
to German public opinion and to the wishes of the Imperial Government,
he was justified in recommending an interchange of shares exceeding the
amount agreed upon. The American concern was prohibited from calling at
any German ports, and the Hamburg company agreed not to run any services
to such European ports as were served by the other party. A pool
agreement covering the cabin business was entered into; and with respect
to the steerage and cargo business it was agreed that the existing
understandings should be maintained until they expired, and that
afterwards a special understanding should be concluded between both
contracting parties.

Immediately after Ballin's return to Hamburg the Board of Trustees
unanimously expressed its agreement in principle with the proposals.

"For my own part," Ballin says in his notes on these matters, "I
declared that I could only regard the practical execution of these
proposals as possible if they receive the unequivocal assent of the
Kaiser and of the Imperial Chancellor. Next evening I was surprised to
receive two telegrams, one from the Lord Chamberlain's office, and one
from the Kaiser, commanding my presence on the following day for dinner
at the Hubertusstock hunting lodge of the Kaiser, where I was invited to
stay until the afternoon of the second day following. I left for Berlin
on the same evening, October 16th (1901); and, together with the
Chancellor, I continued my journey the following day to Eberswalde. At
that town a special carriage conveyed us to Hubertusstock, where we
arrived after a two-hours' drive, and where I was privileged to spend
two unforgettable days in most intimate intercourse with the Kaiser. The
Chancellor had previously informed me that the Kaiser did not like the
terms of the agreement, because Metternich had told him that the
Americans would have the right to acquire 20 million marks' worth of our
shares. During an after-dinner walk with the Kaiser, on which we were
accompanied by the Chancellor and the Kaiser's A.D.C., Captain v.
Grumme, I explained the whole proposals in detail. I pointed out to the
Kaiser that whereas the British lines engaged in the North Atlantic
business were simply absorbed by the trust, the proposed agreement would
leave the independence of the German lines intact. This made the Kaiser
inquire what was to become of the North German Lloyd, and I had to
promise that I would see to it that the Lloyd would not be exposed to
any immediate danger arising out of our agreement, and that it would be
given an opportunity of becoming a partner to it as well. The Kaiser
then wanted to see the actual text of the agreement as drafted in
London. When I produced it from my pocket we entered the room adjacent
to the entrance of the lodge, which happened to be the small bedroom of
Captain v. Grumme; and there a meeting, which lasted several hours, was
held, the Kaiser reading out aloud every article of the agreement, and
discussing every single item. The Kaiser himself was sitting on Captain
v. Grumme's bed; the Chancellor and myself occupied the only two chairs
available in the room, the Captain comfortably seating himself on a
table. The outcome of the proceedings was that the Kaiser declared
himself completely satisfied with the proposals, only commissioning me,
as I have explained, to look after the interests of the North German
Lloyd.

"On the afternoon of the following day, after lunch, the Chancellor and
I returned to Berlin, this giving me a chance of discussing with the
former--as I had previously done with the Kaiser--every question of
importance. On October 18th I arrived back in Hamburg."

The negotiations with the North German Lloyd which Ballin had undertaken
to enter upon proved to be very difficult, the Director General of that
company, Dr. Wiegand, not sharing Ballin's views with respect to the
American danger and the significance of the American combination. After
Ballin, however, had explained the proposals in detail, the Lloyd people
altered their previously held opinion, and in the subsequent London
discussions, which were resumed in November, the President of the Lloyd,
Mr. Plate, also took part. Nevertheless, it was found impossible to
agree definitely there and then, and a further discussion between the
two directors general took place at Potsdam on November 13th, both of
them having been invited to dinner by the Kaiser, who was sitting
between the two gentlemen at the table. Ballin's suggestion that he and
Dr. Wiegand should proceed to New York in order to ascertain whether the
shipping companies and the American railroads had actually entered into
a combination, was heartily seconded by the Kaiser, and was agreed to by
Dr. Wiegand. The Lloyd people, however, were still afraid that the
proposed understanding would jeopardize the independence of the German
lines; but Ballin, by giving detailed explanations of the points
connected with the financial provisions, succeeded in removing these
fears, and the Board of Trustees of the Lloyd expressed themselves
satisfied with these explanations. They insisted upon the omission of
the clauses dealing with the financial participation, but agreed to the
proposals in every other respect.

The arrangements for such mutual exchange of shares were thereupon
dropped in the final drafting of the agreement, and were replaced by a
mutual participation in the distribution of dividends, the American
concern guaranteeing the German lines a dividend of 6 per cent., and
only claiming a share in a dividend exceeding that figure. This change
owed its origin to a proposal put forward by Mr. v. Hansemann, the
Director of the Disconto-Gesellschaft, who had taken an active interest
in the development of the whole matter.

In the course of the negotiations the Lloyd made a further proposal by
which it was intended to safeguard the German national character of the
two great shipping companies. It was suggested that a
corporation--somewhat similar to the Preussische Seehandlung--should be
set up by the Imperial Government with the assistance of some privately
owned capital. This corporation should purchase such a part of the
shares of each company as would defeat any attempts at destroying their
national character. Ballin, however, to whom any kind of Government
interference in shipping matters was anathema, would have nothing to do
with this plan, and thus it fell through.

Ballin thereupon having informed the Kaiser in Kiel on board the
battleship _Kaiser Wilhelm II_ regarding the progress of the
negotiations, a further meeting with the Lloyd people took place early
in December, which led to a complete agreement among the two German
companies as to the final proposals to be submitted to the American
group; and shortly afterwards, at a meeting held at Cologne, agreement
was also secured with Mr. Pirrie. The final discussions took place in
New York early in February, Ballin and Mr. Tietgens, the chairman of the
Board of Directors, acting on behalf of the Hamburg-Amerika Linie, and
President Plate and Dr. Wiegand on that of the Lloyd. Meanwhile,
Morgan's negotiations with the White Star Line and other British
companies had also led to a successful termination. Concerning the New
York meetings we find an interesting entry in Ballin's diary:

     "In the afternoon of February 13th, 1902, Messrs. Griscom, Widener,
     Wilding, and Battle, and two sons of Mr. Griscom met us in
     conference. Various suggestions were put forward in the course of
     the proceedings which necessitated further deliberations in private
     between ourselves and the Bremen gentlemen, and it was agreed to
     convene a second general meeting at the private office of Mr.
     Griscom on the 15th floor of the Empire Building. This meeting was
     held in the forenoon of the following day, and a complete agreement
     was arrived at concerning the more important of the questions that
     were still open. I took up the position that the combine would only
     be able to make the utmost possible use of its power if we
     succeeded in securing control of the Cunard and Holland American
     Lines. I was glad to find that Mr. Morgan shared my view. He
     authorized me to negotiate on his behalf with Director Van den
     Toorn, the representative of the Holland American Line, and after a
     series of meetings a preliminary agreement was reached giving
     Morgan the option of purchasing 51 per cent. of the shares of the
     Holland American Line. Morgan undertook to negotiate with the
     Cunard Line through the intermediary of some British friends. It
     has been settled that, if the control of the two companies in
     question is secured to the combine, one half of it should be
     exercised by the American group, and the other half should be
     divided between the Lloyd and ourselves. This arrangement will
     assure the German lines of a far-reaching influence on the future
     development of affairs.

     "On the following Thursday the agreements, which were meanwhile
     ready in print, were signed. We addressed a joint telegram to the
     Kaiser, informing him of the definite conclusion of the agreement,
     to which he sent me an exceedingly gracious reply. The Kaiser's
     telegram was dispatched from Hubertusstock, and its text was as
     follows:

     "'Ballin, Director General of the Hamburg-Amerika Linie, New York.
     Have received your joint message with sincere satisfaction. Am
     especially pleased that it reached me in the same place where the
     outlines gained form and substance in October last. You must be
     grateful to St. Hubertus. He seems to know something about shipping
     as well. In recognition of your untiring efforts and of the success
     of your labours I confer upon you the Second Class of my Order of
     the Red Eagle with the Crown. Remember me to Henry.--WILHELM I.R.'

     "Morgan gave a dinner in our honour at his private residence which
     abounds in treasures of art of all descriptions, and the other
     gentlemen also entertained us with lavish hospitality. Tietgens and
     I returned the compliment by giving a dinner at the Holland House
     which was of special interest because it was attended not only by
     the partners of Morgan, but also by Mr. Jacob Schiff, of Messrs.
     Kuhn, Loeb & Co., who had been Morgan's opponents in the conflict
     concerning the Northern Pacific. During the following week the
     Lloyd provided a big dinner on board the _Kronprinz Wilhelm_ for
     about 200 invited guests.

     "Prince Henry of Prussia was one of the passengers of the
     _Kronprinz Wilhelm_ which, owing to the inclemency of the weather,
     arrived in New York one day behind her scheduled time. On the day
     of her arrival--Sunday, February 23rd--I had dinner on board the
     _Hohenzollern_. We also took part in a number of other celebrations
     in honour of the Prince. Especially memorable and of extraordinary
     sumptuousness was the lunch at which Mr. Morgan presided, and at
     which one hundred captains of industry--leading American business
     men from all parts of the States--were present. On the evening of
     the same day the press dinner took place which 1,200 newspaper men
     had arranged in honour of the Prince. Mr. Schiff introduced me to
     Mr. Harriman, the chairman of the Union Pacific, with whom I
     entered into discussions concerning our participation in the San
     Francisco-Far East business."

At the request of the American group the publication of the agreement
was delayed for some time, because it was thought desirable to wait for
the final issue of the Congress debates on the Subsidies Bill. A report
which Ballin, after some further discussion with Morgan and his London
friends had taken place, made for the German Embassy in London,
describes the situation as it appeared in April, 1902. It runs as
follows:

     "(1) Acquisition of the joint control of the Cunard Line by the two
     German companies and the American syndicate. On this subject
     discussions have taken place with Lord Inverclyde, the chairman of
     the Cunard Line. Neither Lord Inverclyde nor any of the other
     representatives of British shipping interests objected in any way
     to the proposed transaction for reasons connected with the national
     interest. He said, indeed, that he thought the syndicate should not
     content itself with purchasing 51 per cent. of the shares, but that
     it should rather absorb the whole company instead. The purchase
     price he named appeared to me somewhat excessive; but he has
     already hinted that he would be prepared to recommend to his
     company to accept a lower offer, and it is most likely that the
     negotiations will lead to a successful issue, unless the British
     Government should pull itself together at the eleventh hour.

     "(2) Public announcement of the formation of the Combine. Whereas
     until quite recently the American gentlemen maintained that it
     would be advisable to wait for the conclusion of the negotiations
     going on at Washington with respect to the proposed subsidy
     legislation, Mr. Morgan now shares my view that it is not desirable
     to do so any longer, but that it would be wiser to proceed without
     any regard to the intentions of Washington. The combine,
     therefore--unless unexpected obstacles should intervene--will make
     its public appearance within a few weeks.

     "(3) The British Admiralty. An agreement exists between the British
     Admiralty and the White Star Line conceding to the former the right
     of pre-emption of the three express steamers _Oceanic, Teutonic,_
     and _Majestic._ This agreement also provides that the White Star
     Line, against an annual subsidy from the Government, must place
     these boats at the disposal of the Admiralty in case of war. The
     First Lord has now asked Mr. Ismay whether there is any truth in
     the report that he wants to sell the White Star Line; and when he
     was told that such was the case, he declared that, this being so,
     he would be compelled to exercise his right of pre-emption.

     "It would be extremely awkward in the interests of the combine if
     the three vessels had to be placed at the service of the Admiralty,
     especially as it is probable that they would be employed in
     competition with the combine. Therefore a compromise has been
     effected in such a form that Mr. Morgan is to take over the
     agreement on behalf of the combine for the three years it has still
     to run. This means that the steamers will continue to fly the
     British flag for the present, and that they must be placed at the
     disposition of the Admiralty in case of war. The Admiralty
     suggested an extension of the terms of the agreement for a further
     period of three years; but it was content to withdraw its
     suggestion when Mr. Morgan declined to accept it. The agreement
     does not cover any of the other boats of the line which are the
     biggest cargo steamers flying the Union Jack, and consequently no
     obligations have been incurred with respect to these.

     "(4) Text of the public announcement. A memorandum is in course of
     preparation fixing the text of the announcement by which the public
     is to be made acquainted with the formation of the combine. In
     compliance with the wishes emanating from prominent British
     quarters, the whole transaction will be represented in the light of
     a big Anglo-American 'community of interest' agreement; and the
     fact that it virtually cedes to the United States the control of
     the North Atlantic shipping business will be kept in the
     background, as far as it is possible to do so."

The first semi-official announcement dealing with the combine was
published on April 19th by the British Press, and at an Extraordinary
General Meeting of the Hamburg-Amerika Linie on May 28th, the public was
given some carefully prepared information about the German-American
agreement. At that meeting Dr. Diederich Hahn, the well-known chairman
of the _Bund der Landwirte_ (Agrarian League), rose, to everybody's
surprise, to inquire if it was the case that the national interests, and
especially the agricultural interests of Germany, would be adversely
affected by the agreement. The ensuing discussion showed Ballin at his
best. He allayed Dr. Hahn's fears lest the American influence in the
combination would be so strong as to eliminate the German influence
altogether by convincing him that the whole agreement was built up on a
basis of parity, and that the German interests would not be jeopardized
in any way. The argument that the close connexion established between
the trust and the American railroad companies would lead to Germany
being flooded with American agricultural produce he parried by pointing
out that the interests of the American railroads did not so much require
an increased volume of exports, but rather of imports, because a great
disproportion existed between their eastbound and their westbound
traffic, the former by far exceeding the latter, so that a further
increase in the amount of goods carried from the western part of the
country to the Atlantic seaports would only make matters worse from the
point of remunerative working of their lines.

What Ballin thought of the system of Government subsidies in aid of
shipping matters is concisely expressed by his remarks in a speech which
he made on the occasion of the trial trip of the s.s. _Blücher_, when he
said: "If it were announced to me to-day that the Government subsidies
had been stolen overnight, I should heave a sigh of relief, only
thinking what a pity it was that it had not been done long ago."

In Great Britain the news that some big British shipping companies had
been purchased by the American concern caused a great deal of public
excitement. In Ballin's diary we find the following entry under date of
June 5th:

     "In England, in consequence of the national excitement, a very
     awkward situation has arisen. Sir Alfred Jones and Sir Christopher
     Furness know how to make use of this excitement as an opportunity
     for shouldering the British nation with the burden which the
     excessive tonnage owned by their companies represents to them in
     these days of depression. King Edward has also evinced an
     exceedingly keen interest in these matters of late, which goes to
     show that what makes people in England feel most uncomfortable is
     not the passing of the various shipping companies into American
     hands, but the fact that the German companies have done so well
     over the deal. Mr. Morgan has had an interview with some of the
     British Cabinet ministers at which he declared his readiness to
     give the Government additional facilities as regards the supply of
     auxiliary cruisers. We are hopeful that such concessions will take
     the wind out of the sails of those who wish to create a
     counter-combination subsidized by grants-in-aid from the
     Government."

An outcome of the German-American arrangements was that Morgan and his
friends were invited by the Kaiser to take part in the festivities
connected with the Kiel Week. The American gentlemen were treated with
marked attention by the Kaiser, and extended their visit so as to
include Hamburg and Berlin as well.

At a conference of the transatlantic lines held in December, 1902, at
Cologne, Ballin put forward once more his suggestion that a cabin pool
should be established. The proposal, however, fell through owing to the
opposition from the Cunard Line.

The depression in the freight business which had set in in 1901, and
which was still very pronounced towards the close of 1902, seriously
affected the prospects of the transatlantic shipping companies,
especially those combined in the Morgan Trust, who were the owners of a
huge amount of tonnage used in the cargo business, and whose sphere of
action was restricted to the North Atlantic route. "Experience now
shows," Ballin wrote in his notes, "that we were doing the right thing
when we entered into the alliance with the Trust. If we had not done
this, the latter would doubtless have tried to invade the German market
in order to keep its many idle ships going."

Meanwhile the Cunard Line had concluded an agreement with the British
Government by which the Government bound itself to advance to the
company the funds for the building of its two mammoth express liners,
the _Mauretania_ and the _Lusitania_, while at the same time granting it
a subsidy sufficient to provide for the payment of the interest on and
for the redemption of the loan advanced by the Government for the
building of the vessels.

Further difficulties seemed to be ahead owing to the aggressive measures
proposed by the Canadian Pacific Company, which was already advertising
a service from Antwerp to Canada. To ward off the danger threatening
from this quarter, Ballin proceeded to New York to take up negotiations
with Sir Thomas Shaughnessy, the president of the Canadian Pacific. He
went there on behalf of all the Continental shipping companies
concerned, and the results he arrived at were so satisfactory to both
parties that Ballin corresponded henceforth on terms of close personal
friendship with Sir Thomas, who was one of the leading experts on
railway matters anywhere. These friendly relations were very helpful to
Ballin afterwards when he was engaged in difficult negotiations with
other representatives of Sir Thomas's company, and never failed to
ensure a successful understanding being arrived at.

On the occasion of this trip to America Ballin had some interesting--or,
as he puts it, "rather exciting"--discussions with Morgan and his
friends. He severely criticized the management of the affairs of the
Trust, and tried to make Morgan understand that nothing short of a
radical improvement--i.e. a change of the leading personages--would put
matters right. "Morgan," he writes, "finds it impossible to get the
right men to take their places, and he held out to me the most alluring
prospects if I myself should feel inclined to go to New York as
president of the Trust, even if only for a year or two; but I refused
his offer, chiefly on account of my relations with the Kaiser."

Ballin's suggestions, nevertheless, led to a change in the management of
the Trust. This was decided upon at meetings held in London, where
Ballin stayed for a time on his way back to Hamburg. Mr. Pirrie also
took part in these meetings.

In the meantime the relations between the Cunard Line and the other
transatlantic shipping companies had become very critical. The Hungarian
Government, for some time past, had shown a desire to derive a greater
benefit from the considerable emigrant traffic of the country--a desire
which was shared by important private quarters as well. The idea was to
divert the stream of emigrants to Fiume--instead of allowing them to
cross the national frontiers uncontrolled--and to carry them from that
port to the United States by direct steamers. Ballin had repeatedly
urged that the lines which were working together under the pool
agreement should fall in with these wishes of the Hungarian Government;
but his proposals were not acted upon, mainly owing to the opposition of
the North German Lloyd, which company carried the biggest share of the
Hungarian emigrants.

To the great surprise of the pool lines it was announced in the early
part of 1904 that the Hungarian Government was about to conclude an
agreement with the Cunard Line--the only big transatlantic shipping
company which had remained outside the Trust--by which it was provided
that the Cunard Line was to run fortnightly services from Fiume, and by
which the Hungarian Government was to bind itself to prevent--by means
of closing the frontiers or any other suitable methods--emigrants from
choosing any other routes leading out of the country. Such an agreement
would deprive the pool lines of the whole of their Hungarian emigrant
business. Discussions between Ballin and the representatives of the
Cunard Line only elicited the statement on the part of the latter that
it had no power any longer to retrace its steps. An episode which took
place in the course of these discussions is of special interest now, as
it enables us to understand why the amalgamation of the Cunard Line with
the Morgan Trust never took place.

Ballin asked Lord Inverclyde why the attitude of the Cunard Line had
been so aggressive throughout. The reply was that the Morgan Trust, and
not the Cunard Line, was the aggressor, because Morgan's aim was to
crush it. When Ballin interposed that this had never been intended by
the Trust--that the Trust, indeed, had attempted to include the Cunard
Line within the combination, that Lord Inverclyde himself had also made
a proposal towards that end, and that the project had only come to grief
on account of the strong feeling of British public opinion against
it--Lord Inverclyde answered that, far from this being the case, the
Trust had never replied to his proposal, and that he had not even
received an acknowledgment of his last letter.

In a letter to Mr. Boas, the general representative of his company in
New York, in which he described the general situation, Ballin stated
that the statement of Lord Inverclyde was indeed quite correct.

The Hungarian situation became still more complicated after the receipt
of some information that reached Ballin from Vienna to the effect that
the Austrian Government intended to imitate the example set by the
Hungarian Government by running a service from Trieste. After prolonged
discussions the Austrian Government also undertook not to grant an
emigration licence to the Cunard Line so long as the struggle between
the two competing concerns was not settled.

Thereupon this struggle of the pool lines--both the Continental and the
British ones--against the Cunard Line was started in real earnest, not
only for the British but also for the Scandinavian and the Fiume
business. After some time negotiations for an agreement were opened in
London in July on the initiative and with the assistance of Mr. Balfour,
who was then President of the Board of Trade. These, however, led to no
result, and a basis for a compromise was not found until August, 1904,
when renewed negotiations took place at Frankfort-On-Main. A definite
understanding was reached towards the close of the same year, and then
at last this struggle, which was really one of the indirect consequences
of the establishment of the Morgan Trust, came to an end.

Looked upon from a purely business point of view, the Morgan Trust--or,
to call it by its real name, the "International Mercantile Marine
Company," which in pool slang, was simply spoken of as the "Immco
Lines"--was doubtless a failure. Only the World War, yielding, as it
did, formerly unheard-of profits to the shipping business of the neutral
and the Allied countries, brought about a financial improvement, but it
is still too early to predict whether this improvement will be
permanent. The reasons why the undertaking was bound to be
unremunerative before the outbreak of the war are not far to seek, and
include the initial failure of its promoters to secure the adhesion of
the Cunard Line--a failure which, as is shown by Ballin's notes, was to
a large extent due to the hesitating policy of the Hamburg company. To
make business as remunerative as possible was the very object for which
the Trust was formed, but the more economical working which was the
means to reach this end could not be realized while such an essential
factor as the Cunard Line not only remained an outsider, but even became
a formidable competitor.

It can hardly be doubted that the adhesion of the Cunard Line to the
Morgan Trust--or, in other words, the formation of a combine including
all the important transatlantic lines without exception--would have
brought about such a development of the pool idea as would have led to a
much closer linking-up of the financial interests of the individual
partners than could be achieved under a pool agreement. Under such a
"community of interest" agreement, every inducement to needless
competition could be eliminated, and replaced by a system of mutual
participation in the net profits of each line. This was the ideal at
which Ballin, taught by many years of experience, was aiming.

Over and over again the pool lines had an opportunity of finding out
that it paid them better to come to a friendly understanding, even if it
entailed a small sacrifice, than to put up a fight against a new
competitor. Sometimes, indeed, an understanding was made desirable owing
to political considerations. However, the number of participants
ultimately grew so large that Ballin sarcastically remarked: "Sooner or
later the pool will have to learn how to get along without us," and he
never again abandoned his plan of having it replaced by closely-knit
community of interest agreements which would be worked under a
centralized management, and therefore produce much better results. In
other branches of his activities--e.g. in his agreements with the other
Hamburg companies and in the one with the Booth Line, which was engaged
in the service to Northern Brazil, he succeeded in developing the
existing understandings into actual community of interest agreements,
and it seems that these have given all-round satisfaction. The
negotiations between himself and the North German Lloyd shortly before
the outbreak of the war were carried on with the same object.

Throughout the endless vicissitudes in the history of the pool the
formation of the Morgan Trust decidedly stands out as the most
interesting and most dramatic episode. At the present time the position
of the German steamship companies in those days seems even more imposing
than it appeared to the contemporary observer. To-day we can hardly
imagine that some big British lines should, one after the other, be
offered for purchase first to some German, and then to the American
concerns. Such a thing was only possible because at that time British
shipping enterprise was more interested in the employment of tramp
steamers than in the working of regular services, the shipowners
believing that greater profits could be obtained by the former method.
The result was a noticeable lack of leading men fully qualified to speak
with authority on questions relating to the regular business, whereas in
Germany such men were not wanting. The transatlantic business
threatened, in fact, to become more and more the prerogative of the
German-American combination. To-day, of course, it is no longer possible
to say with certainty whether the Cunard Line could have been induced to
join that combination, if the right moment had not been missed. The
great danger with which British shipping was threatened at that time,
and the great success which the German lines achieved, not only stirred
British public opinion to its depths, but also acted as a powerful
stimulus on the shipping firms themselves. This caused a pronounced
revival of regular line shipping, which went so far that tramp shipping
became less and less important, and which ultimately led to a
concentration of the former within the framework of a few large
organizations which exercise a correspondingly strong influence on
present-day British shipping in general. These organizations differ from
the big German companies by the circumstance that they represent close
financial amalgamations and that they have not, like the German
companies, grown up slowly and step for step with the expanding volume
of transatlantic traffic.




CHAPTER VI

THE EXPANSION OF THE HAMBURG-AMERIKA LINIE


The principal work which fell to Ballin's share during the period
immediately following his nomination in 1888 on the Board of his company
was that connected with the introduction of the fast steamers and the
resulting expansion of the passenger business. Offices were established
in Berlin, Dresden, and Frankfort-On-Main in 1890, and arrangements were
made with the Hamburg-South American S.S. Co., the German East Africa
Line, and the Hansa Line--the latter running a service to Canada--by
which these companies entrusted the management of their own passenger
business to the Packetfahrt. Thus, step by step, the passenger
department developed into an organization the importance of which grew
from year to year.

The expansion of the passenger business also necessitated an enlargement
of the facilities for the dispatch of the Company's steamers. This work
had been effected until then at the northern bank of the main Elbe, but
in 1888 it was transferred to the Amerika-Kai which was newly built at
the southern bank; and when the normal depth of the fairway of the Elbe
was no longer sufficient to enable the fast steamers of considerable
draught to come up to the city, it was decided to dispatch them from
Brunshausen, a small place situated much lower down the Elbe. In the
long run, however, it proved very inconvenient to manage the passenger
dispatch from there, and the construction of special port facilities at
Cuxhaven owned by the Company was taken in hand. The accommodation at
the Amerika-Kai, although it was enlarged as early as 1889, was soon
found to be inadequate, so that it was resolved to provide new
accommodation at the Petersen-Kai, situated on the northern bank of the
Elbe, and this project was carried out in 1893.

The number of services run by the Company was augmented in those early
years by the establishment of a line to Baltimore and another to
Philadelphia. In 1889 a new line starting from New York was opened to
Venezuelan and Colombian ports. The North Atlantic services were
considerably enlarged in 1892, when the Company took over the Hansa
Line.

The desire to find remunerative employment for the fast steamers during
the dead season of the North Atlantic passenger business prompted the
decision to enter these boats into a service from New York to the
Mediterranean during the winter months. The same desire, however, also
gave rise to one of the most original ideas carried into practice
through Ballin's enterprise, i.e. the institution of pleasure trips and
tourist cruises. It may perhaps be of interest to point out in this
connexion that, about half a century earlier, another Hamburg shipping
man had thought of specially fitting out a vessel for an extended cruise
of that kind. I do not know whether this plan was carried out at the
time, and whether Ballin was indebted to his predecessor for the whole
idea; in any case, the following advertisement which appeared in the
_Leipziger Illustrierte Zeitung,_ and which I reprint for curiosity's
sake, was found among his papers.

              "AN OPPORTUNITY FOR TAKING PART IN A VOYAGE
                            ROUND THE WORLD

     "The undersigned Hamburg shipowner proposes to equip one of his
     large sailing vessels for a cruise round the world, to start this
     summer, during which the passengers will be able to visit the
     following cities and countries, viz. Lisbon, Madeira, Teneriffe,
     Cap Verde Islands, Rio de Janeiro, Rio de la Plata, Falklands
     Islands, Valparaiso, and all the intermediate ports of call on the
     Pacific coast of South America as far as Guayaquil (for Quito), the
     Marquesas Islands, Friendly Islands (Otaheite), and other island
     groups in the Pacific, China (Choosan, Hongkong, Canton, Macao,
     Whampoa), Manilla, Singapore, Ceylon, Île de France or Madagascar,
     the Cape of Good Hope, St. Helena, Ascension Island, the Azores,
     and back to Hamburg.

     "The cruise is not intended for business purposes of any kind; but
     the whole equipment and accommodation of the vessel, the time spent
     at the various ports of call, and the details of the whole cruise,
     are to be arranged with the sole object of promoting the safety,
     the comfort, the entertainment, and the instruction of the
     passengers.

     "Admission will be strictly confined to persons of unblemished
     repute and of good education, those possessing a scientific
     education receiving preference.

     "The members of the expedition may confidently look forward to a
     pleasant and successful voyage. A first-class ship, an experienced
     and well-educated captain, a specially selected crew, and a
     qualified physician are sufficient guarantees to ensure a complete
     success.

     "The fare for the whole voyage is so low that it only represents a
     very slight addition to the ordinary cost of living incurred on
     shore. In return, the passenger will have many opportunities of
     acquiring a first-hand knowledge of the wonders of the world, of
     the beautiful scenery of the remotest countries, and of the manners
     and customs of many different nations. During the whole voyage he
     will be surrounded by the utmost comfort, and will enjoy the
     company of numerous persons of culture and refinement. The sea air
     will be of immeasurable benefit to his health, and the experience
     which he is sure to gain will remain a source of pleasure to him
     for the rest of his life.

     "Full particulars may be had on application to the undersigned, and
     a stamped envelope for reply should be enclosed.

"ROB. M. SLOMAN,

"_Hamburg, January_, 1845. _Shipowner in Hamburg._"

Ballin's idea of running a series of pleasure cruises did not meet with
much support on the part of his associates; the public, however, took it
up with enthusiasm from the very start. Early in 1891 Ballin himself
took part in the first trip to the Far East on board the express steamer
_Auguste Victoria_. Organized pleasure trips on a small scale were by no
means an entire novelty in Germany at that time; the Carl Stangen
Tourist Office in Berlin, for instance, regularly arranged such
excursions, including some to the Far East, for a limited number of
participants. To do so, however, for as many as 241 persons, as Ballin
did, was something unheard-of until then, and necessitated a great deal
of painstaking preparation. Among other things, the itinerary of the
intended cruise, owing to the size and the draught of the steamer used,
had to be carefully worked out in detail, and arrangements had to be
made beforehand for the hotel accommodation and for the conveyance of
passengers during the more extended excursions on shore. All these
matters gave plenty of scope to the organizing talents of the youthful
director, and he passed the test with great credit.

The first Far Eastern cruise proved so great a success that it was
repeated in 1892. In the following year it started from New York, surely
a proof that the Company's reputation for such cruises was securely
established not in Germany alone, but in the States as well. Meanwhile,
however, Hamburg had been visited by a terrible catastrophe which
enormously interfered with the smooth working of the Company's express
steamer services. This was the cholera epidemic during the summer of
1892. It lasted several weeks, and thousands of inhabitants fell victims
to it. Those who were staying in Hamburg in that summer will never
forget the horrors of the time. In the countries of Northern Europe
violent epidemics were practically unknown, and the scourge of cholera
especially had always been successfully combated at the eastern frontier
of Germany, so that the alarm which spread over the whole country, and
which led to the vigorous enforcement of the most drastic measures for
isolating the rest of Germany from Hamburg, may easily be comprehended,
however ludicrous those measures in some instances might appear. There
are no two opinions as to the damage they inflicted on the commerce and
traffic of the city. The severest quarantine, of course, was instituted
in the United States, and the passenger services to and from Hamburg
ceased to be run altogether, so that the transatlantic lines decided to
temporarily suspend the steerage pool agreement they had just concluded.
The Packetfahrt, in order not to stop its fast steamer services
completely, first transferred them to Southampton, and afterwards to
Wilhelmshaven, thus abstaining from dispatching these boats to and from
Hamburg. The steerage traffic had to be discarded entirely, after an
attempt to maintain it, with Stettin as its home port, had failed.
Financially this epidemic and its direct consequences brought the
Company almost to the verge of collapse, and the Packetfahrt had to stop
altogether the payment of dividends for 1892, 1893, and 1894.

Business was resumed in 1893, but at first it was very slow. Every means
were tried to induce the United States to rescind her isolation
measures. An American doctor was appointed in Hamburg; disinfection was
carried out on a large scale; with great energy the city set herself to
prevent the recurrence of a similar disaster. The Packetfahrt, in
conjunction with the authorities, designed the plans for building the
emigrants' halls situated at the outskirts of the city, which are unique
of their kind and are still looked upon as exemplary. These plans owe
their origin to the extremely talented Hamburg architect, Mr. Thielen,
whose early death is greatly to be regretted.

An important innovation was the establishment of regular medical control
and medical treatment for the emigrants from the East of Europe on their
reaching the German frontier, a measure which was decided upon and taken
in hand by the Prussian Government. The expansion of the Packetfahrt's
business, of course, was most adversely affected by the epidemic and its
after-effects; and several years of consolidation were needed before the
latter could be overcome. Consequently, hardly any new services were
opened during the years immediately following upon the epidemic.

An important step forward, which greatly strengthened the earning
capacities of the Company's resources, was taken in 1895, when the
building orders for the steamers of the "P" class were given. These
vessels were of large size but of moderate speed. They were extremely
seaworthy, and were capable of accommodating a great many passengers,
especially steeragers, as well as of carrying large quantities of cargo.
The number of services run by the Company was added to in 1893 by a line
from New York to Italy, and in the following year by one from Italy to
the River Plate. Pool agreements were concluded with the Lloyd and the
Allan Line with respect to the first-named route, and with the Italian
steamship companies with respect to the other. The agreement with the
Italians, however, did not become operative until a few years
afterwards.

In 1897 the Packetfahrt celebrated the fiftieth anniversary of its
existence--an event in which large sections of the public took a keen
interest. Perhaps the most noteworthy among the immense number of
letters of congratulation which the Company received on that occasion is
the one sent by the chairman of the Cunard Line, of which the verbatim
text is given below. It was addressed to one of the directors in reply
to an invitation to attend the celebrations in person.

     "It is with great regret I have to announce my inability to join
     with you in celebrating the fiftieth anniversary of the foundation
     of your Company, to be held on board your s.s. _Auguste Victoria_.

     "I the more regret this as I have the greatest possible admiration
     of the skill and enterprise which has directed the fortunes of your
     Company, especially in recent years.

     "You were the first to give the travelling public the convenience
     of a speedy and reliable transit between the two great continents
     of the world by initiating a regular service of twin-screw steamers
     of high speed and unexceptionable accommodation.

     "You also set the shipping world the example of the great economy
     possible in the transit of the world's commodities in vessels of
     greatly increased capacity and proportionate economy, which other
     nations have been quick to follow and adopt to their great
     advantage.

     "Your Company had furthermore met a felt want in giving most
     luxurious and well-appointed accommodation for visiting scenes,
     both new and old, of world-wide interest, and making such
     journeyings, hitherto beset with anxiety and difficulty, as easy of
     accomplishment as the ordinary railway journey at home.

     "You have succeeded in this, not through any adventitious aids,
     such as Government subsidies, but by anticipating and then meeting
     the wants of the travelling and commercial public; and no one, be
     his nationality what it was, can, in the face of such facts,
     abstain from offering his meed of praise to the foresight, acumen,
     and ability that have accomplished such great results in such a
     comparatively small time as the management and direction of the
     Hamburg-American Packet Company.

     "I would venture, therefore, to thus congratulate you and your
     colleagues, and whilst reiterating my regret at being prevented
     from doing so at your forthcoming meeting, allow me the expression
     of the wish that such meeting may be a happy and satisfactory one,
     and that a new era of, if possible, increased success to the
     Hamburg-American Packet Company may take date from it."

Towards the latter end of the 'nineties, at last, a big expansion of the
Company's activities set in. In 1897 the Hamburg-Calcutta Line was
purchased, but the service was discontinued, the steamers thus acquired
being used for other purposes. Shortly before the close of the same year
a suggestion was put forward by some Hamburg firms that were engaged in
doing business with the Far East that the Packetfahrt should run a
service to that part of the world.

Just then the steamship companies engaged in the Far Eastern trade were
on the point of coming to a rate agreement among themselves; and the
management of the Packetfahrt which, owing to the offer held out to it
by Hamburg, Antwerp, and London firms, could hope to rely on finding a
sure basis for its Far Eastern business, did not consider it wise to let
the favourable opportunity slip. Quick decision and rapid action, before
the proposed agreement of the interested lines had become an
accomplished fact, were necessary; because, once the gates were closed,
an outsider would find it difficult to gain admission to the ring.

Hence the negotiations with a view to the Packetfahrt joining in the Far
Eastern business, which had only been started during the second half of
December, 1897, came to a close very soon; and in the early days of
January, 1898, the Packetfahrt advertised its intention of running
monthly sailings to Penang, Singapore, Hongkong, Shanghai, Yokohama, and
Hiogo. Six cargo steamers of 8,000 tons burden were entered into the new
service; and simultaneously an announcement was made to the effect that
large fast passenger boats would be added to it as soon as the need for
these should make itself felt.

The participation in the Far Eastern business, and the consequent taking
over of competing lines or the establishment of joint services with
them, was not the only important event of the year 1898 as far as the
development of the Packetfahrt is concerned. In the spring of that same
year an agreement was made with the Philadelphia Shipping
Company--which, in its turn, had an agreement with the Pennsylvania
Railroad Company--by which the Packetfahrt undertook to run a regular
service of cargo steamers between Hamburg and Philadelphia.

An event of still greater importance, however, was the outbreak of war
between the United States and Spain which also took place in that year.
The Spanish Government desired to strengthen the fighting power of its
navy by the addition of several auxiliary cruisers; and even some time
before the war broke out an offer reached the Packetfahrt through the
intermediary of a third party to purchase its two express steamers,
_Columbia_ and _Normannia_, which were among the fastest ocean-liners
afloat. Before accepting this offer, the Packetfahrt, in order to avoid
the reproach of having committed a breach of neutrality, first offered
these two steamers to the United States Government; but on its refusal
to buy them, they were sold to the British firm acting on behalf of the
Spanish Government, and re-sold to the latter. As the Packetfahrt had
allowed a high rate of depreciation on the two boats, their book-value
stood at a very low figure; and the considerable profit thus realized
enabled it to acquire new vessels for the extension of its passenger
services.

Meanwhile a new express steamer, the _Kaiser Wilhelm der Grösse_, had
been added to the fleet of the North German Lloyd. Ballin, having made a
voyage on board this vessel to New York, reported to the Trustees of his
Company that he considered her a splendid achievement. Owing to the
heavy working expenses, however, she would not, he thought, prove a
great success from a financial point of view. He held that the
remunerativeness of express steamers was negatived by the heavy working
expenses and, as early as 1897, had projected the construction of two
steamers of very large proportions, but of less speed. This, however,
was not carried out. Instead, the Packetfahrt decided to build a vessel
which was to be bigger and faster still than the _Kaiser Wilhelm der
Grösse_. The new liner was built by the Stettin Vulkan yard, and
completed in 1900. She was the _Deutschland_, the famous ocean
greyhound, a great improvement in size and equipment, and she held the
blue riband of the Atlantic for a number of years.

About the same time, the express service to New York had been
supplemented by the inauguration of an additional passenger service on
the same route, which proved a great success in every way. The steamers
employed were the combined passenger and cargo boats of moderate speed
of the "P" class referred to above; and, their working expenses being
very low, they could carry the cargo at very low rates, so that they
proved of great service to the rapidly expanding interchange of goods
between Germany and the United States. Their great size made it
necessary to accelerate their loading and discharging facilities as much
as possible. This necessity, among other things, led to the introduction
of grain elevators which resulted in a great saving of time, as the
grain was henceforth no longer discharged in sacks, but loose. The
Company also decided to take the loading and discharging of all its
vessels into its own hands. To accelerate the dispatch of steamers to
the utmost possible extent, it was decided in 1898 to enlarge once again
the Company's harbour facilities, and an agreement was concluded with
the Hamburg Government providing for the construction of large harbour
basins with the necessary quays, sheds, etc., in the district of
Kuhwärder on the southern banks of the Elbe.

It was typical of Ballin's policy of the geographical distribution of
risks and of the far-sighted views he held concerning the international
character of the shipping business that he attempted at the end of the
'nineties to gain an extended footing abroad for the Company's
activities. The Packetfahrt therefore ordered the building of two
passenger boats in Italian yards, and it was arranged that these vessels
should fly either the German or the Italian flag. In the end, however, a
separate Italian shipping company, the Italia, was set up, which was to
devote itself more particularly to the River Plate trade. When the
financial results of the new enterprise failed to come up to
expectations, the shares were sold to Italian financiers in 1905.

The closing years of the nineteenth and the opening years of the
twentieth century represented a period of extraordinary prosperity to
shipping business all over the world--a prosperity which was caused by
the outbreak of the South African war in 1899. An enormous amount of
tonnage was required to carry the British troops, their equipment,
horses, etc., to South Africa, and the circumstance that this tonnage
temporarily ceased to be available for the needs of ordinary traffic
considerably stiffened the freight rates. The favourable results thus
obtained greatly stimulated the spirit of enterprise animating the
shipping companies everywhere.

About the same time the business of the Company experienced a notable
expansion in another direction. A fierce rate war was in progress
between the Hamburg-South American S.S. Co. and the firm of A. C. de
Freitas & Co., and neither party seemed to be able to get the better of
the other. As early as 1893 Ballin, on behalf of the Hamburg-South
American S.S. Co., had carried on some negotiations with the firm of de
Freitas with the object of bringing about an amalgamation of the two
companies with respect to their services to Southern Brazil. In 1896 he
had done so again in compliance with the special request of Mr. Carl
Laeisz, the chairman of the former company, and in 1898 he did so for
the third time, but in this case on his own initiative. No practical
results, however, were reached, and as Ballin was desirous of seeing an
end being put to the hopeless struggle between the two rival firms, he
took up those negotiations for the fourth time in 1900, hoping to
acquire the de Freitas Line for his own Company. He was successful, and
an expert was nominated to fix the market value of the fourteen steamers
that were to change hands. As the valuation took place at a time when
the shipping business was in an exceedingly flourishing state, the price
which he fixed worked out at so high an average per ton as was never
again paid before the outbreak of the war. The valuer told me that he
himself considered the price very high, so that he felt in duty bound to
draw Ballin's attention to it beforehand. Ballin tersely replied: "I
know, but I want the business," thus making it perfectly clear that he
attached more than ordinary importance to the deal.

As soon as the purchase of the de Freitas Lines had become an
accomplished fact, arrangements were made with the Hamburg-South
American S.S. Company, which provided for a joint service to South
America, a service which was still further extended when the Packetfahrt
bought up a British line trading from Antwerp to the Plate, thus also
securing a footing at Antwerp in connexion with its South American
business. The necessity for taking such a step grew in proportion as
Antwerp acquired an increasing importance owing to the increasing German
export business.

Perhaps there is no country which can be served by the seaports of so
many foreign countries as Germany. Several Mediterranean ports attract
to themselves a portion of the South German trade; Antwerp and some of
the French ports possess splendid railway connexion with Southern and
Western Germany, and both Antwerp and Rotterdam are in a position to
avail themselves of the highway of the Rhine as an excellent means of
communication with the whole German hinterland. Finally, it must be
remembered that the Scandinavian seaports are also to a certain extent
competing for the German business, especially for the trade with the
hinterland of the Baltic ports of Germany. All this goes to show that
the countries surrounding Germany which have for centuries striven to
exercise a kind of political hegemony over Germany--or, rather,
generally speaking, over Central Europe--are not without plenty of
facilities enabling them to try to capture large portions of the
carrying trade of these parts of Europe. This danger of a never-ending
economic struggle which would not benefit any of the competing rivals
was the real reason underlying Ballin's policy of compromise. He clearly
recognized that any other course of action would tend to make permanent
the existing chaos ruling in the realm of ocean shipping.

In this struggle for the carrying trade to and from Central Europe the
port of Antwerp occupied a position all by itself. The more the
countries beyond the sea were opened up by the construction of new
railways and the establishment of industrial undertakings, and the more
orders the manufacturers in the Central European countries received in
consequence of the growing demand, the greater became the value of
Antwerp to the shipping companies in every country. In this respect the
early years of the twentieth century witnessed an extraordinary
development, which, in its turn, benefited the world's carrying trade to
an ever-increasing extent. Never before had so much European capital
been invested in overseas countries. Again, as a result of the Spanish
war the political and economic influence of the United States had
enormously expanded in the West Indian islands, whilst, at the same
time, the Monroe doctrine was being applied more and more thoroughly and
systematically. Consequently the attention of the American investors was
also increasingly drawn towards those same countries. In Central America
new railway lines were constructed by British and American capital,
including some right across the country from the Atlantic to the
Pacific, thus considerably facilitating trade with the Pacific coast of
America. Other lines were built in Brazil and in the Argentine, and
harbour and dock facilities were constructed in nearly all the more
important South American ports. French and Belgian capital shared in
these undertakings, and some German capital was also employed for the
same purpose. The Trans-Andine railway was completed, and numerous
industrial works were added to the existing ones. The great economic
advance was not exclusively restricted to South America; it extended to
the Far East, to the great British dominions beyond the sea, especially
to Canada and Australia, and--after the close of the South African
War--to Africa also. Russia built the great Trans-Siberian railway, and
Germany commenced to exploit the resources of her colonies. As a result
of all these activities the iron and steel manufacturers were
overwhelmed with export orders. This applies particularly to the German
iron and steel manufacturers, whose leading organization, the
Stahlwerks-Verband, largely favoured the route _via_ Antwerp, because it
was the cheapest, to the great detriment of the German ports. Thus the
German shipowners were compelled to follow the traffic, and the
importance of Antwerp increased from year to year. The Hamburg-Amerika
Linie met this development by opening a special branch office for
dealing with the Antwerp business.

In 1899, a year before the Hamburg-Amerika Linie established itself in
the services to Brazil and the River Plate, a line had been started by
the Company to Northern Brazil and the Amazon River. The conflict with
the Booth Line which resulted from this step was amicably settled in
1902 through negotiations conducted by Ballin. Later on, indeed, the
relations between the two companies became very cordial, and even led to
the conclusion of a far-reaching community of interest agreement, the
Booth Line being represented in Hamburg by the Hamburg-Amerika Linie,
and the latter in Brazil by the British company. An agreement of such
kind was only feasible when a particularly strong feeling of mutual
trust existed between the two contracting partners, and Ballin
repeatedly declared that he looked upon this agreement with the Booth
Line as the most satisfactory of all he had concluded.

In 1900 the West Indian business was extended by opening a passenger
service to Mexico, and another noteworthy event which took place during
the same year was the conclusion of an agreement with the big German
iron works in the Rhenish-Westphalian district by which the
Hamburg-Amerika Linie undertook to ship to Emden the Swedish iron ore
needed by them from the ports of Narvik and Lulea. Two special steamers
were ordered to be exclusively used for this service. Henceforth Emden
began to play an important part in connexion with the German ore supply,
and the real prosperity of that port dated from that time.

Early in 1901 Ballin decided to embark on a trip round the world. He
thought it desirable to do so in order to acquire a first-hand knowledge
of the Far Eastern situation, which had become of special interest to
the country owing to the acquisition by Germany of Tsingtau, and to the
unrest in China. His special object was to study the questions that had
become urgent in connexion with the organization of the passenger
service of which the Packetfahrt, in consequence of the agreement with
the Lloyd, had just become a partner. There was, in addition, the
project of starting a Pacific service, which engaged his attention. All
these important details could only be properly attended to on the spot.
It became necessary to acquire a business footing in the various ports
concerned, to organize the coast transport services which were to act as
feeders to the main line, etc. Besides, the Packetfahrt, and the Lloyd
as well, had special reasons for being interested in Far Eastern
affairs, as both companies had been entrusted with troop transports and
the transport of equipment needed for the German contingent during the
troubles in China. During his Far Eastern trip Ballin wrote detailed
accounts dealing with the business matters he attended to, and also
describing his personal impressions of persons and things in general,
the former kind addressed to the Board of his Company, the latter to his
mother. These letters are full of interest; they present a more faithful
description of his character as a man, and as a man of business, than
could be given in any other way. I shall therefore quote a few extracts
from the comprehensive reports, commencing with those he wrote to his
mother:--

"_On board the I.M.S._ '_Kiautschou_'
"_January 16th, 1901._


     "The weather was cold and windy when we arrived late at night
     outside Port Said, and midnight was well past when we had taken up
     the pilot and were making our way into the port. The intense cold
     had caused me to leave the navigating bridge; and as I did not
     think it likely that our agent would arrive on board with his
     telegrams until the next morning, I had followed the example of my
     wife and of nearly all the other passengers and had gone to bed.
     However, if we had thought that we should be able to sleep, we soon
     found out our mistake. The steamer had scarcely taken up her
     moorings when several hundreds of dusky natives, wildly screaming
     and gesticulating, and making a noise that almost rent the skies,
     invaded her in order to fill her bunkers with the 800 tons of coal
     that had been ordered. Perhaps there is no place anywhere where the
     bunkers are filled more rapidly than at Port Said, and certainly
     none where this is done to the accompaniment of a more deafening
     noise. Just imagine a horde of natives wildly screaming at the top
     of their voices, and add to this the noise produced by the coal
     incessantly shot into the bunkers, and the shouting of the men in
     command going on along with it. You will easily understand that it
     was impossible for anyone to go to sleep under conditions such as
     these.... After trying for several hours, I gave up the attempt,
     and, on entering the drawing-room, I found that willy-nilly (but,
     as Wippchen would have said, more nilly than willy) practically all
     the other passengers had done the same thing. There I was also
     informed that those who were in the know had not even made an
     attempt to go to sleep, but had gone ashore at 2 A.M. Port Said is
     a typical brigands' den, and relies for its prosperity on the mail
     packets calling there. The shops, the taverns, the music-halls, and
     the gambling places are all organized on lines in accordance with
     the needs of modern traffic. So it was not surprising to see that
     the proprietors of these more or less inviting places of
     entertainment had brightly lit up their premises, and hospitably
     opened their doors despite the unearthly hour, being quite willing
     to try and entice the unwary passengers into their clutches."

"_Between_ ADEN _and_ COLOMBO.
"_January 24th_, 1901.

     " ... We did not stop long at Aden; and as the quarantine
     regulations for all vessels arriving from Port Said were very
     strict, it became impossible for the passengers on board the
     _Kiautschou_ to land on the island. Aden, which the British would
     like to turn into a second Gibraltar, is situated in a barren,
     treeless district, and is wedged in between hills without any
     vegetation. Small fortifications are scattered all over the island.
     It must be a desolate spot for Europeans to live at. The British
     officers call it 'The Devil's Punch Bowl,' and to be transferred to
     Aden is equivalent to them to being deported."

"_January 28th_, 1901.

     " ... In the meantime we have spent a most enjoyable and
     unforgettable day at Colombo. The pilot brought the news of Queen
     Victoria's death, which filled us with lively sympathy, and which
     caused a great deal of grief among the British passengers. Shortly
     before 9 o'clock we went ashore: and as the business offices do not
     open until an hour later--thus preventing me from calling on my
     business friends at that hour--I took a carriage-drive through the
     magnificent park-like surroundings of the city. The people one
     meets there are a fit match to the beautiful scenery; but whilst in
     former times they were the rulers of this fertile island, they are
     now, thanks to the blessings of civilization, the servants of their
     European masters....

     "When we reached the old-established Oriental Hotel where we had
     our lunch, we met there a number of our fellow-passengers busily
     engaged in bargaining with the Singhalese and Indian dealers who
     generally flock to the terraces of the hotel as soon as a mail
     packet has arrived. The picture presented by such Oriental
     bargaining is the same everywhere, except that the Colombo dealers
     undeniably manifest an inborn gracefulness and gentlemanly bearing.
     When I tried to get rid of an old man who was pestering me with his
     offers to sell some precious stones, he said to me, in the
     inimitable singing tone of voice used by these people when they
     speak English: 'Just touch this stone, please, but do not buy it: I
     only wish to receive it back from your lucky hands.' In spite of
     their manners, however, these fellows are the biggest cheats on
     earth. Another dealer wanted to sell me a sheet of old Ceylon
     stamps for which he demanded fifteen marks--a price which, as he
     stated, meant a clean loss of five marks to him. When I offered him
     two marks instead, merely because I had got tired of him, he handed
     me the whole sheet, and said: 'Please take them; I know that one
     day I shall be rewarded for the sacrifice which I bring.' Later on
     I discovered that the same man had sold exactly the same stamps to
     a fellow-passenger for 50 pfennigs, and that he had told the same
     story to him as to me. Such are the blessings of our marvellous
     civilization....

     " ... In the afternoon we went for a magnificent drive to the Mount
     Lavinia Hotel, which is beautifully situated on a hill affording an
     extensive view of the sea. Boys and girls as beautiful as Greek
     statues, and as swift-footed as fallow deer, pursued us in our
     carriage, begging for alms. It was curious to see with what
     unfailing certainty they managed to distinguish the German from the
     English passengers, and they were not slow in availing themselves
     of this opportunity to palm off what little German they knew on us.
     'Oh, my father! My beautiful mother! You are a great lady! Please
     give me ten cents, my good uncle!' We were quite astonished to meet
     such a large progeny...."

"_February 2nd_, 1901.

     ".... The entrance to Singapore is superbly beautiful. The steamer
     slowly wended her way through the channels between numerous small
     islands clad with the most luxurious vegetation, so that it almost
     took us two hours to reach the actual harbour.... The food question
     is extremely complicated in this part of the tropics, which is
     favoured by kind Nature more than is good. The excessive fertility
     of the soil makes the cultivation of vegetables and cereals quite
     impossible, as everything runs to seed within a few days, so that,
     for instance, potatoes have to be obtained from Java, and green
     vegetables from Mulsow's, in Hamburg. I am sure my geography master
     at school, who never ceased to extol the richness of the soil of
     this British colony, was not aware of this aspect of the matter.

     "Singapore is a rapidly developing emporium for the trade with the
     Far East. It has succeeded in attracting to itself much of the
     commerce with the Dutch Indies, British North Borneo, the
     Philippines, and the Federated Malay States. To achieve this, of
     course, was a difficult matter, even with the aid of the shipping
     companies, but its clever and energetic business community managed
     to do it. We Germans may well be proud of the fact that our
     countrymen now occupy the premier position in the business life of
     the city....

     " ... We spent about thirty-six hours at Saigon. This city has been
     laid out by the French with admirable skill, and there is no doubt
     but that Indo-China is a most valuable possession of theirs. As
     regards the difference in the national character of the French and
     the British, it is interesting to note that the former have just
     erected a magnificent building for a theatre at Saigon, at a cost
     of 2-1/2 million francs. The British would never have dreamt of
     doing such a thing; I am sure they would have invested that money
     in the building of club-houses and race-courses...."

"_February 16th_, 1901.

     " ... As far as social life and social pleasures are concerned, it
     must be said that the German colony at Hongkong is in no way
     inferior to that at Singapore. Premier rank in this respect must be
     assigned to the Siebs family. Mr. Siebs, the senior member of the
     Hamburg firm of Siemssen and Co., has been a resident in the East
     for a long term of years--forty-two, if I remember rightly; and he
     now occupies an exceedingly prominent position both in German and
     British society. That this is so is largely due--apart from his
     intimate knowledge of all that concerns the trade and commerce of
     China, and apart from his own amiability and never-failing
     generosity--to his charming wife, who, by means of the hospitality,
     the refinement, and the exemplary management characterizing her
     home, has been chiefly instrumental in acquiring for the house of
     Siebs the high reputation it enjoys. Whoever is received by Mrs.
     Siebs, I have been told, is admitted everywhere in Hongkong
     society.

     "Even though I only give here an outline of my impressions, I
     cannot refrain from adding a few details dealing with some aspects
     of everyday life at Hongkong, this jewel among the crown colonies
     of Britain. The offices of the big firms and of the shipping
     companies' agencies, most of them housed in beautiful buildings,
     flank the water's edge; farther back there is the extensive
     shopping quarter, and still more in the rear there is the Chinese
     quarter, teeming with an industrious population. Being myself so
     much mixed up with the means of communication, I am surely entitled
     to make a few remarks concerning this subject in particular. Horses
     are but rarely seen, and are only used for riding, and sporting
     purposes generally. Their place is taken by the coolies, who no
     doubt represent the most pitiable type of humanity--at least, from
     the point of view of a sensitive person. In the low-lying part of
     the town the jinrikishas, which are drawn by coolies, predominate;
     but the greater part of Hongkong is situated on the slopes of a
     hill, and nearly all the private residences are built along the
     beautifully kept, terrace-like roads leading up to the summit of
     the peak. In this part the chair coolies take the place of the
     jinrikisha coolies; and in the low-lying parts also it is
     considered more stylish to be carried by chair coolies. The
     ordinary hired chairs are generally carried by two coolies only,
     but four are needed for the private ones. The work done by these
     poor wretches is fatiguing in the extreme. They have to drag their
     masters up and down the hill, which is very steep in places, and it
     is a horrid sensation to be carried by these specimens of panting
     humanity for the first time. In the better-class European
     households each member of the family has his own chair, and the
     necessary coolies along with it, who are paid the princely wage of
     from 16 marks to 17 marks 50 pfennigs a month. They also receive a
     white jacket and a pair of white drawers reaching to the knee, but
     they have to provide their own food. The poor fellows are generally
     natives from the interior parts of the island. They spend about one
     mark a week on their food; the rest they send home to their
     families. They are mostly married, and the money they earn in their
     capacity as private coolies represents to them a fortune. They
     rarely live longer than forty years; in fact, their average length
     of life is said not to exceed thirty-five. As many as eight coolies
     were engaged to attend to the needs of my wife and myself for the
     time of our stay. The poor creatures, who, by the way, had quite a
     good time in our service, spent the whole day from early in the
     morning to late at night lying in front of a side entrance to our
     hotel, except when they had to do their work for us....

     " ... The Chinese have only one annual holiday--New Year. They are
     hard at work during the whole year; they know of no Sundays and of
     no holidays, but the commencement of the New Year is associated
     with a peculiar belief of theirs. To celebrate the event, they take
     their best clothes out of pawn (which, for the rest of the year,
     they keep at the pawnbroker's to prevent them from being stolen).
     To keep the evil spirits away during the coming twelvemonth, they
     burn hundreds of thousands of firecrackers when the New Year
     begins, and also during the first and second days of it,
     accompanied by the noise of the firing of guns. One must have been
     through it all in order to understand it. For the better part of
     two days and two nights one could imagine a fierce battle raging in
     the neighbourhood; crackers were exploding on all sides, together
     with rockets and fireballs, and the whole was augmented by the
     shouting and screaming of the revellers. It was a mad noise, and we
     could scarcely get any sleep at night.

     "The houses in the Chinese quarter were decorated up to the roofs
     with bunting, beautiful big lanterns, paper garlands with religious
     inscriptions, and a mass of lovely flowers.

     "On such days--the only holidays they possess--the Chinese
     population are in undisputed possession of their town, and the
     British administration is wise enough not to interfere with the
     enjoyment of these sober and hard-working people. I really wonder
     how the German police would act in such cases...."

"SHANGHAI, _March 6th, 1901_.

     " ... It is surely no exaggeration to describe Shanghai as the New
     York of the Far East. The whole of the rapidly increasing trade
     with the Yangtse ports, and the bulk of that with the northern
     parts of the country, passes through Shanghai. The local German
     colony is much larger than the one at Hongkong; and here, too, it
     is pleasant to find that our countrymen are playing an extremely
     important part in the extensive business life of the town...."

"_Between_ TSINGTAU _and_ NAGASAKI,
_on board the s.s_ _'Sibiria_.'
"_March 18th, 1901._

     "Our s.s. _Sibiria_ had arrived in the harbour about ten days ago,
     and was now ready for our use. I had decided first of all to make a
     trip up the Yang-tse-Kiang on board the _Sibiria_, because I wanted
     to get to know this important river, which flows through such a
     fertile tract of country, and on the banks of which so many of the
     busiest cities of China are situated. The Yangtse--as it is usually
     called for shortness' sake--is navigable for very large-sized
     ocean-going steamers for a several days' journey. During the summer
     months it often happens that the level of the water in its upper
     reaches rises by as much as 50 feet, which--on account of the
     danger of the tremendous floods resulting from it--has made it
     necessary to pay special attention to the laying-out of the cities
     situated on its banks. The object of our journey was Nanking. This
     city, which was once the all-powerful capital of the Celestial
     Empire, has never again reached its former importance since its
     destruction during the great revolution of 1862, and since the
     choice of Peking as the residence of the Imperial family. Two years
     ago it was thrown open to foreign commerce; and the Powers
     immediately established their consulates in the city, not only
     because a new era of development is looked forward to, but also
     because Nanking is the seat of a viceroy.

     "Our amiable consul, Herr v. Oertzen, received us with the greatest
     hospitality. The German colony which he has to look after consists
     of only one member so far. This young gentleman, who holds an
     appointment in connexion with the Chinese customs administration,
     feels, as is but natural, quite happy in consequence of enjoying a
     practical monopoly of the protection extended to him by the home
     government. He has helped himself to the consul's cigars and to his
     moselle to such good effect that the _Sibiria_ arrived just in time
     to prevent the German colony at Nanking from lodging a complaint
     regarding the insufficiency of the supplies put at its disposal by
     the Government. The consul told us that we should never have a
     chance of coming across another Chinese town that could compare
     with the interior of Nanking, and so we had to make up our minds
     to pay a visit to these parts.

     "I had seen plenty of dirt and misery at Jaffa and Jerusalem, but I
     have never found so much filth and wretchedness anywhere as I
     noticed at Nanking. My wife and a charming young lady who
     accompanied us on our Yangtse expedition were borne in genuine
     sedan chairs as used for the mandarins, preceded by the interpreter
     of the consulate, and followed by the rest of us, who were riding
     on mules provided with those typically Chinese saddles, which,
     owing to their hardness, may justly claim to rank among the
     instruments of torture.

     "Our procession wended its way through a maze of indescribably
     narrow streets crowded with a moving mass of human beings and
     animals. Everywhere cripples and blind men lay moaning in front of
     their miserable hovels, and it almost seemed that there were more
     people suffering from some disease or other than there were healthy
     ones. When we stopped outside the big temple of Confucius, where
     the ladies of our party dismounted from their chairs, the people,
     in spite of their natural timidity, flocked to see us, because they
     had probably never seen any European ladies until then. We were
     thankful when at last we reached the consulate building again, and
     when, after having had a good bath, we are able to enjoy a cup of
     tea.

     " ... In the early hours of March 13th our steamer arrived at
     Tsingtau. I was surprised and delighted with what I saw. There, in
     spite of innumerable difficulties, a city had sprung up in an
     incredibly short space of time.

     "Rooms had been reserved for us at the handsome, but very cold,
     Hotel Prinz Heinrich; and in the afternoon of the day of our
     arrival we strolled up the roads, which were still somewhat dusty,
     and in parts only half finished, to the summit of the hill where
     the acting Governor and the officers of higher rank had their
     homes. Even though it is true that up to now military necessities
     have taken precedence in the laying-out of the town, so that the
     needs of trade and traffic have not received due attention, it must
     be admitted that a wonderful piece of constructive work has been
     achieved. All the members of our party--especially those who, like
     Dr. Knappe, our consul-general at Shanghai, had known the place two
     years ago--were most agreeably surprised at the progress that had
     been made.

     "Our first few days at Tsingtau were spent much as they were
     everywhere else--plenty of work during the day-time, and plenty of
     social duties in the evenings. But things began to look different
     on Saturday morning, when my old friend and well-wisher,
     Field-Marshal Count Waldersee, arrived on board H.M.S. _Kaiserin
     Auguste_. He had announced that his arrival would take place at 9
     A.M., and his flagship cast anchor with military punctuality. The
     Governor and I went on board to welcome the old gentleman, who was
     evidently greatly touched at meeting me out here, and it was plain
     to see that my presence in this part of the world made him almost
     feel homesick. The Field-Marshal very much dislikes the
     restrictions imposed on his activities; and judging from all he
     told me, I must confess that a great military leader has hardly
     ever before been faced with a more thankless task than he. On the
     one hand he is handicapped through the diplomatists, and on the
     other through the want of unanimity among the Powers. Thus, instead
     of fulfilling the soldier's task with which he is entrusted, he is
     compelled to waste his time in idleness, and to preside at endless
     conferences at which matters are discussed dealing with the most
     trivial questions of etiquette. He really deserves something better
     than that...."

"TOKIO. _March 31st, 1901._

     " ... What a difference between Japan and the cold and barren north
     of China! There everything was dull and gloomy, whilst this country
     is flooded with sunshine. Here we are surrounded by beautifully
     wooded hills, and a magnificent harbour extends right into the
     heart of the city. From the windows of our rooms we overlook big
     liners and powerful men-of-war, and our own _Sibiria_ has chosen
     such a berth that the Hapag flag merrily floating in the breeze
     gives us a friendly welcome.

     "The difference in the national character of the Chinaman and the
     Japanese clearly proves the great influence which the climate and
     the natural features of a country can exercise on its inhabitants.
     The one always grave and sulky, and not inclined to be friendly;
     the other always cheerful, fond of gossip, and overflowing with
     politeness in all his intercourse with strangers. But it must not
     be forgotten that the integrity of the Chinese, especially of the
     Chinese merchants, is simply beyond praise, whereas the Japanese
     have a reputation for using much cunning and very little sincerity,
     so that European business men cannot put much faith in them.

     "The women of Japan are known to us through 'The Mikado' and 'The
     Geisha.' They make a direct appeal to our sympathies and to our
     sense of humour. In one week the stranger will become more closely
     acquainted with the womenfolk and the family life of Japan than he
     would with those of China after half a dozen years of residence in
     their midst. In China the women are kept in seclusion as much as
     possible, but the whole family life of the Japs is carried on with
     an utter indifference to publicity. This is due to a large extent
     to the way their homes are built. Their houses are just as dainty
     as they are themselves; and it is really quite remarkable to see
     that the Japs, who closely imitate everything they see in Europe,
     still build them exactly as they have done from time immemorial.
     They are practically without windows, and in place of these the
     openings in the walls are filled with paper stretched on to frames.
     Instead of doors there are movable screens made of lattice-work;
     and since everything is kept wide open during the day-time one can
     look right into the rooms from the street. In the summer the
     Japanese make their home in the streets, and we are told that then
     the most intimate family scenes are enacted in the open air. I am
     of opinion that this, far from pointing to a want of morality, is
     really the outcome of a highly developed code of morals. Things
     which are perfectly natural in themselves are treated as such, and
     are therefore not hidden from the light of day....

     " ... At 9 A.M. on March 23rd we arrived at Kobe, where we had to
     spend several days.

     "Our trip is now approaching its end; at least, we now experience
     the pleasant feeling that we are daily nearing home. What will it
     look like when we get back? At almost every port of call some sad
     news has reached us, and our stay at Kobe was entirely overshadowed
     by my grief at the loss of my old friend Laeisz. Even now I cannot
     realize that I shall find his place empty when I return...."

The brief statement in which Ballin summarized the results of his trip
from a business point of view is appended:--

     "Among the business transacted during my trip the following items
     are of chief importance:

     "(1) The establishment of a branch of our Company at Hongkong.

     "(2) The acquisition of the Imperial Mail Packet Service to
     Shanghai, Tsingtau, and Tientsin, formerly carried on by Messrs.
     Diedrichsen, Jebsen and Co.

     "(3) The acquisition of the Yangtse Line, hitherto carried on by
     the firm of Rickmers.

     "(4) The joint purchase with the firm of Carlowitz and Messrs.
     Arnhold, Karberg and Co. of a large site outside Shanghai harbour
     intended for the building of docks and quays, and the lease of the
     so-called Eastern Wharf, both these undertakings to be managed by a
     specially created joint-stock company.

     "(5) The establishment of temporary offices at Shanghai.

     "(6) In Japan discussions are still proceeding concerning the
     running of a line from the Far East to the American Pacific coast.

     "(7) In New York negotiations with the representative of the firm
     of Forwood are under way regarding the purchase of the Atlas Line."

This list summarizes the contents of a long series of letters from all
parts of the world where Ballin's keen insight, long foresight, and
business acumen suggested to his alert mind possibilities of extending
Packetfahrt shipping interests. Time translated many of his suggestions
into flourishing actualities, some of which survived the 1914-18 years;
others disappeared in the cataclysm; others, again, by the lapse of time
have not the keen general interest that appertained to the ideas when
they fell fresh-minted from his pen. The following, however, in regard
to China and Japan, are worthy of record:

"_Shanghai._
_March 4th, 1901._

     "I am not quite satisfied with the course which the negotiations
     concerning the possible inauguration of a Yangtse line have taken
     so far.

     "The vessels employed are of the flat-bottomed kind, some being
     paddle boats, others twin-screw steamers. In their outward
     appearance the Yangtse steamers, owing to their high erections on
     deck, greatly resemble the saloon steamers plying on the Hudson.
     Their draught rarely exceeds 12 feet, and those which occasionally
     go higher up the river than Hankau draw even less. Most of the
     money earned by these boats is derived from the immense Chinese
     passenger traffic they carry.... The chief difficulty we have
     experienced in our preparations for the opening of a Yangtse line
     of our own consists in the absence of suitable pier
     accommodation...."

"_On board the s.s. Sibiria on the Yangtse._
_March 10th, 1901._

     " ... After what I have seen of Nanking, I am afraid that the
     development of that place which is being looked forward to will not
     be realized for a fairly long time to come. Matters are quite
     different with respect to Chin-kiang where we are stopping now, a
     port which is even now carrying on a thriving trade with the
     interior parts of the country. It can scarcely be doubted that, if
     the Celestial Empire is thrown open to the Western nations still
     more than has been done up to now, the commerce of the Yangtse
     ports is bound to assume large proportions. During the summer
     months, i.e. for practically two-thirds of the year, the Yangtse is
     navigable for ocean-going steamers of deep draught, even more so
     than the Mississippi. At that time of the year the volume of water
     carried by the river increases enormously in certain reaches. This
     increase has been found to amount to as much as 38 feet, and some
     of the steamers of the Russian Volunteer Fleet going up to Hankau
     possess a draught which exceeds 25 feet...."

"_On board the Sibiria between_
TSINGTAU AND JAPAN.
_March 19th, 1901._

     " ... We arrived at Tsingtau on the morning of March 14th. The
     impression produced by this German colony on the new-comer is an
     exceedingly favourable one. Everywhere a great deal of diligent
     work has been performed, and one feels almost inclined to think
     that the building activity has proceeded too fast, so that the
     inevitable reaction will not fail to take place. Looked at from our
     shipping point of view, it must be stated that the work
     accomplished looks too much like Wilhelmshaven, and too little like
     Hongkong. It was, of course, a foregone conclusion that in the
     development of a colony which is completely ruled by the Admiralty
     the naval interests would predominate. However, there is still time
     to remedy the existing defects, and I left Kiautschou with the
     conviction that a promising future is in store for it. Only the
     landing facilities are hopelessly inadequate at present; and as to
     the accommodation for merchant vessels which is in course of being
     provided, it would seem that too extensive a use has been made of
     the supposed fact that mistakes are only there in order to be
     committed, and that it would be a pity not to commit as many as
     possible...."

"_On board the s.s. Empress of China between_
YOKOHAMA AND VANCOUVER.
_April 17th, 1901._

     " ... In the meantime I have had opportunities of slightly
     familiarizing myself in more respects than one with the conditions
     ruling in Japan.

     "The country is faced with an economic crisis. Encouraged by a
     reckless system of credit, she has imported far more than
     necessary; she is suffering from a shortage of money, which is sure
     to paralyse her importing capacities for some time to come.

     "It seems pretty certain too, that future development will be
     influenced by another and far more serious factor, viz.: the
     ousting of the German by the American commerce from the Japanese
     market. The exports from the United States to Japan have increased
     just as much as those to China.... I cannot help thinking that in
     the coming struggle America will enjoy immense advantages over us;
     but you must permit me to postpone the presentation of a detailed
     statement showing my reasons for thinking so until my return to
     Hamburg.... I believe we shall be well advised to establish as soon
     as possible a service between the Far East and the Pacific coast of
     America...."

In 1903 far-reaching alterations were made in the relations existing
between the Hamburg-Amerika Linie and the North German Lloyd, which had
become somewhat less friendly than usual in more respects than one; and
in particular the agreement concerning the Far Eastern services of both
companies was subjected to some considerable modifications.

The year 1903 is also remarkable for an event which, although not of
great importance from the business point of view, is of interest in
other respects. This event was the establishment of business relations
with a Danish company concerning, in the first place, the West Indian
trade, and later that with Russia also. The Danish concern in question
was the East Asiatic Company, of Copenhagen. The founder of this company
was a Mr. Andersen, one of the most successful business men known to
modern commercial enterprise, and certainly not only the most successful
one of his own country, but also one of high standing internationally.
When still quite young he founded a business in Further India which,
although conducted at first on a small scale only, he was able to
extend by the acquisition of valuable concessions, especially of
teak-wood plantations in Siam. In course of time this business developed
into a shipping firm which, owing to the concessions just mentioned, was
always in a position to ship cargo of its own--an advantage which proved
inestimable when business was bad and no other freight was forthcoming.
When Mr. Andersen returned to Europe he continued to enlarge his
business, making Copenhagen its centre. He enjoyed the special patronage
of the Danish Royal Family, and afterwards also that of the Imperial
Russian family. His special well-wisher and a partner of his firm was
the Princess Marie of Denmark, who became known in the political world
because she incurred the enmity of Bismarck, chiefly on account of her
attempt to stir up ill feeling between the Iron Chancellor and Tsar
Alexander III. Bismarck, in the second volume of his memoirs, describes
how he succeeded in circumventing her plans through a personal meeting
with the Tsar. It was the exceptional business abilities of the Princess
Marie which brought Mr. Andersen into contact with the Russian Imperial
family. It is typical of the common sense of the Princess and of her
unaffected manners that she arrived at the offices of the
Hamburg-Amerika Linie one day without having been previously announced;
and as she did not give her name to the attendant outside Ballin's
private office, he could only tell him that "a lady" wanted to see him.
The two letters addressed to Ballin which are given below are also
illustrative of her style.

     "MY DEAR SIR,

"_January 17th_, 1904.

     "I hope you will excuse my writing in French to you, but you may
     reply to me in English. I have had a chat with Director Andersen,
     who told me that your discussions with him have led to nothing. I
     greatly regret this, both for personal reasons and in the interests
     of the business. I am convinced that your negotiations would have
     had the desired result if it had not been for some special
     obstacles with which this new company had to contend. It is such a
     pity that Mr. Andersen had to attend to so many other things. If
     you and he alone had had to deal with it, and if it had been purely
     a business matter, the agreement would certainly have been
     concluded at once. Perhaps you and Andersen will shortly discover a
     basis on which you can co-operate. I personally should highly
     appreciate an understanding between my company and yours if it
     could be brought about, so that you could work together hand in
     hand like two good friends. You _must_ help me with it. Mr.
     Andersen was so charmed with your amiability when he came back. One
     other thing I must tell you, because I possess sufficient business
     experience to understand it, and that is that both he and I admire
     you as a man of business. I should be delighted if you could come
     here; but I request you to give a few days' notice of your arrival.
     Wishing you every success in your undertakings and the best of luck
     during the new year,

"I remain, Yours faithfully,
(_signed_) "MARIE."



     "MY DEAR DIRECTOR,

"_February 10th, 1905._

     "I am so delighted to hear from Mr. Andersen that his company and
     yours intend to co-operate in the Danish West Indies and in Russia
     to your mutual interest. I have always held that such an
     understanding between you and Mr. Andersen would lead to good
     results, and you may feel convinced that I shall extend to you not
     only my personal assistance and sympathy, but also that of my
     family, and that of my Russian family, all of whom take a great
     interest in this matter. I am looking forward to seeing you in
     Hamburg early in March on my way to France. With my best regards,

"Yours faithfully,
(_signed_) "MARIE."

In June, 1904, after the close of Kiel Week, Ballin paid a visit to
Copenhagen. There he met the Princess Marie and the King and Queen of
Denmark, and was invited to dine with them at Bernstorff Castle. The
business outcome of the negotiations was that in 1905 a joint service to
the West Indies was established between the Hamburg-Amerika Linie and
the Danish West Indian Company. Four of the big new steamers of the
latter were leased to the Packetfahrt, and operated by that company,
which thus not only increased the tonnage at its disposal, but also
succeeded in eliminating an unnecessary competition.

At the same time the Packetfahrt bought the larger part of the shares of
the Russian East Asiatic S.S. Company owned by the Danish firm. The
object of the purchase was to establish a community of interests with
the Russian Company. The Kaiser took great interest in this scheme, and
during his visits to Copenhagen in 1903 and 1905 Mr. Andersen reported
to him on the subject. It was intended to bring about close business
relations between Germany, Russia, and Denmark for the special purpose
of developing Russian trade, and to organize the Russian East Asiatic
S.S. Company on such lines as would make it a suitable instrument to
this end. It is to be regretted that the community of interest agreement
then concluded was not of long duration. The Russian bureaucracy made
all sorts of difficulties, and it is possible that the representatives
of the Hamburg-Amerika Linie in Russia did not display as much
discretion in their dealings with these functionaries as they ought to
have done. At any rate, the Packetfahrt was so little satisfied with its
participation in this Russian concern that it re-sold its rights to the
interested Copenhagen parties in 1906, not without incurring a
considerable loss on the transaction. The West Indies agreement
automatically lapsed when the Packetfahrt acquired sole possession of
the four Danish steamers.

Later on some sort of co-operation with the Russian company was brought
about once more by the admission of that company to the transatlantic
steerage pool. The Packetfahrt also had an opportunity of profiting from
the technical experience gained by the Danish East Asiatic Company,
which was the first shipping concern to specialize in the use of
motor-ships. It was enabled to do so by the support it received from the
shipbuilding firm of Messrs. Burmeister and Wain, of Copenhagen, who had
applied the Diesel engine, a German invention, to the propulsion of
ships, and who subsequently built a fleet of excellent motor-ships for
the East Asiatic Company. One of these vessels was afterwards acquired
by the Hamburg-Amerika Linie for studying purposes. The new type of
vessel proved exceedingly remunerative during the war, as it made the
owners independent of the supply of British bunker coal, and relieved
them of the numerous difficulties connected with obtaining it. This
great practical success of the Danish shipbuilders became possible only
because they applied themselves consistently to the development of one
particular type of engine, whereas in Germany endless experiments were
made with a great variety of different types which led to no tangible
results. It was only when the war came, and when the building of
numerous submarines became necessary that German engineering skill
obtained a chance of showing what it could do, and then, indeed, it
proved itself worthy of the occasion.

In 1904 war broke out between Russia and Japan, an event which exercised
such an influence on the Packetfahrt that it is hardly an exaggeration
to say that the rapid progress the company made during the next few
years amounted to a re-birth. The war provided the company with a chance
to sell a large number of its units at a considerable rate of profit,
and the contract concluded with the Russian Government for the coal
supply added enormously to its revenues. The Russian Government partly
converted the purchased steamers into auxiliary cruisers for the purpose
of checking and disorganizing Japanese sea-borne trade, and it partly
used them to accompany its Baltic fleet on its way to the Far East. As
an illustration of the magnitude and the complexity of this transaction,
it may be permitted to quote a few extracts from Ballin's notes
referring to it:

"_May, 1904._

     "Much though my time has been occupied by the Hungarian affair (the
     competition of the Cunard Line in Hungary), and great though the
     strain on my nerves has been on that account, I must say that much
     bigger claims are made on my time and on my nerves by the
     negotiations we are now carrying on with the Russian Government
     concerning the sale of some of our steamers. On Christmas Day I
     sent some representatives to Petrograd who were to approach the
     government in case it intended to acquire any merchant vessels for
     purposes of war. These gentlemen are still staying at Petrograd,
     where they have been all the time with the exception of a few
     weeks, and we have carried on some extremely difficult negotiations
     by cable which so far have led to the definite sale of the _Fürst
     Bismarck_ and the _Belgia_. The _Auguste Victoria_, which is still
     in dock until the necessary repairs have been executed, has also
     been sold to Russia, and the prospects that the _Columbia_ will
     follow suit are extremely good.

     "The sales, of course, necessitate large alterations of the
     existing schedules, and they lead to a great deal of inconvenience.
     A particularly awkward situation has been brought about by the
     circumstance that the _Fürst Bismarck_ has been chartered to the
     firm of Thos. Cook and Sons for an excursion from Marseilles, in
     which 500 members of a Sunday school are to take part, so that, in
     order to release her, it has become necessary for the _Augusts
     Victoria_ to interrupt her usual trip to the Near East, and for the
     _Columbia_ to take her place....

     "Our big coal contract with the Russian Government has, in the
     meantime, been considerably added to. The execution of the
     contract, however, is causing me a great deal of anxiety, as the
     English press, notably _The Times_, is only too glad to make use of
     this circumstance as a pretext for rousing suspicions as to
     Germany's neutrality. As our government is not taking up a very
     firm attitude, the effect of these articles, of course, is highly
     disagreeable. On Friday, September 23rd, I had an opportunity of
     discussing this matter with the Imperial Chancellor at Homburg. The
     Chancellor did not disguise the anxiety he felt concerning these
     contracts, especially as he had just then received a long telegram
     from the German Ambassador in Tokio advising him to proceed with
     much caution. I told the Chancellor that he need not study in any
     way the damage which our company might suffer; that we did not ask
     that any regard should be paid to our business interests in case
     these should clash with those of the country, and that, if the
     Government were of opinion that the interests of the country
     necessitated the cancelling of the whole agreement, I should be
     glad to receive instructions from him to that effect. Failing such
     instructions, of course, I was not entitled to cancel a contract
     which was in every respect a properly drawn-up legal instrument. At
     the same time I pointed out to the Chancellor that Germany, if he
     thought that he had reason to adopt such an attitude, would run the
     risk of offending both antagonists; for it was but reasonable to
     expect that, owing to the agitation carried on by the British, no
     action on Germany's part would cause a change of feeling in Japan,
     but that it would be a fatal blow to Russia, whose Baltic fleet in
     that case would simply be unable to reach the Far East.

     "From Frankfort I went to Berlin in order to discuss the question
     of the coal contract with the Foreign Office, which the Chancellor
     had requested me to do. I had a long conference with Richthofen....

     " ... _October 1st, 1904._ Meanwhile our negotiations with the
     Russian Government have made good progress, and practically the
     whole of my time is taken up with these transactions, which have
     given us a very exciting time. They compel me to go to Berlin
     pretty frequently, as I consider it both fair to the Foreign
     Office and advisable in our own interests that the former should
     always be fully informed of all the steps I am taking. Several of
     our gentlemen are constantly travelling from Hamburg to Petrograd,
     and conferences of our directors are held nearly every morning,
     necessitated by the telegrams which arrive from Petrograd
     practically every day. In order to be in a position to carry out
     the coal contracts, we have been obliged to charter a large number
     of steamers, so that at times as many as 80 of these are employed
     in this Russian transaction. Besides the old express steamers and
     the _Belgia_ we have now sold to the Russians the _Palatia_ and the
     _Phoenicia_, as well as nine other boats of our company,
     including the _Belgravia_, _Assyria_, and _Granada_ (the remaining
     ones are cargo vessels, mostly taken out of the West Indies
     service), but as regards these latter, we have reserved to
     ourselves the right of redemption.... We have successfully
     accomplished the great task we had undertaken, although, owing to
     the absence of coaling stations, it was thought next to impossible
     to convey such a huge squadron as was the Baltic fleet all the way
     from European to Far Eastern waters. It safely reached its
     destination, because the previously arranged coaling of the vessels
     was carried out systematically and without a hitch anywhere,
     although in some cases it had to be done in open roadsteads. Its
     inglorious end in the Korea Straits cannot, and does not, diminish
     the magnitude of the achievement; and the experiences we have
     gained by successfully carrying out our novel task will surely
     prove of great value to the Government. This whole coaling business
     has been a source of considerable profits to our company, although
     if due regard is paid to the exceptional character of the work and
     to the unusual risks we had to run, they cannot be called
     exorbitant."

A few statistics will show what the whole undertaking meant to the
Hamburg-Amerika Linie from a business point of view. During the years
1904 and 1905 the company increased its fleet by no less than 21
steamers--partly new buildings and partly new purchases--representing a
value of 22-1/2 million marks. To these new acquisitions must be added
the 19 steamers then building, of a value of 52 million marks, amongst
them the two big passenger steamers _Amerika_ and _Kaiserin Auguste
Victoria_ for the New York route, and other big boats for the Mexico,
the River Plate, and the Far East services. A large fraction of the sums
spent on this new tonnage--viz. no less than 24 million
marks--represented the profits made on the sales of ships; another large
portion was taken out of current earnings, and the remainder was secured
by a debenture issue. Never again, except in 1913, has the company added
such an amount of tonnage to its fleet in a single year as it did at
that time. But the "re-birth" of the company did not only consist in
this augmentation of tonnage, but also, and chiefly, in the entire
reorganization of its New York service by the addition to its fleet of
the _Amerika_ and the _Kaiserin Auguste Victoria_. This event meant that
the era of the express steamers was being succeeded by one characterized
by another type of vessel which, though possessing less speed, was
mainly designed with a view to securing the utmost possible comfort to
the passengers. The two steamers proved exceedingly remunerative
investments, and added enormously to the clientèle of the company. The
profits earned on the Russian transaction also made up to a large extent
for the losses incurred in the keen rate war with the Cunard Line then
in progress. In spite of this rate war the company was able to increase
its dividend to 9 per cent. in 1904, and to 11 per cent. in 1905.

Another event which took place in 1904 was the conclusion of a contract
with the German Government concerning the troop transports to German
South-West Africa, and the year 1905 witnessed the settlement of a
short-lived conflict with the North German Lloyd. This conflict
attracted a great deal of attention at the time, and the Kaiser himself
thought fit to intervene with a view to terminating it.

When it was seen that German commercial interests in the Middle East had
considerably increased, the Hamburg-Amerika Linie opened a special line
to the Persian Gulf in 1906. The year 1907 is chiefly remarkable for a
rate war affecting the services from Hamburg to the West Coast of
Africa, of which until then the Woermann Line had considered itself
entitled to claim a monopoly.

The African shipping business had been jealously nursed by its founder,
Adolph Woermann, who had always tried hard to guard this special domain
of his against the encroachments of all outsiders. However much Ballin
and Adolph Woermann differed in character, they were akin to each other
in one essential feature--viz. the jealous love they bore to the
undertaking with which they had identified themselves. Both men, grown
up in absolutely different environments, yet resembled each other in the
daring and the fearlessness with which they defended the interests of
their businesses. The one had trained himself to employ moderation and
commonsense to overcome resistance where the use of forcible means
promised no success; the other was a pioneer in the colonial sphere, a
king in his African empire, the discoverer of new outlets, but broken in
spirit and bereft of his strength when compelled by circumstances to
share with others. When Adolph Woermann had died, Ballin honoured his
memory by contributing to the public Press an appreciation of his
character, which is perhaps the best that has been written, and which
ought to be saved from being forgotten. This fact, it is hoped, will be
sufficient justification for reproducing in this connexion a translation
of Ballin's article:

     "The late Adolph Woermann was a man whom we may truly describe as
     the ideal of what a Hanseatic citizen should be. Secretary of State
     Dernburg himself once told me that he knew quite well that the work
     he was doing for the benefit of our colonies would never come up to
     what Adolph Woermann had achieved in the face of the greatest
     imaginable difficulties.

     "Never before, perhaps, has any private shipowner displayed so much
     daring as we see embodied in the business he has built up through
     his labours. Woermann has developed the means of communication
     between Germany and her African colonies to such perfection that
     even the similar work performed by British shipping men has been
     overshadowed. He has done this without receiving any aid from the
     Government; in fact, he had to overcome all sorts of obstacles
     which were put in his way by the bureaucracy. His confidence in his
     work was not shaken when losses had to be faced. Then, more than
     ever, he had his eyes firmly fixed on his goal; and practically
     every vessel which he had built to facilitate communication between
     the German mother country and her colonies represented a fresh step
     forward towards a higher type, thus increasing the immense personal
     responsibility with which he burdened himself. His patriotism was
     of the practical kind; he did his work without asking for the help
     of others, especially without that of the Government.

     "And now he has died in bitter disappointment. His striking outward
     appearance has always reminded us of the Iron Chancellor, but the
     similarity in the character of the two men has only become apparent
     during the last few years. It is well known that when the troubles
     in the colonies had been settled he was accused of having enriched
     himself at the expense of the country. He never lost his resentment
     of this accusation; and even though his accusers can point to the
     fact that the court which had to investigate the claims put forward
     by the Government gave judgment to the effect that some of these
     claims were justified, it must be said in reply that this statement
     of the case is inadequate and one-sided. All that was proved was
     that Woermann, who hated red tape, and who never had recourse to
     legal assistance when drawing up his agreements, did not use as
     much caution in this matter as would have been advisable in his
     own interest. The facts that have become known most clearly
     disprove the accusation that he had made large profits at the
     expense of the country, and that he had used the country's distress
     to enrich himself. To the task of carrying out the troop transports
     he devoted himself with his customary largeness of purpose, and he
     accomplished it magnificently. In order to be able to do so, he had
     enlarged his fleet by a number of steamers, and the consequence was
     that, when the work was achieved, he had to admit himself that he
     had over-estimated his strength. When my late colleague Dr.
     Wiegand, the Director-General of the North German Lloyd, and I were
     asked to express an expert opinion on the rates which Woermann had
     charged the Government, we found them thoroughly moderate; in fact,
     we added a rider to the effect that if either of our companies had
     been entrusted with those transports, we could only have carried
     out a very few expeditions at the rates charged by Woermann.
     Woermann, however, carried through the whole task; and when it was
     done he found himself compelled to pass on to the shoulders of the
     Hamburg-Amerika Linie part of the excessive burden which he had
     taken upon himself.

     "His iron determination would have enabled him to dispense with the
     assistance thus obtained. But by that time his accusers had
     commenced their attacks on his character, and when the Government
     had officially taken up an attitude against him, he became a prey
     to that resentment to which I have referred before. All those who
     had the privilege of being associated with him during the past few
     years must have noted with grief how this great patriot gradually
     became an embittered critic. The heavy blow also led to the
     breakdown of his health, and during the last years of his life we
     only knew him as a sick man.

     "If it is borne in mind how strong, how masterful, and how
     self-reliant a man has passed away with Adolph Woermann, it is sad
     to think that in the end he was not strong enough after all to bear
     on his own shoulders entirely the immense burden of responsibility
     which he had taken upon himself, and that he received nothing but
     ingratitude as the reward of his life's work, although he was
     actuated by truly patriotic motives throughout. Still, this shall
     not prevent us from acknowledging that he was the greatest, the
     most daring, and the most self-sacrificing private shipowner whom
     the Hanseatic cities have ever produced--a princely merchant if
     ever there was one. He was a true friend and an earnest well-wisher
     to the city in which he was born, and to the country which he
     served as a statesman. We are sincerely grateful to him for the
     work he has done, and in honouring his memory we know that we are
     paying tribute to the greatest Hanseatic citizen who had been
     living in our midst."

To complete the enumeration of the many rate wars which occurred during
the first decade of the twentieth century, we must make brief reference
to the competition emanating in 1909 from the so-called "Princes' Trust"
(Fürstenkonzern) and its ally, viz. a Hamburg firm which had already
fought the Woermann Line. The object of the fight was to secure the
business from Antwerp to the Plate. The struggle ended with the
acquisition of the shipping interests of the Princes' Trust, the
business career of which came to a sudden end shortly afterwards by a
financial disaster causing enormous losses to the two princely families
concerned--the house of Hohenlohe and that of Fürstenberg. The details
connected with this affair are still in everybody's memory, and it would
be beyond the scope of this volume to enter into them. It should be
mentioned, however, that in connexion with the settlement arrived at the
two big companies undertook to start some transatlantic services from
the port of Emden, and in particular to establish a direct line for the
steerage traffic to North America. The necessary arrangements to this
end had just been made when the war broke out, and further progress
became impossible.

The transatlantic pool was considerably extended in scope during those
years. More than once, however, after the rate war with the Cunard Line
had come to an end, the amicable relations existing between the lines
were disturbed, e.g. when the Russian Volunteer Fleet opened a competing
service--a competition which was got rid of by the aid of the Russian
East Asiatic S.S. Company; when some British lines temporarily withdrew
from the steerage pool, and when some differences of policy arose
between the Hamburg-Amerika Linie and the North German Lloyd. The
Hamburg company demanded a revision of the percentages, contending that
the arrangements made fifteen years ago no longer did justice to the
entirely altered relative positions of the two companies. The
discussions held in London in February, 1908, under Ballin's
chairmanship, which lasted several days, and in which delegates of all
the big Continental and British lines, as well as of the Canadian
Pacific Railway Company took part, led to the formation of the Atlantic
Conference (also known as the General Pool). It was supplemented in the
following year by that of the Mediterranean Conference. Both these
agreements were renewed in 1911, and further agreements were concluded
with the Russian and Scandinavian lines to complete the system.
Agreements on so large a scale had never before been concluded between
any shipping companies.

This network of agreements existed until it was destroyed through the
outbreak of the war.

During the fluctuating conditions which characterized the shipping
business of those years the year 1908 witnessed a depression which, in
its after-effects, is comparable only to that caused by the cholera
epidemic sixteen years earlier. Business had been excellent for a fairly
long time, but it became thoroughly demoralized in the second half of
1907, and an economic crisis of a magnitude such as has seldom been
experienced began to affect every country. No part of the shipping
business remained unaffected by it; hundreds and hundreds of
ocean-going liners lay idle in the seaports of the world.

Very gradually prospects began to brighten up in the course of 1908, so
that the worst of the depression had passed sooner than had been
expected. Indeed, in one respect the crisis had proved a blessing in
disguise, inasmuch as it had strengthened the inclination of the
shipping concerns everywhere to compromise and to eliminate unnecessary
competition--the formation of the general pool, in fact, being the
outcome of that feeling. The subsequent recovery made up for the losses;
and the succeeding years, with their very gratifying financial results,
and their vast internal consolidation, represent the high-water mark in
the development of the Hamburg-Amerika Linie.

Shortly after the end of the depression a renewed spell of building
activity set in. First of all a new cargo steamer, possessing a burden
of 12,000 tons--which was something quite unusual at the time--was
ordered to be built by Messrs. Harland and Wolff, at a price which was
also unusually low. It almost created a record for cheapness; and the
courage of the builders who accepted such an order at such terms was
greatly admired. A German yard--the Vulkan, of Bremen--then came forward
with a similar offer, because the German shipbuilders, too, were glad to
provide their men with work. The result of the combined labour of both
these firms was a type of cargo boat which proved extremely useful,
especially in the Far Eastern trade, and which represented a good
investment to the company.

Gradually the other branches of the business began to increase their
activity, and the service to North America especially received the close
attention of the company's management. Meanwhile, other shipping
companies had added some vessels of the very highest class to their
fleets. The two big turbine steamers of the Cunard Line, the
_Lusitania_ and the _Mauretania_, had attracted many passengers, and the
White Star Line had the mammoth liner _Olympic_ building, which was to
be followed by two others of the same type, the _Titanic_ and the
_Gigantic_. The new Cunarder, the _Aquitania_, was to be of the same
type, so that once more the public was offered the choice of steamers of
a kind unknown until then. This competition compelled the Packetfahrt to
follow suit, and Ballin commenced to evolve plans for the building of a
new vessel which, of course, had to surpass the highest achievement of
the competing lines, i.e. the _Olympic_. Thus, in co-operation with the
Vulkan yard, of Stettin, and with Messrs. Blohm and Voss, of Hamburg,
the plans for the three steamers of the "Imperator" class were designed.
The competition among the various yards had been extremely keen, and the
Vulkan yard secured the order for the building of the first unit of this
class, the _Imperator_. From the point of view of speed, these new
vessels resembled the fast steamers of the older kind; with regard to
their equipment, they represented a combination of this type and that of
the _Kaiserin_, but from the business point of view they were quite a
novelty, as the basis of their remunerativeness was no longer the cargo
and steerage business, but the cabin business. If the booking of a
certain number of cabins could be relied on for each voyage an adequate
return would be assured. Everything, therefore, was done to attract as
many cabin passengers as possible. These vessels were a triumph of
German shipbuilding and engineering skill; and the senior partner of
Messrs. Blohm and Voss, when the _Vaterland_ was launched, stated with
just pride that she was the biggest vessel in existence; that she was
built on the biggest slip; that she had received her equipment under the
biggest crane, and that she would be docked in the biggest floating dock
in the world. The launching of the third and biggest of the three
steamers, the _Bismarck_, represented a red-letter day in the life of
Ballin and in the history of the company. Nominally she was christened
by the granddaughter of the Iron Chancellor, but actually by the Kaiser.
The bottle of champagne used for the purpose did not break when it left
the young lady's hands; but the Kaiser seized it, and with a sweeping
movement of the arm hurled it against the stem of the huge vessel. To
remove as far as possible the last vestige of the unhappy estrangement
between the Kaiser and the Chancellor had always been Ballin's earnest
desire. So it filled him with great joy when he was enabled to dedicate
the greatest product of his life-work to the memory of the Prince whom
he admired intensely; and still more was he pleased when the Kaiser
consented to take part in the ceremony. He had often expressed his
regret at the unfortunate stage management in connexion with the
Kaiser's visit to Hamburg after the unveiling of the Bismarck monument,
when he was driven past it without an opportunity having been arranged
for him to inspect it. Such a course, Ballin remarked, was bound to
create the impression that the Kaiser had intentionally been led past
it. "I wish I had been permitted to speak to the Kaiser about it
beforehand," he told me afterwards. "I am sure he would have insisted
upon seeing it." Proper stage management plays so prominent a part in
the life of royalty, and it can be of such great use in avoiding certain
blunders and in hiding certain shortcomings that it is much to be
regretted that the Kaiser had so often to dispense with it.

The entering into the Packetfahrt's service of the "Imperator" type of
steamers represented an extraordinary increase in the amount of tonnage
which the company employed on the New York route; and when the North
German Lloyd refused to allow the Packetfahrt a corresponding addition
to its percentage share under the pool agreement, which the Packetfahrt
believed itself justified in asking for, a conflict threatened once more
to disturb the relations existing between the two companies. As a result
the position of both was weakened in Austria, where the Government
cleverly used the situation to its own advantage. Apart from this,
however, not much damage was done, as negotiations were soon started
with the object of securing the conclusion of a far-reaching community
of interest agreement which was not merely to be restricted to the
transatlantic services of the two companies. If these negotiations could
be brought to a successful issue, Ballin thought that this would be the
dawn of a new era in the contractual relations existing between shipping
firms everywhere, because he believed that such development would not be
confined to the German lines, but would assume international
proportions. The agreements actually in force seemed to him obsolete--at
least in part. That this should be so is but natural, as the factor
which it is intended to eliminate by the terms of such agreements--man's
innate selfishness--is, after all, ineradicable. "Nature," in the words
of the Roman poet, "will always return, even if you expel it with a
pitchfork." Wherever a human trait like selfishness is to be kept within
certain bounds by means of written agreements, it becomes necessary not
only to make small improvements from time to time, but to subject the
whole system to a thorough overhauling every now and then.

Many events affecting the progress of the company's business have no
reference in these pages, but the reader can visualize the importance of
Albert Ballin's life-work if he keeps before his mind the fact that
while in the early part of 1886 the Hamburg-Amerika Linie maintained but
a mail service from Hamburg to New York and four lines to Mexico and
the West Indies, from that date to 1913 fifty new services were added to
the existing ones.

The fleet possessed by the Hamburg-Amerika Linie in 1886 consisted of 22
ocean-going steamers, totalling 60,531 G.R.T.[1] By the end of 1913
these figures had increased to 172 steamers and 1,028,762 G.R.T.
respectively. During the twenty-eight years 269 vessels of 1,388,206
tons had been added, either by new building or by purchase, and 101
steamers of 346,927 tons had been sold. At the end of 1913 19 steamers
of 268,766 tons were building, so that, including these, the total
tonnage amounted to 1,360,360 G.R.T. at that date.

During the same period the joint-stock capital of the company had
increased from 15 to 157-1/2 million marks, the debenture issues from
5·6 to 69·5 million marks, and the visible reserves from 3,595,285 to
58,856,552 marks.

The working profits of the company during those twenty-eight years
amounted to 521,727,426 marks, 2,735,700 of which were Government
subsidies received during the temporary participation in the Imperial
Mail Service to the Far East.

The average dividend paid to the shareholders was 7·02 per cent. per
annum. This figure, to my thinking, proves that the biggest steamship
company the world has ever known was to a small extent only a
"capitalist enterprise." Out of a total net profit of over 500 millions,
no more than 140 million marks went to the shareholders as interest on
their invested capital; by far the greater part of the remainder was
used to extend the company's business, so that the country in general
benefited by it.

Concerning one matter which played an important part in Ballin's career,
viz., the relations between his company and the North German Lloyd, the
reader may perhaps desire a more exhaustive account. There certainly
was no want of rivalry between the two companies. One notable reason for
this was the fact that at the time when Ballin joined the Packetfahrt
the latter had fallen far behind its younger competitor in its
development, both from the business and the technical point of view. The
Packetfahrt, in particular, had not kept pace with the technical
progress in steamship construction, and the consequence was that, when
the pool was set up, it had to content itself with a percentage which
was considerably less than that allotted to the Lloyd. The enormous
advance made under the Ballin régime naturally caused it to demand a
larger share. At the same time the Lloyd also increased its efforts more
than ever before, and thus a race for predominance was started between
the two big companies, which greatly assisted them in obtaining the
commanding position they acquired as the world's leading shipping firms.
I do not think this is the place to go into all the details of this
struggle, and I shall confine myself to reproducing an article which
Ballin himself contributed in 1907 on the occasion of the fiftieth
anniversary of the foundation of the North German Lloyd. As this article
throws several interesting sidelights on the development of
transatlantic shipping enterprise, it may furnish a suitable conclusion
to the account given in the present chapter:

     "The year 1907 is one which will stand out prominently in the
     history of our transatlantic shipping on account of the two
     anniversaries which we are going to celebrate during its course. On
     May 27th it will be sixty years since the Hamburg-Amerika Linie was
     called into existence, and on February 20th the North German Lloyd
     will celebrate the fiftieth anniversary of its foundation. I
     suppose that a more competent pen than mine will present us on that
     day with a detailed account of the development of the great Bremen
     shipping firm, and my only object in writing this article is to
     review in brief the period of more than twenty years during which I
     have had the pleasure of working hand in hand with our Bremen
     friends.

     "Until the year 1885 the two big companies, the Lloyd and the
     Packetfahrt, scarcely had any mutually profitable dealings with
     each other; on the contrary, their relations were characterized by
     open enmity. It is true that the attempts at a _rapprochement_,
     which were made from time to time, did in some cases lead to the
     conclusion of an agreement concerning certain rates to which both
     companies bound themselves to adhere, but they never lasted more
     than a short time, and ultimately, far from causing an improvement
     of the existing state of things, they left matters worse than they
     had been before. I think I may congratulate myself on being the
     first to have brought about a better understanding between the two
     companies which, in the end, paved the way to the establishment of
     a lasting friendship which has grown closer and closer during the
     past twenty years.

     "In 1886, shortly after I had joined the Hamburg-Amerika Linie,
     when I went to Bremen in order to find out what could be done to
     lessen or, if possible, to remove altogether the competition
     between both companies, the conduct of the firm's business had
     passed from the hands of Consul Meier, who was getting on in years,
     into those of Director Lohmann. Mr. Lohmann was a man of unusual
     energy and possessed of a rare gift for organization. In the annals
     of international shipping his name will be for ever associated with
     the introduction into the North Atlantic route of fast steamers
     under the German flag. He had been fortunate enough to meet with a
     congenial mind on the technical side in the head of the firm of
     Messrs. John Elder and Co., the Glasgow shipbuilders. At their
     yard, starting in 1881, a series of fast steamers were built--the
     _Elbe_, the _Werra_, the _Fulda_, the _Saale_, the _Trave_, the
     _Aller_, and the _Lahn_--which opened up a new and memorable era in
     the progress of the means of communication between the Old World
     and the New. These boats proved of great benefit to the company
     financially, and they were also a considerable boon to the
     passengers owing to their speed and punctuality. I recollect
     talking to the chairman of a big British steamship company on
     board one of his steamers in New York harbour in 1888, when the
     s.s. _Lahn_, of the North German Lloyd, steamed in. My British
     colleague, filled with admiration, glanced at his watch, touched
     his hat by way of salutation, and said with honest enthusiasm:
     'Wonderful boats; they are really doing clockwork.' He only
     expressed the sentiment felt by the travelling public generally;
     everybody appreciated their reliability and punctuality, and the
     excellence of their service.

     "Director Lohmann died very suddenly on February 9th, 1892; he had
     just concluded an address at a general meeting of the company held
     at the 'Haus Seefahrt' when he dropped down dead. During the last
     few years of his life he had not been well advised technically, and
     failed to adopt the twin-screw principle, as had been done by the
     Hamburg company. Thus, when the two fast single-screw steamers, the
     _Havel_ and the _Spree_, were built at Stettin in 1890, they were
     practically obsolete, because the travelling public by that time
     had come to prefer those of the twin-screw type, owing to the
     increased safety they afforded.

     "In 1888 Consul Meier retired from the chairmanship of the Lloyd,
     to be succeeded--after the short reign of Mr. Reck--by Mr. George
     Plate. To Mr. Plate, if I am rightly informed, great credit is due
     for having secured the services of Director-General Dr. Heinrich
     Wiegand on the board of the company.

     "What the Lloyd has achieved under the Wiegand régime far surpasses
     anything accomplished in the past.

     "The Hamburg-Amerika Linie, meanwhile, had been alive to the needs
     of the times; and the consequence was a healthy competition between
     these two steamship companies--by far the biggest the world has
     ever seen--practically on all the seven seas. This competition, by
     intelligent compromise, was restricted within reasonable limits,
     the guiding spirits of the two concerns consciously adopting the
     policy implied by the strategic principle: 'In approaching the
     enemy's position we must divide our forces; in attacking him we
     must concentrate them.'

     "It would not be correct to say that this atmosphere of friendship
     had never been clouded--it would, indeed, have been tedious had it
     been otherwise than it was. Up to now, however, Wiegand and I have
     always been able to maintain pleasant relations between our two
     concerns, and in the interests of both of them it is sincerely to
     be hoped that this spirit of mutual understanding will continue to
     animate them in the future."




CHAPTER VII

THE TECHNICAL REORGANIZATION OF THE HAMBURG-AMERIKA LINIE


In another chapter of this book the big passenger boats of the
Hamburg-Amerika Linie have been described as the outcome of Ballin's
imaginative brain. This they were indeed, and in many instances it is
scarcely possible to say how far the credit for having built them is due
to the naval architect, and how far it is due to Ballin. He was
profoundly against employing _one_ system throughout, and on accepting
the views of _one_ expert exclusively; and this aversion was so
pronounced that he objected on principle to the nomination of any
technical expert to the Board of his company. The company, he said, is
surely going to last longer than a lifetime or two. Besides, it must try
to solve the problem of perpetual youth, and therefore it cannot afford
to run the risk of staking its fortune on the views held by one single
man who is apt to ignore the progress of his science without noticing
it. The same dislike of onesidedness induced him to encourage to the
best of his capacity a healthy competition among the various shipyards,
and to avail himself of the experiences gained not only by the German
yards but by their British rivals also. At an early stage of his career
close business relations were established between himself and Messrs.
Harland and Wolff, of Belfast; and a personal friendship connected him
with the owner of that firm, Mr. (now Lord) Pirrie. Acting upon the
example set by the White Star Line, Ballin made an agreement with
Messrs. Harland and Wolff as early as 1898, by which the latter bound
themselves always to keep a slip at the disposal of the Packetfahrt. The
reason which prompted Ballin to make this arrangement was, as he
explained to the Board of Trustees, that the company's orders for new
construction and repairs had nowhere been carried out more
satisfactorily and more cheaply than by the Belfast yard, where all the
new vessels ordered were built under a special agreement, i.e. at cost
price with a definitely fixed additional percentage representing the
profits and certain expenditure incurred by the builders. This
arrangement enabled the Packetfahrt to become acquainted with whatever
was latest and best in British shipyard production, and, as it were, to
acquire models which it could improve upon in German yards after they
had been tested on actual service. Some of the best and most important
types of vessels which the Packetfahrt has produced owe their origin to
this system; and it is only fair to say that it exercised an entirely
beneficial influence on the progress of the German shipbuilding
industry, the prosperity of which is largely due to the fact that it has
profited from the century-old experience gained by the British yards and
by British ocean-shipping.

Ballin held the view that, just as the shipbuilding expert had to watch
the progress of naval architecture and to make practical application of
its results, and just as the merchant had to exploit this progress for
the benefit of his business, the shipowner--especially the one who
maintains a service of passenger boats--has the special task of making
every step in the direction of further advance serviceable to the needs
of the passengers. Being himself, as has been pointed out elsewhere,
gifted with a strong faculty for appreciating things beautiful, and
raising no less high demands as regards the beauty and the comfort of
all his surroundings, Ballin constantly endeavoured to make use of all
the results of his own observations and of his own experience for the
greater comfort of the passengers. Those who saw the finished products
of his imagination, the beautifully appointed "floating hotels," hardly
realized how many apparently insignificant details--which, after all, in
their entirety make what we call comfort--owe their origin to his own
personal suggestions. Each time he made a sea voyage on board a steamer
of his own, or of some other company, he brought home with him a number
of new ideas, chiefly such as affected technicalities, and matters
dealing with the personal comfort of the passengers. Numerous entries in
the notebooks which he carried on such occasions are there to serve as
illustrations; the following items, for instance, are selected from
those which he jotted down, roughly, on a voyage to New York some time
in the 'nineties. They speak for themselves, in spite of their
sketchiness:

"List of Moselle purveyors wants revision--notices on board to be
restricted as much as possible, those which are necessary to be
tastefully framed--sailing lists and general regulations to be included
in passengers' lists--state cabin on board _Kaiser Friedrich_: key,
latch, drawer; no room for portmanteaux and trunks; towels too
small--_Deutschland_: soiled linen cupboard too small--stewards
_Oceanic_ white jackets--celery glasses--butter dishes too small--large
bed pillows--consommé cups--playing cards: Packetfahrt complete name of
firm--Packetfahrt complete name on Wehber's wine bottles--toast to be
served in a serviette (hot)."

Rough notes such as these were used to serve Ballin as the material
underlying the detailed reports and instructions to the company's
servants which he composed during the voyage, so that not even a long
sea voyage gave him the unbroken spell of leisure he so badly needed.
Indeed, the longer it lasted the more chances did it provide for
thoroughly inspecting the practical working of the steamer. Many other
reports are in my possession, but the one given will serve to emphasize
the meticulous quality of observation he possessed, and how practical
was his mind in regard to details of comfort and convenience, and the
special climatic needs of different routes.

Even where the peculiar conditions obtaining in tropical climates were
concerned--conditions with which he was personally quite
unacquainted--he unfailingly discovered any defects that might exist,
and also the means by which they could be remedied.

Ballin's connexion with the Packetfahrt practically coincides with the
whole of that period during which the immense progress of modern
steamship building from humble beginnings to its present stage of
development took place; with the only exception that the North German
Lloyd had already, before Ballin joined the Packetfahrt, established its
services of fast steamers which were far ahead of those maintained by
other shipping companies owing to their punctuality and reliability, and
which Ballin then set himself to improve upon and to excel. Apart from
this one type of vessel, the science of steamship construction, as seen
from our modern point of view, was still in its infancy.

In 1886 the steamships owned by the Hamburg-Amerika Linie were mainly of
two different types, viz., those used in the North Atlantic service
(principally on the New York route), and those used in the Mexico-West
Indies service.

The expansion of the Packetfahrt's business after Ballin had joined the
company, and especially the addition of new services together with the
increase in the number of ports of departure and of destination, made it
necessary constantly to increase the size and the carrying capacity of
the cargo boats, and the size and the speed of the passenger steamers,
as well as to improve and to modernize the passenger accommodation on
board the latter. All this, of course, considerably added to the cost
price of the vessels, so that, as a further consequence, the facilities
for loading and discharging them had to be improved and extended. Four
principal types of steamers may be distinguished in the development of
the company's fleet, especially of that part of it which was engaged on
the North Atlantic route, where the main development took place.

_Type One_: Fast steamers--twin screws, 18 knots, 8,500
G.R.T.--possessing accommodation for passengers of all classes and
provided with comparatively little cargo space, but comfortably and
luxuriously appointed throughout. The three leading ideas governing
their construction were safety, speed, and comfort; and progress was
made to keep abreast of competing lines, until it culminated in the
vessels of the "Imperator" class. The _Imperator_ was built in 1913.
They were quadruple screw turbine steamers, possessing no fewer than 42
multitubular boilers each, and, as they were of a capacity of 52,000
gross register tons, they were nearly three times the size of the
_Deutschland_.

_Type Two_: Ships of medium speed and of considerable size, and
therefore providing a high standard of comfort for passengers combined
with ample facilities for cargo accommodation.

_Type Three_: Chiefly built as cargo boats, but in such a way that a
part of their space could be utilized for the accommodation of a large
number of steerage passengers.

_Type Four_: Cargo steamers without any passenger accommodation.

The difference between the floating palaces of type No. 1 in 1913 and
those vessels which the Hamburg-Amerika Linie possessed when Ballin
first entered upon his career as a shipping man was like that between
day and night. A brief comparison of a few details will be the best
means of illustrating the enormous progress achieved within less than
the lifetime of a generation. The size of the vessels had increased from
3,000 to more than 50,000 tons; the speed from 14 to nearly 25 knots;
the height of the decks from 6-1/2 to 8 feet in the lower decks, whilst
that of the upper ones, as far as the social rooms were concerned,
amounted to as much as 20 feet. Large portions of the upper decks were
reserved for the social rooms, the finest of which--the ball-room--could
challenge comparison with almost any similar room in any hotel ashore
with respect to its size and to the magnificence of its furnishings and
of its decoration. From a technical point of view, too, the construction
of such a huge room on board a vessel, which possessed a floor space of
4,800 square feet, and a ceiling unsupported by any columns or pillars
of any kind, was an unprecedented achievement. Besides, there were
immense dining-rooms for each class, smoking-rooms, ladies' saloons, a
restaurant, a winter garden, a swimming pool, and numerous smaller rooms
suitable for the relaxation and amusement of the passengers.

On the older boats the arrangement was that the small cabins were all
grouped round the one and only social room on board, so that the
occupants of the cabins could hear all that was going on in the social
room, and _vice versa_. The superficial area at the disposal of each
passenger was gradually increased from 43 square feet in the double
cabins to 172 square feet in the cabins of the _Imperator_, so that the
latter were really no longer mere cabins, but actual rooms. The
suites-de-luxe comprised up to twelve rooms, the largest of which
covered an area of 247 square feet.

It must not be thought, however, that the first-class passengers were
the only ones for whose comfort the company catered. The other classes
progressed proportionately in added comfort, space, and social
facilities, not excepting the steerage.

But by far the greatest improvements made were those in connexion with
the enormous progress of the purely technical side of shipbuilding
during the whole period under review. The more the vessels increased in
size, the less were they liable to the pitching and rolling motion
caused when the weather was rough. Moreover, special appliances, such as
bilge keels and bilge tanks, were employed to lessen these movements
still more, even when the sea was high. The reciprocating engines
gradually gave place to higher types, and later on turbines and
oil-engines were also introduced. In addition to the propelling
machinery a number of auxiliary engines were used which were of various
kinds and for various purposes, such as the ventilation of the cabins
and the other rooms, the generation of light, the services in connexion
with the personal welfare of the passengers and with their safety whilst
on board ship. Instead of single bottoms, double bottoms were used, and
the additional safety resulting therefrom was still further enhanced by
dividing the space between the two by means of a whole network of
partitions. The vessels of the "Imperator" class, indeed, possessed
practically a double shell, which formed an effective protection against
the danger of collision. The lifeboats increased in size and in number,
and their shape and equipment were improved. Emergency lighting stations
were arranged which could generate a sufficient amount of electric
current if the ordinary supply should break down at any time. The whole
vessels were divided into self-contained compartments by water-tight
bulkheads, the doors of which could be automatically closed. This
division into many compartments proved an effective protection against
the risk of fire; but a number of special devices were also adopted to
serve the same purpose, e.g. an extensive system of steampipes by which
each single room could be rapidly filled with steam, so that the fire
could be automatically extinguished. Fire-proof material was used for
the walls separating adjacent rooms and cabins, and, not content with
all this, the company provided its mammoth liners with an actual fire
brigade, the members of which were fully trained for their work. The
most important improvements affecting the navigation of the steamers
were the introduction of wireless telegraphy apparatus, the gyroscopic
compasses, the system of submarine direction indicator signalling, and
the substitution of two steering gears instead of one, not to mention a
series of minor improvements of all kinds.

The provisioning on board the German steamers was of proverbial
excellence, the kitchen arrangements were modelled after those found in
the big hotels, and were supplied with all manner of supplementary
devices. The huge store rooms were divided into sections for those
provisions that were of a perishable nature and for those that were not;
and for the former refrigerating rooms were also provided in which the
temperature could be regulated according to the nature of the articles.

Perhaps the most interesting development of the various types of
steamers is that which type No. 2 has undergone. It originated in Great
Britain, whence it was taken over in 1894. The first unit of this type
added to the fleet of the Packetfahrt was the _Persia_, of 5,800 G.R.T.,
and a speed of 12 knots, built to accommodate a number of cabin and
steerage passengers, and to carry a considerable amount of cargo as
well. These boats possessed many advantages over similar ones,
advantages which were due to their size, their shape, and the loading
facilities with which they were equipped. Ballin immediately recognized
the good points of this type, and he improved it until the vessels
reached a size of 13,000 G.R.T., which still enabled them to travel at a
speed of 13 knots. They were twin-screw steamers, and were provided with
every safety device known at the time. A still further improvement of
this type was represented by the _Amerika_ and the _Kaiserin Auguste
Victoria_, built in 1905 and 1906 respectively, luxuriously equipped
throughout; by their large size--they possessed a capacity of very
nearly 25,000 G.R.T.--extremely seaworthy, and as they could travel at
the rate of 17-1/2 knots, their speed was scarcely inferior to that
possessed by the older type of fast steamers. From the point of view of
actual remunerativeness they were far superior to the fast steamers,
combining, as they did, all the earning possibilities of the passenger
and of the cargo vessels.

The development of the types comprising the cargo steamers went hand in
hand with the expansion of international trade relations, and with the
constant increase in the amount of goods exchanged between the nations.
To a certain extent development was limited by the dimensions of the
Suez Canal. Still, improvements became possible in this respect too when
the depth of the Canal was increased to 27 feet in 1908, 29 feet in
1912, and 30 feet in 1914.

Ballin carefully watched this development, incessantly improving the
existing types of his company's cargo boats, so that they should always
meet the growing needs of sea-borne trade, and in some instances even
anticipating them, until, when the war broke out, twin screw cargo boats
of a capacity of 16,000 tons and possessing a speed of 13 knots were
being built for the company.

In a brief outline such as this, it is not possible to enter into
details concerning the expansion of the other lines which became
affiliated to or otherwise associated with the Packetfahrt in course of
time. One special type, however, ought to receive a somewhat more
detailed treatment in this connexion, viz., that of the excursion
steamers. The running of pleasure cruises, originally nothing but a mere
expedient to prevent the express steamers from lying idle during the
dead season, gradually became an end in itself. The Northern and
Mediterranean cruises were soon followed by others, e.g. those to the
West Indies and the pleasure trips round the globe. Two special
steamers, the _Prinzessin Victoria Luise_, and the somewhat smaller and
less sumptuous _Meteor_, both of them equipped after the style of
pleasure yachts, were built when it was found advisable to make this
service independent of the fast steamers and the big passenger boats
which had also been employed for this purpose. After the loss of the
_Prinzessin Victoria Luise_ she was replaced first by a British
passenger boat that had been purchased, and then by the _Deutschland_,
specially reconditioned for her new purpose, and renamed _Victoria
Luise_. Both vessels were extremely popular with the international
travelling public, and year after year they carried thousands of
tourists to countries and places distinguished for the beauty of their
natural scenery or for their historical and artistic associations. They
were largely instrumental in constantly augmenting the number of those
who formed the regular clientèle of the company.

"Imitation is the sincerest form of flattery." In the realm of shipping
it has always been customary for each company to profit by the
experience gained and the progress made by its competitors. This applies
to the Packetfahrt and its management also; but in their case they have
given infinitely more than they have received, and in the whole history
of shipping there has never been one single person who has exercised a
more stimulating influence on its technical progress than Albert
Ballin.




CHAPTER VIII

POLITICS


Notwithstanding the many business controversies in which Ballin took an
important part, it has occasionally been said that he was not really a
"fighter." This statement may be allowed to pass quite unchallenged,
provided that by the term "fighter" we mean a man whose habit it is to
fight to the bitter end. Ballin never indulged in fighting for its own
sake, nor was it ever his object to see his vanquished opponent lie
prostrate before him. Such a mental attitude he, in his own drastic way,
would have described as a "perverted pleasure." Always and everywhere it
was his aim to secure to himself and to those he represented the maximum
benefit obtainable consistent with the realities of the situation, so
that he has been justly described as "a man of compromise."

This feature of his personality, indeed, forms the key-note both to his
policy and to the principles on which it was based. Perhaps in other
spheres of economic activity it is possible for a struggle between two
competing rivals to end in the complete victory of one of them; in the
shipping business such an outcome is the exception but not the rule.
There a really _weak_ opponent is never met with, unless one's rival
happens to be exceptionally inexperienced or constitutionally unsound.
The minor competitor, where shipping is concerned, is by no means always
the less powerful of the two. On the contrary, the contest which
inflicts small losses on him inflicts heavy losses on his big opponent,
and may easily exhaust the latter first. The last few decades have
witnessed the establishment of many new shipping firms under the
auspices of national sentiment. Governments and whole peoples have
backed them, and in such cases private undertakings have found it
difficult to compete.

During his early training Ballin had so thoroughly convinced himself of
the necessity for co-operation and compromise in matters economic that
this conviction became the corner-stone of his policy. He also made it
his principle never to tie an unwilling partner to an agreement which
the latter considered to be detrimental to his vital interests, and he
would only approve of an agreement if both parties to it felt satisfied
that they had done a good stroke of business by concluding it. The
numerous "community of interest" agreements to which he signed his name
established, the longer they lasted and the further they were extended,
an increasingly intimate contact between the shipping firms all over the
world, thus proving that the consistent application of his principles
was justified by its success.

In politics, too, he regarded this line of action as the only correct
one. Over and over again he described the World War as a "stupid war" or
as the "most stupid of all wars," because its origin, the conflict
between Austria-Hungary and Serbia, was so utterly meaningless to the
progress of the world. Its actual outbreak was caused by the strained
economic relations between Hungary and Serbia, or--to put it quite
plainly--by the boycott of the Serbian pig, a matter which was surely of
no importance to the world's trade and traffic at large. "No Bismarck
was needed to prevent _this_ war," he often said when speaking of its
immediate origin.

This attitude of his does not mean that he shut his eyes to the
deep-seated antagonisms which were at the back of these local squabbles,
viz., the Franco-Russian coalition against Germany, and the
Anglo-German rivalry. The latter he regarded as sufficient to turn the
scale; if it could be adjusted a World War, he felt sure, would be
avoided. The possibility of a universal conflagration had been pointed
out to him by no less an authority than Prince Bismarck on the occasion
of the latter's visit to Hamburg, when he was shown over the express
steamer of the Packetfahrt that was to bear his name. "I shall not live
to see the World War," Bismarck told him; "but you will, and it will
start in the Near East."

With ever-increasing anxiety, Ballin noticed how, as a result of the
German naval armaments, the Anglo-German antagonism came into existence,
and how in time the position became worse and worse. When the
Government, about the year 1900, embarked upon its propaganda for the
creation of a big navy, he lent it his active assistance, but in later
years he strongly opposed the naval race with Great Britain, trying to
the best of his ability to circumvent its disastrous consequences.

The British argument against Germany's naval programme was that a nation
which owned one-third of the inhabited globe and intended to maintain
its supremacy could not renounce its naval predominance. His knowledge
of British mentality--gained, as it was, through many years of
intercourse with the English--told him that this reasoning was certainly
unassailable from the British point of view, and that England would
fight for its recognition to the bitter end. Therefore, he considered
the situation could only be met by an Anglo-German understanding. The
failure of arriving at such a solution was probably caused--apart from
personal motives--by the fact that in Germany the spirit of compromise
was not the predominant one, but that its place was taken by an
exaggerated opinion of the country's own strength combined with a
certain ignorance regarding foreign countries.

This mental attitude is typical of the two factions which were
all-powerful in Germany at the time, viz., what might be called the Old
Prussian aristocracy, and the representatives of the heavy industries.
The common platform on which these two groups met was the policy to be
pursued regarding customs tariffs, which, although it formed the basis
of the economic greatness of Germany, also prepared the way for serious
international conflicts. During the war these two groups were in charge
of what was meant to be the political policy of the country, but which
was, in fact, nothing but an inferior substitute for it.

Ballin's international position is illustrated by the fact that he was
the first to be approached in the matter of a projected Anglo-German
rapprochement, an affair which reached its climax with Lord Haldane's
visit to Berlin. Owing to its historical interest this episode is worth
a detailed account.

The first steps in this direction date back as far as the year 1908, and
the ultimate breakdown of the project did not take place until the
outbreak of the war. The British negotiator was Sir Ernest Cassel, who,
a native of Germany, had settled in England when quite young, and who
had become one of the world's most successful financiers. He was the
intimate friend of King Edward from the time when the latter was Prince
of Wales, and he also acted as his banker and as his political adviser.
The King visited his home almost daily during the last few years of his
life to take part in a game of bridge. The motives which may have
prompted Sir Ernest to lend his assistance and his great influence to an
endeavour which aimed at an understanding between his adopted country
and the land of his birth need not, in the case of a man so clever and
so experienced, be very far to seek. Sir Ernest repeatedly referred to
himself as a German, and as such he was deprived of his
privy-councillorship during the war. Thus it is quite likely that he
might have been prompted no less by an inherited predilection for the
one, than by an acquired preference for the other country. This very
fact may also have enabled him to see matters with particular clearness
of vision and without any prejudice. He and his friends reasoned
somewhat along the following lines:

The policy of King Edward having led to a considerable strengthening of
the position of France on the Continent, there arose the danger of an
armed conflict between the continental Powers, especially as many points
of dispute threatened at the same time to disturb the relations between
Germany and Great Britain. These differences were caused on the one hand
by the political activities of Germany as a world power, and on the
other by her commercial and industrial expansion which bid fair to
relegate Great Britain to a subordinate position. People in England
regarded the want of a system of protection similar to the German
protective tariffs as the real cause of this development, a want which
retarded the progress of British industrialism, and which prevented
British financiers from taking an active interest in these matters. The
German financiers, however, exerted all their influence on behalf of the
industrial expansion of their country, thus emancipating it more and
more from foreign capital. The time during which the financing of the
German industries by French money (the so-called French "pensions"),
i.e. the discounting by French capitalists of bills drawn by German
industrialists, played an important part, and even represented a serious
menace in days of political tension, had only just passed, but, thanks
to the increasing capital strength of Germany, its effects had now quite
ceased to make themselves felt.

The advantage to Great Britain of an understanding with Germany was that
it would guarantee her maritime supremacy which she was resolved to
maintain at any price, whilst at the same time reducing the burden of
her naval armaments which, in her case, too, had become wellnigh
insupportable. The Liberal Government then in power was particularly
interested in such financial retrenchment, being quite aware that the
time had arrived for the State to enter upon an era of social
legislation.

Contact between Ballin and the above-mentioned British groups was
established through the agency of some friends of his connected with
German high finance. The fact that the British selected Ballin to start
these negotiations is probably due to his well-known friendship with the
Kaiser, which suggested the possibility of approaching the German
Government--even if only by informal channels in the first instance.
This first attempt, should it prove successful, might at any moment be
followed up by direct negotiations between the two governments. In view
of the traditional close connexion existing in England between business
circles on the one hand, and the politicians, the parties, and the
Government on the other, such proceedings did not by any means imply a
policy of backstairs, but might be relied upon to open up a way for
sounding German official quarters in the most natural manner.

The general tenor of Anglo-German relations at that time was somewhat as
follows.

The visit of King Edward to Wilhelmshöhe and that of the German Emperor
and Empress to Windsor Castle in the summer of 1907 had been of a very
friendly character, and, together with other manifestations of
friendship exchanged between various German and British societies, they
had exercised a favourable impression on public opinion in both
countries. But very soon this friendly feeling was replaced by one of
irritation. Great Britain and Russia had concluded an agreement
concerning their frontiers in the Middle East, and this led to questions
in the Reichstag as to whether German interests had been properly
safeguarded. At the same time (in the summer of 1907) the Hague
Conference came to an end without having led to an understanding
regarding the limitation of armaments, which many people in England
would have liked to be brought about. Towards the end of the year the
German Government submitted to the Reichstag a Navy Bill by which the
life of the capital ships was to be reduced from 25 to 20 years. This
was tantamount to asking for the cost of three new ships of the line.
Simultaneously a powerful propaganda for the navy was started, and when
Prince Rupprecht of Bavaria resigned the protectorate of the Bavarian
section of the Navy League, because the League which at that time was
presided over by the well-known General Keim had engaged in party
politics, his withdrawal had the undesirable effect of focusing public
attention on the League's share in this agitation. This step, as was but
natural, brought about a change in the chairmanship of the League.

In England the agitation against Germany in general, and against her
naval policy in particular, became very violent in the early part of
1908. In February _The Times_ announced that the Kaiser, for the express
purpose of interfering with the British naval budget, had sent a letter
to that effect to Lord Tweedmouth, the First Lord of the Admiralty. His
lordship categorically denied in Parliament that the document had any
political character whatever, but in spite of this denial, and in spite
of the support which he received from Lord Lansdowne and from Lord
Rosebery, the matter produced a violent outburst of feeling on the part
of the British Press and public. During March, 1908, both houses of
Parliament discussed German and British naval policy in great detail. In
an article published by the _National Review_, Lord Esher, the chairman
of the Imperial Maritime League, demanded that for every keel laid down
by Germany, Britain should lay down two, and General Baden-Powell
described the danger of a German invasion as imminent. On the other
hand, Sir Edward Grey, the Foreign Secretary, emphasized in one of his
speeches the point of view referred to above, viz. that a reduction of
the naval burdens would also be desirable in the interest of Britain,
but that he could recommend such a policy only if the other governments
consented to do the same.

All these considerations might easily suggest to the clear-headed men of
business on either side of the North Sea how greatly it would be to the
mutual advantage of both if a way could be found towards a limitation of
naval armaments.

The first interview between Ballin and Sir Ernest Cassel took place in
the summer of 1908, and Ballin afterwards gave the Kaiser a detailed
account of it when the latter visited Hamburg and Kiel at the end of
June. Another report, based on material supplied by Ballin, was composed
by the chief of the Press Department of the Foreign Office, Geheimrat
Hammann, for the use of the Imperial Chancellor and the Foreign
Secretary, and in the absence of any original account by Ballin himself,
it may be permitted to give an outline of its contents below.

Sir Ernest opened the conversation by saying that for a long time back
he had desired to discuss the political situation simply in his capacity
as a private person, and that he felt qualified to do so because of his
intimate acquaintance with some of the leading personages and with
politics in general. He would like to contribute his share towards the
prevention of a dangerous development of the existing rivalry. The King
felt very keenly that the rapid increase of the German naval forces
constituted a menace to Britain's maritime position. He was convinced,
however, that his nephew would never provoke a wanton conflict, and
that, in his heart of hearts, he loathed the horrors of war. Although,
therefore, during his--the King's--lifetime the danger of an
Anglo-German war was remote, it was nevertheless necessary that, when
his son succeeded him, the latter should find Britain's maritime
position so strong that the Kaiser's successor should be unable to
assail it.

When Ballin interposed at this stage that the British navy, because of
its unchallenged superiority in numbers, need not be afraid of the newly
created naval power of Germany, Sir Ernest replied that it was well
known to British naval experts that the increase of the German navy was
considerably greater than the official statements made in the Reichstag
would let it appear. Undoubtedly the British navy would always preserve
its superiority, not only numerically, but also technically with regard
to material, construction, and armaments. Nevertheless, the advantages
possessed by the German system of manning the ships and the great
efficiency of German naval officers justified an apprehension lest the
German superiority in the human factor might outweigh the British
superiority in tonnage. The Boer war had taught England how difficult it
was to conquer a high-spirited, though numerically weak enemy. He said
that fear of the German danger formed the driving power of the whole
policy of the Entente, and that this policy was only meant to guard
against that menace. Therefore Russia had been advised at the Reval
meeting to forgo the enlargement of her navy, and to concentrate all her
energies on her army.

Upon Sir Ernest's intimation that at some date Britain, together with
France and Russia, might inquire of Germany when she intended to put a
stop to her naval armaments, Ballin replied that his friend, if he was
anxious to render a really valuable service to Britain and to the cause
of peace, could do no better than make it perfectly plain that such an
inquiry would mean war. Germany would resist with her whole strength any
such attempt which unmistakably suggested the methods employed at
Fashoda.

During the progress of the interview Sir Ernest--who showed that he
possessed excellent information concerning Germany's finances--observed
that the state of the same would render it very difficult for her to
make war. In that connexion he pointed out the intimate bearing of
international finance on political relations, and he emphasized how much
the borrowing countries were dependent on the lending ones. Still, even
the creditor nations would sometimes be forced into an uncomfortable
position, as was, for instance, the case with Great Britain after the
United States had passed on to her the greater part of the Japanese
debt. In Japan the disproportion between military burdens and economic
strength was becoming more and more pronounced, and if the country were
faced with the alternative of choosing between the total financial
exhaustion of the people and a stoppage of the payment of interest, it
would prefer to take the latter course.

In London Ballin was present at the Constitutional Club when a Member of
Parliament made a speech in which he stated, with the general approval
of his audience, that the position of Britain was not really so good as
the policy pursued by the Entente might lead one to believe. The
national balance-sheet had been much more satisfactory during the reign
of Queen Victoria; the items now appearing on the credit side being
partly bad debts incurred by Spaniards, Portuguese, and Japanese, for
whose political good behaviour Britain paid far too high a price, and
one should not allow oneself to be misled as to the value of these
ententes by balance-sheets which were purposely kept vague.

Geheimrat Hammann told Ballin by letter that Prince Bülow, the Imperial
Chancellor, and Herr v. Schön, the Foreign Secretary, were very grateful
to him for his information, and that in the opinion of both gentlemen
his reply to the suggestion concerning the stoppage of naval armaments
was "as commendable as it was correct." Meanwhile the Kaiser had also
supplied the Chancellor with a general résumé of Ballin's report to him.

Ballin's visit gave rise to an exchange of letters which it may not be
inappropriate to reproduce in this place. By way of explanation, it
should first be said that the Sandjak Railway project, to which
reference is made in Ballin's letter, had greatly agitated public
opinion all over Europe during the spring of 1908. In February, Count
Aehrenthal, the Austrian Foreign Minister, at a committee meeting of the
delegations, had announced the Government's intention of constructing a
railway line connecting the Bosnian system with the town of Mitrovitza
in the Sandjak (or province) of Novi Bazar. This announcement led to a
violent outburst of the Russian Press, which described this project as a
political _démarche_ on the part of Austria in the Balkans and as an
interference with the Macedonian reforms aimed at by the Powers. In
Austria it was thought that Germany would support her ally as a matter
of course, and Prince Bülow, in an interview given to a journalist,
tried to pacify the _Novoie Vremia_. He declared that the Russian papers
were absolutely mistaken when they alleged that the project was inspired
from Berlin, and he stated that Austria, like her German ally, pursued
none but commercial aims in the Balkans.

These remarks will be a sufficient explanation of the allusions
contained in Ballin's letter of July 13th, 1908, which, after an
expression of thanks for the hospitality extended to him, reads as
follows:

     "By the way, the views I expressed to you on the matter of the
     Sandjak Railway are now completely borne out by the facts. Both the
     Kaiser and, later, Prince Bülow have given me positive assurances
     that the German Government was just as much taken by surprise on
     hearing of this Austrian project as were the London and Petrograd
     Cabinets.

     "I hope that our respective monarchs may soon meet now. There is
     nothing that we on our side would welcome more heartily than the
     establishment and the maintenance of the most friendly and most
     cordial relations between the two sovereigns and their peoples. The
     Kaiser will not return home from his Northern cruise and from his
     visit to the Swedish Royal Court until the middle of August, but I
     think it is probable that the two monarchs may meet when King
     Edward returns from Marienbad, and that their Majesties will then
     fix the date for the official return visit to Berlin. I sincerely
     trust that this Berlin visit will be of the utmost benefit to both
     countries."

Sir Ernest Cassel replied:

     "I also feel that the meeting of their Majesties must produce a
     great deal of good, and, as I now hear, it will after all be
     possible to arrange for this meeting to take place on the outward
     journey of the King. I am still as convinced as ever that our side
     is animated by the same friendly sentiments as yours."

The meeting between the Kaiser and King Edward which was suggested in
these letters actually took place on August 11th at Friedrichshof
Castle, when the King was on his way to Ischl, and it was accorded a
friendly reception in the German Press. It was followed up by an
exchange of equally friendly manifestations on the part of the peoples
of both countries. Mr. Lloyd George, then Chancellor of the Exchequer,
went to Germany in August, 1908, to study the German system of workmen's
insurance against disability and old age, and British workmen came to
visit German trade unions, and to gather information about German
industrial conditions. Official Britain also pronounced herself in
favour of an understanding between the two countries which Mr. Lloyd
George described as the only means of relieving the European tension,
and Mr. Churchill professed similar sentiments.

Shortly afterwards, however, at the end of October, an event took place
which severely compromised the Kaiser's policy, viz. the incident of the
_Daily Telegraph_ interview. In this the Kaiser, amongst other matters,
bitterly complained that his friendship for England received such scant
acknowledgment. As a proof of the friendly sentiments by which his
actions were guided he stated that he, during the Boer war, had refused
the humiliating suggestion put forward by France and Russia that the
three Powers conjointly should compel Britain to put a stop to the war;
that he had communicated this refusal to King Edward, and that he
previously had presented Queen Victoria with a plan of campaign mapped
out by himself, to which the one actually pursued by Britain bore a
striking resemblance. With regard to Germany's naval programme, he
emphasized that his country needed a big fleet in order to command
attention when the question of the future of the Pacific was discussed.
Finally, with regard to Anglo-German relations, the Kaiser said that the
middle and lower classes in Germany did not entertain very friendly
feelings towards England.

The effect which this interview produced all over Germany was one of
profound consternation. Its publication led to the well-known
discussions in the Reichstag in November, 1908, during which the Kaiser,
to the great dismay of the nation, was staying at Donaueschingen with
Prince Fürstenberg, where he was hunting. In England, and abroad
generally, people regarded this interview as proving a great want of
consistency in the conduct of Germany's foreign policy, and this
impression was by no means changed when it became known that its
publication was only due to an unfortunate oversight. The Kaiser had
sent the account of it, as he was bound to do by the Constitution, to
Prince Bülow, who was then staying at Norderney. Bülow, however, did not
read it himself, but passed it on to the Berlin Foreign Office to be
examined. There, indeed, an examination took place, but only with a view
to finding out whether it contained any errors of fact, and when this
was proved not to be the case, it was marked to that effect, passed the
various ministries without any further examination, and was published.
This unfortunate chain of accidents did not, however, alter the fact
that the Kaiser ought to have been aware of the great political
importance of his utterances. It has always been a chief fault of his to
speak out too impulsively when it would have been politically more
expedient to be less communicative. Nor can the entourage of the
sovereign be excused for not drawing his and the Chancellor's attention
to the great political significance of his utterances. The Chancellor
himself and the Foreign Office, profiting from their previous
experiences with the Kaiser and his appearances in public, ought to have
used a great deal more circumspection, and it would have been well if
the permanent officials in the Foreign Office had shown rather more
political insight.

The endeavours of the official circles to remove the tension existing
between the two countries were not affected by the incident. On February
9th, 1909, King Edward and his Queen paid their visit to Berlin, thus
bringing about the event which Ballin in his letter of July 13th, 1908,
had described as so very desirable. To appreciate the importance of this
strictly official visit, we must bear in mind the fact that it did not
take place until the ninth year of the reign of King Edward. This long
postponement was no doubt due to a large extent to the estrangement
between uncle and nephew, and this, in its turn, had its origin in the
natural dislike which the Kaiser felt for his uncle's mode of conducting
his private life while still Prince of Wales. It would have been
preferable, however, to relegate such personal likes and dislikes to the
background where politics or business were concerned. British official
comments emphatically underlined the significance of the visit, and the
German Press followed suit, although voices were not wanting to warn
against any over-estimation of such acts of courtesy. The reply given in
the Reichstag by Herr v. Schön, the Foreign Secretary, to a question as
to whether any suggestions had been put forward by Great Britain with
respect to a reduction of naval armaments was very cool in its tone. His
statement amounted to this: that no formal proposal for an understanding
which might have served as a basis for negotiations had been received,
probably for the reason that it was not customary among friendly Powers
to put forward any proposals of which it was doubtful to say whether
they would be entertained.

In spite of this cold douche and in spite of other obstacles, the
promoters of an understanding, Ballin and Sir Ernest Cassel, did not
cease their efforts in that direction. In July, 1909, Ballin paid a
second visit to Sir Ernest, during which the political discussions were
continued. On these latter he reported to the Kaiser as follows:

     "My friend to whom I had intimated in a private letter written
     about a week earlier that it was my intention to visit him--at the
     same time hinting that, for my personal information, I should like
     very much to take up the threads of the conversation we had had a
     twelvemonth ago on the subject of the question of the navy--had
     evidently used the interval to supply himself at the proper
     quarters with authoritative information about this matter. During
     the whole of our long talk he spoke with extraordinary assurance,
     and every word seemed to be thought out beforehand.

     "At the commencement of our conversation I said to my friend that
     in view of the great excitement which reigned in England on account
     of the German naval armaments, and which was assuming a decidedly
     anti-German character, he would quite understand that I should
     desire to take up once more the interesting discussions which we
     had had on the same subject a year ago. I pointed out that this
     excitement--spread as it was by an unscrupulous press and fostered
     by foolish politicians--was apt to produce results altogether
     different from those which the Government might perhaps consider it
     desirable to bring about within the scope of its programme. I
     emphasized the fact that, of course, I was merely speaking as a
     private citizen, reading with interest the English papers and the
     letters of his English friends, so that all my knowledge of the
     subject was derived from private sources.

     "A year ago, I said, my friend, in the clear and concise manner
     that distinguished him, had explained to me the need for an
     understanding between Germany and Britain governing the future
     development of their naval forces, at the same time requesting me
     to exert myself in that sense. This suggestion of his had not been
     made in vain. The fact that I had been successful in establishing
     complete concord amongst Germans, British, French, Italians,
     Austrians, and a whole series of small nations on questions
     affecting their highly important shipping interests, and in
     replacing an unbridled and economically disastrous competition by
     friendly agreements to the benefit of each partner, was bound to
     make me sympathize with any measures that it was possible to take
     in order to bring about a similar result between the Governments if
     only they were met in the right spirit. I, therefore, had made up
     my mind to submit such a plan to our Government, but before doing
     so, it would be necessary for me to know whether Britain still
     adhered to the principles which my friend had enunciated to me at
     our previous meeting.

     "Sir Ernest's reply was that as far as Britain was concerned a
     great change had taken place during the interval, and that he was
     no longer able to endorse the views he had held at that time. The
     necessity for his country to maintain her supremacy on the sea at
     all hazards, and subject to no engagements of any kind, was now
     more clearly recognized than it had been a year ago. A one-sided
     understanding between Germany and Britain could no longer be
     thought of, since both Austria and France had now voted large sums
     for the enlargement of their respective navies. Austria would
     certainly be found on the German side, but France could by no means
     be said to be an asset on which it would be safe for Britain to
     rely, to say nothing about the two 'dark horses,' Russia and Italy.
     If Britain, in view of these uncertainties, were to permit Germany
     to nail her down to a fixed programme, she would dwindle down to a
     fifth-rate Power. Germany possessed her overwhelmingly large army
     with which she could keep in check Austria, Italy, Russia, and
     France, but Britain had nothing but her navy to guarantee her
     existence as a world power and to safeguard the roads that linked
     her to her colonies. For many decades Britain had enjoyed
     opportunities for accumulating big fortunes. These times, however,
     had now passed. During the reign of the Emperor William II, who,
     with a consistency which it would be difficult to praise too
     highly, had made his country a commercial power of world-wide
     importance, and who had raised German industrial enterprise and
     German merchant shipping to a condition of undreamt-of prosperity,
     Britain sustained immense losses in her overseas commerce. British
     trade was declining, and there was no doubt but that in the long
     run Britain would be compelled to abandon her principles of Free
     Trade.

     "The question of the Austrian naval armaments appeared to trouble
     my friend more than anything, and this circumstance, combined with
     the doubtful attitude of Russia and the uncertainty of the
     situation in France, was evidently a source of great anxiety to the
     King. My friend remarked in this connexion that in his opinion the
     moment chosen for the conclusion of an understanding was very
     favourable to German but very unfavourable to British interests. It
     was useless to talk of an agreement so long as an element of mutual
     fear had to be reckoned with. At present this fear manifested
     itself in Britain in a manner which was most inopportune, so that
     it was bound to make the German public believe that Britain would
     be ready to come to an understanding even if the terms of it were
     detrimental to her own interests. Britain had got behindhand both
     with her commerce and with her naval programme. To fight her
     competitors in the world's trade with a fair chance of success was
     impossible for more reasons than one, but the elimination of the
     disadvantage from which she suffered with respect to her naval
     armaments was merely a question of money. The funds that were
     required to bring the British Navy up to the necessities of the
     international situation would certainly be found, because they had
     to be found.

     "I told my friend that I was astonished to hear how completely his
     views had changed on these matters. Not what he did say, but what
     he had left unsaid, made me suspect that official circles in
     England--partly, perhaps, through the fault of the German
     Government--had arrived at the conclusion that the latter would
     refrain from a further strengthening of the navy after the existing
     naval programme had been carried out, and that it would merely
     content itself with the gradual replacement of the units as they
     became obsolete. Such a proceeding could be justified only if the
     same plan were adopted by Britain also. If, however, his remarks
     implied that in the opinion of his Government the moment had now
     arrived for altering the ratio of naval strength existing between
     both countries by a comprehensive programme of new building, it
     would soon become evident that there were some flaws in that
     calculation. In view of any such intentions it was my
     opinion--which, however, was quite personal and unofficial--that
     Germany would have to decide upon such an increase of her navy as
     would enable her to carry on a war of defence with the certainty of
     success. If, therefore, Britain meant to go on building warships on
     a large scale, this would merely lead to an aimless naval race
     between the two countries.

     "These remarks of mine concluded our first conversation, and I
     accepted my friend's invitation to dine with him that evening in
     company with some prominent men of his acquaintance.

     "In the evening I was greatly surprised to see that I was the only
     guest present. My friend told me that, in order to be alone with
     me, he had cancelled his invitations to the other gentlemen,
     stating that he did not yet feel well enough to see them. It was
     obvious to me that he had, meanwhile, reported on the outcome of
     our conversation, and that the atmosphere had changed. This change
     had without doubt been brought about by my remarks concerning the
     necessity for a further enlargement of the German Navy, if the
     action of Britain compelled our Government to take such a course.
     The long discussions that followed proved that this view of mine
     was correct in every detail.

     "Sir Ernest explained that the Liberal Cabinet had acted penny wise
     and pound foolish in dealing with the question of the navy. This
     was the conviction of the great majority of the British people, and
     this action had caused the feelings of apprehension and of
     hostility animating them. The Liberal Government had thus made a
     serious blunder, and had, in his opinion, prepared its own doom by
     doing so. He thought the days of the Liberal party were numbered,
     and another party would soon be in office. Anti-German feeling
     would be non-existent to-day if the Liberal cabinet had not,
     because of its preoccupation with questions of social policy,
     neglected the navy. The whole matter was further aggravated by
     other questions of a political kind. France, on account of the
     French national character, had always been a doubtful asset to
     Britain, and, considering the state of her internal politics, she
     was so now more than ever. Germany, on the other hand, possessed a
     great advantage in that her military preponderance enabled her to
     rely with absolute certainty on her Austrian ally. He would say
     nothing about Russia, because he had never regarded the
     Anglo-Russian _rapprochement_ as politically expedient.

     "If it was admitted--and he thought this admission was implied by
     my remarks--that her colonial and her commercial interests made it
     imperative for Britain to maintain an unchallenged supremacy on the
     seas, he felt certain that some reasonable men would, after all, be
     able to discover a formula which would make an understanding
     between both countries possible. A great difficulty, however, was
     presented by my often reiterated demand that Britain must not
     abandon her principles of Free Trade. In questions such as these,
     she could, indeed, speak for herself, but not for her great
     colonies. History had proved that she lost her American colonies as
     soon as she tried to foist her own commercial policy on the
     colonists. He had no doubt that Germany, despite the disagreeable
     surprises which she had experienced when adjusting the system of
     her Imperial finances, possessed sufficient wealth to go on
     increasing her navy in the same proportion as Britain. The great
     mistake committed by the Liberal cabinet and by the other advisers
     of the King had been their assumption that financial considerations
     would prevent Germany from carrying out her naval programme in its
     entirety. German prosperity had grown far more rapidly, he thought,
     than even the German Government and German financial experts had
     believed to be possible. Signs of it could be noticed wherever one
     went, and one would turn round in astonishment if, during the
     season, one heard the tourists in Italy or in Egypt talk in any
     language but German. He, at any rate, felt certain of Germany's
     ability to keep pace with Britain in the naval race, even if that
     pace was very greatly accelerated.

     "Reasons of internal policy had convinced him that Britain would
     not in any case abandon her Free Trade principles within a
     measurable period of time, and as it was not intended to conclude a
     perpetual agreement, but only one for a limited number of years, he
     thought it was not at all necessary that Germany should insist
     upon her demand in connexion with this question. As the colonies
     enjoyed complete independence in these as in other matters, the
     difficulties would be insurmountable. In return for such a
     concession on Germany's part, Britain would doubtless be willing to
     meet the views of the German Government in other respects. For
     these reasons he would be quite ready to change the opinion he had
     expressed in the morning, and to agree that it could produce
     nothing but good if either side were to appoint some moderate men
     for the purpose of discussing the whole question. Such a meeting
     would have to be kept absolutely secret, and both parties should
     agree that there should be no victor and no vanquished if and when
     an agreement was concluded. This condition would have to be a _sine
     qua non_.

     "I promised Sir Ernest that I would use my best endeavours to this
     end when an opportunity should present itself, and we arranged to
     have another meeting in the near future.

     "There is no doubt but that my friend is an extremely
     well-qualified negotiator. I do not recollect that during my long
     experience, extending over many years, I have ever come across a
     man who could discuss matters for hours at a time with so much
     self-reliance, deliberation, and fixity of purpose."

This report was passed on by the Kaiser to Herr v. Tirpitz, the
Secretary for the Navy, who not only expressed his approval of the
project, but also recommended that the Imperial Chancellor, Herr v.
Bethmann-Hollweg, who had succeeded Prince Bülow on July 14th should be
kept informed of all that was done to bring about an understanding. The
Chancellor, accordingly, was presented by the Kaiser himself with a copy
of Ballin's report. This was the correct thing to do, as it avoided a
_faux pas_ such as, during the chancellorship of Prince Bülow, had
sometimes been made. Future developments, however, proved that this step
deprived the whole action of its spontaneity, and its immediate effect
was that the Secretary for the Navy was relieved of all responsibility
in the matter. Ballin, in later days, summed up his views on this way of
dealing with the subject by saying that if Herr v. Tirpitz had been left
a free hand in the whole matter--if, for instance, _he_ had conducted it
as Imperial Chancellor--it would hardly have turned out a failure. The
main object of the negotiations that Ballin had carried on was to ensure
that a number of "experts and men of moderate views," i.e. naval experts
in the first instance, should join in conference in order to discuss
how, without injury to their relative fighting efficiency, both
countries could bring about a reduction of their naval armaments. This
plan was so simple and so obviously right that, had it been carried out
as a preliminary to something else, and had the attention of the experts
been drawn to the enormous political importance of their decision,
success would have been assured. The procedure, however, which the
Chancellor adopted compelled him to combat the active opposition of the
various departments involved even before a meeting of the naval experts
could be arranged for, and this was a task which far exceeded the
strength of Herr v. Bethmann-Hollweg, the most irresolute of all German
chancellors, the man to whom Fate afterwards entrusted the most
momentous decision which any German statesman has ever had to make.

An interview between Ballin and the Chancellor was followed up, with the
consent of the latter, by an exchange of telegrams between Ballin and
Sir Ernest Cassel. From these it became clear that official circles in
London were favourably disposed towards the opening of discussions in
accordance with the terms laid down in Ballin's report, and Ballin
approached the Chancellor with the request to let him know whether he
should continue to work on the same lines as before, or whether the
Chancellor would prefer a different method, by which he understood
direct official negotiations. In a telegram to the Chancellor he
explained that in his opinion Sir Ernest's reference to the friendly
disposition of official London implied that he was authorized to arrange
the details about the intended meeting of experts. If, therefore, he
went to England again, he would have to know what were the views and
intentions of the Chancellor. The reply of the latter, dated August
11th, was as follows:

     "Many thanks for your welcome telegram, which has found my closest
     attention. I shall send you further details as soon as I have
     interviewed the gentlemen concerned, which I intend to do to-morrow
     and during the next few days."

This reply clearly showed that the Chancellor had made up his mind to
deal with the matter along official lines and in conformity with his own
ideas.

The subsequent course of events is indicated by a letter of the
Chancellor to Ballin, dated August 21st, in which he says:

     "I have to-day taken the official steps of which I told you. As Sir
     Ernest Goschen[2] and I have agreed to observe absolute secrecy in
     this matter, and as a statement of your friend to the British
     Government to the effect that I had undertaken an official
     _démarche_, might possibly be regarded as an indiscretion, I
     suggest that if you inform your friend at all, you should word your
     reply in such a way that this danger need not be feared."

This letter shows, and later events have also proved, that the guiding
spirits of Germany's political destiny were unable to meet on such terms
as expediency would dictate the overtures of a man like Sir Ernest
Cassel, whose status and whose good intentions were beyond criticism.
If, on receipt of this news, Sir Ernest, who had been working so hard
for an understanding, was not entirely discouraged, it was no doubt due
to the diplomatic skill with which Ballin--who was a master of this art,
as of so many others--interpreted the Chancellor's rebuff when
communicating it to his friend.

That the latter's account of British feeling towards Germany was
perfectly unbiased, may also be inferred from another piece of news
which reached Ballin about the same time from a British source, and
which reads as follows:

     "My only object in writing just now is to say that if there is any
     feeling in high quarters in your country favourable to coming to an
     understanding with this country concerning naval matters, I am
     quite satisfied from the inquiries I have made that the present
     would be an opportune time for approaching this question, and that
     the present Government of this country would be found entirely
     favourable to coming to such an arrangement."

However, by that time, the matter was in the hands of the various
departments, and they proved unable to make a success of it. Why they
failed, and why the step which Herr v. Bethmann had taken with the
British Ambassador produced no results, are questions which can only be
answered by reference to the files of the Foreign Office.

Mr. Asquith, in a speech dealing with the British naval programme
delivered on July 14th, 1910, explained why no understanding with
Germany had been arrived at.

     "The German Government told us--I cannot complain, and I have no
     answer to make--that their procedure in this matter is governed by
     an Act of the Reichstag under which the programme automatically
     proceeds year by year. That is to say, after the year 1911-12, the
     last year in which under that law four Dreadnoughts are
     constructed, the rate of construction drops in the two succeeding
     years to two each year, so that we are now, we may hope, at the
     very crest of the wave. If it were possible, even now, by
     arrangement to reduce the rate of construction no one would be more
     delighted than his Majesty's Government. We have approached the
     German Government on the subject. They have found themselves unable
     to do anything; they cannot do it without an Act of the Reichstag,
     repealing their Navy Law. They tell us--and no doubt with great
     truth--they would not have the support of public opinion in Germany
     to a modified programme."

As these statements have never been contradicted, it must be assumed
that the departments concerned sheltered themselves behind the formal
objection that, owing to public feeling, a repeal or a modification of
the Navy Law was out of the question. If this assumption is correct, it
is evident that no touch of political genius was revealed in the
treatment of this important question. Even the hope that the "crest of
the wave" had been reached turned out a disappointment, as was proved by
the introduction of the new Navy Bill in 1912.

The objections which Herr v. Bethmann, on March 30th, 1911, raised to an
international limitation of armaments can likewise only be described as
formal ones. He said:

     "If it is the intention of the Powers to come to an understanding
     with regard to general international armaments, they must first of
     all agree upon a formula defining the relative position of each....
     Practically, it might be said, such an order of precedence has
     already been established by Great Britain's claim that,
     notwithstanding her anxiety to effect a reduction of her
     expenditure on armaments, and notwithstanding her readiness to
     submit any disputes to arbitration, her navy must under all
     circumstances be equal--or even superior--to any possible
     combination. Great Britain is perfectly justified in making this
     claim, and in conformity with the views I hold on the disarmament
     problem, I am the last person in the world to question her right to
     do so. But it is quite a different matter to use such a claim as
     the basis of an agreement which is to receive the peaceful consent
     of the other Powers. What would happen if the latter raised any
     counter-claims of their own, or if they were dissatisfied with the
     percentage allotted to them? The mere suggestion of questions such
     as these is sufficient to make us realize what would happen if an
     international congress--because one restricted to the European
     Powers alone could not be comprehensive enough--had to adjudicate
     on such claims."

If this explanation is intended to be a reply to such statements from
the British side as the one just quoted from Mr. Asquith, the fact had
been disregarded that the most serious problem under discussion--viz.
the Anglo-German rivalry--could quite well be solved without convening
an "international congress."

As early as December 10th, 1910, Herr v. Bethmann, in a speech delivered
before the Reichstag, had enlarged on this same subject from the
political point of view:

     "As to the relations between ourselves and Great Britain, and as to
     the alleged negotiations with the latter country concerning a
     mutual curtailment of naval armaments, I am bound to say that the
     British Government, as everybody knows, has more than once
     expressed its conviction that the conclusion of an agreement fixing
     the naval strengths of the various Powers would conduce to an
     important improvement of international relations.... We, too, share
     Great Britain's desire to eliminate the question of naval
     competition, but during the informal _pourparlers_ which have taken
     place from time to time, and which have been conducted in a spirit
     of mutual friendship, we have always given prominence to our
     conviction that a frank discussion of the economic and political
     spheres of interest to be followed up by a mutual understanding on
     these points would constitute the safest way of destroying the
     feeling of distrust which is engendered by the question of the
     respective strengths of the military and naval forces maintained by
     each country."

The speech which Sir Edward Grey delivered in the House of Commons on
March 14th, 1911, with special reference to this speech of Herr v.
Bethmann shows unmistakably that the remarks of the latter did not
reassure Great Britain with respect to the only point at issue in which
she was interested, viz. the limitation of the German naval programme.
Britain, according to Sir Edward, did not desire that her relations with
any Power should be of such a nature as to impede the simultaneous
existence of cordial relations with Germany. An Anglo-German agreement
had been specially suggested. This suggestion required some careful
thinking over. If he were to hold out any hope that Germany, in
compliance with the terms of some such agreement would be willing to
cancel or to modify her naval programme, he would be contradicted at
once. Only within the limits of this programme would it be possible to
come to some understanding between the two Governments. It might, for
instance, be agreed to spread the expenditure voted for the navy over a
longer term of years, or to arrange that the present German programme
should not be increased in future. Matters such as these could form the
subjects for discussion between the two Governments, and it would be
desirable from every point of view that an understanding should be
arrived at. To this speech the _North German Gazette_ replied that
Germany would be quite prepared to fall in with Sir Edward's suggestions
if agreements such as those outlined by him could in any way allay the
feeling of distrust governing public opinion in Great Britain. If from
this semi-official pronouncement it may be inferred that Herr v.
Bethmann on his part was favourably disposed towards an agreement, the
question arises: "Why was it not concluded?"

In order to understand why the British Cabinet attached so much value to
the settlement of the Anglo-German naval questions and to the
pacification of public opinion, it must be remembered that the Liberal
Cabinet, owing to its hostile attitude towards the House of Lords, had
drifted into a violent conflict with the Conservative party, and that
the latter, in its turn, during the election campaign had accused the
Cabinet of having neglected the navy, driving home its arguments by
constantly pointing out the "German danger." Moreover, King Edward had
died in the meantime (May 6th, 1910), and of his son and successor it
was said that he, at the time of his accession to the throne, was no
longer a man of unbiased sentiment, that he was very anti-German, and
that he was under the influence of a small group of Conservative
extremists.

It may not be out of place to reproduce in this connexion the text of
two accounts dealing with the situation in England which Ballin wrote in
the spring and in the summer of 1910 respectively, when he was staying
in London, and which he submitted to the Kaiser for his information.

In the early part of 1910 he wrote:

     "If I were to say that London was completely dominated by the
     election campaign, this would be a very mild way of characterizing
     the situation as it is. The whole population has been seized with a
     fit of madness. The City men who, until quite recently, had
     preserved an admirable calm, have now lost their heads altogether,
     and are the most ardent advocates of Tariff Reform. Every victory
     of a Conservative candidate is cheered by them to the echo. Under
     these circumstances, even in the City, the fear of war has grown.
     If we ask ourselves what it is that has brought about such an
     extraordinary change in the attitude of commonsense business
     people, we find that there are several reasons for it, viz. the
     general slump in business; the unfortunate policy cf Lloyd George
     with regard to the Irish Nationalists; the advances he made to the
     Labour Party, and the effects of his social legislation which are
     now felt with increasing seriousness.

     "Business is bad in England, and up to now very little has been
     seen of the improvement which is so marked in Germany. It is but
     natural that, in view of the extended trade depression which has so
     far lasted more than two years, a people endowed with such business
     instincts as the British should feel favourably disposed towards a
     change of the country's commercial policy. This disposition is
     further strengthened by the constant reiteration of the promise
     that it will be possible to provide the money needed for new
     warship construction and for the newly inaugurated social policy by
     means of the duties which the foreigner will be made to pay.

     "It seems pretty certain that the present Government, in spite of
     the great election successes gained by the Conservative party, will
     still retain a slight majority if it can rely on the Nationalist
     vote. That is what I had always predicted. But the majority on
     which the Liberal Cabinet depends will doubtless be a very
     uncomfortable one to work with, and the opinion is general that it
     will hardly take more than a twelvemonth before another dissolution
     of Parliament will be necessary. It is said that the elections that
     will then be held will smash up the Liberal party altogether, but I
     consider this is an exaggeration. In this country everything
     depends on the state of business. If, in the course of the year,
     trade prospects brighten up again, and if everything becomes normal
     once more, the Tariff Reformers in the City will turn Free Traders
     again and will take great care not to kill the goose that lays the
     golden eggs. I am quite convinced that everything hangs on the
     future development of trade and traffic. To-day, as I have said
     before, Tariff Reform and a Zollverein with the Colonies are the
     catchwords that are on everybody's lips, and the anti-German
     feeling is so strong that it is scarcely possible to discuss
     matters with one's oldest friends, because the people over here
     have turned mad and talk of nothing but the next war and the
     protective policy of the near future. Large crowds are spending
     hours every night in the principal squares such as Trafalgar
     Square, where they have come to watch the announcements of the
     election results in the provinces. Their behaviour is exemplary. It
     is a curious thing that in this country the election game is spread
     over several weeks, in consequence of which the political
     excitement of the masses is raised to boiling-point. Within a few
     months' time, I am sure, things will look entirely different
     again."

From the second report, in the summer of 1910, the following is the
salient extract:

     "I am now returned from England, and it may not be out of place to
     report the impressions I received of the political and economic
     conditions over there.

     "My previous visit to London coincided with the big election
     campaign, and I have already described the fit of mad excitement
     which had taken possession of the people, and which was directed
     against Germany.

     "The situation has now undergone a complete change, which is
     noticeable everywhere and which is caused by the close of the
     election campaign, by the death of the King, and, finally, by the
     visit of the Kaiser on the occasion of the Royal funeral. Everyone
     whom I met in London--Liberals and Conservatives alike--spoke in
     terms of the highest praise of the Kaiser's sympathetic attitude
     displayed during his stay in England, and which was all the more
     commendable as it was not denied that he had suffered many slights
     during the lifetime of his late uncle.

     "The attitude of the people towards the new monarch is one of
     reserve, but also--in conformity with the national character of the
     English--one of loyalty and good faith. The situation with regard
     to home politics is as difficult now as it has been all along.
     Unless a compromise between the parties is arrived at new elections
     will be unavoidable in the spring or even before. I have met a
     great many persons of political experience who are of opinion that,
     even if a compromise is made, it will be necessary to submit such
     an arrangement to the decision of the electorate by an appeal to
     the country. It is difficult to predict the result of such new
     elections. The views held by large sections of the Press and of the
     public bear out the truth of the remarks in my previous letter when
     I emphasized the fact that the British are a nation of business men
     who act on the principle of 'leave well alone,' and who will refuse
     to have anything to do with Tariff Reform as soon as there is an
     improvement in trade.

     "Business has, indeed, improved in the meantime, but only very
     slightly, and much less than in Germany. This slight improvement,
     however, has not failed to give a fillip to the cause of Free Trade
     among the City men. If elections in the spring are regarded as
     likely, much will depend on the further development of trade. I
     must confess that I take a very pessimistic view as to the future
     of Great Britain in this respect. The British can really no longer
     compete with us, and if it were not for the large funds they have
     invested, and for the sums of money which reach the small
     mother-country from her great dominions, their saturated and
     conservative habits of life would soon make them a _quantité
     négligeable_ as far as their competition with us in the world's
     markets is concerned.

     "Of course, their financial strength and their excellent system of
     foreign politics, in which they have now been trained for
     centuries, will always attract business to their country, the
     possession of which we shall always begrudge them (for is not envy
     one of the national characteristics of the German race?)."

Up to the summer of 1911 the feeling remained friendly. Early in July
Ballin wrote:

     "To-day the feeling, as far as the City is concerned, is thoroughly
     friendly towards Germany. The visit in the spring of the Kaiser
     and the Kaiserin, on the occasion of the unveiling of the monument
     to Queen Victoria, has created a most sympathetic impression--an
     impression which has been strengthened by the participation of the
     Crown Prince and Princess in the Coronation festivities. At present
     the Kaiser is actually one of the most popular persons in England,
     and the suggestion of bringing about an Anglo-German understanding
     is meeting with a great deal of approval from all sections of the
     population."

However, this readiness to come to an understanding received a setback
during the course of the year, when it was adversely affected by the new
developments in the Morocco affair and by the dispatch of the _Panther_
to Agadir, which led to fresh complications with France, and later also
with Great Britain. The grievances of the latter found expression in a
sharply worded speech by Lloyd George in July, 1911, the main argument
of which was that Great Britain, in questions affecting her vital
interests, could not allow herself to be treated as though she were
non-existent. In Germany this pronouncement led to violent attacks on
the part of the Conservative opposition against Herr v. Bethmann and
against England, and it was the latter against whom Herr v. Heydebrand
directed his quotation from Schiller, to the effect that a nation which
did not stake her everything on her honour was deserving only of
contempt. It is also well known that the outcome of the whole affair, as
well as its sequel, the Franco-German Congo agreement, produced much
indignation in Germany, where it was felt that the material results
obtained were hardly worth the great display of force, and that it was
still less worth while to be drifted into a big war in consequence of
this incident.

The measure of the anxiety which was felt at that time in business and
financial circles all over the world may be gauged by reading the
following letter from Ballin to the Secretary of State, Herr v.
Kiderlen-Wächter, in which it is necessary to read between the lines
here and there.

     "Baron Leopold de Rothschild has just sent me a wire from London in
     which he says that, on the strength of information he has received
     from the Paris Rothschilds, people there are greatly disappointed
     to see that the German answer--the details of which are still
     unknown there--leaves some important questions still unsolved.
     Public sentiment in the French capital, he says, is beginning to
     get excited, and it would be to the interest of everybody to settle
     matters as speedily as possible.

     "I felt it my duty to draw your attention to this statement, and
     you may take it for what it is worth.

     "I need not tell your Excellency that people here and, I suppose,
     all over Germany, are watching the progress of events with growing
     anxiety. In this respect, therefore, the desires of the German
     people seem identical with those of the French.

     "It would also be presumptuous on my part to speak to your
     Excellency about the feeling in England and the British armaments,
     as the information you derive from your official sources is bound
     to be better still than that which I can obtain through my
     connexions.

     "With best wishes for a successful solution of this difficult and
     important problem, I have the honour to remain,

"Your Excellency's most obedient servant,
(_Signed_) BALLIN."



A most interesting document, and one which casts a clear sidelight on
the divergence of opinion held in Germany and Great Britain, and on the
chances of arriving at an agreement, is an article which dates from the
latter part of 1911.

This article deals with the Anglo-German controversy and was published
by the _Westminster Gazette_. It was sent to Ballin by an English friend
with the remark that it presented a faithful picture of the views on
foreign affairs held by the great majority of British Liberals. Ballin
forwarded it to Berlin for the Kaiser's information, with a note saying
that he had received it from one of the most level-headed Englishmen he
had ever met. It was subsequently returned to him, with the addition of
a number of marginal notes and a lengthy paragraph at its close, all
written in the Kaiser's own handwriting. The numerous underlinings, too,
are the Kaiser's own work. On account of its historical interest a
facsimile reproduction of this article is inserted at the end of the
book. The following is a translation of the Kaiser's criticism at the
conclusion of the article:

     "Quite good, except for the ridiculous insinuation that we are
     aspiring after the hegemony in Central Europe. We simply _are_
     Central Europe, and it is quite natural that other and smaller
     nations should tend towards us and should be drawn into our sphere
     of action owing to the law of gravity, particularly so if they are
     of our own kin. To this the British object, because it absolutely
     knocks to pieces their theory of the Balance of Power, i.e. their
     desire to be able to play off one European Power against another at
     their own pleasure, and because it would lead to the establishment
     of a united Continent--a contingency which they want to prevent at
     all costs. Hence their lying assertion that we aim at a predominant
     position in Europe, while it is a fact that they claim such a
     position for themselves in world politics. We Hohenzollerns have
     never pursued such ambitious and such fantastic aims, and, God
     granting it, we shall never do so.

"(_Signed_) WILHELM I.R."



The year 1912 opened with several pronouncements of the British Press in
favour of an Anglo-German understanding. It was even hinted that Britain
would raise no objections to a possible extension of Germany's colonial
activities, or, as one paper put it, "to the foundation of a German
African empire stretching from the Atlantic to the Indian Ocean."
Similar sentiments were expressed in a letter from Sir Ernest Cassel to
Ballin, dated January 9th, 1912.

     "Since writing to you last," says Sir Ernest, "I have had the
     opportunity of a confidential chat with Mr. Winston Churchill. He
     is aware that the position which he has now occupied for some time
     ties him down to some special limitations which will not allow him
     to pay a visit of the kind you suggest so long as the situation
     remains what it is. Should the King go to Germany, and should he
     take Winston with him, he--Winston--would feel highly honoured if
     he were permitted to discuss the important questions that were
     demanding a solution. Such an opportunity would have to come about
     quite spontaneously, and Winston would have to secure the previous
     consent of the Prime Minister and of Sir Edward Grey.

     "Thus far Winston. His friendly sentiments towards Germany are
     known to you. I have been acquainted with him since he was quite a
     young man, and he has never made a secret of his admiration of the
     Kaiser and of the German people. He looks upon the estrangement
     existing between the two countries as senseless, and I am quite
     sure he would do anything in his power to establish friendly
     relations.

     "The real crux of the situation is that Great Britain regards the
     enormous increase of the German Navy as a grave menace to her vital
     interests. This conviction is a deep-rooted one, and there are no
     two opinions in London as to its significance.

     "If it were possible to do something which, without endangering the
     safety of Germany, would relieve Great Britain of this nightmare,
     it is my opinion that people over here would go very far to
     conciliate German aspirations."

The striking fact that after a long interval, and in spite of the
failure of the previous endeavours, a renewed attempt was made to arrive
at a naval understanding, and that special pains were taken to ensure
its success, may be due to various causes. For instance, the Morocco
incident of 1911 had shown how easily a series of comparatively
unimportant events might lead within reach of a dangerous catastrophe,
unless the atmosphere of general distrust could be removed, and it was
felt in Great Britain that this distrust was largely the result of the
constant and regular increase of Germany's armaments. Moreover, it was
known that a new Navy Bill was then forthcoming in Germany which, in its
turn, would be bound to cause fresh alarm, and growing expenditure in
Great Britain, and that the Liberal Cabinet would prefer to gain its
laurels by bringing about a more peaceful frame of mind. Finally, Mr.
Winston Churchill had been appointed First Lord of the Admiralty in
October, 1911, and as he was known to be by no means anti-German, his
entering upon office may have given rise to the hope that, while he was
administering the affairs of the Navy, it would be possible to settle
certain purely technical matters affecting his department, which could
then furnish the conditions preliminary to an understanding with
Germany. Ballin, at any rate, had cherished the hope--as is borne out by
the letter quoted above--that Mr. Churchill could be induced to pay a
visit to Germany, and that an opportunity might then be found to bring
the naval experts of both countries face to face with each other. Ballin
had always eagerly desired that such a meeting should take place,
because his long experience in settling difficult business questions had
taught him that there was no greater barrier between people, and
certainly none that hampered their intellectual _rapprochement_ to a
larger extent, than the fact of their never having come into personal
contact with one another, and of never having had a chance to actually
familiarize themselves with the mentality and the whole personality of
the man representing the other side. It might also be assumed that, once
the two really responsible persons--Churchill and Tirpitz--had met in
conclave, the feeling of their mutual responsibility would be too strong
to allow the negotiations to end in failure.

Unfortunately, such a meeting never took place; all that was achieved
was a preliminary step, viz. the visit of Lord Haldane to Berlin.

Owing to the lack of documentary evidence it is not possible to say who
first suggested this visit, but it is clear that the suggestion--whoever
may have been its author--was eagerly taken up by Sir Ernest Cassel and
Ballin, and that it also met with a warm welcome on the part of Herr v.
Bethmann. In reply to a telegram which Ballin, with the approval--if not
at the actual desire--of the Chancellor, sent to his friend in London, a
message reached him on February 2nd, 1912, when he was in Berlin engaged
on these very matters. This reply, which originated with the Foreign
Office, expressed the sender's thanks for the invitation to attend a
meeting of delegates in Berlin and his appreciation of the whole spirit
which had prompted the German suggestion, and then went on to say that
the new German Navy Bill would necessitate an immediate increase in the
British naval estimates, because the latter had been framed on the
supposition that the German programme would remain unaltered. If the
British Government were compelled to find the means for such an
increase, the suggested negotiations would be difficult, if not
impossible. On the other hand, the German programme might perhaps be
modified by spreading it out over a longer period of time or by some
similar measure, so that a considerable increase of British naval
construction in order to balance the German efforts could be avoided. In
that case the British Government would be ready to proceed with the
negotiations without loss of time, as it would be taken for granted that
there was a fair prospect of the proposed discussions leading to a
favourable result. If this suggestion was acceptable to Germany, the
British Government thought the next step should be a private--and not an
official--visit of a British Cabinet Minister to Berlin.

Perhaps it is now permissible to give the text of some documents without
any further comment, as these latter speak for themselves. The first is
a letter of the Chancellor addressed to Ballin, and reads as follows:

"BERLIN. _Febr. 4th, 1912._

"DEAR MR. BALLIN,--

     "We are still busy wording the text of our reply, and I shall not
     be able to see you at 11 o'clock. As soon as the text is settled, I
     shall submit it to His Majesty for his approval. Under these
     circumstances I think it is doubtful whether we ought to adhere to
     the time fixed for our appointment. I rather fancy that I cannot
     tell you anything definite before 12 or 1 o'clock, and I shall ring
     you up about that time. You have already made such great sacrifices
     in the interest of our cause that I hope you will kindly accept
     this alteration as well.

     "In great haste.

"(_Signed_) BETHMANN-HOLLWEG."



The next document is a letter of Ballin to Sir Ernest Cassel, intended
to explain the situation.

     "The demand raised by your official telegram rather complicates
     matters. The fact is that the Bill as it stands now only asks for
     half as much as was contained in the original draft. This reduced
     demand is much less than the nation and the Reichstag had expected.
     If after this a still further curtailment is decided upon, such a
     step will create the highly undesirable impression that, in order
     to pave the way for an understanding with London, it had become
     necessary to make very considerable sacrifices. This, of course,
     must be avoided at all costs, because if and when an understanding
     is arrived at, there must be neither victors nor vanquished.

     "I need not emphasize the fact that our Government is taking up the
     matter with the greatest interest and that it is keenly anxious to
     bring about a successful issue. The reception with which you have
     met on our side must have given you convincing and impressive
     proofs of this attitude.

     "I have now succeeded in making our gentlemen promise me--although
     not without much reluctance on their part--that they would not
     object to the formula proposed by your Government, viz. 'It is
     agreed to submit the question of the proposed increase of naval
     tonnage to a _bona fide_ discussion.' Thus there is now a fair
     prospect of reaching a favourable result, and the preliminary
     condition laid down by your Government has been complied with.

     "I think that the delegate sent should be accompanied by a naval
     expert. The gentleman in question should also understand that he
     would have to use the utmost frankness in the discussions, and that
     he must be able to give an assurance that it is intended to subject
     the British programme, too, to such alterations as will make it not
     less, but rather more, acceptable than it is now. Surely, your
     Government has never desired that we should give you a definite
     undertaking on our part, whereas you should be at liberty to extend
     your programme whenever you think fit to do so. A clearly defined
     neutrality agreement is another factor which will enter into the
     question of granting the concessions demanded by your Government.

     "'Reciprocal assurances' is a term which it is difficult to define;
     if, for instance, the attitude of Great Britain and her action last
     summer had been submitted to a court of law, it would hardly be
     found to have violated the obligations implied by such 'reciprocal
     assurances,' and yet we were at the edge of war owing to the steps
     taken by your people.

     "I thought it my duty, my dear friend, to submit these particulars
     to you, so that you, for the benefit of the great cause we are
     engaged in, may take whatever steps you consider advisable before
     the departure of the delegate.

     "Our people would appreciate it very much if you would make the
     great sacrifice of coming over to this country when the meeting
     takes place. I personally consider this also necessary, and it
     goes without saying that I shall be present as well.

     "P.S.--The Chancellor to whom I have shown this letter thinks it
     would be better not to send it, because the official note contains
     all that is necessary.

     "However, I shall forward it all the same, because I believe it
     will present a clearer picture of the situation to you than the
     note. Please convince the delegate that it is a matter of give and
     take, and please come. It entails a great sacrifice on your part,
     but the cause which we have at heart is worth it.

     "The bearer of this note is our general secretary, Mr. Huldermann.
     He is a past master of discretion, and fully acquainted with the
     situation."

I was instructed to hand the following note by the German Government to
Sir Ernest Cassel with the request to pass it on to the British
Government, and at the same time I was to explain verbally and in
greater detail the contents of Ballin's letter on the situation.

The text of the official note is as follows:

     "We are willing to continue the discussion in a friendly spirit.
     The Navy Bill is bound to lead to a discussion of the naval plans
     of both countries, and in this matter we shall be able to fall in
     with the wishes of the British Government if we, in return, receive
     sufficient guarantees as to a friendly disposition of British
     policy towards our own interests. Any agreement would have to state
     that either Power undertakes not to join in any plans,
     combinations, or warlike complications directed against the other.
     If concluded, it might pave the way for an understanding as to the
     sums of money to be spent on armaments by either country.

     "We assume that the British Government shares the views expressed
     in this note, and we should be glad if a British Cabinet minister
     could proceed to Berlin, in the first instance for the purpose of a
     private and confidential discussion only."

On the evening of the same day (February 4th) I left for London. I
arrived there the following evening and went straight to Sir Ernest
Cassel. I prepared the following statement for Ballin at the time, in
which I described the substance of our conversation and the outcome of
my visit:

     "The note which I had brought with me did not at first satisfy our
     friend. He made a brief statement to the effect that we saw a fair
     prospect of reaching a successful solution of the problem was all
     that was needed, and that our answer was lengthy, but evasive. This
     opinion, however, he did not maintain after the close of our
     conversation, which lasted more than two hours. I pointed out to
     him that, as I understood it, the phrase 'We are willing to
     continue the discussion in a friendly spirit' amounted to a
     declaration on the part of the German Government that, in its
     opinion, there was a 'fair prospect,' and that an accommodating
     spirit was all one could ask at present. He thought that Lord
     Haldane had been asked to go to Berlin so that a member of the
     Cabinet should have an opportunity of ascertaining on the spot that
     Berlin was really disposed to discuss matters in a friendly spirit.
     On this point positive assurances were needed before Sir Edward
     Grey and Mr. Winston Churchill went across, who, if they did go,
     would not return without having effected the object of their visit.
     Sir Ernest always emphasized that he only stated his own private
     views, but it was evident that he spoke with the highest authority.
     The demand for three Dreadnoughts, he said, which the new German
     Navy Bill asked for, amounted to a big increase of armaments, and
     Great Britain would be compelled to counterbalance it by a
     corresponding increase, which she would not fail to do. If,
     however, Germany were prepared not to enlarge her existing
     programme, Great Britain would be pleased to effect a reduction on
     her part. When I referred to the apprehension of the German
     Government lest Great Britain should take advantage of the fact
     that Germany had her hands tied, in order to effect big armaments
     which it would be impossible for us to equal, our friend remarked
     that, for the reason stated above, such fears were groundless. In
     spite of this assurance, I repeatedly and emphatically drew his
     attention to the necessity for limiting the British programme just
     as much as the German one. He evidently no longer fancied the
     suggestion previously put forward that the question of agreeing
     upon a definite ratio of strength for the two navies should be
     discussed; because, if this was done, one would get lost in the
     details. Nevertheless, he did not, as the discussion proceeded,
     adhere to this standpoint absolutely. He agreed that the essential
     thing was to establish friendly political relations, and if, as I
     thought, Germany had reason to complain of British opposition to
     her legitimate expansion, one could not do better than discuss the
     various points at issue one by one, similar to the method which had
     proved so successful in the case of the Anglo-French negotiations.
     Great Britain would not raise any objections to our desire for
     rounding-off our colonial empire, and she was quite willing to
     grant us our share in the distribution of those parts of the globe
     that were still unclaimed.

     "By keeping strictly to the literal text of the German note, he
     found the latter quite acceptable as far as it referred to the
     question of a declaration of neutrality. He said there was a great
     difference between such declarations, and often it was quite
     possible to interpret them in various ways. I imagined that what
     was in his mind were the obligations which Britain had taken upon
     herself in her agreement with France, and I therefore asked him for
     a definition of the term 'neutrality.' His answer was very guarded
     and contained many reservations. What he meant was something like
     this: Great Britain has concluded agreements with France, Russia,
     and other countries which oblige her to remain neutral where the
     other partner is concerned, except when the latter is engaged in a
     war of aggression.

     "Applied to two practical cases, this would mean: If an agreement
     such as the one now under consideration had been in existence at
     the time of the Morocco dispute last summer, Great Britain would
     have been free to take the side of France if war had broken out
     between that country and ourselves, because in this case we--as he
     argued with much conviction--had been the aggressors. On the other
     hand, if we had severed our relations with Italy during the
     Turco-Italian war and had come to the support of Turkey, Great
     Britain would not have been allowed to join Italy in conspiring
     against us if we had an agreement such as the one in question.

     "In the interval between my first and my second visit Sir Ernest
     evidently had, by consulting his friend Haldane, arrived at a very
     definite opinion, and when I visited him for the second time he
     assured me most emphatically that Great Britain would concede to us
     as much as she had conceded to the other Powers, but not more. We
     could rely on her absolute loyalty, 'and,' he added, 'our attitude
     towards France proves that we can be loyal to our friends.'

     "For the rest, the manner in which he pleaded the British point of
     view was highly interesting. Great Britain, he argued, had done
     great things in the past, but owing to her great wealth a decline
     had set in in the course of the last few decades. ('Traces of this
     development,' he added, 'have also been noticeable in your
     country.') Germany, however, had made immense progress, and within
     the next fifteen or twenty years she would overtake Great Britain.
     If, then, such a dangerous competitor commenced to increase his
     armaments in a manner which could be directed only against Britain,
     he must not be surprised if the latter made every effort to check
     him wherever his influence was felt. Great Britain, therefore,
     could not remain passive if Germany attempted to dominate the whole
     Continent; because this, if successful, would upset the Balance of
     Power. Neither could she hold back in case Germany attacked and
     annihilated France. Thus, the situation being what it was, Britain
     was compelled--provided the proposed agreement with Germany was not
     concluded--to decide whether she would wait until her competitor
     had become still stronger and quite invincible, or whether she
     would prefer to strike at once. The latter alternative, he thought,
     would be the safer for her interests.

     "Our friend had a copy of the German note made by his secretary,
     and then forwarded it to Haldane. In the course of the evening the
     latter sent an acknowledgment of its receipt, from which Sir
     Ernest read out to me the words: 'So far very good.' It was evident
     that his friend's opinion had favourably influenced his own views
     on the German note.

     "On Tuesday Sir Ernest and Lord Haldane drove to the former's house
     after having attended Thanksgiving Service. Lord Haldane stayed for
     lunch, and was just leaving when I arrived at 3 o'clock. He did not
     want to be accompanied by a naval expert, for, although he did not
     pretend to understand all the technical details, he said that he
     knew all that was necessary for the discussion. He stated that he
     would put all his cards on the table and speak quite frankly.

     "Our friend spoke of our German politics in most disparaging terms,
     saying that they had been worth nothing since Bismarck's time. What
     Ballin had attained in his dealings with the shipping companies was
     far superior to all the achievements of Germany's diplomatists."

The positive information which this report contained was passed on to
the Chancellor.

By way of explanation it may be added that the German Navy Bill, which
later on, at the end of March, 1912, was laid before the Reichstag,
provided for the formation of a third active squadron in order to adapt
the increase in the number of the crews to the increase in the material.
This third squadron necessitated the addition of three new battleships
and of two small cruisers, and it was also intended to increase the
number of submarines and to make provision for the construction of
airships.

The discussions with Lord Haldane took place at the Royal Castle,
Berlin, on February 9th, the Kaiser being in the chair. The Chancellor
did not attend, he had a separate interview with Haldane. The outcome of
the conference is described in a statement from an authoritative source,
viz. in a note which the Kaiser dispatched to Ballin by special
messenger immediately after the close of the conference. It reads as
follows:

"THE CASTLE, BERLIN.
"9.2.1912. 6 P.M.

"DEAR BALLIN,

     "The conversation has taken place, and all the pros and many cons
     have been discussed. Our standpoint has been explained in great
     detail, and the Bill has been examined. At my suggestion, it was
     resolved to agree on the following basis (informal line of action):

     "(1) Because of its scope and its importance, the Agreement must be
     concluded, and it must not be jeopardized by too many details.

     "(2) Therefore, the Agreement is not to contain any reference to
     the size of the two fleets, to standards of ships, to
     constructions, etc.

     "(3) The Agreement is to be purely political.

     "(4) As soon as the Agreement has been published here, and as soon
     as the Bill has been laid before the Reichstag, I, in my character
     of commander-in-chief, instruct Tirpitz to make the following
     statement to the Committee: The third squadron will be asked for
     and voted, but the building of the three additional units required
     to complete it will not be started until 1913, and one ship each
     will be demanded in 1916 and 1919 respectively.

     "Haldane agreed to this and expressed his satisfaction. I have made
     no end of concessions. But this must be the limit. He was very nice
     and very reasonable, and he perfectly understood my position as
     commander-in-chief, and that of Tirpitz, with regard to the Bill. I
     really think I have done all I could do.

     "Please remember me to Cassel and inform him.

"Your sincere friend,
"(_Signed_) WILHELM I.R."



After Lord Haldane's departure from Berlin there was a gap of
considerable length in the negotiations which had made such a promising
start, and unfortunately during that time Mr. Churchill made a speech
which not only the German papers but also the Liberal Press in Great
Britain described as wanting in discretion. The passage which German
opinion resented most of all was the statement that, in contrast with
Great Britain, for whom a big navy was an absolute necessity, to Germany
such navy was merely a luxury.

For the rest, the following two letters from the Chancellor to Ballin
may throw some light on the causes of the break in the negotiations:

"BERLIN.
"2.3.1912.

"DEAR MR. BALLIN,

     "Our supposition that it is the contents of the Bill which have
     brought about the change of feeling is confirmed by news from a
     private source. It is feared that the Bill as it stands will have
     such an adverse influence on public opinion that the latter will
     not accept a political agreement along with it. Nevertheless, the
     idea of an understanding has not been lost sight of, even though it
     may take six months or a year before it can be accomplished.

     "In consequence of this information the draft reply to London
     requires to be reconsidered, and it has not been dispatched so far.
     I shall let you know as soon as it has left.

"Sincerely yours.
"(_Signed_) BETHMANN-HOLLWEG."



"BERLIN.
"8.3.1912.

"DEAR MR. BALLIN,

     "This is intended for your confidential information. Regarding the
     naval question Great Britain now, as always, lays great stress on
     the difficulty of reconciling public opinion to the inconsistency
     implied by a big increase in the Naval Estimates hand in hand with
     the conclusion of a political and colonial agreement. However, even
     if an agreement should not be reached, she hopes that the
     confidential relations and the frank exchange of opinions between
     both Governments which have resulted from Lord Haldane's mission
     may continue in future. The question of a colonial understanding is
     to be discussed in the near future.

     "It is imperative that the negotiations should not break down.
     Success is possible in spite of the Navy Bill if the discussions
     are carried on dispassionately. As matters stand, the provisions
     of the Bill must remain as they are. Great Britain has no right to
     interfere with our views on the number of the crews which we desire
     to place on board our existing units. As far as the building dates
     of the three battleships are concerned, I should have preferred--as
     you are aware--to leave our hands untied, but His Majesty's
     decision has definitely fixed 1913 and 1916 as the years for laying
     them down. This is a far-reaching concession to Great Britain.

     "Discreet support from private quarters will be appreciated.

     "Many thanks for your news. You know that and why I was prevented
     from writing these last few days.

"Sincerely yours,
"(_Signed_) BETHMANN-HOLLWEG."



In order to find out whether any foreign influence might have been at
work in London, I was commissioned to meet Sir Ernest Cassel in the
South of Europe early in March. Ballin supplied me with a letter
containing a detailed account of the general situation. Owing to a delay
in the proposed meeting, I took the precaution of burning the letter, as
I had been instructed to do, and I informed Sir Ernest of its contents
by word of mouth.

In this document Ballin gave a brief résumé of the situation as it
appeared to him after his consultations with the various competent
departments in Berlin, somewhat on the following lines:

(1) After Lord Haldane's return Sir Edward Grey officially told Count
Metternich that he was highly pleased with the successful issue of Lord
Haldane's mission, and gave him to understand that he thought it
unlikely that any difficulties would arise.

(2) A few days later Mr. Asquith made a statement in the House of
Commons which amply confirmed the views held by Sir Edward Grey, and
which produced a most favourable impression in Berlin.

(3) This induced the Chancellor to make an equally amicable and hopeful
statement to the Reichstag.

(4) In spite of this, however, there arose an interval of several weeks,
during which neither Count Metternich nor anybody in Berlin received any
news from the proper department in London. This silence naturally caused
some uneasiness.

(5) Count Metternich was asked to call at the Foreign Office, where Sir
Edward Grey commenced to raise objections mainly in reference to the
Navy Bill. "I must add in this connexion--as, no doubt, Lord Haldane has
also told you verbally--that on the last day of his stay in Berlin an
understanding was arrived at between the competent quarters on our side
and Lord Haldane with regard to the building dates of the three
battleships. As you will remember, it had been agreed not to discuss the
proposed establishment of the third squadron on an active footing and
the increase in the number of the crews connected with it, but to look
upon these subjects as lying outside the negotiations." Quite suddenly
and quite unexpectedly we are now faced with a great change in the
situation. Grey, as I have said before, objects--in terms of the
greatest politeness, of course--to the increase in the number of the
crews, asks questions as to our intentions with regard to torpedo boats
and submarines, and--this is most significant--emphasizes that the
Haldane mission has at any rate been of great use, even if the
negotiations should not lead to any definite result.

(6) The next event was a further interview with Count Metternich during
which it was stated that, according to the calculations of the First
Lord of the Admiralty, the increase in the number of the crews amounted
to 15,000 men, whilst it had been thought in England that it would be a
question of from 4,000 to 5,000 men at the outset. It appeared that this
large increase was looked upon with misgivings, and that it was desired
to enter into fresh negotiations which would greatly interfere with the
arrangements made by the German competent quarters with regard to the
navy. Hence Metternich replied that, in his opinion, these explanations
could only mean that the Cabinet did not agree to the arrangements made
by Lord Haldane. Grey's answer was full of polite assurances couched in
the language of diplomacy, but, translated into plain German, what he
meant was: "You are quite right."

Ballin's letter went on to say that the German Navy Bill had gradually
been reduced to a minimum, and that it was not possible to cut it down
any further. We could not, and we would not, give rise to the suspicion
that great alterations had been made merely to meet British objections.
Finally, Ballin requested his friend to go to London in order to make
inquiries on the spot, and also declared his readiness to go there
himself.

My report on my conversations with Sir Ernest Cassel, which took place
at Marseilles on March 9th and 10th, is as follows:

     "Our friend arrived about four hours late, but he received me all
     the same at 10 P.M. on that evening. I told him all about my
     journey and related to him verbally the contents of Ballin's
     letter. When I described the incident of how Grey had raised new
     objections at his interview with Metternich, and when I explained
     how, after that, the matter had come to a dead stop, so that
     nothing further was heard of it in Germany, our friend interrupted
     me by saying that since then the British Government had presented a
     memorandum containing the objections raised against the German Navy
     Bill. The latter, he suggested, was the only stumbling-block, as
     could be inferred from a letter which he had received _en route_
     from Haldane.

     "When I remarked that Ballin, in a postscript to his letter, had
     expressed an apprehension lest some foreign influence had
     interfered with the course of events, our friend positively denied
     this. France, he said, was on good terms with Great Britain, and
     had no reason for intriguing against an Anglo-German agreement
     destined, as it was, to promote the cause of peace.

     "When I then proceeded with my account, drawing his special
     attention to the reduction of the estimates contained in the Navy
     Bill, Sir Ernest interposed that he was not sufficiently _au
     courant_ as to the details. He himself, in his statement prepared
     for the British Government, had only referred to the battleships,
     and he thought he had perhaps given too cursory an account of the
     other factors of the case. He also threw out some fairly plain
     hints that Haldane had gone too far in Berlin, and that he had made
     statements on a subject with which he was not sufficiently
     conversant. Later on, he continued, the Navy Bill had been
     subjected to a careful examination by the British Admiralty, and
     before his departure from Cannes he, Sir Ernest, had received a
     letter from Mr. Churchill, the tone of which was very angry.
     Churchill complained that Germany had presented such a long list of
     the wishes with which she wanted Great Britain to comply, that the
     least one could hope for was an accommodating spirit in the
     question of the Navy. Everything now depended on Churchill; if he
     could be satisfied, all the rest would be plain sailing. He and
     Lloyd George were the greatest friends of the agreement. Sir Ernest
     also made it fairly clear that Great Britain would be content with
     a postponement of the building dates, or in other words with a
     'retardation of the building programme.' The negotiations would be
     bound to fail, unless Ballin could secure such a postponement. It
     was necessary to strike whilst the iron was hot, and this
     particular iron had already become rather cool. He quite accepted
     Grey's statement that the Haldane mission had not been in vain, as
     the feeling had doubtless become more friendly since then. Some few
     individual indiscretions, such as Churchill's reference to the
     German Navy as an article of luxury, should not be taken too
     seriously. If the German Bill were passed into law in its present
     shape, the British Government would be obliged to introduce one
     asking for three times as much, but it could not possibly do this
     and declare at the same time that it had reached an understanding
     with Germany. Such a proceeding would be absurd. The argument that
     it is inconsistent with common sense to conclude an agreement and
     yet to continue one's armaments, is evidently still maintained in
     Great Britain, and is one which, of course, it is impossible to
     refute.

     "In the course of our conversation Sir Ernest produced the letter
     which he had received from Haldane _en route_. This letter stated
     that the discussions with Metternich were then chiefly on the
     subject of the Navy Bill, and that the Admiralty had prepared a
     memorandum for the German Government dealing with these questions.
     The letter was dated February 25th, and its tone was not
     pessimistic; Churchill, however, as stated above, had previously
     written him a 'very angry' letter. In this connexion it must not be
     forgotten that the man on whom everything depends is not the
     amiable negotiator Haldane, but Churchill."

In order to make further inquiries about the state of things and to
assist in promoting the good cause, Ballin, immediately after my return,
proceeded to Paris and then to London. He reported to the Chancellor
upon the impressions he had received in Paris. The following is an
extract from his report:

     "Owing to the brief time at my disposal when I was in Paris, I
     could only learn the views of the members of the '_haute finance_.'
     It is well known that in France the attitude taken up by financial
     circles is always regarded as authoritative. They look upon the
     present situation as decidedly pacific; they are pleased that the
     Morocco affair is settled, and they feel quite sure that the
     political sky is unclouded by complications. They would gladly
     welcome an agreement between Germany and Great Britain. My friends
     assure me that the Government also does not view the idea of such
     an understanding with displeasure; on the contrary, it looks upon
     it as an advantage. It is, however, thought unlikely that an
     agreement will be reached, because it is believed that popular
     feeling in Germany is too much opposed to it. If, notwithstanding
     these pacific views held by influential and competent sections, the
     casual visitor to the French capital is impressed by a certain
     bellicose attitude of the nation as a whole, it is largely due to
     the propaganda carried on by the _Matin_ with the purpose of
     obtaining voluntary subscriptions for the furtherance of aviation.
     The French are enthusiastic over this idea, and as it has a strong
     military bearing, the man in the street likes to connect the French
     aviation successes with a victorious war."

From London Ballin sent me some telegrams which I was instructed to pass
on to the Chancellor. In these messages he stated that his conversations
with the German Ambassador and with Haldane had convinced him that
people in London believed that the increase in the number of the crews,
if the proposed German Navy Bill became law, would be greater than the
figures given by Berlin would make it appear. It would therefore be most
desirable to arrange for a meeting of experts to clear up this
discrepancy. Ballin's impression was that the British Cabinet, and also
the King, were still favourably disposed to the whole plan, and that the
Cabinet was unanimous in this view. A conversation with Churchill, which
lasted several hours, confirmed these impressions. In London the
increase in the number of the crews had previously been estimated at
half of what it would really be, and alarm was felt about the large
number of torpedo boats and submarines demanded; but since the German
Government had explained that the figures arrived at in London--i.e.
those stated in the memorandum which had been addressed to the German
Government some time before--were not correct, Churchill had agreed that
both sides should nominate experts who would check the figures and put
them right. Churchill was anxious to see that the matter was brought to
a successful issue, and he was still hoping that a neutrality agreement
would induce the German Government to make concessions in regard to the
Navy Bill.

When Ballin had satisfied himself as to this state of things, he
immediately returned to Berlin, as he did not consider it appropriate
that any private person should do anything further for the time being,
and as he thought that the conduct of the discussions concerning the
neutrality agreement were best left to the Ambassador.

Meanwhile, however, the German Government had definitely made up its
mind that the Navy Bill would have to remain as it stood. This was the
information Ballin received from the Kaiser and the Chancellor when he
returned from London on March 16th.

Sir Ernest Cassel then suggested to the British Government that the
negotiations concerning the neutrality agreement should be re-opened as
soon as the first excitement caused by the Navy Bill had subsided, which
would probably be the case within a few months, and that the interval
should be utilized for clearing up the details. In Berlin, however, the
discussions were looked upon as having been broken off, as may be seen
from the following telegram which the Kaiser sent to Ballin on March
19th in reply to Ballin's information about his last exchange of
telegrams with London:

     "Many thanks for letter. The latest proposals arriving here
     immediately after you had left raised impossible demands and were
     so offensive in form that they were promptly rejected. Further harm
     was done by Churchill's arrogant speech which a large section of
     the British press justly described as a provocation of Germany. The
     'agreement' has thus been broken by Great Britain, and we have done
     with it. The negotiations must be started afresh on quite a
     different basis. What apology has there been offered to us for the
     passage in the speech describing our fleet as an article of luxury?

"(_Signed_) WILHELM I.R."



That the negotiations had actually been broken off was confirmed to
Ballin by a letter of the Chancellor of the same date:

"DEAR MR. BALLIN,

     "My cordial thanks for your letter of the 18th. What your friend
     told Metternich is identical with what he wired you. Churchill's
     speech did not come up to my expectations. He really seems to be a
     firebrand past praying for. The Army and Navy Bills will probably
     not go up to the Federal Council until the 21st, as the Army Bill
     requires some amendments at the eleventh hour. Their contents will
     be published simultaneously.

     "My opinion is that our labours will now have to be stopped
     altogether for some time. The problem before us suffers from the
     defect that, because of its inherent difficulties, it admits of no
     solution. I shall always remain sincerely grateful to you for your
     loyal assistance. When you come to Berlin next time, please don't
     forget to call at the Wilhelmstrasse.

"With kindest regards,
"Sincerely yours,
"(_Signed_) BETHMANN-HOLLWEG."



The conviction of the inherent impossibility of solving the problem was
shared by many people in Germany--chiefly, of course, by those connected
with the Navy; and some critics went so far as to say that Great Britain
had never honestly meant to arrive at an understanding, or at any rate
that Haldane--whose honesty and sincerity were beyond doubt--was
disowned by his fellow-members in the Cabinet.

When Ballin, in compliance with the wishes of the Foreign Office, went
to London during the critical period before the outbreak of the war in
1914, he wrote a letter from there to a naval officer of high rank with
whom he had been on terms of friendship for years. This document is of
interest now because it shows what Ballin's own standpoint was with
regard to the views described in the previous paragraph:

     "People over here," he wrote, "do not believe that negotiations
     with Great Britain on the subject of a naval agreement could
     possibly be crowned with success, and you yourself contend that it
     would have been better if such negotiations had never been started.
     Your standpoint is that the failure of any efforts in that
     direction would merely tend to aggravate the existing situation, a
     point of view with which I entirely concur.

     "On the other hand, however, you cannot deny the soundness of the
     argument that, if the responsible leaders of British naval policy
     keep expressing their desire to enter into a discussion, the
     refusal of Germany to do so must cause the British to believe that
     we are pursuing aims far exceeding those we have openly avowed. My
     somewhat fatigued brain is unable to see whether the German
     contention is right or wrong. But naturally, I always look upon
     things from the business man's point of view, and so I always think
     it better to come to some kind of an agreement with a competitor
     rather than allow him an unlimited measure of expansion. Once,
     however, I have come to the conclusion that for financial or other
     reasons this competitor can no longer keep pace with me, his
     further existence ceases altogether to interest me.

     "Thus the views of the expert on these matters and those of the
     business man run counter to each other, and I am entitled to
     dismiss this subject without entering upon a discussion of the
     interesting and remarkable arguments which Winston Churchill put
     before me last night. I cannot, however, refrain from contradicting
     by a few brief words the contention that the motives which had
     prompted the Haldane mission were not sincere. A conversation with
     Sir Edward Grey the night before last has strengthened this
     conviction of mine still further. I regard Sir Edward as a serious,
     honest, and clever statesman, and I am sure you will agree with my
     view that the Haldane mission has cleared the atmosphere
     surrounding Anglo-German relations which had become very strained."

It may be supposed that history, in the meantime, has proved whose
standpoint was the correct one: that of the business man or that of the
naval expert.

Not much need be said about the subsequent development of events up to
the outbreak of the war.

The above-mentioned opinion which the Chancellor held regarding
Churchill's speech of March 18th, 1912, was probably arrived at on the
strength of the cabled reports only. Whoever reads the full original
text of the speech must fail to find anything aggressive in it, and
there was no harm in admitting that it was a perfectly frank and honest
statement concerning the naval rivalry of the two Powers. Among other
things it contained the suggestion that a "naval holiday" should be
agreed upon, i.e. both countries should abstain from building new ships
for a definite period. We, at any rate, looked upon Churchill's speech
as a suitable means of making people see what would be the ultimate
consequences of the interminable naval armaments. I made a German
translation of it which, with the aid of one of the committees for an
Anglo-German understanding, I spread broadcast all over the country.
However, it proved a complete failure, as there were powerful groups in
both countries who contended that the efforts to reconcile the two
standpoints could not lead to any positive result, and that the old
injunction, _si vis pacem, para bellum_, indicated the only right
solution. Only a master mind could have overcome these difficulties. But
Herr v. Bethmann, as we know, considered that the problem, for inherent
reasons, did not admit of any solution at all, and the Kaiser's initial
enthusiasm had probably been damped by subsequent influences of a
different kind. Ballin himself, in later years, ascribed the failure of
the mission to the circumstance that the Kaiser and his Chancellor,
between themselves only, had attempted to bring the whole matter to a
successful issue instead of entrusting this task to the Secretary of
Foreign Affairs and to Admiral Tirpitz, the Secretary for the Navy.

An interesting sidelight on the causes which led to the failure of this
last important attempt to reach an understanding is thrown by the
rumours which were spread in the German Press in March, 1912, to the
effect that the Secretary of State for Foreign Affairs, Herr v.
Kiderlen, wished to resign, because he felt that he had been left too
much in the dark with regard to the Anglo-German negotiations. It was
also reported that the Chancellor's position had been shaken, and that
Admiral Tirpitz felt dissatisfied, because the Navy Bill did not go far
enough. Probably there was some vestige of truth in all these rumours,
and this may have been connected with the attitude which the three
gentlemen concerned had taken up towards the question of the
negotiations with Great Britain.

Shortly after the visit of Lord Haldane Ballin received a letter from a
personage belonging to the Kaiser's entourage in which it was said:

     "The impression which has taken root with me during the many hours
     which I spent as an attentive listener is that your broad-minded
     scheme is being wrecked by our official circles, partly through
     their clumsiness, and partly through their bureaucratic conceit,
     and--which is worse--that we have failed to show ourselves worthy
     of the great opportunity."

When it had become certain that the last attempt to reach an
understanding had definitely and finally failed, the ambassador in
London, Count Metternich, did not shrink from drawing the only possible
conclusion from it. He had always expressed his conviction that a war
between Germany and a Franco-Russian coalition would find Great Britain
on the side of Germany's opponents, and his resignation--which, as
usual, was explained by the state of his health--was really due to a
report of his in which he stated it as his opinion that a continuation
of German armaments would lead to war with Great Britain no later than
1915. It is alleged that the Kaiser added a very "ungracious" marginal
note to this report. Consequently, the ambassador, who was a man of very
independent character, did the only thing he could consistently do, and
resigned his office. In taking this step he may have been influenced by
the reception which the failure of the Haldane mission met with in
Conservative circles in Great Britain, where no stone was left unturned
to urge the necessity for continuing the policy of big armaments and to
paint German untrustworthiness in the most glaring colours.

Count Metternich's successor was Herr v. Marschall, a gentleman whose
appointment the Press and the official circles welcomed with great
cordiality, and from whose considerable diplomatic abilities, which were
acknowledged on all sides, an improvement of Anglo-German relations was
confidently expected. It was said that the Kaiser had sent "his best
man," thus demonstrating how greatly he also desired better relations.
But Herr v. Marschall's activities came to a sudden end through his
early death in September, 1912, and in October his place was taken by
Prince Lichnowsky, whose efforts in the direction of an improvement in
the relations are familiar to everyone who has read his pamphlet. Apart
from the work performed by the ambassadors, great credit is also due to
the activities displayed by Herr v. Kühlmann, the then Secretary to the
Legation and subsequent Secretary of State. The public did not see a
deal of his work, which was conducted with skill and was consistent. His
close personal acquaintance with some of the leading British
politicians, especially with Sir Edward Grey, enabled him to do much
work for the maintenance of good relations and in the interest of
European peace, particularly during the time when the post of ambassador
was vacant, and also during the Balkan War. He had, moreover, a great
deal to do with the drafting of the two colonial agreements dealing with
the Bagdad Railway and the African problems respectively, both of which
were ready for signature in the summer of 1914. The former especially
may be looked upon as a proof not only that a considerable improvement
had taken place in Anglo-German relations, but also that Great Britain
was not inclined to adjust the guiding lines of her policy in Asia Minor
exclusively in conformity with the wishes of Russia. Anybody who takes
an interest in the then existing possibilities of German expansion with
the consent of Great Britain and on the basis of these colonial draft
agreements cannot do better than read the anonymous pamphlet entitled
"_Deutsche Weltpolitik und kein Krieg_" ("German World Power and No
War"), published in 1913 by Messrs. Puttkamer & Mühlbrecht, of Berlin.
The author is Dr. Plehn, the then representative of the _Cologne
Gazette_ in London, and it partly reflects the views of Herr v.
Kühlmann.

In this connexion I should like to refer briefly to an episode which
took place towards the close of 1912. The German periodicals have
already discussed it, especially the _Süddeutsche Monatshafte_ in June,
1921, in a review of the reports which Count Lerchenfeld, the Bavarian
minister to the Court of Berlin, had made for the information of his
Government. In these reports he mentions an event to which the Kaiser
had already referred in a letter to Ballin dated December 15th, 1912.
The Kaiser, in commenting on the state of tension then existing between
Austria and Serbia, made some significant remarks concerning the policy
of Germany towards Austria-Hungary. When the relations between Vienna
and Petrograd, he wrote, had assumed a dangerous character, because it
was recognized that the attitude of Serbia was based on her hope of
Russian support, Germany might be faced with the possibility of having
to come to the assistance of Austria.

     "The Slav subjects of Austria," the letter continued, "had become
     very restless, and could only be brought to reason by the resolute
     action of the whole Dual Monarchy against Serbia. Austria had
     arrived at the cross roads, and her whole future development hung
     in the balance. Either the German element would retain its
     ascendancy, in which case she would remain a suitable ally, or the
     Slav element would gain the upper hand, and she would cease to be
     an ally altogether. If we were compelled to take up arms, we should
     do so to assist Austria not only against Russian aggression, but
     also against the Slavs in general, and in her efforts to remain
     German. That would mean that we should have to face a racial
     struggle of the Germanic element against Slav insolence. It is
     beyond our power to prevent this struggle, because the future of
     the Habsburg monarchy and that of our own country are both at
     stake. (This was the real meaning of Bethmann's very plain
     speaking.) It is therefore a question on which depends the very
     existence of the Germanic race on the continent of Europe.

     "It was of great importance to us that Great Britain had so far
     supported the Austro-German standpoint in these matters. Now, since
     a war against Russia would automatically imply a war with France as
     well, it was of interest to us to know whether, in this purely
     continental case, Great Britain could and would declare her
     neutrality in conformity with her proposals of last February.

     "On December 6th, Haldane, obviously sent by Grey, called on
     Lichnowsky and explained to the dumbfounded ambassador in plain
     words that, assuming Germany getting involved in war against Russia
     and France, Great Britain would _not_ remain neutral, but would at
     once come to the assistance of France. The reason given for this
     attitude was that Britain could not and would not tolerate at any
     time that we should acquire a position of continental predominance
     which might easily lead to the formation of a united continent.
     Great Britain could therefore never allow France to be crushed by
     us. You can imagine the effect of this piece of news on the whole
     of the Wilhelmstrasse. I cannot say that I was taken by surprise,
     because I, as you know, have always looked upon Great Britain as an
     enemy in a military sense. Still, this news has decidedly cleared
     matters up, even if the result is merely of a negative character."

Ballin did not omit to ask his friend for some details concerning the
visit of Lord Haldane mentioned in the Kaiser's letter, and was
furnished with the following explanation by Lord Haldane himself.

Nothing had been further from his intentions, he said, than to call on
Prince Lichnowsky for the express purpose of making any such
declaration; and Balkan questions, to the best of his recollection, had
not been touched at all. He had spent a very pleasant half-hour with the
Prince, and in the course of their conversation he had seen fit to
repeat the formula which had been discussed during his stay in Berlin,
and which referred to Britain's interest in the preservation of the
integrity of France. This, possibly, might have given rise to the
misunderstanding.

Prince Lichnowsky himself, in his pamphlet entitled "My London Mission,"
relates the incident as follows:

     "In my dispatches sent to Berlin I pointed out again and again that
     Great Britain, being a commercial country, would suffer enormously
     through any war between the European Powers, and would prevent it
     by every means within her power. At the same time, however, she
     could never tolerate the weakening or the crushing of France,
     because it would disturb the Balance of Power and replace it by the
     ascendancy of Germany. This view had been expressed to me by Lord
     Haldane shortly after my arrival, and everybody whose opinion
     counts for anything told me the same thing."

The failure of the negotiations aiming at an understanding led to a
continuance of the increase in the British armaments, a concentration of
the British battle fleet in the North Sea, and to that of the French
fleet in the Mediterranean. The latter arrangement was looked upon in
Germany as a menace directed against Italy, and produced a sharp
semi-official criticism in the _Frankfurter Zeitung_. In spite of all
this, however, friendly messages from London concerning the
possibilities of an understanding, the "naval holiday," etc., reached
Germany from time to time.

How closely Ballin clung to his favourite idea that the naval experts of
both countries should come to an understanding is demonstrated by the
circumstance that in 1914, when the British squadron was present during
the Kiel yachting week, he tried to bring about a meeting and a personal
exchange of views between Churchill and Tirpitz.

Churchill was by no means disinclined to come to Germany for this
purpose, but unfortunately the desire was expressed by the German side,
and especially by the Kaiser, that the British Government should make an
official inquiry whether his visit would be welcomed. The Government,
however, was not disposed to do so, and the whole thing fell through,
although Churchill sent word that, if Tirpitz really wanted to see him,
he would find means to bring about such a meeting.

Thus the last attempt at an understanding had resulted in failure, and
before any further efforts in the same direction could be made, Europe
had been overtaken by its fate.




CHAPTER IX

THE KAISER


The origin of the friendship between Ballin and the Kaiser, which has
given rise to so much comment and to so many rumours, was traced back by
the Kaiser himself to the year 1891, when he inspected the express
steamer _Auguste Victoria_, and when he, accompanied by the Kaiserin,
made a trip on board the newly-built express steamer _Fürst Bismarck_.
Ballin, although he received the honour of a decoration and a few
gracious words from His Majesty, did not think that this meeting had
established any special contact between himself and his sovereign. He
told me, indeed, that he dated their acquaintance from a memorable
meeting which took place in Berlin in 1895, and which was concerned with
the preparations for the festivities in celebration of the opening of
the Kiel Canal.

The Kaiser wanted the event to be as magnificent as possible, and his
wishes to this effect were fully met by the Hamburg civic authorities
and by the shipping companies. Although Ballin had only been a short
time in the position he then held, his versatile mind did not overlook
the opportunity thus offered for advertising his company. The Kaiser was
keenly interested in every detail. After some preliminary discussions
with the Hamburg Senate, all the interested parties were invited to send
their delegates to Berlin, where a general meeting was to be held in the
Royal Castle with the Kaiser in the chair. It was arranged that the
North German Lloyd and the Hamburg-Amerika Linie should provide one
steamer each, which was to convey the representatives of the Government
departments and of the Reichstag, as well as the remaining guests,
except those who were to be accommodated on board the _Hohenzollern_,
and that both steamers should follow in the wake of the latter all the
way down the Elbe from Hamburg to the Canal. When this item was
discussed the Kaiser said he had arranged that the _Hohenzollern_ should
be followed first by the Lloyd steamer and then by the Hamburg-Amerika
liner. Thereupon Ballin asked leave to speak. He explained that, since
the journey was to start in Hamburg territorial waters, it would perhaps
be proper to extend to the Hamburg company the honour of the position
immediately after the Imperial yacht. The Kaiser, in a tone which
sounded by no means gracious, declared that he did not think this was
necessary, and that he had already given a definite promise to the Lloyd
people. Ballin replied that, if the Kaiser had pledged his word, the
matter, of course, was settled, and that he would withdraw his
suggestion, although he considered himself justified in making it.

At the close of the meeting Count Waldersee, who had been one of those
present, took Ballin's arm and said to him: "As you are now sure to be
hanged from the Brandenburger Tor, let us go to Hiller's before it comes
off, to have some lunch together." Ballin never ceased to be grateful to
the Count for this sign of kindness, and his friendship with him and his
family lasted until his death. The arrangements made by the
Hamburg-Amerika Linie for the reception of its guests were carefully
prepared and carried out. It is not easy to give an idea to a non-expert
of the great many minute details which have to be attended to in order
to accommodate a large number of exacting visitors on a steamer in such
a manner that nobody finds anything to complain of, especially if, as is
but natural on an occasion such as this, an endless variety of
questions as to precedence and etiquette have to be taken into account.
Great pains and much circumspection are necessary to arrange to
everybody's satisfaction all matters affecting the reception of the
guests, the provision of food and drinks, the conveyance of luggage,
etc. Thanks to the infinite care, however, with which Ballin and his
fellow-workers attended to this matter, everything turned out eminently
satisfactory. In the evening, when the guests of the Hamburg-Amerika
Linie were returning to their steamer at the close of the festivities,
the company agreeably surprised them by providing an artistically
arranged collation of cold meats, etc., and the news of this spread so
quickly that from the other vessels people who felt that the official
catering had not taken sufficient account of their appetites, lost no
time in availing themselves of this opportunity of a meal.

This event, at any rate, helped to establish the reputation of the
company's hospitality.

It may be presumed that this incident had shown the Kaiser--who,
although he did not object to being contradicted in private, could not
bear it in public--that the Hamburg Company was animated by a spirit of
independence which did not subordinate itself to other influences
without a protest, and which jealously guarded its position. It must be
stated that the Kaiser never bore Ballin any ill will on account of his
opposition, which may be partly due to the great pains the Packetfahrt
took in order to make the festivities a success. The event may also have
induced the Kaiser to watch the progress of the Hamburg-Amerika Linie
after that with particular attention. His special interest was centred
round the provision for new construction, and in this matter he exerted
his influence from an early time in favour of the German yards.

The first occasion of the Kaiser's pleading in favour of German yards
dates from the time previous to his accession to the throne. Ballin, in
a speech which he delivered when the trial trip of the s.s. _Meteor_
took place, stated the facts connected with this intervention as
follows: The directors had just started negotiations with British
shipbuilding firms for the building of their first express steamer when
the Prussian Minister to the Free City of Hamburg called to inform them,
at the request of Prince Bismarck, that the latter, acting upon the
urgent representations of Prince Wilhelm, suggested that they should
entrust the building of the big vessel to a German yard. The Prince was
profoundly convinced that Germany, for the sake of her own future, must
cease to play the part of Cinderella among the nations, and that there
was no want of engineers among his countrymen who, if given a chance,
would prove just as efficient as their fellow-craftsmen in England. The
Packetfahrt thereupon entrusted the building of the vessel to the
Stettin Vulkan yard. She was the fast steamer _Auguste Victoria_, and
was christened after the young Empress. Launched in 1888, she
immediately won "the blue riband of the Atlantic" on her first trip.

Another and still more practical suggestion of the Kaiser was put
forward at the time when the company were about to build an excursion
steamer. The satisfactory results which their fast steamers had yielded
during the dead season in the transatlantic passage business when used
for pleasure cruises had induced them to take this step, and when the
Kaiser's attention was drawn to this project, he, on the strength of the
experience he had made with his _Hohenzollern_, designed a sketch and
composed a memorandum dealing with the equipment of such a steamer. It
was Ballin's opinion that this Imperial memorandum contained some
suggestions worth studying, although it was but natural that the
monarch could not be expected to be sufficiently acquainted with all the
practical considerations which the company had to bear in mind in order
to make the innovation pay, and that, therefore, some of his
recommendations could not be carried out.

If we remember what vivid pleasure the Kaiser derived from his own
holiday cruises, it cannot surprise us to see that he took such a keen
interest in the company's excursion trips. How keen it was may be
inferred from an incident which happened early in his reign, and to
which Ballin, when describing his first experiences on this subject,
referred in his above-mentioned speech on the occasion of the trial trip
of the _Meteor_. Ballin said: "Even among my most intimate associates
people were not wanting who thought that I was not quite right in my
mind when, at the head of 241 intrepid travellers, I set out on the
first pleasure cruise to the Far East in January, 1891. The Kaiser had
just inspected the vessel, and then bade farewell to the company and
myself by saying: 'That's right. Make our countrymen feel at home on the
open sea, and both your company and the whole nation will reap the
benefit.'"

In after years the Kaiser's interest in the company chiefly centred
round those landmarks in its progress which marked the country's
expansion in the direction of _Weltpolitik_, e.g. its participation in
the Imperial Mail Service to the Far East, its taking up a share in the
African trade, etc. In fact, after 1901, when the Kaiser had keenly
interested himself in the establishment of the Morgan Trust and its
connexion with German shipping companies, there was scarcely an
important event in the history of the company (such as the extension of
its services, the addition of a big new steamer, etc.) which he allowed
to pass without a few cordial words of congratulation. He also took the
liveliest interest in the personal well-being of Ballin. He always sent
him the compliments of the season at Christmas or for the New Year,
generally in the shape of picture post-cards or photographs from his
travels, together with a few gracious words, and he never failed to
remember the anniversaries of important events in Ballin's life or to
inquire after him on recovering from an illness. Ballin, in his turn,
acquainted the Kaiser with anything which he believed might be of
interest to His Majesty, or might improve his knowledge of the economic
conditions existing in his own as well as in foreign countries. He kept
him informed about all the more important pool negotiations, e.g. those
in connexion with the establishment, in 1908, of the general pool, and
those referring to the agreements concluded with other German shipping
companies, etc. Whenever he noticed on his travels any signs of
important developments, chiefly those of a political kind, he furnished
his Imperial friend with reports on the foreign situation.

In 1904 the Kaiser's interest in Ballin took a particularly practical
form. Ballin had suffered a great deal from neuralgic pains which, in
spite of the treatment of various physicians, did not really and
permanently diminish until the patient was taken in hand by Professor
Schweninger, the famous medical adviser of no less a man than Bismarck.
Ballin himself testified to the unvaried attention and kindness of Dr.
Schweninger, and to the great success of his treatment. It is to be
assumed that Schweninger, because of his energetic manner of dealing
with his patients, was eminently suited to Ballin's disposition, which
was not an easy one for his doctor and for those round him to cope with.

     "As early as January, 1904," Ballin remarks in his notes, "the
     Kaiser had sent a telegram inviting me to attend the _Ordensfest_
     celebrations in Berlin, and during the subsequent levee he favoured
     me with a lengthy conversation, chiefly because he wanted to tell
     me how greatly he was alarmed at the state of my health. His
     physician, Professor Leuthold, had evidently given him an
     unfavourable account of it. The Kaiser explained that he could no
     longer allow me to go on without proper assistance or without a
     substitute who would do my work when I was away for any length of
     time. This state of things caused him a great deal of anxiety, and,
     as it was a matter of national interest, he was bound to occupy
     himself with this problem. He did not wish to expose himself to a
     repetition of the danger--which he had experienced in the Krupp
     case--that a large concern like ours should at any moment be
     without a qualified steersman at the helm. He said he knew that of
     all the gentlemen in his entourage Herr v. Grumme was the one I
     liked best, and that I had an excellent opinion of him. He also
     considered Grumme the best man he had ever had round him, and it
     would be difficult to replace him. Nevertheless he would be glad to
     induce Grumme to join the services of the Hamburg-Amerika Linie, if
     I thought that this would solve the difficulty he had just referred
     to, and that such a solution would fall in with my own wishes. He
     was convinced that I should soon be restored to my normal health if
     I were relieved of some part of my work, and that this would enable
     me to do much useful service to the nation and himself; so he would
     be pleased to make the sacrifice. I sincerely thanked His Majesty,
     and assured him that I could not think of any solution that I
     should like better than the one he had proposed, and that, if he
     were really prepared to do so much for me, I would beg him to
     discuss the matter with Grumme. That very evening he sent for
     Grumme, who immediately expressed his readiness to enter the
     services of our company if such was His Majesty's pleasure."

The lively interest which the Kaiser took in the development of our
mercantile marine was naturally closely connected with the growth of the
Imperial Navy and with our naval policy in general. The country's
maritime interests and the merchant fleet were the real motives that
prompted his own naval policy, whereas Tirpitz chiefly looked upon them
as a valuable asset for propaganda purposes. During the first stage of
the naval policy and of the naval propaganda--which at that time were
conducted on quite moderate lines--Ballin, as he repeatedly told me,
played a very active part. It was the time when the well-known
periodical _Nautikus_, afterwards issued at regular annual intervals,
was first published by the Ministry for the Navy, and when a very active
propaganda in favour of the navy and of the country's maritime interests
was started. Experience has proved how difficult it is to start such a
propaganda, especially through the medium of a Press so loosely
organized as was the German Press in those days. But it is still more
difficult to stop, or even to lessen, such propaganda once it has been
started, because the preliminary condition for any active propaganda
work is that a large number of individual persons and organizations
should be interested in it. It is next to impossible to induce these
people to discontinue their activities when it is no longer thought
desirable to keep up the propaganda after its original aim has been
achieved. Germany's maritime interests remained a favourite subject of
Press discussions, and the animation with which these were carried on
reached a climax whenever a supplementary Navy Bill was introduced. Even
when it was intended to widen the Kiel Canal, as it proved too narrow
for the vessels of the "Dreadnought" type, the necessity for doing so
was explained by reference to the constantly increasing size of the new
steamers built for the mercantile marine; although, seeing that the
shallow waters of the Baltic and of the channels leading into it made it
quite impossible to use them for this purpose, nobody ever proposed to
send those big ships through the canal. In later years Ballin often
spoke with great bitterness of those journalists who would never leave
off writing about "the daring of our merchant fleet" in terms of
unmeasured eulogy, and whom he described as the greatest enemies of the
Hamburg-Amerika Linie.

But it was not only the propaganda work for the Imperial Navy to which
the Kaiser contributed by his own personal efforts: the range of his
maritime interests was much wider. He gave his assistance when the
problems connected with the troop transports to the Far East and to
South West Africa were under discussion; he studied with keen attention
the progress of the German mercantile marine, the vessels of which he
frequently met on his travels; he often went on board the German tourist
steamers, those in Norwegian waters for instance, when he would
unfailingly make some complimentary remarks on the management, and he
became the lavish patron of the sporting events known as Kiel Week, the
scope of which was extending from year to year. The Kiel Week,
originally started by the yachting clubs of Hamburg for the
encouragement of their sport, gradually developed into a social event of
the first order, and since 1902 it became customary for the
Hamburg-Amerika Linie to dispatch one of their big steamers to Kiel,
where it served as a hotel ship for a large number of the visitors. From
1897 Kiel Week was preceded by a visit of the Kaiser--and frequently of
the Kaiserin as well--to Hamburg, where their Majesties attended the
summer races and the yachting regatta on the lower Elbe. In 1897 the
Kaiser had the intention of being present at a banquet which the
Norddeutsche Regatta-Verein was giving on board the Packetfahrt liner
_Columbia_, and he was only prevented from doing so at the last moment.
In the following year the Hamburg-Amerika Linie sent their s.s.
_Pretoria_ to Kiel. On this vessel the well-known "Regatta dinner" took
place which the Kaiser attended, and which, on future occasions, he
continued to honour with his presence. Ballin received a special
invitation to visit the Kaiser on board his yacht _Hohenzollern_. He
could not, however, avail himself of it, because the message only
reached him on his way home to Hamburg. The year after, the Kaiser
commanded Ballin to sit next to him at the table, and engaged him in a
long conversation on the subject of the load-line which he wanted to see
adopted by German shipping firms for their vessels. The Packetfahrt
carried this suggestion into practice shortly afterwards, and in course
of time the other companies followed suit.

On the occasion of these festivities the Kaiser in 1904 paid a visit to
the new premises of the Hamburg-Amerika Linie. In 1905 and in subsequent
years he also visited Ballin's private home and took lunch with him. The
speeches which he made at the regatta dinners given in connexion with
the regatta on the lower Elbe frequently contained some political
references. In 1908, for instance, he said:

     "Although we do not possess such a navy as we ought to have, we
     have gained a place in the sun. It will now be my duty to see to it
     that we shall keep this place in the sun against all comers.... I,
     as the supreme head of the Empire, can only rejoice whenever I see
     a Hanseatic citizen--let him be a native of Hamburg, or Bremen, or
     Lübeck--striking out into the world with his eyes wide open, and
     trying to find a spot where he can hammer a nail into the wall from
     which to hang the tools needed to carry on his trade."

In 1912 he quoted the motto from the Lübeck Ratskeller:

     "It is easy to hoist the flag, but it costs a great deal to haul it
     down with honour."

And in 1914, after the launch of the big steamer _Bismarck_, he quoted
Bismarck's saying, slightly altered:

"We Germans fear God, but nothing and nobody besides."

Kiel Week never passed without a great deal of political discussion. The
close personal contact on such occasions between Ballin and the Kaiser
furnished the former with many an opportunity for expressing his views
on politics. Much has been said about William II's "irresponsible
advisers," who are alleged to have endeavoured to influence him in the
interests of certain cliques, and it cannot, of course, be denied that
the men who formed the personal entourage of the monarch were very far
from representing every shade of public opinion, even if that had been
possible. The traditions of the Prussian Court and of princely education
may have contributed their share to this state of things. The result, at
any rate, was that in times of crises--as, for instance, during the
war--it was impossible to break through the phalanx of men who guarded
the Kaiser and to withdraw him from their influence. Events have shown
how strong this influence must have been, and how little it was suited
to induce the Kaiser to apply any self-criticism to his preconceived
ideas. Added to this, there was the difficulty of obtaining a private
conversation with the Kaiser for any length of time--a difficulty which
was but rarely overcome even by persons possessing very high
credentials. It has already been mentioned that the Kaiser did not like
to be contradicted in the presence of others, because he considered it
derogatory to his sovereign position. Ballin repeatedly succeeded in
engaging the Kaiser in private conversations of some length, especially
after his journeys abroad, when the Kaiser invited him to lunch with
him, and afterwards to accompany him on a walk unattended.

Ballin's notes more than once refer to such conversations with the
Kaiser, e.g. on June 3rd, 1901, when he had been a member of the
Imperial luncheon party:

     "After lunch the Kaiser asked me to report on my trip to the Far
     East, and he, in his turn, told me some exceedingly interesting
     pieces of news relating to his stay in England, and to political
     affairs connected with it."

The following passage, referring to the Kiel Week, is taken from the
notes of the same year:

     "I received many marks of the Kaiser's attention, who, on July
     27th, summoned me to Kiel once more, as he wished to discuss with
     the Chancellor and me the question of the Japanese bank."

During his trip to the Far East Ballin had taken a great deal of trouble
to bring about the establishment of a German-Japanese bank.

The following extracts are taken from the notes of subsequent years:

     "On December 10th (1903) I received a wire asking me to see the
     Kaiser at the _Neues Palais_. To my infinite joy the Kaiser had
     quite recovered the use of his voice. He looked well and fit, and
     during a stroll through the park I had a long chat with him
     concerning my trip to America and other matters. In February the
     Kaiser intends to undertake a Mediterranean cruise on board the
     _Hohenzollern_ for the benefit of his health. He will probably
     proceed to Genoa on board one of the Imperial mail packets, which
     is to be chartered for him."

     (April 1904). "The Kaiser had expressed a wish to see me in Italy.
     On my arrival at Naples I found a telegram waiting for me in which
     I was asked to proceed to Messina if necessary. Owing, however, to
     the state of our negotiations with the Russian Government, I did
     not think it desirable to meet the Kaiser just then, and thus I had
     no opportunity of seeing him until May 3rd when I was in Berlin to
     attend a meeting of the _Disconto-Gesellschaft_, and to confer with
     Stübel on the question of some further troop transports to South
     West Africa. I received an invitation to join the Imperial luncheon
     party at which the birthday of the Crown Prince was to be
     celebrated in advance, since his Majesty would not be in town on
     May 6th. The Kaiser's health had much improved through his cruise;
     he had lost some of his stoutness, and the Kaiserin, too, was
     greatly pleased to see him looking so well. We naturally discussed
     the topics of the day, and the Kaiser, as always, was full of
     kindness and goodwill towards me."

     "On June 21st, 1904, the usual Imperial Regatta took place at
     Cuxhaven, and the usual dinner on board the _Blücher_. These events
     were followed by Kiel Week, which lasted from June 22nd to 28th. We
     stayed on board the _Victoria Luise_, and I was thus brought into
     especially close contact with the Kaiser. I accompanied him to
     Eckernförde on board the _Meteor_, and we discussed the political
     situation, particularly in its bearing on the Morocco question and
     on the attitude of Great Britain."

     "On June 19th, 1904, the Kaiser, the Kaiserin, and some of their
     sons were staying in Hamburg. I dined with them at Tschirschky's
     (the Prussian Minister in Hamburg), and we drove to the races. On
     June 20th we proceeded to Cuxhaven, where, on board the
     _Deutschland_, I heard the news--which the Kaiser had just
     communicated to Kaempff (the captain of the _Deutschland_)--that
     the North German Lloyd steamer _Kaiser Wilhelm II_, in consequence
     of her being equipped with larger propellers, had won the speed
     record. Late at night the Kaiser asked me to see him on board the
     _Hohenzollern_, where he engaged me in a long discussion on the
     most varied subjects. On June 21st the regatta took place at
     Cuxhaven. The Kaiser and Prince Heinrich were amongst the guests
     who were entertained at dinner on board the _Deutschland_. The
     Kaiser was in the best of health and spirits. Owing to the
     circumstance that Burgomaster Burchard--who generally engages the
     Kaiser in after-dinner conversation--was prevented by his illness
     from being present, I was enabled to introduce a number of Hamburg
     gentlemen to His Majesty. As the Kaiser had summoned me to dine
     with him on board the _Hohenzollern_ on the 22nd, I could not
     return to Hamburg, but had to travel through the Kiel Canal that
     same night on board a tug steamer. On the 22nd I stayed at the club
     house of the Imperial Yachting Club, whilst at my own house a
     dinner party was given for 36 persons. On the 23rd I changed my
     quarters to the _Prinzessin Victoria Luise_, and the other visitors
     arrived there about noon. A special feature of Kiel Week of 1904
     was the visit of King Edward to the Kaiser whom he met at Kiel. For
     the accommodation of the ministers of state and of the other
     visitors whom the Kaiser had invited in connexion with the presence
     of the King, we had placed our s.s. _Prinz Joachim_ at his
     disposal, in addition to the _Prinzessin Victoria Luise_. We also
     supplied, for the first time, a hotel ship, the _Graf Waldersee_,
     all the cabins of which were engaged. On June 27th my wife and I,
     and a number of other visitors from the _Prinzessin Victoria
     Luise_, were invited to take afternoon tea with the Kaiser and
     Kaiserin on board the _Hohenzollern_, and I had a lengthy
     conversation with King Edward."

Whenever the Kaiser granted Ballin an interview without the presence of
witnesses he cast aside all dignity, and discussed matters with him as
friend to friend. Neither did he object to his friend's counsel and
admonitions, and he was not offended if Ballin, on such occasions,
subjected his actions or his opinions to severe criticism.

On such occasions the Kaiser, as Ballin repeatedly pointed out, "took it
all in without interrupting, looking at me from the depth of his kind
and honest eyes." That he did not bear Ballin any malice for his
frankness is shown by the fact that he took a lively and cordial
interest in all the events touching the private life of Ballin and his
family, his daughter's engagement, for instance--an interest which still
continued after Ballin's death.

In spite of this close friendship between Ballin and the Kaiser, it
would be quite wrong to assume that Ballin exercised anything resembling
a permanent influence on His Majesty. Their meetings took place only
very occasionally, and were often separated by intervals extending over
several months, and it happened only in rare cases that Ballin availed
himself of the privilege of writing to the Kaiser in person. It is true
that the latter was always pleased to listen to Ballin's explanations of
his views, and it is possible that every now and than he did allow
himself to be guided by them; but it is quite certain that he never
allowed these views to exercise any actual influence on the country's
politics. The events narrated in the chapter of this book dealing with
politics show that in a concrete case, at any rate, Ballin's
recommendations and the weight of his arguments were not sufficient to
cope successfully with the influence of others who were the permanent
advisers of the sovereign, and who had at all times access to His
Majesty.

If thus the effect of Ballin's friendship with the Kaiser has frequently
been greatly overrated in regard to politics, the same holds good--and,
indeed, to a still greater extent--in regard to the advantages which the
Hamburg-Amerika Linie is supposed to have derived from it. One of
Ballin's associates on the Board of the company was quite right when he
said: "Ballin's friendship with the Kaiser has done more harm than good
to the Hamburg-Amerika Linie." Indirectly, of course, it raised the
prestige of the company both at home and abroad. But there is no doubt
that it had also an adverse effect upon it: at any rate, outside of
Germany. It gave rise to all sorts of rumours, e.g. that the company
obtained great advantages from the Government; that the latter
subsidized it to a considerable extent; that the Kaiser was one of the
principal shareholders, etc. It is also quite certain that these beliefs
were largely instrumental in making the Hamburg-Amerika Linie, as Ballin
put it, one of the war aims of Great Britain, and it is even alleged
that, at the close of the war, the British Government approached some of
the country's leading shipping firms with the suggestion that they
should buy up the Hamburg-Amerika Linie or the North German Lloyd. This
was at the time when it became desirable to secure the necessary
organization for the intended commercial conquest of the Continent. It
is quite possible--and, I am inclined to think, quite probable--that
this suggestion was put forward because such a step would be in harmony
with that frame of mind from which originated such stipulations of the
Versailles treaty as deal with shipping masters, and with the assumption
that German shipping--which was supposed to depend for its continuance
mainly on the existence of the German monarchial system--would
practically come to an end with the disappearance of the latter. It
would, indeed, be difficult to name any historical document which pays
less regard to the vital necessities of a nation and which actually
ignores them more completely than does the treaty signed at Versailles.

The allegation that Ballin should ever have attempted to make use of his
friendship with the Kaiser for his own or for his company's benefit is,
moreover, diametrically opposed to the established fact that he knew the
precise limits of his influence, and that he never endeavoured to
overreach himself. His "policy of compromise" was the practical outcome
of this trait of his character.

The opinion which my close observation of Ballin's work during the last
ten years of his life enabled me to form was, as far as its political
side is concerned, confirmed to me in every detail by no less a person
than Prince Bülow, who, without doubt, is the most competent judge of
German affairs in the first decade of the twentieth century. When I
asked the Prince whether Ballin could be accused of ever having abused
the friendship between himself and the Kaiser for any ulterior ends
whatever, he replied with a decided negative. Ballin, he said, had never
dreamt of doing such a thing. He had always exercised the greatest tact
in his relations with the Kaiser, and had never made use of them to gain
any private advantage. Besides, his views had nearly always coincided
with those held by the responsible leaders of the country's political
destinies. Once only a conflict of opinion had arisen between Ballin and
himself on a political question, and this was at the time when the
customs tariffs were under discussion. Ballin held that these were
detrimental to the country's best interests, and it is a well-known fact
that, at that time, there was a widespread feeling as to the
impossibility of concluding any commercial treaties so long as those
tariffs were in operation.

During the most critical period of the existence of the monarchy--i.e.
during the war--Ballin's influence on the Kaiser was but slight. Only on
a very few occasions was he able to meet the Kaiser, and he never had an
opportunity of talking to him privately, as in former times. It was the
constant aim of the Kaiser's entourage to maintain their controlling
influence over the Kaiser unimpaired. Even when they last met--in
September, 1918--and when Ballin, at the instance of the Supreme Army
Command, was asked to explain to the Kaiser the situation as it actually
was, he was not permitted to see the Kaiser without the presence of a
witness, so that his influence could not assert itself. The fact that
the Kaiser was debarred from knowing the truth was the cause of his and
of his country's ruin. "The Kaiser is only allowed to know the bright
side of things," Ballin used to say, "and therefore he does not see
matters as they really stand."

This is all the more regrettable because, as Ballin thought, the Kaiser
was not wanting in either the capacity or the independence of mind which
would have enabled him to pursue a policy better than the one in which
he actually acquiesced. More than once, Ballin said, the Kaiser's
judgment on a political issue was absolutely sound, but he did not wish
to act contrary to the recommendations of his responsible advisers.
When, for instance, it was decided that the gunboat _Panther_ should be
dispatched to Agadir, a decision which was arrived at during Kiel Week
of 1911, the Kaiser exclaimed, with much show of feeling, that a step of
such far-reaching importance could not be taken on the spur of the
moment and without consulting the nation, and he only gave his consent
with great reluctance. Moreover, Ballin stated, he was by no means in
sympathy with Tirpitz, and the latter was not a man after his own heart,
but he was content to let him have his way, because he believed that the
naval policy of Tirpitz was right, so that he was not entitled to
jeopardize the interests of his country by dismissing him. The Kaiser
was not moved by an ambitious desire to build up a powerful navy
destined to risk all in a decisive struggle against Great Britain, and
the numerous passages in his public speeches which foreign observers
interpreted as implying such a desire, must be regarded as the explosive
outbursts of a strong character which was sometimes directed into wrong
channels by a certain sense of its own superiority, and which, in
seeking to express itself, would occasionally outrun discretion. His
inconsistency which made him an easy prey to the influence of his
entourage, caused him to be looked upon by foreign critics as
vacillating and unstable, and this impression--as was discovered when
too late--discredited his country immensely in the eyes of Great
Britain, who, after all, had to be reckoned with as the decisive factor
in all questions relative to world policy. Such a character could be
guided in the right direction only if the right influence could be
brought permanently to bear on it. But who was to exercise such
influence on the Kaiser? Certainly his entourage did not include anyone
qualified to do so, because it was not representative of all sections of
the nation; neither was any of the successive Chancellors able to
undertake such a task, since none of them succeeded in solving the
questions of internal policy in a manner approved by a reliable and
solid majority in the Reichstag. The Kaiserin also was not free from
prejudice as to the war and the causes of its outbreak. Ballin relates
how, on one of the few occasions when he was privileged to see the
Kaiser during the war, Her Majesty, with clenched fists, exclaimed:
"Peace with England? Never!" The Imperial family considered themselves
betrayed by England and the English court. Why this should be so is
perhaps still more difficult to say now than Ballin could understand in
those days. Arguments, however, were useless in such a case, and could
produce nothing but harm. The Kaiser did not bear Ballin any malice
because of the frankness with which he explained his views that day; on
the contrary, members of the Kaiser's entourage have confirmed that,
after Ballin had left that evening, he even tried to make the Kaiserin
see his (Ballin's) point of view. Putting himself into Ballin's
position, he said, he could perfectly understand how he felt about it
all; but he himself could not help thinking that his English relatives
had played him false, so that he was forced to continue the struggle
with England tooth and nail.

When Ballin, during the summer of 1918, gave me a character sketch of
the Kaiser, of which the account I have endeavoured to present in the
preceding paragraphs is an outline, he added: "But what is the good of
it? He is, after all, the managing director, and if things turn out
wrong he is held responsible exactly as if he were the director of a
joint-stock company."

This comparison of the German Empire and its ruler with a joint-stock
company and its board of directors used to form a frequent subject of
argument in our inner circle, and even before the war these discussions
regularly led to the conclusion that, what with the policy carried on by
the Government and that carried on by the parties in the Reichstag, the
Hamburg-Amerika Linie would have gone bankrupt long ago if its affairs
had been conducted on such lines as those of the German Empire. It was a
never-ending cause of surprise to us to learn how completely the
European situation was misjudged in the highest quarters, when, for
instance, the following incident, which was reported to Ballin during
the war, became known to us. One day, when the conversation at lunch in
the Imperial headquarters turned to the subject of England, the Kaiser
remarked: "I only wish someone had told me beforehand that England would
take up arms against us," to which one of those present replied in a
quiet whisper: "Metternich." It would have been just as proper, Ballin
added, to have mentioned my own name, because I also warned the Kaiser
over and over again. On another page in this book reference is made to
the well-known fact that the reason why Count Metternich, the German
ambassador at the Court of St. James, had to relinquish his post was
that he, in one of his reports, predicted that Germany would be involved
in war with Great Britain no later than 1915 unless she reduced the pace
of her naval armaments. This was one of those numerous predictions to
which, like so many others, especially during the war, no one wanted to
listen. Even in the late summer of 1918, when Ballin saw the Kaiser for
the last time, such warnings met with a deaf ear. This meeting, to which
Ballin consented with reluctance, was the outcome of a friendship which,
politically speaking, was devoid of practical results. A detailed
account follows.




CHAPTER X

THE WAR


About the middle of the month of July, 1914, Ballin, when staying at
Kissingen for the benefit of his health, received a letter from the
Foreign Secretary, Herr v. Jagow, which made him put an immediate end to
his holiday and proceed to Berlin. The letter was dated July 15th, and
its principal contents were as follows:

The _Berliner Tageblatt_, it said, had published some information
concerning certain Anglo-Russian agreements on naval questions. The
Foreign Office did not attach much value to it, because it was at
variance with the general assumption that Germany's relations with Great
Britain had undergone a change for the better, and also with the
apparent reluctance of British statesmen to tie their country to any
such agreements. The matter, however, had been followed up all the same,
and through very confidential channels it had been ascertained that the
rumours in question were by no means devoid of an actual background of
fact. Grey, too, had not denied them point blank at his interview with
Lichnowsky. It was quite true that Anglo-Russian negotiations were
proceeding on the subject of a naval agreement, and that the Russian
Government was anxious to secure as much mutual co-operation between the
two countries as possible. A definite understanding had not, so far,
been reached, notwithstanding the pressure exercised by Russia. Grey's
attitude had become somewhat uncertain; but it was thought that he
would ultimately give his consent, and that he would quieten his own
conscience by arguing that the negotiations had not really been
conducted between the Cabinets, but between the respective naval
authorities. It was also quite likely that the British, who were adepts
at the art of making nice distinctions, would be negotiating with the
mental reservation that they would refrain from taking an active part
when the critical moment arrived, if it suited them not to do so; and a
_casus foederis_ would presumably not be provided for in the
agreement. At any rate, the effect of the latter would be enormously to
strengthen the aggressive tendencies of Russia. If the agreement became
perfect, it would be useless for Germany to think any longer of coming
to a _rapprochement_ with Great Britain, and therefore it would be a
matter of great importance to make a last effort towards counteracting
the Russian designs. His (v. Jagow's) idea was that Ballin, who had
intimate relations with numerous Englishmen in leading positions, should
send a note of warning across the North Sea. This suggestion was
followed up by several hints as to the most suitable form of wording
such a note, and the letter concluded with the statement that the matter
was one of great urgency. A postscript dated July 16th added that a
further article had been published by the _Berliner Tageblatt_,
according to which the informants of the author also took a serious view
of the situation.

Ballin, in response to the request contained in the letter, did not
content himself with sending a written note to his London friends, but
he immediately went to Berlin for the purpose of gaining additional
information on the spot, with special reference to the general political
outlook. He learned that Austria intended to present a strongly worded
note to Serbia, and that it was expected that in reply a counter-note
dictated by Russia would be received. He was also told that the
Government not only wanted some information regarding the matter which
formed the special subject of Herr v. Jagow's letter, but also regarding
the general political situation in London, as it was doubted whether the
reports received from the ambassador were sufficiently trustworthy and
complete. This was all that Ballin was told. Since then many facts have
become known which throw a light on the way in which political questions
were dealt with by the Berlin authorities during the critical period
preceding the war, and if we, knowing what we know now, read the letter
of Herr v. Jagow, we ask ourselves in amazement what was the object of
the proposed action in London? Could it be that it was intended to
intimidate the British Government? This could hardly be thought
possible, so that some other result must have been aimed at. We can only
say that the whole affair is still surrounded by much mystery, and we
can sympathize with Ballin's bitter complaints in later days that he
thought people had not treated him with as much openness as they should
have done, and that they had abused his intimate relations with leading
British personages.

Ballin then left Berlin for Hamburg. He gave me his impressions of the
state of political affairs--which he did not regard as critical--and
went to London, ostensibly on business. In London he met Grey, Haldane,
and Churchill, and there also he did not look upon the situation as
critical--at least, not at first. When, however, the text of the
Austrian note became known on Thursday, July 23rd, and when its full
significance had gradually been realized, the political atmosphere
became clouded: people asked what was Austria's real object, and began
to fear lest the peace might be disturbed. Nevertheless, Ballin returned
from London on July 27th with the impression that a fairly capable
German diplomat might even then succeed in bringing about an
understanding with Great Britain and France which, by preventing Russia
from striking, would result in preserving the peace. Great Britain and
the leading British politicians, he said, were absolutely in favour of
peace, and the French Government was so much against war that its
representatives in London seemed to him to be rather nervous on the
subject. They would, he thought, do anything in their power to prevent
war. If, however, France was attacked without any provocation on her
part, Great Britain would be compelled to come to her assistance.
Britain would never allow that we, as was provided for in the old plan
of campaign, should march through Belgium. It was quite true that the
Austrian note had caused grave anxiety in London, but how earnestly the
Cabinet was trying to preserve peace might be gauged by the fact that
Churchill, when he took leave of Ballin, implored him, almost with tears
in his eyes, not to go to war. These impressions of Ballin are confirmed
by the reports of Prince Lichnowsky and other members of the German
Embassy in their observations during the critical days.

Apart from these politicians and diplomatists on active service there
were other persons of political training, though no longer in office,
who did not think at that time that there was an immediate danger of
war. In this connexion I should like to add a report of a very
remarkable conversation with Count Witte, which took place at Bad
Salzschlirf on July 24th. The Count--whose untimely death was greatly
regretted--was without any doubt one of the most capable statesmen of
his time--perhaps the only one with a touch of genius Europe
possessed--and he certainly knew more about the complicated state of
things in Russia than any living person. For these reasons his views on
the events which form the first stage of the fateful conflict are of
special interest. I shall reproduce the report of this conversation
exactly as we received it at the time, and as we passed it on to Berlin.
The authenticity of the statements of Count Witte as given here is
beyond question.

     "Yesterday (on July 24th) I paid a visit to Count Witte who was
     staying at Bad Salzschlirf, and in the course of the day I had
     several conversations with him, the first of which took place as
     early as ten o'clock in the morning. After a few words of welcome,
     and after discussing some matters of general and personal interest,
     I said to the Count: 'I should like to thank you for your welcome
     letter and for your telegram. The question which you raise in them
     of a meeting between our two emperors appears of such fundamental
     importance to me that I may perhaps hope to be favoured with some
     details by you personally.'

     "Witte replied: 'In the first instance I wish to reaffirm what I
     have repeatedly told you, both verbally and by letter, viz. that I
     am not in the least anxious to be nominated Russian delegate for
     the proposed negotiations concerning a commercial treaty between
     Germany and Russia. Whoever may be appointed from the Russian side
     will gain no laurels. I think a meeting between the Kaiser and the
     Tsar some time within the next few weeks would be of very great
     importance. Have you read the French papers? The tone now assumed
     by Jules Hedeman is a direct challenge. I know Hedeman, and I also
     know that he only writes what will please Sasonov, Poincaré and
     Paléologue (the French ambassador in Petrograd). Now that the
     Peterhof meeting has taken place the language employed by all the
     French and Russian papers will become more arrogant than ever. It
     is quite certain that the Russian diplomatists and their French
     colleagues will now assume a different tone in their intercourse
     with the German diplomatists. The _rapprochement_ with Great
     Britain is making considerable progress, and whether a naval
     convention exists or not, Great Britain will now side with Russia
     and France. If even now a meeting could be arranged between the two
     Emperors, this would be of immense significance. The
     mischief-makers both in Russia and in France would be made to look
     small, and public opinion would calm down again."

     "I asked Witte: 'Do you think, Sergei Yulyevitch, that the Tsar
     would avail himself of a possible opportunity of meeting the
     Kaiser?'

     "Witte replied: 'I am firmly convinced of it; I may, indeed, state
     without hesitation that the Tsar would be delighted to do so. The
     personal relations between the Tsar and the Kaiser are not of an
     ordinary kind. They converse with each other in terms of intimate
     friendship, and each time the Tsar has had a chat with the Kaiser
     he has been in better spirits. Believe me, if this meeting comes
     off, the impression which the French visit has left on the Tsar
     will be entirely wiped out. The effect of the showy reception of
     the French visitors which the press agitators have not failed to
     use for their own ends will be obliterated. Such a meeting will
     express in unambiguous terms that, whatever value the Tsar attaches
     to the Franco-Russian alliance, he insists on the maintenance of
     amicable relations with Germany. The meeting will have to be
     arranged without loss of time, in about four or six weeks, because
     in two months from now the Tsar will be leaving for Livadia. The
     army manoeuvres will be held within the next few weeks, and the
     Tsar will then go to the Finnish skerries where, in my opinion, the
     meeting might take place without difficulty.'

     "I asked Witte: 'Do you not think that, if the meeting were
     officially proposed by Germany, it might be looked upon as a sign
     of weakness on her side, especially in view of the now existing
     tension between the two countries?'

     "Witte replied: 'By no means. One has always to take into account
     the fact that the relations between the Tsar and the Kaiser, as I
     explained before, are in the highest degree friendly and intimate.
     I do not know how the Kaiser would feel on the subject, but I am
     convinced that he is possessed of the necessary political sagacity
     to find the way that will lead to a meeting. He might, e.g., write
     to the Tsar quite openly that, as the relations between their two
     countries had lately been somewhat under a cloud in consequence of
     the inefficient diplomacy of their respective representatives, he
     would be particularly happy to meet him at this juncture. Or the
     suggestion might reach the Tsar _via_ the Grand Duke of Hesse and
     his sister, the Tsarina. But this is immaterial, because the Kaiser
     is sure to find the right way. I can only repeat that the effect of
     the meeting would be enormous. The Russian press and Russian
     society would change their whole attitude, and the agitation in the
     French press would receive a severe setback.'

     "I said to Witte: 'I shall communicate the gist of our conversation
     to Mr. Ballin. As it is quite possible that he will be ready to
     endorse this suggestion, I should like to know your answer to one
     more question, viz., whether, if Mr. Ballin were to submit the
     proposal to the proper quarters, you would allow him to refer to
     you as the originator of the suggestion.'

     "Witte replied: 'Certainly. He may say that I look upon this
     meeting as an event of the utmost importance to both countries at
     the present moment.'

     "I said: 'Seeing that you will be leaving Germany within five days
     from now, would you be prepared to go to Berlin if the Kaiser would
     receive you unofficially?'

     "Witte replied: 'Certainly. At any moment.'

     "When we went for a walk in the afternoon, Witte made reference,
     amongst other things, to various political questions. I shall
     confine myself to quoting only a few of his remarks.

     "'Practically speaking,' he said, 'I think that there will be no
     war, although theoretically the air is thick with difficulties
     which only a war can clear away. But nowadays there is nobody who,
     like William the First, would put his foot down and say: "Now I
     will not yield another inch!" The spot at Ems where this happened
     is now adorned with a monument. Within a few years when the
     armaments which for the present are on paper only, shall be
     completed, Russia will really be strong. But even then, one has
     still to reckon with the possibility of internal complications.
     France, however, need not fear any such difficulties, because
     countries possessing a constitution acknowledged by all their
     inhabitants are not liable to revolutionary movements, no matter
     how often their governments change.'

     "In speaking of Hartwig, Witte remarked: 'His death is the severest
     blow to Russian diplomacy. He was unquestionably the most gifted
     Russian diplomatist. When Count Lammsdorff, who was a great friend
     of mine, was Minister for Foreign Affairs, he used to do nothing
     without first asking my advice. Hartwig, at that time, was the
     chief of his departmental staff, and he often came to see me. Even
     in those early days I had an opportunity of admiring his eminent
     diplomatic gifts.'"

The suggestion which formed the principal subject of the above
conversations--viz. that a personal meeting of the two Emperors should
be arranged in order to remove the existing tension--was not followed
up, and the proposal would in any case have been doomed to failure,
because the politicians who were responsible for the conduct of affairs
at that time had done nothing to prevent the Kaiser from embarking on
his customary cruise in Northern waters.

The latter end of July was full of excitement for the directors and the
staff of the Hamburg-Amerika Linie. We endeavoured to acquaint the
vessels that were under way with the critical situation, and we
instructed each captain to make for a neutral port in case war should
break out. The naval authorities warned us not to allow any ships to put
to sea, and we were particularly asked not to permit the sailing of the
s.s. _Imperator_, which was fixed for July 31st, because the attitude of
Great Britain was uncertain. At a midnight meeting held at Ballin's
private residence it was decided to postpone the departure of the vessel
"on account of the uncertain political situation." Every berth on the
steamer was booked, and hundreds of passengers were put to the greatest
inconvenience. Most of them proceeded to a neutral or to a British port
from which they subsequently embarked for the United States.

After this, events followed upon each other's heels in swift succession.
When war broke out, most of the ships succeeded in reaching neutral
ports, so that comparatively few of them were lost in the early part of
the war. By August 5th the cables had been cut. This circumstance made
it very difficult to keep up communications with New York, and compelled
the majority of our agencies and branches abroad to use their own
discretion as to what to do. The place of regular business was taken by
the work involved in carrying out the various agreements which the
company had entered into during peace time, viz. those for the
victualling and bunkering of various units of the Imperial Navy, for the
supply of auxiliary vessels, and for the establishment of an
organization which was to purchase the provisions needed by the navy.

In the meantime, the Ministry of the Interior had started to devise
measures for provisioning the country as a whole, as far as that was
still possible. It is well known that the responsible authorities had
done far too little--indeed, hardly anything at all--to cope with this
problem, because they had never taken a very serious view of the danger
of war. Even the arrangements of the military authorities in connexion
with the plans of mobilization were utterly deficient in this respect.

The first who seriously studied the question as to what would have to be
done for the provisioning of the military and civil population if
Germany had to fight against a coalition of enemies, and if the overseas
supplies were stopped, was General Count Georg Waldersee, who became
Quartermaster General in 1912. In a letter which he wrote to Ballin
about that time, he gave a very clear description of the probable state
of things in such an emergency. He pointed out that the amount of
foodstuffs required during a war would probably be larger than the
quantities needed in peace time--a contingency which had escaped
attention in Germany altogether--and that above all there would be an
enormous shortage of raw materials. Therefore, he said, if it was
desired to guard the country against disagreeable surprises, it was
imperative to make certain preparations for an economic and a financial
mobilization. The military authorities at least had studied this problem
theoretically, but the civil authorities would not make any move at all.
The general said he thought it desirable that this question should
receive more attention in the future, and he asked Ballin to let him
know his views on the matter, and to give him some practical advice. The
anxiety felt in military quarters was largely augmented by the receipt
of disquieting rumours about the increase of Russian armaments.

In reply we furnished Count Waldersee with a brief memorandum written by
myself in which, amongst other items, I referred him to some suggestions
put forward by Senator Possehl, of Lübeck, in the course of a lecture
delivered about the same time before a selected audience. In view of the
fact that Germany depended for her food supply and for her raw materials
to an increasing extent on foreign sources, there could be no doubt as
to the necessity for making economic preparations against the
possibility of a war, if a war was considered at all probable.

Nevertheless, and in spite of the newly awakened interest on the part of
the military authorities, these economic preparations had, before the
war, made absolutely no progress worth mentioning. The only practical
step which, as far as my knowledge goes, had been taken by the civil
authorities, was the conclusion of an agreement entered into with a
Dutch firm dealing with the importation of cereals in case of war. When,
in the fateful summer of 1914, this contingency arose, the firm in
question had chartered some British steamers, which instead of carrying
their cargoes to Rotterdam took them to British ports.

Thus, no serious efforts of any kind had been made to grapple with the
problem. On Sunday, August 2nd, Geheimrat Frisch, who afterwards became
the director of the _Zentral-Einkaufs-Gesellschaft_ (Central Purchasing
Corporation), came to Hamburg, in order to inform Ballin, at the request
of the Ministry for the Interior, that the latter felt very anxious in
regard to the quantity of food actually to be found in Germany, which,
it was feared, would be very small, and that it was expected that a
great shortage would arise after a very brief period. He therefore asked
him to use his best endeavours in order to secure supplies from abroad.
A Hamburg firm was immediately requested to find out how much food was
actually available in the country, and, although the figures obtained
were not quite so bad as it was expected, steps were taken at once to
remedy the deficiencies by importing food from neutral countries. A
great obstacle to the rapid success of these efforts was the absolute
want of any preparatory work. The very attempt to raise the necessary
funds abounded with difficulties of every kind, because no money had
been set aside for such expenditure in connexion with the scheme of
mobilization, and the time taken by the attempts made in this direction,
as well as the circumstance that communication with the United States
could only be maintained _via_ neutral countries, were the causes of a
great deal of serious delay.

At Ballin's suggestion the _Reichseinkauf_ (Government Purchasing
Organization) was then formed. For this organization the Hamburg-Amerika
Linie was to do all the purchasing, and it was arranged that it should
put at the disposal of the new body all those members of its staff who
were not called up, and who were considered suitable for the work.
Buyers were sent to every neutral country; but the mobilization then in
progress led to a complete stoppage of railway travelling for the civil
population, thus causing no end of difficulties to these buyers, and
making personal contact with the Berlin authorities almost impossible.
Added to all this, there was the inevitable confusion which the
replacement of the civil administration by the army commands brought in
its train. It had, in fact, been assumed that this war would resemble
its predecessors in every respect, and no one was prepared for a world
war. Hence, such important matters as the importation of foodstuffs from
abroad and the work of supplying political information to neutral
countries concerning the German standpoint were sadly neglected;
everything had to be provided at a moment's notice, and had to be
carried through in the face of a great deal of opposition. Funds and
energy were largely wasted; the military, naval, and civil organizations
were working against one another instead of co-operating; and it took a
long time before a little order could be introduced into the chaos. It
was also found that the German credits abroad were quite inadequate for
such enormous requirements. An attempt to dispose of some treasury bills
in New York was only moderately successful, and in consequence of this
lack of available funds the supplies obtained from the United States
were but small. Even the fact that the Hamburg-Amerika Linie immediately
succeeded in establishing the necessary connexions with American
shippers, and in securing a sufficient amount of neutral tonnage, did
not improve matters in the least. To obtain the required funds in
Berlin, as has been explained before, involved considerable loss of
time; and as the months passed the British blockade became more and more
effective. Thus, as the war continued, large quantities of food could
only be procured from European countries.

Ballin took a large personal share in the actual business transacted by
the _Reichseinkauf_. He did so, if for no other reason, because he
needed some substitute for the work connected with the real shipping
business which was rapidly decreasing in extent. The only benefit his
company derived from its new work was that it gave employment to part of
the members of its staff, thus reducing in some measure the expenses.
With the stoppage of the company's real business its principal source of
income ran dry in no time, and the small profits made out of the supply
of provisions to the navy was only a poor compensation.

The world's economic activities in those days presented a picture of
utter confusion. All the stock exchanges were closed; all dealings in
stocks and shares had ceased, so that no prices could be quoted; several
countries had introduced a moratorium, and numerous banks had stopped
payment. Germany had no longer any direct intercourse with the overseas
countries; the British censorship was daily increasing its hold on the
traffic proceeding _via_ neutral ports. At first those foreign steamship
companies which maintained passenger services to America did splendid
business, because Europe was full of American tourists and business men
who were anxious to secure a berth to get home, and numerous cabin
passengers had to be content with steerage accommodation. When this rush
was past, however, shipping business, like international commerce,
entered upon its period of decline. The freight rates came down, the
number of steamers laid up assumed large proportions, and the world's
traffic, in fact, was paralysed.

After a comparatively brief period it was found too difficult to conduct
the _Reichseinkauf_ organization with its headquarters at Hamburg,
because the intercourse with the Imperial Treasury at Berlin, which
provided the funds, took up too much time, and also because it seemed
highly advisable to purchase the foreign foodstuffs needed by the
military as well as the civil population through one and the same
organization. The state of things in respect to these matters was
simply indescribable; indeed, if it had been purposely intended to
encourage the growth of war profiteering, it would have been impossible
to find a better method of setting about it. Numerous buyers,
responsible to different centres, not merely purchased without regard to
each other, but even outbid each other, thus causing a rise in prices
which the public had to pay. Conditions such as these were brought about
by the utter unpreparedness of the competent civil authorities and by
the fact that the military authorities could dispose of the vast amounts
of money placed at their command at the outbreak of the war. These
conditions were doubtless the soil from which sprang all the evils which
later on developed into the pernicious system we connect with the name
of _Kriegswirtschaft_, and for which it will be impossible to demand
reparation owing to the lost war and to the outbreak of the revolution.

In order to facilitate the intercourse with the proper Government
boards, and to centralize the purchasing business as much as possible,
Ballin's suggestion that the seat of the organization should be removed
to Berlin was adopted, and at the same time the whole matter was put on
a sounder footing by its conversion into a limited company under the
name of _Zentral-Einkaufs-Gesellschaft_ (Central Purchasing
Corporation). The history of the Z.E.G. is well known in the country,
and its work has been subject to a great deal of criticism, largely due
to the fact that all the annoyance caused by the many restrictions which
the Government found it necessary to impose, and which had to be put up
with during the war, was directed against this body. Generally speaking,
this attitude of the population was very unfair, because the principal
grievances concerned the distribution of the foodstuffs, and for this
part the Z.E.G. was not responsible. Its only task was to obtain the
necessary supplies from abroad. If it is remembered that the
transactions of the corporation reached enormous proportions, and that,
after all, it was improvised at a time of war, we cannot be surprised to
see that some mistakes and even some serious blunders did occur
occasionally, and that the right people were not always found in the
right places. Moreover, some of the really amazing feats accomplished by
the Z.E.G--e.g. the supply of grain from Roumania, which necessitated
enormous labour in connexion with the transhipment from rail to steamer
and with the conveyance up the Danube--were only known to a few people.
It is obvious that nothing could be published during the war about these
achievements nor about the agreements concluded, after endless
negotiations, with neutral countries and thus the management of the
Z.E.G. was obliged to suffer in silence the criticisms and reproaches
hurled at it without being able to defend itself.

The volume of the work done by the Z.E.G. may be inferred from the fact
that the goods handled by the organization during the four years from
1915 to 1918 represented a value of 6,500 million marks, in which
connexion it must not be forgotten that at that time the purchasing
power of the mark was still nearly the same as before the war. When the
Roumanian harvest was brought in the daily imports sometimes reached a
total of 800 truck-loads. However, the greatest credit, in my opinion,
is due to the Z.E.G. for putting a stop to the above-mentioned confusion
in the methods of buying abroad and for establishing normal conditions.
To-day it is scarcely possible to realize how difficult it was and how
much time it required to overcome the opposition often met with at home.

Not much need be said here about the activities of the Hamburg-Amerika
Linie during the war. The longer the struggle lasted, and the larger the
number of countries involved in the war against Germany became, the
heavier became the company's losses of tonnage and of other property.
All the shore establishments, branch offices, pier accommodation, etc.,
situated in enemy countries, were confiscated, and the anxiety about the
post-war reconstruction grew from month to month. Ballin never lost
sight of this problem, and it is chiefly due to his efforts that the
Government and the Reichstag passed a Bill (1917) providing the means
for the rebuilding of the country's mercantile marine. Along with this
he tried to keep the company financially independent by cutting down
expenses, by finding work for the inland offices of the company, by
selling tonnage, and by other means. The families and dependents of
those employees who had been called to the colours were assisted as far
as the funds at the company's disposal permitted. Of all these measures
the company has already given the necessary information to the public,
and I can confine myself to these brief statements. There is only one
circumstance which requires special mention.

It is universally acknowledged that no German industry has suffered so
greatly through the action of the German Government as the shipping
business. When the discussions as to the rebuilding of the merchant
fleet were being carried on, the Government frankly admitted this fact.
I am not thinking, in this connexion, of those measures which were
imposed upon the Government by the Versailles Treaty, such as the
surrender of the German mercantile marine, but what I have in mind is
the steps taken whilst the war was in actual progress. These have one
thing in common with those imposed by the enemy: their originators have,
more or less, arrived at the belated conviction that they have
sacrificed much valuable property to no purpose. In Great Britain it is
admitted quite openly that the confiscation of the German merchant
fleet has very largely contributed to the ensuing collapse of the
world's shipping markets, and to the confusion which now prevails on
every trade route. The war measures of the German Government--or,
rather, of the German naval authorities--have sacrificed enormous values
merely for the sake of a phantom, thus necessitating the compensation
due to the shipowners--a compensation far from sufficient to make good
even a moderate fraction of the loss. The vessels that can be built for
the sums thrown out for this purpose will not be worth the twentieth
part of the old ones, if quality is taken into account as well as
quantity. This will become apparent when the compensation money has been
spent, and when it will be possible to compare the fleet of German
passenger boats then existing with what the country possessed previous
to the war.

The phantom just referred to was the foolish belief that it would be
possible to eliminate all ocean tonnage from the high seas--a belief
which was in itself used to justify the submarine war, and which was
responsible for the assumption that the withdrawal of German tonnage
from the high seas would affect the food and raw material supply of the
enemy countries. This mistaken idea was also the reason for prohibiting
the sale of the German vessels in neutral ports, and for ordering the
destruction of their engines when it became impossible to prevent their
confiscation. The latter measure, and in particular the manner in which
it was carried out, prove the utter inability of the competent
authorities to grasp the very elements of the great problem they were
tackling, and in view of such lack of knowledge it is easy to understand
the bitterness of tone which characterizes Ballin's criticism of these
measures as contained in his memorandum to the Minister of the Interior
(1917). He wrote:

     "When Your Excellency decided to permit the sale of our vessels in
     the United States it was too late to do so, because the U.S.
     Government had already seized them. Previous to that, when we saw
     that war would be inevitable, and when we had received an
     exceedingly favourable purchasing offer from an American group, we
     had asked permission to sell part of our tonnage laid up in that
     country.

     "Your Excellency, acting on behalf of the Chancellor, declined to
     grant this permission. I am quite aware that neither the Chancellor
     nor Your Excellency as his representative were responsible for this
     refusal, but that it was due to a decision of the Admiralty Staff.
     However, the competent authority to which the protection and the
     furtherance of the country's shipping interests are entrusted is
     the Ministry of the Interior. With the Admiralty Staff itself, as I
     need not remind Your Excellency, we have no dealings whatever, and
     we are not even entitled to approach that body directly in such
     matters.

     "Our company which was the biggest undertaking of its kind in the
     world, and which previous to the war possessed a fleet aggregating
     about 1,500,000 tons, has lost practically all its ships except a
     very few. The losses are not so much due to capture on the part of
     the enemy as to the measures taken by our own Government. If our
     Government had acted with the same foresight as did the
     Austro-Hungarian Government with respect to its ships in United
     States and Chinese waters, the German vessels then in Italy,
     Portugal, Greece, the United States, Brazil, and elsewhere, might
     have been either retained by us or disposed of at their full value.

     "The Austrian ships, with their dismantled engines were, at the
     instance of the Austrian Government, sold in such good time that
     the shipping companies concerned are not only in a position to-day
     to refrain from asking their Government to pass a Shipowners'
     Compensation Bill, as we are bound to do, but they have even
     enriched the Austrian national wealth by such handsome additions
     that their capital strength has reached a sum never dreamt of
     before, and that they are now able to rebuild their fleet by
     drawing upon their own funds, and to make such further additions to
     their tonnage that in future we shall not only be compelled to
     compete with the shipping companies of neutral and enemy
     countries--which have accumulated phenomenal profits--but with the
     Austrian mercantile marine as well.

     "From the point of view of our country's economic interests it is
     greatly to be regretted that the policy of the Government has not
     changed in this respect even now. We have received reliable news
     from private sources to the effect that the engines of the German
     vessels now in Argentine waters have been destroyed without Your
     Excellency having so far informed us of this action, and without
     Your Excellency having asked us to take steps to utilize the
     vessels, if possible, for the benefit of the country's economic
     interests and for that of the completely decimated German merchant
     fleet.

     "Moreover, a wire sent by His Excellency Herr v. Jonquières to the
     competent Hamburg and Bremen authorities states that the ships in
     Uruguayan waters are also in great jeopardy. The Government of that
     country, according to this report, would prefer to purchase them
     rather than confiscate them. After what has been done before, we
     fear that the Admiralty Staff will either not permit the sale at
     all, or only grant its permission when it is too late.

     "Your Excellency, I am sure, is fully aware of the fact that the
     methods of the Admiralty Staff--ignoring, as it does, all other
     considerations except its own--have caused one country after the
     other to join the ranks of Germany's enemies. In view of the
     shortage of tonnage which Great Britain and other of our enemies
     systematically try to bring about--evidently with the intention of
     inconveniencing neutral countries as much as possible--these latter
     feel compelled, for the very reason of this lack of tonnage, to
     declare war upon us, because the politics of our country are guided
     by a body of men who, unfortunately, shut their eyes to the
     economic and political consequences of their decisions.

     "Several months ago, at a time when nobody thought of unrestricted
     submarine warfare, an opportunity presented itself to us of
     concluding an agreement with the Belgian Relief Committee by which
     it would have been possible for us to withdraw our steamers, one
     after the other, from American ports and, under the flag of that
     committee, to bring them to Rotterdam. At that time, it was again
     the Admiralty Staff which prevented the conclusion of this
     agreement, because, for reasons best known to itself, it would
     grant permission for only three of these vessels, although Great
     Britain had agreed that the whole of our fleet interned in U.S.
     ports, representing 250,000 tons in all, could sail under the terms
     of the proposed agreement, and although the Allies as a whole had
     signed a written declaration to the effect that they would not
     interfere with our ships so long as they were used for the
     provisioning of Belgium. I took the liberty of pointing out to
     Captain Grashoff, the representative of the Admiralty Staff, that
     nothing could have prevented us from letting the ships remain at
     Rotterdam after they had completed their mission, and that
     afterwards, as has been borne out by later facts, they could have
     been safely taken to Hamburg.

     "I respectfully ask Your Excellency whether it is not possible to
     enter a protest against such unnecessary dismemberment of part of
     the German national assets....

     " ... I must also protest most emphatically against the
     insinuation--which is sure to be made--that I have no right to
     criticize any steps which the Admiralty Staff has regarded as
     necessary for reasons of our naval strategy. Without reservation
     the German shipowners agree to any measures which are strategically
     necessary, however greatly they may injure their interests. The
     criticism which I beg to make on behalf of German
     shipping--although possessing no formal mandate--concerns itself
     with those steps which might have been taken without jeopardizing
     the success of our naval strategy if the vital necessities of
     German mercantile shipping had been studied with as much
     consideration as this branch of the economic activities of our
     country has a right to claim.

     "What we principally take exception to in this connexion is that no
     information was sent to us before the decision to destroy the
     engines of our ships was arrived at, and that we were not assisted
     in making use of these dismantled vessels in the financial
     interests of our country. Nothing of this kind was done, although
     it was the most natural thing to do so, and although such action
     would have deprived many a country of a reason to declare war upon
     Germany."

To a man of the type of Ballin--who had, throughout his life, been
accustomed to perform a huge amount of successful work--a period of
enforced inactivity was unbearable. The longer it lasted the more he
suffered from its effects, especially because the preparatory work for
the post-war reconstruction, the work connected with the war
organization of the German shipowners, etc., was only a poor substitute
for the productive labour he had been engaged in during more than thirty
years of peace. There is no doubt but that the Government could have
made better use of Ballin's gift of organization, but it must be
remembered that there was really no effective central Government in
Germany throughout the war. The civil administration was not exactly
deposed, but it was subordinated to the military one from the very
beginning, and the latter carried on its work along the guiding lines
laid down in the scheme of mobilization. The authorities to whose care
the economic aspects of the war were entrusted did not often--if at
all--avail themselves of Ballin's advice; and to offer it unbidden never
entered his mind, because he was cherishing the hope that the war would
not last long, and because it was his belief that the world would be
sensible enough to put an end to the wholesale destruction before long.
It was a bitter disappointment to him to find how greatly he was
mistaken, and to see that the forces of unreason remained in the
ascendancy, especially as he was always convinced that Time would be on
the side of Germany's enemies. The sole aim of his political activities
during the war was to bring about peace as early as possible.

Of all the attempts at mediation known to me, the one which seemed to be
most likely to succeed passed through the hands of Ballin. To give a
detailed account of it must be left to a time which need no longer pay
regard to governments and individuals. Ballin's share in it was brought
about through his former international connexions. Through him it
reached the Kaiser and the Chancellor, and owing to his untiring
efforts, which lasted for two years, the position in the early part of
1917 was such that the establishment of direct contact between the two
sides was imminent. Then the unrestricted submarine war began, the
intended direct contact could not be established, and the carefully
woven thread was definitely snapped asunder; because from that time on
the Allies were certain that the United States would join them, and they
felt assured of victory. No other mediation scheme with which I am
acquainted has been pursued with so much unselfishness, devotion, and
energy as this one. This attempt, however, no more than any other, could
have procured for us that kind of peace which public opinion in Germany
had been led for years to expect, thanks to the over-estimation of the
country's strength, fostered by the military censorship and by the
military reports.

From such exaggerated opinions Ballin always held himself aloof. He
recognized without reservation the immense achievements of Germany in
the war, but he was fearful lest the strength of the country could not
cope in the long run with the ever-increasing array of enemies, and he
therefore maintained that, if it was desired to bring about peace, the
Government would have to be moderate in its terms. A much discussed
article which he contributed to the _Frankfürter Zeitung_ on January
1st, 1915, under the heading of "The Wet Triangle," is not inconsistent
with these views of his. In it he pointed out that Germany's naval
power, in order to make a future blockade impossible, should no longer
be content to be shut up in the "wet triangle," i.e. the North Sea, but
ought to establish itself on the high seas. This statement has been
alleged to refer to Belgium, and Ballin has been wrongly claimed a
partisan by those who supported the annexation of that country. What he
really meant was that Germany should demand a naval base on the
Atlantic, somewhere in the northern parts of Africa, and this idea
seemed to be quite realizable if taken in conjunction with the terms of
peace he had in view, viz. no annexations, no indemnities, economic
advantages, a permanent political and naval understanding with Great
Britain, based on her recognition that a military defeat of Germany was
impossible. All this would be somewhat on the lines of the article
published by the _Westminster Gazette_, referred to in the eighth
chapter and a facsimile of which is given at the end of the book. Ballin
was firmly convinced that, even if a mere peace of compromise was the
outcome, i.e. one which left Germany without any territorial gains and
without any indemnities, the impression which the German achievements
during the war would produce on the rest of the world would be so
overwhelming that the country would secure indirectly far greater
advantages than could be gained by means of the largest possible
indemnity and the most far-reaching annexations. Besides, the
experiences of former times had proved that Germany would be quite
unable to absorb such large accessions of territory as certain people
had in mind. These views of Ballin, of course, were looked upon as those
of a "pacificist," and Ballin was classified among their number.

In a letter which Ballin wrote to a friend of his, a naval officer, in
April, 1915, he puts up a highly characteristic defence of himself
against the accusations implied by describing him as "pacificist" and
"pro-English."

     "If," he wrote, "the fact that I have been privileged to spend a
     considerable part of my life in close contact with you, entitles me
     to add a few personal remarks, I should like to say that I have
     made up my mind to retire from my post after the end of the war
     altogether. I told you shortly after the outbreak of the war that
     my life's work was wrecked. To-day I am convinced that it will soon
     come to life again, but my youth would have to be restored to me
     before I could ever dream of taking up again that position in
     international shipping which I held before the war. I cannot
     imagine that I would ever go to London again and take the chair at
     the conferences at which the great problems of international
     shipping would come up for discussion, and nobody, I think, can
     expect that I should be content to play second fiddle at my age.
     Indeed, I cannot see how I could ever re-enter upon intimate
     relations with the British, the French, the Italians, and
     especially with the Americans. Strangely enough, influential
     circles on our side, and even His Majesty himself, look upon me as
     'pro-English,' and yet I am the only German who can say with truth
     that he has been fighting the English for supremacy in the shipping
     world during the last thirty years. During this long period I have,
     if I am allowed to make use of so bold a comparison, conquered one
     British trench after the other, and I have renewed my attacks
     whenever I could find the means for doing so."

It is no secret that during the war many prominent politicians and
economists--men of sound political training--viewed the question of the
war aims which it was desirable to realize very much in the same light
as did Ballin, but that the censorship made it impossible for anyone to
give public expression to such opinions. Ballin's appreciation of the
probable gain which Germany would derive from a peace by compromise has
now been amply confirmed by the undeniable fact that the rest of the
world has been tremendously impressed by Germany's achievements, an
impression which has made foreigners regard her chances of recovery with
much more confidence than she has felt herself, stunned as she was by
the immensity of her _débâcle_.

The following notes, which are largely based on Ballin's own diary, are
intended to supplement the information given so far as to his political
activities during the war.

The outbreak of war, as may be inferred from what has already been
related, took him completely by surprise, and he did not think that the
struggle would last very long. "The necessities of the world's commerce
will not stand a long war," was his opinion during the early days. For
the rest, he tried to find work for himself which would benefit his
country. "What we need to-day," he wrote to a friend, "is work. This
will lift us up and keep us going, and will make those of us who are no
longer fit to fight feel that we are still of some use after all." But
in connexion with this thought another one began to occupy his mind. He
anxiously asked: "Which of the men now at headquarters will have the
strength and the wisdom required to negotiate a successful peace when
the time comes?" All his thoughts centred round the one idea of how to
secure peace; what advantages his country would derive from it; and how
it would be possible to bring about an international grouping of the
Powers which would be of the greatest benefit to Germany. On October
1st, 1914, he wrote to Grand Admiral v. Tirpitz:

     " ... I quite agree with what you say in your welcome letter.
     Indeed, you could not view these matters[3] with graver anxiety
     than I do myself. I hope I shall soon have the opportunity I desire
     of discussing these things with you personally.

     "To win the peace will be hardly less difficult than to win the
     war. My opinion is that the result of this world war, if it lasts
     12 months, will be exactly the same as if it lasts six months. I
     mean to say that, if we do not succeed in acquiring the guarantees
     for our compensation demands within a few months, the further
     progress of events will not appreciably improve our chances in this
     direction.

     "What we must aim at is a new grouping of the Powers round an
     alliance between Germany, Great Britain and France. This alliance
     will become possible as soon as we shall have vanquished France and
     Belgium, and as soon as you shall have made up your mind to bring
     about an understanding with Great Britain concerning the naval
     programme.

     "I am aware that this idea will find but slight favour with you,
     but you will never secure a reasonable peace with Great Britain
     without a naval agreement.

     "By a reasonable peace I mean one which will enable both Germany
     and Britain to sheathe their swords in honour, and which will not
     burden either nation with a hatred which would contain within it
     the germs of future war.

     "We have had no difficulty in putting up with the French clamour
     for _revanche_ for a period of 44 years, because in this case we
     had only to deal with a small group of nationalist firebrands, but
     a British clamour for revenge would produce an exceedingly adverse
     effect on the future of our national well-being and of our share in
     the world's trade and commerce.

     "For a long time past it has been my conviction that the era of the
     super-Dreadnoughts has passed, and some time ago I asked Admiral
     von Müller if it was not possible to consider the question of a
     naval understanding simply on the basis of an agreement as to the
     sum of money which either Government should be entitled to spend
     annually on naval construction, leaving it to the discretion of
     each side how to make use of the money agreed upon for the building
     of the various types of ships.

     "Great Britain is putting up a fight for her existence just as much
     as we do, if not to an even greater extent. Her continuance as a
     world power depends on the superiority--the numerical superiority
     at least--of her navy.

     "I am convinced--always supposing that we shall succeed in
     conquering France and Belgium--that the British terms concerning
     her naval supremacy will be very moderate, and I cannot help
     thinking that a fair understanding regarding naval construction is
     just as important to Germany as it is to Great Britain.

     "The present state of things is the outcome of a _circulus
     vitiosus_, and is bound to produce a soreness which will never
     permit of a sound understanding....

     " ... And what about the further course of the war? I sincerely
     hope that your Excellency will not risk the navy. The expression
     'The Fleet in being' which has never left my memory, and which has
     lately been heard of again, implies exactly all I mean.

     "The navy, in my opinion, has never been, and never ought to be,
     anything but the indispensable reserve of a healthy international
     policy. Just as a conscientious director-general would never dream
     of reducing the reserve funds of his company, unless compelled to
     do so by sheer necessity, we ought not to drag the navy into the
     war, if it could possibly be avoided.

     "What would it profit you to risk a naval battle on the high seas?
     Not only our own, but British experts as well, believe that our
     ships, our officers, and our crews are superior to the British, and
     King Edward emphasized at every opportunity that the crews on
     British warships are not a match to those on German vessels. But
     what are you going to do? Are you going to make them fight against
     a numerically superior enemy? Such a course would be open to great
     objections, and even, if the battle turned out successfully, the
     victors would not escape serious damage.

     "I do not know how your Excellency, and their Excellencies v.
     Müller and Pohl look upon these matters, but since you yourself
     have asked me to state my views, I hope you will not take it amiss
     if my zeal causes me to enlarge upon a subject which is not quite
     within my province. Besides, I have another reason for doing so.

     "It is our duty to prepare ourselves in good time for the peace
     that is to come. Does your Excellency believe it would augur well
     for the future peace if Germany succeeded in inflicting a naval
     victory on the British? I do not think so myself, but I rather
     fancy that the opposite effect would take place.... If the British
     should suffer a big naval defeat, they would be forced to fight to
     the bitter end. That is inherent in the nature of things; even
     those who can only argue in terms of a Continental policy must
     understand it.

     "Even a partial loss of her naval prestige would spell ruin to
     Great Britain. It would imply the defection of the great dominions
     which now form part of her world empire. The _raison d'être_ for
     Great Britain's present position ceases to exist as soon as she has
     lost her naval supremacy....

     " ... And, please, do not lose sight of one further consideration.
     We must find our compensation by annexing valuable territories
     beyond the seas; but for the peaceful enjoyment of such overseas
     gains we shall be dependent on the good will of Great Britain....
     At present, men of German blood occupy leading positions in the
     economic life of almost every British colony, and the open door has
     been the means by which we have acquired a great deal of that
     national wealth of ours which caused the smooth working of our
     financial mobilization when the war broke out.

     " ... For all these reasons I consider it a great mistake that the
     press should be allowed to excite German public opinion against
     Great Britain to the extent it is done. I was in Berlin during the
     week, and I was alarmed when I became acquainted with the wild
     schemes which are entertained not only by the people of Berlin, but
     also by distinguished men from the Rhineland and Westphalia."

Apart from the peace problem there was another matter which gave Ballin
grave cause for anxiety. This was the circumstance that the Kaiser,
because of his long absences from Berlin, lost the necessary touch with
the people, and could not, therefore, be kept properly informed of
popular feeling. He expressed his fears on this account in a letter to a
friend of his amongst the Kaiser's entourage in which he wrote:

     "I hope you will soon be able to induce His Majesty to remove his
     winter quarters to Germany. My common sense tells me that, if a war
     is waged on French and Russian soil, the headquarters ought to be
     situated in Germany. From the point of view of security also I
     consider this very desirable, and I feel a great deal of anxiety
     concerning His Majesty.... Whether it is wise to exercise the
     censorship of the press to the extent it is done, is a question on
     which more opinions than one are possible.... I have just had a
     call from a Mr. X., a former officer, and an exceedingly reliable
     and capable man. He complained bitterly of the rigid censorship,
     and he thought it would be a mistake from which we should have to
     suffer in days to come. It would certainly be a blessing if such a
     man who is highly esteemed by the Foreign Office could be given a
     chance of explaining his views at headquarters."

Among the problems of foreign policy with which Germany saw herself
faced in the early part of the war, those referring to Italy and
Roumania were of special interest to Ballin. The question was how to
prevent these two countries from joining the ranks of Germany's enemies.
Ballin did all he could to bring about the Italian mission of Prince
Bülow. He not only urged the Chancellor to select Bülow for this task,
but he also tried hard to induce the Prince to undertake the thankless
errand involved. In addition to the political importance of the mission,
he laid great stress on its bearing on the food problem.

     "The question of provisioning the German people," he wrote in a
     letter to the Army Headquarters, "is closely connected with the
     solution of the Italian and Roumanian difficulties. No pressure is,
     in my opinion, too strong in order to make it perfectly clear to
     Austria that some sort of an agreement with Italy is a _sine qua
     non_ for the successful termination of this war. If it were argued
     that Italy would come forward with fresh demands as soon as her
     original claims had been satisfied, I think the German Government
     could combat this objection by insisting upon a written promise on
     the part of Italy to the effect that she would not extend her
     demands.

     " ... Political and military considerations make it plain beyond
     any question of doubt that Italy, who will be armed to the teeth in
     March, will not be able to lay down her arms again unless Austria
     arrives at an understanding with her. Thus our greatest danger is
     the uncertainty as to what these neutrals will do, and I hope that
     the ministerial changes in Austria will smooth the way for a
     reasonable attitude towards this regrettable but unavoidable
     necessity. Our aim should be to prevent the scattering of our
     forces, for the burden imposed upon ourselves because of the
     inadequacy of our allies is almost superhuman, and contains the
     danger of exhaustion."

The German mission to Italy suffered through the vacillations of
Austrian politics, and was therefore doomed to failure. Austrian feeling
concerning a compromise with Italy was always dependent on the news from
the Italian front; if this was favourable, people did not want to hear
of it, and in the opposite case they would only discuss such an
understanding most unwillingly. The proposed compromise was looked upon
as a heavy sacrifice, and people were by no means favourably disposed
towards German mediation. Prince Bülow was accused of having "presented
Italy with the Trentino." Disquieting news which Ballin received from
Vienna induced him to report to the Chancellor on the state of Austrian
feeling, and to offer his services if he thought that his
old-established relations with Vienna could be of any use. His offer was
also prompted by his conviction that the German diplomatic
representation in Vienna was not adapted to Austrian mentality.

Thereupon Ballin, early in March, 1915, entered upon a semi-official
mission to Vienna. He first acquainted himself with the actual state of
the Austrian mind by calling on his old friend, his Excellency v.
Schulz, the Vice-President of the Austrian Chief Court of Audits, who
was regarded as one of the best informed personages in the capital, and
who was one of the regular partners of the old Emperor Francis Joseph
for his daily game of tarock. This gentleman told Ballin that the
people of Austria felt a good deal of resentment towards Germany, who
had stepped in far too early as the "advocate of Italy," at a time when
Austria was still hoping to settle Serbia all by herself. This hope,
indeed, had proved an illusion; but Germany's strategy had also turned
out a failure, because she had misjudged the attitude of Great Britain,
and had not finished with France as rapidly as she had expected to do.
Now Austria, confronted by stern necessity, would have to make
concessions to Italy which every true Austrian would view with bitter
grief; and, to bring about the active assistance of Roumania, Count
Tisza would consider a sacrifice in the Bukovina debatable, but never
one in Transylvania. Ballin told his friend that, as far as Roumania was
concerned, he would have to leave it to Austria to settle that question
by herself; and that his mission with regard to Italy was so difficult
that he preferred not to make it more so by trying to solve the
Roumanian problem as well.

Ballin's subsequent interviews with the Prime Minister, Count Stürgkh,
and with the Minister v. Koerber, as well as those with other
influential personages, confirmed these impressions, and he left Vienna
buoyed up by the hope that the conference between German, Austrian, and
Italian delegates which it was proposed to hold at Vienna would lead to
a successful result. Such, however, was not the case, and it is quite
probable that the possibility of arriving at an understanding with Italy
had passed by that time, or, assuming the most favourable circumstances,
that only immediate and far-reaching Austrian concessions could have
saved the situation; but these were not forthcoming.

The next subject which caused much anxiety to Ballin was the question as
to what Roumania would do, a country to whose attitude, considering her
importance to Germany as a food-producing area, he attached even more
value than to that of Italy. In his notes dating from that time he said:

     " ... June 21st, 1915. The news which I received from X. regarding
     the political situation in Roumania and Bulgaria was so serious
     that I felt bound to send copies of these letters to the Chief of
     the General Staff, General v. Falkenhayn, and to inform him that,
     in my opinion, our Foreign Office had now done all it could
     possibly do, and that nothing but some forcible military pressure
     such as he and Baron Conrad could exercise on Count Tisza would
     induce this obstinate gentleman to settle his differences with the
     Balkan States...."

     " ... On this occasion X. expressed a great deal of contempt at the
     suggestion that we should draw upon the members of the old
     diplomacy for additional help. On the whole, he seemed to be very
     proud of the achievements of the Foreign Office, whereas I am of
     opinion that this body has entirely failed, and is of no practical
     use any longer. Things must be in a pretty bad state if Herr
     Erzberger, of all people, is looked upon as the last hope of the
     country. I suggested to the gentlemen that it would do some good if
     the Chancellor were to request the more virulent of the Pan-Germans
     to see him, and to ask Hindenburg to explain to them the military
     situation without any camouflage. This suggestion was favourably
     received, and it is to be passed on to the Chancellor....

     " ... The Chancellor informed me that he was considering whether,
     if Roumania remained neutral, and if the operations against the
     Dardanelles terminated successfully for us, he ought to submit any
     official proposals for peace to our enemies. I expressed my
     admiration of the plan, but told the Chancellor of my objections to
     its practical execution. The Entente, I feared, would refuse to
     entertain the proposals, and the German people would regard it as a
     sign of weakness. The Chancellor asked me to refrain from
     pronouncing a definite opinion for the present, but to think it
     over until our next meeting."

In a letter of July 31st, 1915, Ballin wrote as follows:

     "I should like to express my heartfelt gratitude to you for sending
     on to me the report which contains some of the finest observations
     that have come to my knowledge since the outbreak of the war.

     " ... The writer lays great stress on the belief prevalent in enemy
     and neutral countries alike that Germany is making a bid for
     universal supremacy and for supremacy on the high seas--a belief
     which has spurred on the resistance of the enemy to the utmost, and
     has caused a good deal of bad feeling amongst the neutrals. I
     repeatedly brought this fact to the knowledge of the Chancellor and
     I urgently suggested to him that in some way--e.g., by an Imperial
     proclamation on the anniversary of the outbreak of war, or by some
     other suitable means--we should announce to all and sundry that
     such hare-brained schemes are not entertained by any responsible
     person or body of persons in Germany. I sincerely trust that some
     such steps will be taken at an early opportunity, because otherwise
     I do not see when the war will be over. Though not a pessimist I do
     not believe in taking too rosy a view of things. I envy the British
     because they have the courage openly to discuss in their press and
     parliament the reverses as well as the successes they have had.

     " ... You see I am not taking too cheerful a view of matters. I
     have nothing but the most enthusiastic admiration for the
     achievements of the German people, both at the front and at home.
     Although not gifted politically this people could do wonders if led
     by great statesmen and by great politicians."

     " ... August 10th, 1915. This morning I spent an hour with the
     Chancellor, who had requested me to call on him.... We had a long
     discussion as to the advisability of publishing a statement to the
     effect that Germany would be ready at any moment to discuss an
     honourable peace. She had achieved great successes in the field,
     she was in possession of important mortgages, her armies were
     occupying large tracts of the enemy's country, and she was not
     carrying on a war of aggression but one of defence: therefore such
     a step could not be regarded as a sign of weakness. The
     Chancellor, nevertheless, was afraid that such a step might after
     all be interpreted in that sense. I suggested to him that it might
     be of some use if the Pope could be induced to address a peace
     message to the rulers of the various countries.

     "I also called the Chancellor's urgent attention to the need for
     dealing with the food problem during the ensuing winter, especially
     with relation to the price of meat."

     " ... August 12th, 1915. The United States Ambassador, Mr. Gerard,
     had expressed the desire to discuss with me the question as to the
     advisability of suggesting that President Wilson should mediate
     between the belligerents. I therefore called on him on Tuesday,
     August 10th, and advised him to refrain from any official action in
     that direction, but said that I thought he might ask the President
     to sound opinion in Great Britain as to the chances of such peace
     proposals."

In the early part of September, 1915, Admiral v. Holtzendorff was
appointed Chief of the Admiralty Staff. This appointment gave rise to a
conflict with Grand Admiral v. Tirpitz, who threatened to resign
because, _inter alia_, the Kaiser had issued instructions to the effect
that the Chief of the Admiralty Staff should no longer be subject to the
authority of the Secretary for the Navy, but that he could communicate
with the Kaiser and with the Chancellor direct. Ballin thought a
possible resignation of Admiral v. Tirpitz would be fraught with serious
consequences at that moment, as it would produce a bad impression on
public opinion and be inimical to the position of the Kaiser. These
considerations caused Ballin to intervene in person with Admiral v.
Tirpitz and with the Chief of the Naval Cabinet, with the result that
the Grand Admiral withdrew his intended resignation.

The following extracts are taken from Ballin's notes during the next few
months:

     " ... October 20th, 1915. I am annoyed at the importunity with
     which some interested parties, such as the Central Association of
     German Manufacturers and the representatives of agriculture, are
     pushing forward their views on the peace terms. Moreover, my
     alleged readiness to conclude a 'bad peace' with Great Britain is
     being talked about so widely that even His Excellency Herr v.
     Zimmermann has drawn my attention to the ill effects of such
     calumnies. All this has prompted me to avail myself of the
     opportunity presented by the annual meeting of the Association of
     Hamburg Shipowners of making a speech in which I have explained my
     views as to the freedom of the seas.

     "Prince Bülow will be leaving for Lucerne to-day where he intends
     to stay for some time, and the Prussian _chargé d'affaires_, Herr
     v. Mutius--of whom it has been alleged that the Chancellor
     appointed him to his post on the death of his predecessor (the
     excellent Herr v. Bülow, Prussian Minister to Hamburg) for the
     reason that he might have a watchful eye on Prince Bülow and
     myself--has been promptly transferred to Warsaw. Evidently the
     Berlin authorities now think the danger has passed, since Prince
     Bülow has left."

     " ... November 23rd, 1915. Hammann[4] asked me why I did not call
     on the Chancellor, and I told him that I thought the Chancellor
     might feel annoyed with me for my interference in favour of
     Tirpitz, which, however, would not affect me in any way, because I
     was convinced that I had acted in the best interests of the Kaiser,
     and that it would have been unwise to remove Tirpitz from his post
     so long as the war lasted."

     " ... The Chancellor asked me to see him on Wednesday at 6.30 p.m.,
     and I spent nearly two hours with him. I urgently advised him to
     make a frank statement in the Reichstag as to our readiness for
     peace, and to do so in such a form that it could not possibly be
     looked upon as a sign of weakness."

     " ... On January 10th, 1916, I was commanded to dine with Their
     Majesties at the _Neues Palais_. The only other guests apart from
     myself were the Minister of the Royal Household, Count Eulenburg,
     and the Minister of Agriculture, Herr v. Schorlemer. None of the
     suite were present so that the company consisted of five persons
     only. The Kaiser was in high spirits and full of confidence. The
     after-dinner conversation extended to such a late hour that we did
     not catch the train by which we intended to return, and we were
     obliged to leave by the last train that night.

     "A remark of mine concerning the possibility of an extension of
     submarine warfare had, as the Chancellor had been informed, caused
     the Kaiser to assume that I completely shared the point of view of
     Admirals v. Holtzendorff and v. Tirpitz, who now recommend a
     submarine campaign against Great Britain on a large scale. I
     therefore, at the Chancellor's request, addressed the following
     letter to the Kaiser:

     "'A few days ago I had occasion to discuss with Grand Admiral v.
     Tirpitz and Admiral v. Holtzendorff the question of a resumption of
     the submarine campaign.

     "'I was then given confidential information as to the number of
     submarines at our disposal, and I am bound to say that even if due
     allowance is made for the activity of the mine-seeking auxiliaries
     I regard the number of large submarines as insufficient for the
     purposes of such a finally decisive measure.

     "'The first attempt at submarine warfare proved unsuccessful on
     account of the insufficiency of the means employed to carry it
     through; and it is my humble opinion that a second attempt should
     only be undertaken if its success were beyond the possibility of a
     doubt. If this cannot be guaranteed the consequences of such a
     measure appear to me to be out of all proportion to the risks
     attached to it.

     "'I therefore beg to respectfully suggest to Your Majesty that the
     work of the mine-laying auxiliaries should be carried on as
     hitherto, and should even be extended. I also consider that the
     submarines should be made use of to the fullest extent of their
     capacity, with the proviso, however, that their employment against
     passenger steamers should be subject to the restrictions recently
     laid down by Your Majesty.

     "'When the number of the big submarines shall be sufficient
     effectively to cut off the British food supply, I think the time
     will have arrived for us to employ this weapon against Great
     Britain without paying regard to the so-called neutrals.

     "'At present about two hundred ocean steamers or more enter
     British ports every day, and an equal number leave for foreign
     ports. If we sink a daily average of 30 or 40 we can, indeed,
     greatly inconvenience England, but we shall assuredly not be able
     to compel her to sue for peace.

     "'I humbly apologize to Your Majesty for thus stating my views on
     this matter; but I am of opinion that the extreme importance of the
     proposed steps will be a sufficient excuse for me.'"

In the early part of 1916 Ballin went on a second mission to Vienna, and
afterwards he prepared a detailed report for the Chancellor dealing with
the state of public feeling as he found it. This document presents a
faithful picture of the precarious conditions in that capital which the
German Government had constantly to reckon with, and may therefore be of
interest even now. The following passages are extracts from it:

     "If we desire to keep the Austrian fighting spirit unimpaired we
     must avoid at all hazards suggesting the possibility of an
     understanding with Italy. The Italian war is popular down to the
     lowest classes of the people, and the successful stand against
     Italy is a subject of pride and hope to all Austrians.

     "Hence the circumstance that Prince Bülow has temporarily taken up
     his abode at Lucerne has roused a considerable amount of suspicion.
     Even the officials in the various ministerial departments fear that
     the Prince might intend to make unofficial advances to Italy when
     in Lucerne, and that these steps might be followed in Berlin by a
     movement in favour of a separate peace with Italy by which Austria
     would have to cede the Trentino. People were obviously pleased and
     relieved when I could explain to them that the Prince was greatly
     embarrassed on account of having lost his Villa Malta, and that the
     choice of a suitable residence during the winter had been very
     difficult. They were particularly gratified when I told them--what
     I had heard from the Prince's own lips--that he had had no official
     mission, and that he had not been engaged upon any negotiations.

     "People are especially proud of the Isonzo battles, but they do not
     shut their eyes to the uncertain prospects of a successful Austrian
     offensive. They really consider that Austria has gained her war
     aims, and the old Emperor described the military situation to Frau
     Kathi Schratt by saying that the war was in many respects like a
     game of tarock, in which the winner was not allowed to cease
     playing because the losers insisted upon him going on with the game
     so that they might have their revenge. Matters at first had been to
     the advantage of our enemies: the Russians had overrun Galicia, the
     Serbians had defeated the Austrians at Belgrade, and the French had
     looked upon the retreat from the Marne as a great success. Now,
     however, the war was all in favour of Germany and Austria, and
     therefore our opponents did not want to call a truce just yet.

     "If this comparison which the venerable old gentleman has borrowed
     from his favourite game of cards is correct, the war will not be
     over until one side has nothing further to stake, and the decision
     will be brought about by that side whose human and financial
     resources shall last longest.

     "Banking circles, of course, view the financial situation with the
     utmost gravity, but the general public--in spite of the high prices
     ruling here, and in spite of the great want of food which is much
     more noticeable than with us--regard matters a great deal more
     serenely. This is simply due to the greater optimism so
     characteristic of the Austrians, whose motto is: 'Life is so short,
     and death so very, very long.' They prefer to assign to future
     generations the worries which would spoil their sublunary
     existence.

     "The present Cabinet is looked upon as weak and mediocre. The old
     Emperor clings to Count Stürgkh because of the extensive use to
     which the latter puts the celebrated paragraph 14 of the
     Constitution, by which Parliament is eliminated altogether, and
     which provides the Government with every conceivable liberty of
     action. The all-powerful Tisza gives his support to Count Stürgkh
     just because of his weakness. Hence the attempt to replace the
     latter by Prince Hohenlohe, the present Minister of the Interior,
     is beset with much difficulty. The Emperor wants to avoid a break
     with Tisza at all costs. This state of things makes people feel
     very worried. The strain in the relations between Austria and
     Hungary has greatly increased since my last visit, whereas the
     friendly feelings for Germany are now more pronounced than ever.

     "Our Kaiser everywhere enjoys an unexampled veneration. Within the
     next few days he will be made the subject of great celebrations in
     his honour. Although the tickets of admission are sold at enormous
     prices, even General v. Georgi, the Chief of the National Defence
     Organization--whom I met last night--did not succeed in obtaining a
     box, notwithstanding his high connexions. This morning the
     well-known member of the Hofburg Theatre, Herr Georg Reimers, read
     to me two poems dedicated to the Kaiser which he is going to recite
     that night, and I feel bound to say that it can hardly be an
     unmixed pleasure to the members of the court to witness this act of
     enthusiastic homage paid to our ruler.

     "The Roumanian question, particularly in its bearing on the food
     supply, is regarded by people who are able to judge with great
     anxiety. It is believed that the only thing to do is to send to
     Bucharest experienced men connected with the supply and the
     distribution of food who must be properly authorized to purchase as
     much grain as possible for ourselves and for our allies.

     "The big Austro-German _Zollverein_--or by whatever other name it
     is intended to describe the proposed customs union--is looked upon
     with very mixed feelings. Last night Baron Skoda (the Austrian
     Krupp) explained to me after a dinner given at his house, with the
     lively consent of members of the court and of the big
     manufacturers, that the Austrian interests might indeed profit from
     such a union with the Balkan States, but that it would be better
     that Germany should remain an outsider for a period of fifteen
     years. This is evidently a case of _timeo Danaos, et dona
     ferentes_, and people feel that Austria, owing to her economic
     exhaustion, would be easily absorbed by Germany after the
     conclusion of the war. The Hungarians, naturally, view matters from
     a different angle, not only because the Hungarian farmers would
     like to sell their grain to Germany free of any duty, and because
     industry counts for very little in their country, but also because
     they dislike the Austrians.

     " ... I also dined with Count Tisza. He is a purely Magyar
     politician who regards the international situation from his
     Hungarian point of view, and in conformity with his Magyar
     inclinations. He is evidently a strong if obstinate character, and
     he does not impress me as a man who will give up his post without a
     protest. He, too, thinks the real war aims of Austria-Hungary have
     been accomplished. Serbia is crushed, Galicia liberated, and
     Russian supremacy in the Balkans--formerly viewed with so much
     apprehension--is a thing of the past. All that is wanting now is to
     bring the Italian campaign to a successful conclusion and the war
     may be regarded as over as far as Austro-Hungarian interests are
     involved.

     "Both Tisza and the Austrian society showed strong symptoms of an
     Anglophile leaning. Frau Schratt, who in such matters simply
     re-echoes the views of the old Emperor, seemed very pro-English,
     and had something to say about 'German atrocities.'

     "I mention these facts because I cannot help thinking that,
     notwithstanding the war, some friendly threads must have been spun
     across from England to Austria."

The subject of an unrestricted submarine war, already touched upon by
Ballin in his above-mentioned letter to the Kaiser written in January,
1916, was discussed with much animation in the course of the year, and a
powerful propaganda in its favour was started by certain quarters.
Ballin's attitude towards this question, and particularly towards its
bearing on the possible entry of the United States into the war, is
described with great clearness in a letter addressed to a friend of his
attached to the Army Headquarters. In this message he wrote:

     " ... You ask me to tell you something about the political and
     military situation as I see it, and I shall gladly comply with your
     wish.

     "The American danger seems to be averted for the moment at least. A
     severance of diplomatic relations with the United States would
     have been nothing short of fatal to Germany at the present stage.
     Just because the war may be looked upon as won in a military sense,
     we were obliged to avoid such a catastrophe at all costs. As far as
     military exertions are concerned, it is quite correct to say that
     Germany has won the war, because in order to turn the present
     position into a military defeat our enemies, in the first instance,
     would have to gain military victories in Russia, France, and
     Belgium. These would have to be followed up by our retreat from the
     occupied countries and by their invasion of ours, and they would
     have to defeat us at home. Every sensible critic must see that
     neither their human material nor their organizing powers are
     sufficient for such achievements. The fact is that we have reached
     the final stage of a progressive war of exhaustion, which nothing
     but the intervention of the United States could have prolonged.

     "The accession of Italy to the ranks of our opponents has shown
     what it means if an additional Power enters the war against us.
     From a military point of view the entry of Italy did not materially
     aggravate our position; but the whole aspect of the war, as viewed
     by our enemies, underwent a complete change, and Grey, who shortly
     before had announced that 'there is nothing between us and Germany
     except Belgium,' stated a few weeks subsequent to the Italian
     _volte-face_ that he could not find a suitable basis for peace
     negotiations anywhere.

     "The entry of the United States would have been of immeasurably
     greater effect on the imagination and the obstinacy of our enemies.

     "The very intelligent gentlemen who even now preach the
     unrestricted submarine war, especially the leading members of the
     Conservative and National Liberal parties, are misinformed about
     what the submarines can do. They not only regard it as possible,
     but even as practically certain, that the starvation of Great
     Britain could be achieved if the unrestricted submarine war were
     introduced. I need not tell Your Excellency that such an assumption
     fails to estimate things at their true value. Great Britain will
     always be able to maintain her connexion with the French Channel
     ports. Quite apart from that, she will always succeed in importing
     the 14,000 tons of cereals which she needs every day to feed her
     population even if the number of our submarines is trebled, because
     it must not be forgotten that the submarines cannot operate during
     the night.

     "Hence the whole problem is now, as ever, governed by the axiom to
     which I have over and over again drawn the attention of the heads
     of the Berlin economic associations, viz. that we can no more force
     the British into subjection through our submarines than they can
     hope to wear us out by their starvation blockade. Both the
     submarine war and the blockade are extremely disastrous measures,
     inflicting heavy losses on either side; but neither of them can
     determine the fate of the war nor bring about a fundamental
     improvement in the position of either of the belligerent groups of
     Powers. That, apart from all other considerations, the unrestricted
     submarine war would have exposed us to the open hostility of the
     neutral countries, and might even have caused them to join the
     ranks of our enemies, is an additional contingency which the
     submarine enthusiasts have found it most convenient to dismiss by a
     wave of the hand.

     "If after the war Germany remains isolated from the rest of the
     world, she cannot feed her population, and the doctrine of Central
     European brotherhood promulgated by some of our amiable poets has
     given rise to a movement which is apt to be of the greatest
     detriment to the interests of our country when the war is over.

     "If we had wished to invest large parts of our German national
     wealth in countries like Austria-Hungary, Bulgaria, and Turkey,
     nothing could have prevented us from realizing such a plan at any
     time previous to the war, provided we had thought it economically
     sound.

     "Such a return to a continental policy, I maintain, would be a
     disaster to Germany. Our needs and our aspirations have increased
     to such an extent that we can no longer hope to satisfy them by
     economic isolation or within the framework of a Central European
     economic league of states.

     "It is not because I am at the head of the biggest German shipping
     concern that I tell you these things, but I do so with the
     disinterestedness of a man who hopes to be allowed to retire into
     private life when this terrible war is over. No one can perform
     his life's work more than once, and no one can make a fresh start
     at the age of sixty.

     "The war has considerably strengthened the moral fibre of the
     Chancellor; he has learnt to take upon his shoulders
     responsibilities which, I think, he would formerly have shirked. It
     is much to be regretted that the Conservative party cannot see eye
     to eye with him in so many questions. He is blamed for the fact
     that the Kaiser is so difficult of access, and that he does not
     every now and then receive the leaders of our political and
     economic life, as he should do considering the fateful time through
     which the Empire is passing.

     "If the Chancellor is to succeed in carrying through the huge tasks
     still before him, it is, in my opinion, imperative that he should
     not lose touch with Conservative circles, and I think there is no
     reason why the Kaiser should not ask men like Herr v. Wangenheim,
     Count Schwerin-Löwitz, etc., to visit him from time to time at
     headquarters, and to acquaint him with their wishes and anxieties.

     "I cannot help telling you that the whole nation views with
     profound regret the Kaiser's isolation. Since the outbreak of the
     war I have only once had an interview with His Excellency v.
     Falkenhayn, and the main purpose of my asking for it was to request
     him to bring about a change in this state of things by using his
     influence with the Kaiser. His Excellency frankly told me that he
     had some objections to doing this, but he promised me nevertheless
     that he would exercise his influence in this direction. I am only
     afraid that, because of the excessive burden of work he has to get
     through, the matter has slipped his memory...."

Ballin was not the only one who, as early as 1916, regarded with such
alarm the devastating effects of a possible entry of the United States
into the war; other men of political training thought so too, although
their number was not large. The following passages, taken from two
letters which Ballin received from a member of the German diplomatic
service, show that the feeling was there:

     "February 16th, 1916. My chief apprehensions are purely political.
     Although it seems that for the moment our differences with the
     United States will be smoothed over, there can be no doubt but that
     at times the tension has been so great that a wrong move at the
     critical moment would have caused America to take up arms against
     us. Contrary to what most people seem to think, I regard this
     danger as having by no means passed; in fact I look upon it as
     always lurking in the background. Those who, like myself, have seen
     that the secret ideal of British policy is an alliance and
     permanent co-operation with America, will agree with me that such
     an Anglo-American understanding for the period of this war would be
     of lasting detriment to our whole future. You know England, and you
     know that the course of events has turned the Entente automatically
     into an alliance, although the British, especially those who look
     beyond the actual present, have always felt a great deal of
     aversion towards such a development. The individual Frenchman,
     indeed, is mostly looked upon as a somewhat grotesque and slightly
     ludicrous character, but all the same there exists some sympathy
     with the French as a nation, however artificially this may have
     been brought about; but towards Russia the average Englishman never
     felt anything but an icy aloofness and a great deal of antipathy.
     Hence, the so-called allies of the British have never been the
     cause of unalloyed joy to them.

     "On the other hand, to establish permanent relations with that part
     of the Anglo-Saxon race inhabiting the huge continent across the
     Atlantic has at all times been the aim pursued by every really
     far-sighted British statesman. By means of such an alliance, it is
     hoped to consolidate and to strengthen for many generations the
     foundations on which the venerable but also slightly dilapidated
     structure of the United Kingdom rests. From a purely maritime point
     of view, such an alliance would be of overwhelming strength. In my
     opinion it would be perfectly hopeless for our country, constantly
     menaced as it is by serious Continental complications, to gain the
     trident of Neptune in opposition to these two Powers. I believe an
     Anglo-American league, whose object it would be to prevent us from
     becoming a commercial, naval, and Continental Power, would
     restrict us once more to a purely Continental policy, a policy
     which we have so successfully discarded since the accession of our
     present Kaiser.

     "To frustrate such an alliance must be our principal task. To call
     it into being or even to facilitate its conclusion would be the
     greatest crime against Germany's future which anyone could commit.

     "Let us by all means sink as much enemy tonnage as possible, let us
     lay mines, and let us proceed with our submarine warfare as
     hitherto, or even with more energy, but let the people who are at
     the head of the whole movement be aware of the immense
     responsibility that rests on their shoulders. If our leading men
     speak of a war with America just as cheerfully as though San Marino
     or Montenegro were involved, I cannot help viewing such an attitude
     with the utmost apprehension. The British will use all their
     astuteness and all their energy to exploit any mistakes committed
     by Germany. If they succeed in this, and if, in consequence, our
     relations with the United States become very strained again or
     drift towards a rupture, I fear that we shall not be able to bring
     this war to a successful close, or derive from it any security for
     our future development.

     "Berlin, February 26th, 1916. During the two days I have now been
     here it has greatly depressed me to see a number of fanatics who
     cannot gauge the consequences of their doings attempting to drive
     this splendid German people towards a new abyss. Alas! delusions
     and folly are rampant everywhere. If I were you, I should now
     disregard every other consideration, and explain to the Kaiser as a
     friend that everything is being gambled away: the existence of his
     Empire, his crown, and possibly the fate of the dynasty. It is like
     living in a madhouse; everyone talks about war with Holland,
     America, Denmark and Roumania as though a mere picnic were
     concerned."

During the war Ballin tried over and over again to make the responsible
authorities see the position in the same light as his own observations,
and his repeated discussions with unprejudiced and clear-headed men had
led him to see it himself. The letter reproduced below contains a
description of the general situation at the time of writing (July,
1916). It was addressed to a friend of his in the diplomatic service who
was looking after German interests in one of the countries allied with
Germany, and who had asked him for some information concerning the
situation at home:

     "I am sorry that I can send you no good news at all. The conduct of
     the war and its probable outcome are more of a mystery now than
     ever, and with all that I cannot help feeling that our responsible
     quarters do not even now realize the profound gravity of the
     situation. The political and the military leaders are frequently at
     variance. There is a lack of proper co-operation between Berlin and
     Vienna. We imagine ourselves to be the rider, but we are only the
     horse. The road between Berlin and Vienna is studded with
     compromises of doubtful value, and incapable archdukes are given
     the most important positions.

     "The military situation was favourable until the Austrians thought
     their day of reckoning with Italy had come, and when our own
     Supreme Command set out to cover themselves with laurels in France.

     "Both these undertakings turned out to be political and military
     failures. For hundreds of reasons an early peace is imperative to
     us. As matters stand at present only Great Britain and Russia can
     conclude peace, because France and Italy must be regarded as mere
     British vassals.

     "Since the Cabinets of London and Petrograd remain absolutely deaf
     to our publicly expressed overtures for peace, we have no choice
     but to try to utterly defeat the one or the other of these, our
     principal enemies, either Russia or Great Britain.

     "We could have finished with Great Britain if we had had at least
     300 first-class submarines, and in that case we might have regarded
     a war against America with complacency.

     "However, even if we possessed, as some optimists believe, as many
     as 150 first-class submarines, we could not strike a mortal blow at
     Great Britain and defy the United States as well. Therefore, we
     have only one choice left: we must force Russia, our second chief
     enemy, to her knees.

     "Russia has been badly hit through the loss of the industrial
     regions of Poland. If we had exerted all our strength in that
     direction, and if we had taken Kiev, the economic key to Russia,
     the Tsar would have had no alternative but to conclude a separate
     peace, and this would have settled the Roumanian question at the
     same time.

     "With less certainty, but also, perhaps, with less exertion, it
     might have proved possible to make peace _via_ Petrograd. But what
     have we done instead? We have squandered our forces. The Eastern
     theatre of war was denuded of troops, because at first Falkenhayn
     felt sure he could take Verdun in a fortnight, then by Easter, and
     finally by Whitsuntide. All our forces have been hurled at Verdun;
     rivers of blood have been spilt, and now, in July, we are still
     outside it. And what does it profit us if we do get it? We shall
     only find other and more formidable lines behind it.

     "In the meantime our good Austrians have transferred all their
     reliable officers and men to the Tyrol, and have left nothing but
     the rubbish and their inefficient generals to guard the points of
     danger. And what are the results? A graceful retirement for
     Salandra and the formation of an anti-German coalition government
     in Italy on the one hand, and a manifestation of Austrian
     superiority on the other, but a failure, nevertheless, because the
     Austrians were not strong enough numerically to get down into the
     plain. And even if they had compelled the evacuation of Venetia
     nothing would have been gained. The fate of Italy, as it happens,
     does not depend on Austria, but on Great Britain, who will rather
     watch her starve and perish for want of coal than permit her to sue
     for peace.

     "Although all this is perfectly plain to everyone, our Supreme
     Command seems to be undecided as to whether an offensive with all
     the means at our disposal should be started on the Western Front
     simultaneously with one against Russia, or whether it should be
     directed against Russia only. As far back as last year I exerted
     all my influence--small though it has become--in favour of an
     energetic and whole-hearted offensive against Russia.

     "Well-informed and far-seeing men have justly pointed out that, if
     fortune so wills it, the Kaiser, arm in arm with Hindenburg and
     Ludendorff, could risk a 'bad peace' without danger to himself and
     his dynasty, but it appears beyond doubt that the influence of
     Falkenhayn is all-powerful.

     " ... If we were to arrive at an understanding with Russia to-day,
     we should be able to go on with the war against Great Britain for a
     long time to come, and, by means of unimpeded submarine activity,
     to carry it to a successful issue. In that case we could also
     estimate the danger threatening us from America at as low a figure
     as many who are unacquainted with the position are putting it now.

     "Thus it is my view that it is necessary to abandon definitely the
     belief that the war can be brought to a successful issue on the
     Western Front, and without first defeating Russia. It is greatly to
     be deplored that many observers assert that the Western Powers will
     make peace when they have found out that the big offensive now in
     progress remains without any visible success. Only people who do
     not know Great Britain can put forward such a proposition, but how
     many people are there at the Wilhelmstrasse who do know Great
     Britain? Very few indeed, if any....

     " ... You said you would rejoice to hear from me, and I can only
     regret with all my heart that I have not been able to report
     anything to you in which it would really be possible to rejoice."

A still more serious note is struck in the following letter written in
September, 1916:

     "Very many thanks for your welcome letter of yesterday's date, with
     the contents of which I agree in every detail.

     "I quite share your belief that Hindenburg and Ludendorff must each
     feel like a great physician who is only called in when it is too
     late. Two declarations of war within 24 hours were necessary to
     bring about this change which the German people had been looking
     forward to for months and months. The Chancellor is justly
     reproached for not having had the courage to insist upon the
     appointment of these two men and on the resignation of Falkenhayn
     long ago. It is contended that he should have tendered his own
     resignation if his recommendations were refused, and his neglect to
     do so makes him principally responsible for the fate that is in
     store for us. For a long time back I have kept emphasizing the need
     for transferring our main activities to the Eastern theatre of war,
     and for definitely settling these personal questions.

     "The Chancellor clings to his post because he believes that there
     is no one better qualified than himself to be at the head of
     affairs. Such an attitude reminds me of the old gentleman who
     neither wanted to die nor to retire from his post as president of
     the Berlin Chamber of Commerce, and who bitterly complained to
     those who came to congratulate him on his ninetieth birthday that
     he was compelled to stick to his office, in spite of his advanced
     years, because he could not see a better man to succeed him.

     "It is very sad that we have arrived at such an _impasse_, and I am
     convinced that the present internal political situation is
     untenable. No German Chancellor can possibly carry the business of
     the country to a successful issue if, in the midst of a terrible
     war, he is obliged to fight against an opposition consisting of the
     Conservatives, the representatives of the Heavy Industries, and the
     majority of the National Liberals.

     "As far as I can make out, the Chinese wall surrounding the Kaiser
     has not disappeared with the exit of Falkenhayn from the scene. No
     one is granted access to him who knows something about the events
     that led up to this war, and who, in the interests of his dynasty
     as well as his own, would tell him the unvarnished truth. We are,
     after all, a constitutional country. It would doubtless be best to
     transfer General Headquarters to Berlin, but, of course, people are
     not wanting who object to such a proceeding, asserting that it
     would enable outside influences to acquire a hold on the conduct of
     affairs.

     "How badly people are informed with regard to the actual situation
     was brought home to me when I was in Berlin a short while ago, and
     when X. contended with great emphasis that we should have to attach
     more value to huge indemnities than to annexations. If it is
     possible that the men round the Kaiser count on heavy indemnities
     even now, it shows how sadly they misjudge the real state of
     affairs.

     "My feeling tells me that the present Cabinets, containing as they
     do men who are compromised by their actions since the outbreak of
     war, cannot give us peace. How can anyone imagine that men like
     Bethmann, Asquith and Grey, who have hurled such incredible insults
     at each other, can ever sit together at the same table?

     "The question as to who is to succeed them, of course, abounds with
     difficulties.

     "I recently met some Austrian gentlemen in Berlin. They are
     completely apathetic; they have lost all interest in the future,
     and they themselves suggest that Germany should no longer permit
     Austria to have a voice in the conduct of affairs. Her food supply
     will only last until March 1st. After that date she will depend on
     Hungary and ourselves for her food. She fears that she is not
     likely to get much, if anything, from Hungary; on the other hand,
     she feels sure that we are compelled for our own sake to save her
     from famine.

     "Constantinople, too, has only supplies for a few more weeks.

     "With us at home the paraffin question is becoming very serious. In
     country districts it may be possible to tell people to go to bed at
     curfew time, but the working population of our large cities will
     never consent to dispense with artificial light. Serious riots have
     already taken place in connexion with the fat shortage.

     "I am afraid that Great Britain is trying to bring about such a
     change in the situation as will enable her shortly to tell the
     small neutral countries that no one in Europe will be permitted any
     longer to remain neutral, and that they must make up their minds to
     enter one or the other of the two big syndicates. You see nothing I
     can write to you has even a semblance of comfort in it. I regard
     the future with the utmost apprehension."

In contrast to such views as were expressed in the foregoing letters,
the men who were at the head of affairs at that time maintained that
nothing but the application of rigorous force, or, in other words, the
unrestricted use of the submarine weapon against Great Britain, would
lead to a successful termination of the world war. The propaganda in
favour of that measure is still in everybody's memory. Whatever may be
said in defence of the authors of this propaganda, there is one reproach
from which they cannot escape, viz. that they left no stone unturned to
prevent their opponents from stating their views, and this, on account
of the strict censorship to which the expression of every independent
opinion was subject, was not a difficult matter. Their one-sided policy
went so far that, when a pamphlet on the question of submarine warfare
was written by order of the Admiralty Staff and circulated among a
number of persons, including leading shipping men, Ballin was purposely
excluded, because it was taken for granted that he would not express
himself in favour of the contents. It is not likely, however, that the
methods of reasoning put forward in this document--which was much more
like an academic dissertation than an unprejudiced criticism of a
political and military measure affecting the whole national existence of
Germany--would have induced Ballin to change his views on the submarine
war. Once only, and then merely for a brief period, was he in doubt as
to whether his views on that question were right, but he soon returned
to his first opinion when he found that he had been misinformed
regarding the number and the effectiveness of submarines available.

The inauguration of unrestricted submarine warfare in January, 1917, not
only put a sudden end to the peace movement in which Ballin, as has been
explained on a preceding page, played an important part, but also to the
attempt of President Wilson to bring the two sides together. The details
of the President's endeavours have meanwhile become public property
through the revelations of Count Bernstorff, the German ambassador in
Washington. In both instances a few weeks would have sufficed to
ascertain whether the proposed action was likely to bring about the
desired end, and the former attempt had even led to the impending
establishment of mutual contact between the belligerents. The inability
of the German political leaders to avail themselves of this opportunity,
or at least their failure to do so, has doubtless been the greatest
misfortune from which Germany had to suffer during the whole war.

Notwithstanding the successful exploits of the submarines, Ballin's
apprehensions never left him, and they were not allayed by the
development of the position at home. The letter published below, which
he wrote to the Chief of the Kaiser's Civil Cabinet, believing that this
gentleman would be most likely to assist him in laying his views before
the Kaiser, admirably sums up his feelings, and testifies both to his
real patriotism and to his presentiment of the fate that was to overtake
his country:

     "YOUR EXCELLENCY,

"_April 4th, 1917_.

     The internal conditions of our country fill me with grave alarm,
     and I therefore venture to approach Your Excellency privately with
     this expression of my apprehensions.

     "I do not doubt for a moment that our competent authorities intend
     to extract the utmost advantage to ourselves from the situation
     which is developing in Russia. This Russian revolution may enable
     us to bring the war to a close, and to obtain peace terms which,
     relatively speaking, are not unfavourable.

     "What Germany has achieved in this war is beyond all praise. A
     glance at the map shows how small she is compared with her
     opponents in the field; and yet she is bravely struggling against a
     world in arms in which even the few countries that have remained
     neutral are not our friends. It is, indeed, one grand epic. But
     unfortunately the position at home becomes more untenable every
     day.

     "If we find ourselves compelled to reduce the bread ration still
     more, you will, I am sure, agree with me that the bulk of the
     people will suffer enormously through being underfed. In Austria,
     conditions are said to be worse still, and I am afraid that we
     shall even have to part with some of our stores to feed her
     population.

     "At first sight the Chancellor's speech in the Prussian House of
     Deputies appeared to be somewhat too comprehensive in its range of
     vision; but a few days later, when the news of the Russian
     revolution arrived, it almost seemed that his words had been
     prompted by Divine inspiration. After this Russian news had become
     known, it would have been impossible for him to make this speech
     without giving rise to the suspicion that these events had cast
     their shadow in advance on the Prussian Parliament. Unfortunately,
     however, this favourable development was not followed up by the
     right steps. On the contrary, the Chancellor, after his breezy
     advance in the House of Deputies, has now retired from the position
     he then took up, thus creating the impression that our policy is
     constantly shaped by all sorts of mutually contradictory views and
     currents. Up to now, although the people have to suffer greatly
     through the shortage of food and fuel, their patriotism has put up
     with it because of their faith in the promised electoral reforms.
     It would have been so simple to reiterate this promise, and at the
     same time to point out that so many other things claimed precedence
     during the war, and that so much was at stake, that it would hardly
     be advisable to introduce this great reform at present, seeing that
     there was no time to give proper attention to the careful working
     out of all the details.

     "If now, however, such bills as those dealing with the entailed
     property legislation and with the repeal of the Polish laws are to
     be discussed, such a postponement is no longer justifiable.

     "It almost seems as if the Government is unable to read the signs
     of the times. The fate of the Prussian suffrage reform bids fair to
     resemble that of the sibylline books, of which it was said that
     the longer one hesitated to buy them the more expensive they
     became. To-day the people would still be content to agree to plural
     voting, but when the war is over, and when the Socialist leaders
     are demobilizing their men, inducing tens of thousands of them,
     decorated with the Iron Cross, to air their grievances, it will be
     too late to stop the ball from rolling. It is true that people say
     revolutions are impossible in the era of the machine-gun. I have no
     faith in this theory, especially since the events that have
     happened in Petrograd have become known to us. That, in a country
     like Russia, the reigning family could disappear from the scene
     without any opposition, and without a single Grand Duke or a single
     soldier attempting to prevent it, is certainly food for much
     reflection.

     "I hope Your Excellency will pardon me for thus frankly expressing
     my anxieties, but I considered it my duty to let Your Excellency
     know my feelings."

In May, 1917, Ballin accepted an invitation received from the Supreme
Army Command and paid a visit to General Headquarters, where he found a
great deal of discontent prevailing with the policy of the Chancellor.
He also met the Kaiser, and reports on his visit as follows:

     "After sharing the Kaiser's repast--which was plain and on a war
     diet--I had several hours' private conversation with His Majesty. I
     found him full of optimism, far more so than I thought was
     justified. Both he and Ludendorff seem to put too much faith in the
     success of the submarines; but they fail to see that this weapon is
     procuring for us the enmity of the whole world, and that the
     promise held out by its advocates, viz., that Great Britain will be
     brought to her knees within two months, is, to put it mildly,
     extremely doubtful of realization, unless we can sink the ships
     which carry ammunition and pit-props to England."

In a letter addressed to a gentleman in the Kaiser's entourage he gave a
further detailed account of his views on the optimism prevailing in high
places:

     "I cannot help thinking of the enthusiastic and at the same time
     highly optimistic letter which you had the great kindness to show
     me last night. My opinion is that the gentlemen who form the
     entourage of His Majesty ought not to view matters as that
     interesting epistle suggests that they do.

     "You are a believer in the statistics of Mr. X. I took the liberty
     of telling you last night that statistics are a mathematical form
     of telling a lie, and that, to use the expression of a clever
     Frenchman, a statistical table is like a loose woman who is at the
     service of anyone who wants her. 'There are different ways of
     arranging figures,' as they say in England. I do not know Mr. X,
     neither do I know his statistics, but what I have been told about
     them seemed foolish to me. If we carry on the war, and particularly
     the unrestricted submarine war, on the basis of statistics such as
     he and other jugglers with figures have compiled, we are sure to
     fail in the ends we are aiming at.

     "As concerns the unrestricted submarine war itself, I still
     maintain the view I have always held, viz., that we shall never
     succeed in starving out Great Britain to such an extent as to force
     her Government to sue for a peace of our dictation.

     "I have just had a visit from a Danish friend whom His Majesty also
     knows quite well, and who, together with a committee of delegates
     sent by the Danish Government, will be leaving for England
     to-night. The two members of this committee who represent the
     Ministry of Agriculture have been instructed, _inter alia_, to
     complain that Great Britain now imports much less bacon, butter,
     and other articles from Denmark than she had undertaken to do, and
     that the prices she pays for these imports are much below those
     originally stipulated.

     "Apart from the cargo carried by two small steamers that have been
     torpedoed, Denmark has been able, notwithstanding our submarines,
     to supply Great Britain with all the food required of her. The
     vessels remain in territorial waters until a wireless message
     informs them of the spot where they will meet the British convoy
     which is to take them safely to England. They have to pass through
     only a small danger zone which, as I have said, has hitherto proved
     fatal to no more than two vessels.

     "This fact, to my mind, points to the limits of the success
     obtainable by our submarines. I have constantly explained,
     especially to the Chief of the Admiralty Staff, that I can only
     regard the submarine as a successful weapon if it enables us to cut
     off the British supplies of ore from Spain and Sweden, and also
     those of pit-props, because without the possession of these two
     necessities, Great Britain is no longer able to continue the war. I
     have been assured that our submarines would achieve this task, even
     if torpedo boats were employed as convoys; but the experiences
     gained so far do not bear out these predictions. We succeed,
     indeed, in sinking a few vessels out of many; but suppose there are
     ten ships in a convoy, it still means that nine of them, with their
     supplies of ore and pit-props, safely reach their destination.

     "Let me repeat, the starvation of Great Britain is impossible;
     because, in addition to her own harvests, she only needs from
     twelve to fifteen thousand tons of cereals every day, and these she
     can, if necessary, always obtain at night-time through her Channel
     service, _via_ Spain and France. Even this necessity will hardly
     arise, because two medium-sized steamers are sufficient to carry
     the fifteen thousand tons, and things would have to be very bad,
     indeed, if these did not succeed in reaching a British port. And if
     our statistical tricksters juggle with crop failures, please do not
     forget that new harvests are soon to be expected, and that it will
     not do always to count on crop failures.

     "You will be doing a good work if you can persuade people at
     headquarters to abandon their belief that Great Britain can be
     starved to submission. Unfortunately their other belief, viz., that
     we can cut off her supplies of ore and pit-props, will also have to
     be abandoned.

     "Certainly, the achievements of our submarines have been amazing.
     At their present rate they will enormously diminish the British
     tonnage figures, and raise the hatred of everything German to
     boiling point; but they will not, unfortunately, lead to such an
     end of the war as our Pan-Germans desire. It is a thousand pities!

     "When the submarine problem began to assume practical shape, I
     pointed out to the Chief of the Admiralty Staff that, to be
     successful, the submarine war must be brief; that its principal
     object was not to sink a large number of ships, but to produce such
     a feeling of alarm in neutral countries as to prevent them from
     risking their ships (1) because of the great value of tonnage
     immediately after the war, (2) because of the impossibility of
     finding crews, and (3) because of the insurance difficulty. These
     conditions of success were, indeed, realized during the first four
     weeks; but since that time people, as I had predicted, have got
     used to the danger. The crews are coming forth again, the insurance
     companies issue their policies again, and the ships are put to sea
     again.

     "If the Admiralty Staff, who is doubtless in possession of the
     figures, would submit to you a list of the number of vessels laid
     up in Dutch and Scandinavian ports on March 1st, owing to the
     submarine danger, and another one showing the position as it is
     to-day, you would discover that, at a low estimate, at least 30 per
     cent, of the cargo vessels are running again, and that, after
     another month or so, the number of those still idle will have
     dwindled down to 20 per cent, or less.

     "These are my views on the situation. If we have no other means of
     finishing the war but the submarine menace, it will go on for
     years. I should like to protest in anticipation against any
     suggestion to the effect that I am trying to minimize the
     achievements of the submarines. On the contrary, I have nothing but
     the highest admiration for them, and I really find it quite
     impossible to praise in ordinary prose all that our country has
     done during this war; the whole achievement is one grand epic.

     "Within the next few months the problem will have to be solved how
     to put an end to this devastating catastrophe which is ruining the
     progress of the world. There is no need for me to tell you that the
     position of Germany has grown considerably worse through the active
     intervention of the United States. The fact that this enormously
     wealthy country with its one hundred million inhabitants has turned
     against us is fraught with the most dangerous consequences. Now it
     will no longer be possible for us to continue the war for several
     more years, and then to enforce a peace on lines such as are laid
     down by a noisy section of our people, unless we succeed in
     exploiting the extremely fortunate change in the Russian situation
     in such a way that the vast resources of that country will be at
     our disposal.

     "This letter has become longer than it ought to be, but the gravity
     of the subject with which it deals must be my excuse for going into
     so many details. Perhaps I may avail myself of some future occasion
     to acquaint you with my hopes and fears on other political matters;
     because, as I have already explained, the present state of affairs
     makes it urgently desirable that the gentlemen whose privilege it
     is to be near His Majesty should see things as they really are, and
     not as they would wish them to be.

     "Compare, if you have a chance, the advertisement pages of an
     English paper with those of a German one. I have just come across a
     copy of the _Daily Telegraph_ which I beg to enclose for this
     purpose. I have been in the habit of studying these advertisements
     for many months; they are excellent means of gauging the difference
     in the effects of the war on the two countries."

During the remaining part of 1917, and during the first months of 1918
as well, Ballin took an active interest in the preparations for the Bill
dealing with the rebuilding of the German mercantile marine; in other
respects, especially with regard to political matters, the course of
events condemned him to remain passive. His notes during this period are
few. I select the following passages from them:

     " ... July 17th, 1917. The Erzberger resolution which was chiefly
     aimed at Helfferich and the naval authorities has made the
     Chancellor's position untenable. Everybody turned against Herr von
     Bethmann, and General von Ludendorff informed me by telephone that
     he would resign if Bethmann remained in office.

     "I then had a lengthy talk with His Excellency v. Valentini who
     agreed that it was necessary for the Chancellor to retire; but he
     found it just as difficult as other people to name a suitable
     successor. Vienna had raised strong objections to the appointment
     of Prince Bülow, and, acting upon Valentini's suggestion, I made
     up my mind to approach the Kaiser with a view to discussing with
     him the situation which appeared to me fraught with the greatest
     danger. I therefore asked His Excellency von Reischach to arrange
     such a meeting for me, but on Thursday night I was rung up from
     headquarters and informed that Hindenburg and Ludendorff were
     already on their way to the Kaiser to report to His Majesty on this
     subject. Under these circumstances I did not like to interfere, and
     on Friday I withdrew my application for an interview. The Kaiser
     has told the two generals that he had accepted Bethmann's
     resignation the previous evening. He is thus able to save himself
     from a perplexing situation by contending that he had to give in to
     the wishes of the Supreme Army Command.

     " ... July 25th, 1917. Yesterday I called on Prince Bülow at his
     Flottbek residence, and found him looking better than I had seen
     him for years. After I had left him I had the feeling that the
     Prince, who regards the whole situation with a great deal of
     misgiving, would even be willing to accept the post of Foreign
     Secretary under Michaelis himself, in order to be able to guide our
     foreign policy along sensible lines once more. Contrary to the
     reserve which he formerly showed, he now condemns Bethmann's policy
     with great bitterness. Bethmann, he maintains, by yielding to the
     demand for universal suffrage, acted like a banker on the day
     before bankruptcy who would try to save himself from disaster by
     using his clients' deposits.

     "The Mexico telegram[5] he treated with a good deal of sarcasm,
     remarking that it was the maddest prank since the exploits of the
     Captain of Köpenick, with which I agreed. If anyone, he said, ever
     wrote a comedy on the subject, he would scarcely venture to lay the
     plot in modern times, but would go back to the period when pigtails
     and wigs were the fashion.

     " ... July 30th, 1917. I had several messages over the telephone,
     as well as a visit, from Lieutenant-Colonel von Voss, the Chief of
     Staff with the Altona Army Command, who wanted to consult me as to
     whether Prince Bülow should be offered the post of Foreign
     Secretary. I am afraid, however, that there is not much chance of
     his being appointed. The Prince shares this opinion, and would not
     like the Press to make any propaganda in his favour.

     " ... Sept. 14th, 1917. In the meantime, on August 19th, the Kaiser
     has been to Hamburg on a one day's visit. He came from Heligoland,
     and was brimful of optimism.

     "He pretended to be very well satisfied with his new Chancellor,
     and was very optimistic as to a German victory, an attitude which,
     I am afraid, is not in the least justified by the situation as it
     is."

In the month of September, 1917, Ballin wrote a memorandum for Dr.
Schwander, the newly appointed Secretary of State for National Economy.
Apart from politics this document deals with economic matters, and in
particular with the legislation concerning these during the period of
transition which would succeed the close of the war. Ballin gave a great
deal of thought to these questions, and I shall refer to them later on.
Meanwhile I will quote the text of the memorandum:

_"September 6th, 1917._

     "The fall of Riga shows once more how far superior our military
     achievements are to the work performed by our politicians. With the
     dispatch of the Mexico telegram their folly appeared to me to have
     reached its height; but the descent from that point is but slow.
     The news recently published by the Press to the effect that the
     Federal Council is to deal with the question of the constitutional
     and administrative reforms which are to be granted to
     Alsace-Lorraine, makes me fear that some big political blunder is
     going to be committed again. It is evidently believed that, if
     Alsace-Lorraine were to be established as an independent federal
     state with perhaps some South German prince as its Grand Duke, such
     a measure would remove an obstacle to peace. I, however, consider
     it a great tactical mistake to attempt such a solution of the
     Alsace-Lorraine problem before the war is over. We must never lose
     sight of the fact that each one of the leading actors in the
     political drama has to play to his own gallery, and that therefore
     at the conclusion of peace--which in my opinion can only be one of
     compromise--French diplomacy must be able to show up something
     which the man in the street can be induced to regard as a _succès
     d'estime_. No doubt it would be easier and more to our liking to
     solve the problem in our own way, and at the initiative of our
     Government; but by doing so we would deprive ourselves of another
     possibility for compromising which we ought to keep in order to
     enable the French to retire from the struggle with a fair measure
     of success.

     "We have a bad habit of spoiling the chances of peace by premature
     actions intended to help it on and to prepare the way for it. Just
     think of what we did in Poland! In the same way we deliberately
     diminished the great value of the important asset which we possess
     in the shape of Belgium when we set up the Council of Flanders and
     introduced the administrative partition of that country.

     "Besides these political matters there are others which were better
     left alone for the present. I am thinking of the steps taken to
     regulate our economic restoration after the war. War corporations
     are springing from the ground like mushrooms after rain, and the
     preparations made in order to solve the difficult economic post-war
     problems have an ugly tendency toward establishing too many
     Government-controlled organizations. To my mind the appointment of
     a 'Government Commissioner for the period of Economic Transition'
     is altogether superfluous. We must refrain from all attempts at
     interfering by artificial means with the natural development of
     events. This, however, is precisely what the Commissioner would
     have to do. He would have to act according to instructions received
     from the Bank of Germany or from some specially created body
     dealing with the question of the foreign exchanges and the
     provision of foreign bills.

     "My belief is that our foreign exchanges which have so completely
     got out of order will prove an excellent means of diminishing the
     hatred against us and of making our enemies less disinclined to
     resume business with us. The Americans who are now able to obtain
     goods to the value of M 6.20 for their dollar, instead of M 4.20,
     as they used to do, will soon discover their liking for us again.

     "Another point is that the coming peace, even if we derive no other
     gain from it, will enormously raise German prestige all over the
     world. Prussia became a European Power after the Seven Years' War,
     in spite of the fact that the peace treaty brought her neither a
     territorial nor a financial gain, merely confirming the right of
     Frederick the Great to the possessions he had defended in the war.
     Prestige, however, means credit, and this circumstance makes me
     believe that all these anxious discussions of the foreign exchange
     question and of the need for controlling German payments abroad are
     just as superfluous as the Government control of our economic
     activities during the period of transition.

     "The nations now at war will be impoverished after the war, and the
     state of our exchange and the high prices of raw material will
     compel us to live from hand to mouth as far as the importation of
     raw material is concerned. Pending the return of normal conditions,
     no sensible manufacturer will want to import more raw material than
     he urgently requires.

     "I therefore think we ought to try to induce the Government to
     desist from its proposed control of trade and industries, and to
     restore the old conditions. If the Government's proposal to carry
     on under its own management large sections of our import and export
     trade--in order to make these valuable sources of profit available
     for the reduction of its debts--were allowed to materialize, our
     economic doom would be certain, however attractive the plan might
     be in view of the huge national debt. One must be careful not to
     ignore the fact that the flourishing state of trade and
     manufactures is always largely due to the existence of personal
     relations.

     "If I think of the lessons of the past forty years--a period during
     which the freedom of trade, the freedom of industrial enterprise,
     and the freedom of shipping have led to marvellous successes and to
     the accumulation of huge wealth--I ask myself: 'How is it possible
     that a wise statesman could seriously occupy himself with the plan
     of establishing a Government-bound system in place of it?' How, I
     ask you, can a State-managed industrial organization avail itself
     of the advantages to be had when trade is booming, or to guard
     itself against the losses when there is a slump? What will be the
     attitude of such an organization towards dealings in futures and
     speculation, both of which are indispensable forms of modern
     business enterprise? True, it has been suggested that these
     difficulties could be overcome if some business men were requested
     to accept appointments under this system, and if so-called 'mixed'
     concerns worked by the co-operation of public funds and private
     capital were established. May Heaven grant that this will never be
     done! I am sure you have had even more to do than I with business
     men who had been promoted to the higher dignity of Government
     officials. Most of them have turned out complete failures in their
     new spheres; they have become more bureaucratic than our
     bureaucrats themselves; their initiative and their eagerness to
     take upon themselves responsibilities have never lasted very long.
     Let there always be a fair field and no favour! Personal relations
     and personal efficiency are all that we need for the rebuilding of
     our national economic system. The 'mixed' concerns are bad because
     they lack the necessary elasticity, because they disregard the
     personal equation, and because they impede the indispensable
     freedom of action.

     "I am quite prepared for these views of mine to meet with much
     criticism. People will say: 'All that is very well, but the
     Government's huge indebtedness compels it to take recourse to
     extraordinary measures.' Quite right, but would it not be much
     wiser to reduce this indebtedness by increasing direct and indirect
     taxation, instead of depriving those who have proved during the
     past few decades what they can do of the means that have made them
     so efficient?

     "Even among the efficient business men, unless they be born
     geniuses, a distinction must be drawn between those who can make
     profits and those who can organize. The former kind--who are,
     moreover, but few and far between--will never submit to the
     personal restrictions to which they would be subjected in
     state-managed or 'mixed' concerns. The second kind alone, however,
     would never make any concern prosper.

     "Another consideration is that the enemy countries would view with
     much suspicion any such institutions controlled partly or wholly
     by the Government. I remember quite well the scant respect with
     which the French delegates were treated at the International
     Shipping Conferences before the war. Everyone knew that the big
     French shipping companies, owing to the huge Government subsidies,
     had to put up with a great deal of supervision on the part of the
     Government, and that they could often vote neither for nor against
     the most important proposals with which the Conference had to deal,
     because they had first to obtain the consent of the Government
     commissioner. They were, therefore, simply ignored, as it was clear
     that they could raise no counter-proposals at their own initiative.

     "And truly there is every reason for us to use the utmost caution
     whenever any questions connected with the reconstruction of our
     country are concerned. The excellent Dr. Naumann, with his
     'Berlin--Bagdad' slogan, has already smashed a good many window
     panes which will have to be paid for after the war by the producing
     classes. The suggestion that an economic union of the Central
     European countries should be established was put forward at a most
     inopportune moment, and the propaganda in its favour was bound to
     bring about the retaliatory measures agreed upon by our enemies at
     the Paris Economic Conference.

     "The resolutions of this Conference were of little practical
     importance to us until the day when America entered the field
     against us. If the United States assents to them, it will become
     possible to enforce them, and for this reason I am watching the
     further development of the economic question with growing concern.
     I maintain that peace negotiations should only be started after a
     previous agreement has been arrived at between the belligerents to
     the effect that, on the conclusion of peace, the commercial
     relations formerly existing between them should be restored as far
     as possible, and that the resolutions passed at the Paris Economic
     Conference and at the Central European Conference should be
     rescinded. Such an attitude, however, can only be taken up by our
     delegates if they agree that the former commercial treaties, no
     matter whether they are still running or whether they have elapsed,
     should automatically become valid again for a fairly extensive
     period of time after the close of the war. The disadvantages which
     some of these treaties involve for us are easily outbalanced by the
     advantages secured by the others.

     "Our Government cannot be reminded too often that it is necessary
     to consult experienced men of business in all such questions. Since
     the early days of the war I have vainly tried to convince Herr v.
     Bethmann of this necessity. After all, nobody can possibly be an
     expert in everything. Yesterday, when reading the letters of Gustav
     Freytag to his publisher, Mr. Hirzel, I came across the following
     admirable piece of self-criticism: 'I do not know yet what is to
     become of my work; but I fear I am doing what others, better
     qualified than I, ought to be doing, and that I am leaving undone
     what I ought to do.' Every great leader in our political and
     economic life must have experienced that it is extremely
     unsatisfactory to waste one's time and energy on work which another
     man could do just as well as, or even better than, oneself. This
     the Government should remember whenever it attempts to interfere
     with the big industrial combines, such as trusts, syndicates, etc.
     Wherever a syndicate is necessary in the best interests of any
     industry, a leader will be forthcoming who will create it; and only
     in cases where inferior minds, acting for selfish reasons of their
     own, do not wish to acknowledge the need for combining, the
     Government should be asked to exercise whatever pressure it
     considers advisable in order to further the great aims that are
     involved.

     "I am afraid that after the war we shall lack the funds needed for
     the solution of the traffic problems with which we shall then be
     confronted, especially with regard to our inland waterways. At any
     rate, if we do build the necessary canals immediately after the
     war, we shall find ourselves compelled to charge such high rates to
     the vessels using these waterways that their advantages will
     largely tend to become illusory. Even as it is now, our trade and
     our manufactures are seriously handicapped by the high canal dues
     existing, by the tugboat monopoly, etc. A really far-sighted policy
     which would make it its principal object to assist the progress of
     our foreign trade would have to guard against the mistaken idea
     that the levying of high rates was the only means of obtaining
     interest on the capital invested. After all, even the turnpikes had
     to be abolished in the end.

     "The agitation in favour of separating from Russia the Ukraine,
     Finland, and other parts inhabited by alien peoples--an agitation
     which is becoming noisier every day--troubles me very much. Since
     the early days of the war I have maintained that it must be our
     main war aim to detach Russia from the Entente, and that we must
     endeavour to establish close relations between our own country and
     Russia so that the two of us shall be strong enough to face a
     possible alliance between Great Britain, the United States, and
     France. This should be our aim even now. But if we are going
     deliberately to dismember the Russian Empire and to parcel it out
     into a number of independent units, our political influence after
     the war will be slight indeed, and the result must necessarily make
     itself felt to the detriment of our whole economic life."

At Ballin's suggestion, the members of the Reichstag were invited to
attend a meeting which was to be held in Hamburg during the summer of
1918. Large sections of people in the three Hanseatic cities viewed with
grave concern the plans which the Government entertained for the
economic development after the war, and the meeting had been called to
draw the attention of the visitors to this state of affairs. Three
principal speeches were delivered, and at the close of the meeting
Ballin briefly recapitulated the main arguments against too much
Government interference. Much of what he said on that occasion, and much
of what he had written in the memorandum quoted above, has been borne
out by the events of the recent past, even though the actual terms of
the peace imposed on Germany were much more unfavourable than he had
expected them to be. In addressing himself to the Vice President of the
Reichstag, Geheimrat Dove, and the large number of the elected
representatives of the German people who accepted the invitation, Ballin
said:

     "We should be glad if you would see to it that the Government does
     not put a halter round our necks, and that it refrains from the
     dangerous attempt to employ barrack-room methods where economic
     questions of national and international importance are at stake.
     Let us have air, and light, and freedom to act; and we, by availing
     ourselves of our relations with the overseas countries, shall be
     able to carry out the work that lies before us....

     " ... I am convinced that all the measures which are contemplated
     to stabilize economic conditions during the period of transition
     from war to peace will do more harm than good. If carried into
     practice, they will merely prepare the soil for an economic
     struggle to succeed the present war of arms. We need a peace that
     is doubly secure! We cannot ask our enemies to give us freedom
     where we impose compulsion. We cannot fight for the freedom of the
     seas, and at the same time surround Central Europe with a barbed
     wire.

     "I do not wish to deny that in order to carry out our economic
     tasks a certain amount of Government control will be necessary.
     That, of course, goes without saying; but anything beyond it is an
     unmixed evil. If it is said to-day that the measures to be adopted
     during the period of economic transition are, in some instances,
     intended to remain in force for three years, and if it is announced
     semi-officially that the thousand and one war corporations are to
     be made use of for the purposes of this policy, and that their
     disappearance is to be very gradual--I can only sound a serious
     note of warning against any such designs. When the war is over all
     those who can do efficient work will return to their normal
     occupations; and those who then prefer to remain attached to the
     war corporations in one capacity or other are surely to some extent
     people who have discovered some hidden charms in these
     institutions, or, if not, they are persons who, fearful of the
     risks connected with the unfettered interplay of forces, feel that
     they are better off under the protecting wing of the Government. If
     you are going to entrust the future of our country to such
     organizations for better or worse, the economic war after the war,
     as I have said before, will be sure to follow, and you will have to
     face a war that will last years and years."

As regards the closing months of the war--which are also the closing
months of Ballin's life--it must suffice to refer here to one event
only; one, however, which is of dramatic significance. I am speaking of
Ballin's last meeting with the Kaiser. His notes on this subject,
roughly sketched though they are, require no further comment. I
reproduce them in full:

_"Hamfelde, August 25th (Sunday), 1918._

     "Last Tuesday Herr Deters[6] rang me up to ask me on behalf of Hugo
     Stinnes if I would meet him in Berlin on the Thursday.
     Lieut.-Colonel Bauer, one of Ludendorff's aides-de-camp, a
     gentleman largely responsible for the Pan-German leanings of the
     General and for his close association with the interests of the big
     manufacturers, had been to see Stinnes, and on the strength of the
     information he had received from Lieut.-Colonel Bauer he thought it
     advisable to have a talk with me. I declined the invitation because
     I expected that the work they wanted me to do would be anything but
     pleasant.

     "Next morning Herr Deters rang me up again and told me that Stinnes
     would call on me in Hamburg on Friday morning.

     "I left for Hamfelde on Wednesday afternoon, but returned to town
     again on Thursday, because Stinnes had arranged to call on me as
     early as 10.30 a.m. on Friday.

     "The proposed meeting thus took place on Friday, August 23rd, from
     10.40 a.m. to 1.15 p.m. Stinnes, with admirable frankness and
     directness, started our conversation by stating that the military
     situation had become much worse. Our troops, he said, began to fail
     us in our task, and the number of deserters had been very large
     lately (he mentioned, I believe, that their number was 32,000).
     Ludendorff had told the Crown Prince the plain truth; but it was
     still necessary to explain the true state of affairs to the Kaiser,
     and to make it clear to His Majesty that Hertling, who was
     completely laid up with sickness, could no longer effectively fill
     his post. The real work was done by his son, Captain v. Hertling,
     and no efforts were being made to come to a cessation of
     hostilities. In other directions, too, matters were drifting
     towards a catastrophe. The Minister of War, v. Stein, lacked the
     necessary authority. In many instances the men called up did not
     enlist at all; in Silesia large numbers of them had concealed
     themselves in the woods and forests, and their wives provided them
     with food, while no energetic steps to check these occurrences were
     taken by the Chief Army Command. I replied to Stinnes that if
     Ludendorff agreed I would be ready to undertake the unpleasant task
     of informing the Kaiser, but that it would first be necessary that
     Ludendorff and myself should come to an understanding as to whom to
     propose to His Majesty for the Chancellorship.

_"Continuation. Hamburg, August 26th, 1918._

     "Stinnes said he thought that Ludendorff had Prince Bülow in his
     mind. I told Stinnes that Bülow, in my opinion, might perhaps be
     suitable at the head of a peace delegation, but that it was too
     late to think of him as a possible Chancellor, and that the German
     people--more particularly the Socialists--had not now the requisite
     confidence in his ability to fill the post of Chancellor. Neither
     would he be acceptable to our enemies. It would be difficult to
     persuade Great Britain, the United States and France that a prince,
     especially Prince Bülow, would seriously carry out the
     democratization of Germany. If, however, we really were to discuss
     peace at last it would be necessary that the office of Chancellor
     should be vested in a man to whom our enemies could take no
     possible exception. Stinnes perfectly agreed with me in this
     matter.

     "We continued to discuss other possible candidates for the post,
     but we could not agree on anyone. Finally Stinnes proposed that we
     should both go to Berlin and there continue the discussion together
     with Lieut.-Colonel Bauer, Ludendorff's representative. He would in
     the meantime report to Berlin about our conversation, and he was
     hopeful that we could see Bauer either to-night (Monday), or
     to-morrow (Tuesday, August 27th).

     "This morning Stinnes informed me through Deters that he had sent
     me a wire stating that the proposed meeting could not take place
     until Monday next, September 2nd, at 8 p.m. He proposed that we
     should have a preliminary meeting at the Hotel Continental at 7
     p.m. the same evening. I suggested that it would be better to fix
     this preliminary meeting at 6.30 p.m.

     "I must add that Bauer's (that is Ludendorff's) suggestion was that
     I should not see the Kaiser by myself, but together with Stinnes,
     Duisburg, and Krupp v. Bohlen.

     "I replied to Stinnes that I considered it very inadvisable for
     such a deputation to visit the Kaiser, who would never tolerate
     that four gentlemen--two of whom were perfect strangers to
     him--should speak to him about such matters. It would be better
     that Herr v. Bohlen, or, if Ludendorff attached special value to
     it, I myself should call on the Kaiser in private, and that either
     Herr v. Bohlen or I should then endeavour to induce the Kaiser to
     see the other three gentlemen as well.

     "Stinnes was greatly depressed and took as grave a view of the
     situation as I did myself."

Ballin's notes on the Berlin meeting are confined to a few jottings,
from which it appears that not Lieutenant-Colonel Bauer but Major v.
Harbou in his stead took part in it, and that the question of selecting
a suitable candidate for the Chancellorship proved impossible of a
satisfactory solution. As a last resort, if everything else should fail,
Ballin thought of proposing Stinnes himself, because in his opinion the
situation demanded a man of dictatorial character and with the authority
of a dictator.

Concerning his interview with the Kaiser, Ballin wrote down the
following notes:

     "I arrived at Wilhelmshöhe on the morning of September 5th, and I
     was asked to 'report' to the Kaiser at 12.45 p.m. This expression
     was chosen because the new head of the Kaiser's Civil Cabinet, Herr
     v. Berg, evidently wished to invest my visit with an official
     character which would enable him to be in attendance. After a
     while, however, the Kaiser became impatient and did not wish to
     wait till the hour appointed for the interview. So I was requested
     by telephone to hold myself in readiness by 11 o'clock.

     "I went to the Castle at that hour and waited in the room of the
     aide-de-camp until the Kaiser came and asked me to go for a walk
     with him. However, Herr v. Berg was also there and accompanied us.
     Consequently the conversation lost much of the directness which
     would have been highly desirable in the Kaiser's own interest, as
     well as in that of the country.

     "I found the Kaiser very misinformed, as usual, and full of that
     apparent buoyancy of spirit which he likes to display in the
     presence of third persons. The facts have been twisted to such an
     extent that even the serious failure of our offensive--which, at
     first, had depressed him very much--has been described to him as a
     success. It is now intended to retire to the old Hindenburg line,
     so that the only result of the offensive has been the loss of
     several hundreds of thousands of valuable lives. All this, as I
     have said, is dished up to the poor Kaiser in such a fashion that
     he remains perfectly blind to the catastrophic effect of it.

     "He now puts his whole trust in Herr v. Hintze, whom he evidently
     looks upon as a great light.

     "I told the Kaiser of my grave misgivings and made him clearly
     understand that I did not think there would be much use in entering
     into peace negotiations with Great Britain. I urged that no time
     should be lost in immediately approaching Wilson, who was an
     idealist and who had no territorial aspirations in Europe. If,
     however, the war should continue much longer Wilson would most
     probably become subject to the influences of a war party, and then
     we could no longer hope that he would still insist upon a
     settlement along the lines of his idealist programme.

     "The Kaiser agreed that my views were well founded, but he thought
     we ought not to enter into peace negotiations before the approach
     of autumn, by which time we should have returned to the safe
     position afforded by the Hindenburg line. Then, he thought, we
     should avail ourselves of the offer of mediation which had been
     made by the Queen of Holland.

     "Whenever I was too frank in my criticisms and suggestions, Herr v.
     Berg skilfully interposed. He declared to me when the Kaiser had
     left that it would not do to make His Majesty too pessimistic.

     "I also discussed with the Kaiser the question of doing away with
     the restrictions imposed upon the sale of perishable articles of
     food, such as butter, eggs, etc.; and I pointed out to him that the
     fixing of maximum prices and the issuing of regulations dealing
     with illicit trading merely forced the people to pay exorbitant
     prices, at the same time helping those engaged in underhand trading
     to amass huge fortunes. On this subject, too, the Kaiser fell in
     with my own views, and it was decided to release at least the
     perishable articles, and to allow them to be sold once more through
     the ordinary channels without restriction.

     "The Kaiser also declared that this war would soon be followed by
     another, to which he referred as the Second Carthaginian War. He
     spoke a great deal of an Anglo-American alliance which would, of
     course, be directed against Japan, and the views on political
     subjects which he expressed in this connexion showed that he is
     being very badly advised indeed.

     "Herr v. Berg is obviously conservative and Pan-German in his
     politics, and it seems that his influence is predominant at Court.
     Only on the Prussian suffrage question did he agree with my own
     standpoint, which is that universal suffrage must be granted now
     that the King has promised it.

     "Since the Kaiser and the Kaiserin, on account of the latter's
     illness, were dining alone, I joined the so-called 'Court Marshal's
     table,' together with the Countesses Keller and Rantzau, the
     gentlemen-in-waiting on the Kaiser, and the physician-in-ordinary
     and the chamberlain of the Kaiserin. The duty of acting as court
     marshal fell to General v. Gontard, as Herr v. Reischach had
     unfortunately fallen seriously ill."

In order to illustrate further what has been shown to be Ballin's views
on the character of the Kaiser, I here quote the first part of a letter
of his, dated October 25th, 1918:

     "In the meantime," he writes, "Wilson's reply has been received,
     and it is certain that compliance with its terms will be equivalent
     to capitulation.

     "To my mind Wilson's note clearly shows that he and his allies will
     demand that the Hohenzollerns, or at any rate the Kaiser and the
     Crown Prince, shall relinquish their rights to the throne, and
     that, in consideration of such an act, they will ease their terms
     of peace.

     "Each of the men who are at the head of their respective
     Governments has to play to his gallery, and if these men desire to
     give their audience a convincing proof of the completeness of the
     success they have achieved, they can do no better than demand
     condign punishment for the man who has been held responsible for
     the war, and inflict it upon him. I do not believe that the Kaiser
     would grieve very much if he were given a chance now of retiring
     into private life without much loss of dignity. The war, which was
     something absolutely uncongenial to his whole nature, has had such
     bad effect on his health that it would be desirable in his own
     interest if he were enabled to retire comfortably into private
     life. He must see the force of this argument himself, and it is not
     likely that he would refuse to accept such a chance, as a refusal
     would prejudice the best interests of his country. The Kaiserin,
     however, may be expected to oppose any such solution with much
     feeling. If the Kaiser's grandson were now appointed his successor,
     and if a regent were nominated in whom everybody had confidence,
     the whole German situation would lose much of its seriousness. Of
     course, the abdication of the Kaiser would not take place without
     certain disturbances, but it would be necessary to face these
     disadvantages with a good grace. No doubt the outlook would be
     better if they could be avoided, and if the Kaiser, without losing
     his position, could be invested with rights and duties similar to
     those of the British king, who, broadly speaking, enjoys all the
     advantages of his dignity without having to take upon himself
     responsibilities which he is unable to bear. I quite believe that
     the Kaiser never derived much pleasure from his sovereign powers;
     at any rate, if he did, he has ceased to do so since this
     unfortunate war has been forced upon him."

Ballin's last entry in his diary contains the following passage:

     "Stinnes has sent word to me that the Socialist and Centre parties
     are of opinion that I ought to be nominated to conduct the peace
     negotiations. I have told him that I should not shirk it, but that
     I should be much better pleased if somebody else would do it."

This note was written on November 2nd, 1918. One short week later, on
November 9th, his heart had ceased to beat--a heart which had so warmly
responded to the call of his Kaiser and country, and which had succumbed
to its excessive load of grief and sorrow.




CHAPTER XI

PERSONAL CHARACTERISTICS


To present an exhaustive description of Albert Ballin's life-work within
the compass of this volume is an impossible task, and the more the
writer entered into the details of his attempt to do so, the more
thoroughly did he realize this impossibility.

The story of a life comprising thirty-two years of incessant hard work,
only interrupted when nature's law or a very imperative behest of his
medical adviser made it necessary, and spent at the head of an
undertaking which, as a result of this work, developed into one of the
greatest that the economic history of the generation just passed has
known, cannot be told in full by means of a mere description unless it
be accompanied by volumes of statistics which, however, convey no
meaning to anyone except the initiated.

The author, therefore, had to content himself with delineating a picture
of his hero with a background formed by the events which he himself had
helped to shape, and which, in many instances, had received their
distinguishing stamp through his own genius. The essence of his
character, and the importance of his work to his contemporaries, must
stand out from this background as the portrait of a painter--as seen by
himself--would stand out from a mirror. What the mirror does not show,
and cannot show, is the immensity of the mental forces hidden below the
surface which alone give expression to the portrait; all the factors
which have brought about the final result--the strength, the courage,
the daring, and the feeling of responsibility without which it would
never have been achieved.

Still more difficult it is to interpret the very essence of the
character of him whose work we see before us, or, indeed, to give a
comprehensible account of it to the stranger.

The only way of doing justice to a man of such commanding genius as
Ballin is to try to discover first of all the one essential root
principle of his personality. Having succeeded in that, we shall find no
more difficulty in reconciling the great number of apparently mutually
contradictory traits of his character. This principle is the focus where
all the rays of light are collected from all directions, and which forms
the source of light, warmth, and vital energy.

Albert Ballin was a born business man if ever there was one. To him the
noble words of Schiller's lines apply: "The treasures which his ships
carry across the oceans spell untold blessings to all who receive them."
His whole mind was drawn towards the sea; his inborn inclinations and
the surroundings amidst which he grew up had destined him to be a
shipping man. To the boy Ballin the Hamburg harbour was the favourite
playground; and the seven seas were just large enough to serve as a
field of action for the youth and the man. There was his real home, and
there he felt at rest. How often, indeed, has he assured us that the
sleeplessness to which he fell an unfortunate victim whenever he was
ashore left him as soon as he was on board ship, and that a miserable
river barge was sufficient to have this effect on him. He was proof
against sea-sickness, both bodily and mentally. Thus he became a
shipping man, because it was his natural vocation; and in this chosen
profession of his he became one of the greatest and most brilliantly
gifted rulers the world has ever seen.

Whenever there was a problem to be solved he attacked it in a spirit of
boldness, yet tempered by the utmost conscientiousness and caution. No
task he encountered was so big that his daring could not tackle it and
overcome its difficulties; nothing was so insignificant that he would
not attend to it somehow. Whatever decision his infallible instinct
intuitively recognized as right, and to whatever idea his impulsive
nature had given practical shape, had to pass muster during the
sleepless hours of the night before the tribunal of his restless mind
when, as he used to say, "everything appears wrapt up in a grey mist."
At such times his reason began to analyse and to criticize the decisions
he had reached during the day. Then he would often shudder at his own
boldness, and the torments of doubt would be aggravated by the thought
of the enormous responsibility which he bore towards his company. For it
must be understood that from the day he joined the Hamburg-Amerika Linie
his interests and those of the company became parts of an inseparable
whole.

The company's affairs absorbed all his thoughts at all times; the
company's well-being was the object of his constant care; he devoted
himself exclusively to the service of the company, and the opinions
which he formed in his mind regarding persons and things were
instinctively coloured according to their relationship to the company's
affairs. The gradual progress during its infancy, the later expansion,
and the final greatness of the company, were as the events of his own
life to him; when the proud structure which he had raised collapsed his
life was ended. His thoughts incessantly converged towards this very
centre of his being. All his work, all his words and deeds, were devoted
to the furtherance of the company's interests. He identified himself so
completely with the company that he actually was the Packetfahrt, and
the Packetfahrt was he. Even his love and hatred were rooted in the
company. He remained a grateful and lifelong friend to anyone who had
been of service to the company or to him as representing it.

This highly subjective and indissoluble relationship between himself and
the company--which it had been the dream of his life to raise to the
highest pinnacle of prosperity--is the key to the fundamental principle
which lies at the root of his whole complex personality. But however
well-defined his personal individuality stood out, his subjectivity was
nevertheless animated by a strong sense of duty. His views, for
instance, on the essential principles governing the most perfect
organization which modern capitalism has produced--i.e. the joint-stock
company--were free from any tinge of personal considerations whatever.
He was himself the responsible head of a big joint-stock company, and
instinctively this fact exercised such a powerful influence on all his
thoughts and feelings that it is quite impossible to arrive at a just
appreciation of his character unless this circumstance is borne in mind.
His character which appears so complicated to the cursory onlooker, but
which is in reality of singular simplicity and consistency, is best
illustrated by his reply to a question of one of his friends who had
asked him why he did not allow some piece of scathing criticism which he
had just expressed in private to be made public. "My dear friend," he
said, "you forget that you are not the chairman of the board of
directors of a joint-stock company." What he meant to convey was that
the enmity which he would incur by expressing those views in public
would adversely affect the firm of which he was the head, and that the
interests of his company compelled him to impose upon himself
restrictions which he could ignore in his private capacity.

Although he had nothing but scorn for the very suggestion that this
company should receive at any time any subsidies from public funds, he
made it to the fullest extent subservient to the needs of the public and
of the nation at large. He often remarked that such gigantic concerns
as, e.g., the Hamburg-Amerika Linie, are no longer private ventures
purely and simply. The ties that bind them to the whole economic life of
the nation--and, for the matter of that, to the world in general--are so
close and so manifold that it would be disastrous to ignore them or to
sever them. Hundreds of industrial, commercial, and agricultural
enterprises were lavishly supplied with work through the orders they
received from the Hamburg-Amerika Linie in connexion with the building
and the equipment of its steamers and with the needs of its
organizations on shore. Its hundreds of thousands of passengers and
emigrants, and the huge volume of German-made products and manufactured
articles carried on board its vessels, spread the German name and German
fame throughout the civilized world. Hence, to Albert Ballin the
national flag and that of the Hapag were two symbols expressive of but
one idea.

A man who, like Ballin, was at the head of the biggest German shipping
company and therefore also, by implication, one of the leading spirits
in the economic life of Germany, could not very well hold himself aloof
where high politics were concerned. The more the economic problems
gained in importance, the greater became their bearing on the course of
the country's politics. Ballin, however, would never have become a
professional politician from inclination, because he invariably refused
to be mixed up with the strife of parties. He never officially belonged
to any political party; and although he made friends with members of all
the non-Socialist parties, his general outlook on politics was mainly
coloured by Liberal views, and he was a firm believer in Free Trade.
Whenever questions dealing with the interests of shipping and trade were
involved, he had no difficulty in making the responsible people listen
to his claims and to his suggestions, but he never tried to make his
influence felt on purely political affairs unless they affected the
country's vital international interests. His lengthy and extensive
travels to the countries of Europe, to the North American continent, and
to the Far East, had broadened his outlook. His profession as a shipping
man not only brought him into frequent contact with the heads of the big
shipping companies all the world over, but also with a number of the
financial magnates and industrial captains of Great Britain, the United
States, and other countries of economic importance. He took rank with
the greatest economic leaders as an equal, and this unchallenged
position of commanding authority was reflected by the esteem in which he
was held by the principal statesmen and parliamentarians. He was
familiar with the essential and vital needs of other nations, and he
therefore not only stood up for the national rights whenever they
appeared in jeopardy, but he also raised his warning voice against a
policy provocative of conflicts whenever he thought it possible to avoid
them. Whoever is conscious of his strength is also aware of the
limitations set to his power.

In politics as well as in business he held that "a lean compromise was
preferable to a fat lawsuit," as the German proverb puts it. It has been
mentioned elsewhere in this volume that Ballin was essentially the man
of compromise. It is very probable that the experiences of his early
life had helped to develop this outstanding feature of his personality.
It may be assumed that he, a young man of unknown Jewish family, found
his path beset with difficulties in a city-state like Hamburg, where the
influence of the wealthy patriciate of the merchant classes was
supreme, and that he was looked upon as an upstart even after he had
reached a prominent position himself. The casual observer is far too
much inclined to underestimate the conservative character--both
politically and socially--of the three Hanseatic cities. Still, evidence
is not wanting that Ballin's unusual gifts were occasionally recognized
and appreciated even in the days of his early career. An English
journalist, for instance, who met him some time about 1895,
characterized him by the following words: "He struck me as a great man;
otherwise nothing so incongruous as such a type of man at the head of a
big steamship line could be imagined." That Field-Marshal Count
Waldersee honoured him by his friendship at an early period has been
mentioned in a different chapter of this volume. And even in patrician
Hamburg he found an immensely powerful friend and patron shortly after
he had entered the services of the Packetfahrt. This was no less a man
than the shipowner Carl Laeisz, the most eminent representative of the
"House of Laeisz."

The firm of F. Laeisz, which was successfully owned by its founder,
Ferdinand, his son Carl, and his grandson Carl Ferdinand, has stood
sponsor to all the more important shipping companies established in
Hamburg, and through its great authority helped them all to get over the
critical years of their early youth. The sound principles by which the
firm was guided might sometimes lead to much disappointment on the part
of the shareholders, but they proved to be of unsurpassable benefit to
the companies concerned, and nothing illustrates them better than the
oft-told episode of the shareholder who went to see Carl Laeisz,
complaining that the Hamburg South American S.S. Company did not pay any
dividend. "The object of the company is to carry on the shipping trade,
and not to distribute dividends," was the blunt but characteristic
reply. Being thoroughly unconventional in his habits, Carl Laeisz--no
less than his singularly gifted son, who was one of those rare men whom
it was really impossible to replace--nevertheless did invaluable service
in connexion with the establishment of new firms in Hamburg, and with
the encouragement of existing ones.

It was a great compliment to Ballin that in 1888, when he had only been
associated with the Packetfahrt for a couple of years, and when the
directors asked for authority to increase the joint-stock capital of the
company from 20 to 25 million marks, Carl Laeisz informed them in
advance that, at the general meeting of the shareholders, he would move
an increase of 10 instead of 5 millions, and that this motion was
unanimously carried. Those who have known Carl Laeisz personally will
appreciate what it meant to Ballin when, by way of giving him an
introduction to the London firm of Messrs. J. Henry Schröder, Laeisz
scribbled the following note on the back of one of Ballin's visiting
cards:

     "It gives me pleasure to introduce to you the bearer of this card,
     whom I am proud to name my friend, and to recommend him to your
     protection and to your unfailing kindness.

"Sincerely yours,
"(_Signed_) LAEISZ."



As this card was found among the papers and documents which Ballin left
at the time of his death, it would seem that it was not used for its
intended purpose, but that he preferred to keep it as a souvenir of the
man whom he always remembered with gratitude and affection, and of whose
life he could tell a good number of characteristic anecdotes. The
telegram of which the text is given below is also highly typical of Carl
Laeisz. I have not been able to discover what was the occasion of
sending it, but I am inclined to think that it must be in some manner
connected with the conference held in the Berlin Royal Castle, and
referred to on an earlier page, at which Ballin first attracted the
Kaiser's attention. The text is as follows:

     "Persons who give in without a protest are miserable creatures, and
     being such, they are deserving of nothing but contempt. Suggest
     that you obstinately stick to Hamburg point of view, not only from
     personal conviction, but for other weighty reasons as well. Meeting
     hardly convened simply to induce you to give in."

Although there is scarcely anyone to whom the name of a Hamburg patriot
can be applied with greater justice than to Ballin, and although there
are few people who have done more to promote the well-being and the
prosperity of their native city, and who have had a better appreciation
of one of the most lovable features of her inhabitants, viz. their dry,
unconventional, and kindly humour, it would be wrong to assume that this
local patriotism of Ballin made him blind to the shortcomings and
deficiencies of his native city. On the contrary, his eminent sense of
the realities of life made him see most clearly the points of weakness
in the position of Hamburg, e.g. those connected with the system of her
finances. The so-called Köhlbrand agreement, which, after a hard
struggle, put an end to the long controversy between Hamburg and Prussia
by stipulating that the course of the lower Elbe should be regulated
without detriment to the interests of the town of Harburg, imposed such
a vast amount of expenditure upon Hamburg, and the Prussian local
authorities concerned insisted on securing the payment of such large
compensations to the owners whose rights were adversely affected by the
improvement of the waterway, that it might well be doubted whether
Hamburg could shoulder these enormous burdens.

It speaks volumes for Ballin's unprejudiced mind that he frequently
maintained nothing would be of greater benefit to Hamburg than her
renunciation of her sovereignty as a city-state in favour of
incorporation with Prussia. Prussia, he argued, was her natural
hinterland, after all; and if she consented to be thus incorporated, she
would be such a precious jewel in the crown of Prussia that she could
secure without an effort all the advantages and privileges which
Prussia, by pursuing the strictly Prussian line in her politics, now
actually prevented her from acquiring. In course of time, however, her
present isolation would undermine the foundations of her existence,
especially if and when the increasing volume of traffic passing through
her port should demand a further expansion of the latter, and,
consequently, a further rise in the financial burdens. In that case the
unnatural position which resulted from the fact that the "Elbe delta"
belonged to two different states, and which had its origin in the
political history of the district, would make itself felt with all its
drawbacks, and the ultimate sufferer would be the country as a whole of
which Hamburg, after all, was the connecting link with the nations
beyond the sea.

These are the same arguments and considerations which are used when the
modern problem of a "Greater Hamburg" is under discussion, with this
difference only, that in Ballin's time the only solution which was
regarded as possible was that Hamburg should cast in her lot with her
Prussian neighbour.

Ballin repeatedly vented the full force of his sarcasm against the
advocates of an "out-and-out Hamburg policy" to whom his own views
sounded like heresy, a policy which found perhaps its most comic
expression in the speech of a former Hamburg burgomaster who referred to
the King of Prussia as "our illustrious ally." Ballin did not recognize
the existence of a line of demarcation which, as many lesser minds
imagined, separated republican Hamburg from the rest of Germany. In
reality there is no such separation; Hamburg, indeed, receives year
after year a constant influx of human material and of ideas from her
German hinterland, without which she could not exist at all, and in
spite of which she has never had a superfluity, but--at times, at
least--rather a deficiency of specially gifted citizens. This latter
circumstance and the frequent absence of that quality of mental
alertness which Bismarck, in speaking of the German character in
general, used to designate as the missing "dash of champagne in the
blood" once made Ballin say: "I quite see that what this town wants is
10,000 Jews. I do not, by any means, shut my eyes to the disagreeable
qualities of the Jewish character, but still, another 10,000 of them
would be a decided advantage." This utterance confirms how free from
prejudice he was where the Jewish question was concerned. Although not
at all orthodox, but rather indifferent in his religious views, he was
far too proud to disavow his origin or his religion, or to change the
latter. Of someone who had changed his name, he said, in a tone of
bitter reproach, that he had insulted his father.

Ballin's relations with the working classes and his attitude towards the
Labour question were not such as the Socialist papers were fond of
alleging, especially at the time when the Labour controversy was at its
height, and when strikes were constantly occurring or threatening. The
first big strike affecting Ballin's special sphere of activity was that
of the Hamburg dock labourers in 1896. It was caused by wages disputes
which the Packetfahrt tried in vain to settle by raising the wages paid
to the men. The interests of the employers in the ensuing struggle were
not, however, specially represented by the associations of the shipping
firms, but were looked after by the big "Association of Employers of
Labour," and therefore the attitude taken up by the employers as a whole
was not determined by practical considerations from the point of view of
the shipping companies. The Packetfahrt, however, seems to have
emphasized the necessity of being guided by such practical
considerations, as may be inferred from the fact that the Packetfahrt
was the only one among the large firms of employers which advocated from
the outset that certain concessions should be granted in respect of the
demands put forward by the workmen. Although, as has been remarked, the
company succeeded in seeing its recommendation adopted, the strike
started on November 18th, 1896. At first it was restricted to the
dockers, but the number of the strikers was soon swelled by the adhesion
of the quay-labourers and of several other categories of port-labourers
and seamen. When this had occurred, and when the Packetfahrt suggested
that steps should be taken on the part of the employers with the object
of reaching a friendly settlement, these suggestions did not secure a
majority in the counsels of the employers, and it was in regard to this
that Ballin's notes, under date of December 9th, contain the following
entry: "We are continuing our efforts to induce the Employers'
Association and the Shipowners' Association to give the strikers a
chance of an honourable retreat. What we propose in detail is that the
men should be asked to resume work of their own accord in consideration
of which the employers would promise to submit their grievances to a
_bona fide_ examination. All our efforts have failed because of the
attitude taken up by the Employers' Association. We can only hope that
the Senate will consent to mediate in the conflict." This body, however,
was afraid of being accused of prejudice in favour of the employers, and
declined to act as mediator. "It is very much against my wish,"
Ballin's notes continue, "that our own interests are represented by the
Employers' Association," and on December 23rd, he wrote: "Meanwhile, the
Senate, in reply to the resolution passed by the men, has asked them to
resume work unconditionally against the promise to look into their
grievances, and as far as they appeared to be justified, to redress them
after a joint conference had been held between the employers and the
strikers. This offer of a compromise was rejected by the workmen." The
employers were able to get the most urgent work done by substitute
labour, and the strike came to an end in the early days of February.

Among the subsequent Labour troubles those of 1907 are of special
significance. In that year, after a strike of the dockers and the
seamen, all those employers who had occasion to employ any workmen in
the port of Hamburg founded an organization somewhat on the lines of a
Labour Bureau, called the _Hafenbetriebsverein_. The termination of the
strike just referred to was brought about by Ballin's personal
influence, and it was he who conducted the prolonged negotiations with
the heads of the Labour organization. Later on, in 1911, when the
_Hafenbetriebsverein_ began to conclude agreements with this
organization by which the wages for the various categories of dock
labourers were fixed--a policy which did not exactly meet with the full
approval of large sections of employers, it was again due to Ballin's
influence that these agreements were generally accepted. It is just
possible that a certain event, insignificant in itself, may have
strengthened Ballin's natural tendency towards a settlement along the
lines of a compromise. As has been said before, the year 1907, which,
from the business point of view, had been excellent (at least, during
the first six months), and during which the above-mentioned strike
occurred, was succeeded by a year which brought exceedingly
unsatisfactory earnings to the company. Ballin did what he had done on a
previous occasion, in 1901: he sent a memorandum to all the employees of
the firm asking them to cut down expenses to the lowest possible extent,
to contribute their share towards a more economical working of every
department, and to submit to him any suggestions of their own as to how
the necessary retrenchment could be effected. I was instructed to
examine the general expenses account with a view to finding out in what
way a reduction would be possible, and I drew Ballin's attention to the
fact that the considerable sums which had to be spent in 1907 in
consequence of the strike would, of course, not appear again in the
balance-sheet for 1908, so that this would lead to an automatic
reduction of the working expenses. Ballin was surprised to see how large
this particular item was, and the whole occurrence proved once more that
a lean agreement would have been preferable to a fat lawsuit.

As Ballin was pre-eminently a man whose mind was bent on practical work
and on the production of practical results, it is but natural that he
was greatly interested in the practical aspects of social politics, and
that he applied its principles to the activities in which he was engaged
as far as he thought he was justified in doing so. Not in peace times
only, but also during the war did he hold these views, and when he was
connected with the work of provisioning the civil population, and,
later, with that of preparing the economic post-war reconstruction, he
was frequently brought into contact with men who occupied prominent
positions in the world of Labour.

His capacity for work was enormous and seemed wellnigh inexhaustible. He
made a most lavish use of it, especially in the early part of his life,
and the personal assistance he required with his work was of the
slightest. His greatest aid, indeed, was his marvellous memory, which
almost enabled him to do his work without ever referring to the files of
letters and documents. He could always recall to his mind every phase of
past events, and every detail of all the ships he had built or
purchased, and he was never wavering in the opinion he had formed of
anyone who had ever crossed his path, because such opinion was founded
on facts.

Very gradually only did his fellow-members on the Board of Directors
succeed in persuading him to refrain from putting in an appearance at
his office on Sundays, and to do such Sunday work as he wanted to do at
home. The telegraph and the telephone always kept him busy, both on
weekdays and on Sundays. Even on his travels and on his holidays he
wanted to be informed of all that was going on, and he could be very
annoyed when any important news had been withheld from him, or when he
believed that this had been the case, so that his secretariat, to be on
the safe side, had gone rather far in forwarding on his correspondence
when he was away from town. When I first entered upon my duties with him
he had just returned from a rest cure at Kissingen. He pointed at the
huge pile of letters that had been forwarded to him on his so-called
holiday, adding, in a tone of bitterness: "You see, every expansion of a
business becomes a curse to its leader." Sometimes his absences from
Hamburg would amount to as much as eight months per annum, and it was
certainly no easy task always to know what to send on and what to hold
over until after his return. To do so one had to be well acquainted with
all the details of each transaction and to know what was important,
especially what was important to him; and if one wished to see his mind
at ease it was necessary never to let him think that anything was kept
back from him. Any apparent neglect in this respect he was apt to
regard as a personal slight. And yet the time which he had at his
disposal for attending to current correspondence, both when at the
office and when travelling, was but limited.

The waiting-room outside his private office was nearly always crowded
with intending visitors. The callers were carefully sifted, and all
those who were strangers and those who had come without having an
appointment were passed on to someone else as far as this was possible.
Great credit is due to his ever faithful personal attendant at home and
on his travels, Carl Fischer, for the perfect tact which he showed in
the performance of this difficult task.

In spite of all this sifting, however, the time left for getting through
a day's mail was not sufficient. I therefore, shortly after entering the
company's services, made it a point to submit to his notice only those
letters which I considered of real importance. According to the mood in
which he seemed to be I then acquainted him with the contents of as much
of the remainder as I thought it wise to do. I believe I gradually
succeeded in acquiring a fair amount of skill in reading his mind, and
this facility enabled me to avoid more dangerous rocks than one. I tried
to proceed along similar lines when he was away from Hamburg, especially
when he was taking a holiday. On such occasions I forwarded on to him
only the important letters, taking great care, however, that he was not
kept out of touch with any matter of real consequence, so that he should
never feel that he was left in the dark about anything. After some time
I had the satisfaction of being told by him when he returned from a
holiday that that had been "his first real holiday since he had joined
the Packetfahrt."

Once one had learnt to understand his way of reasoning and his
individual traits, it was not difficult to know how to treat him. If a
mistake had been made, or if some oversight had taken place, the most
foolish thing would be not to tell him so at once. To act otherwise
would mean the immediate and permanent forfeiture of his confidence,
whilst an open admission of the mistake would strengthen his faith
enormously. He hated to be shut out from the actual practice of the
company's business by a Chinese wall of bureaucratic control. Whenever
such a wall was in process of erection he quickly and inexorably pulled
it down, and he always remained in personal contact with every
department and with every prominent member of the staff as far as the
size of the huge undertaking enabled him to do so. For this reason he
but rarely, and only when the pressure of other business was encroaching
too much on him, omitted to receive at his private office the captains
who came to make their reports to the directors. He knew, of course,
every one of them personally, as he had appointed many of them himself
years ago. He was no stranger to their various idiosyncrasies, and he
knew all their good qualities. He was also personally acquainted with a
great many of those unconventional and often somewhat blunt but always
good-natured individuals of humble rank who seem to thrive wherever much
shipping is going on. He was not too proud to write an appreciative
article on the death of one of them, which, since it reflects high
credit on his own generosity and kindness of heart, ought not to be
allowed to be forgotten altogether. It was published by the _Hamburger
Fremdenblatt_, to the staff of which the subject of his appreciation
might, in a sense, be said to have belonged.

                                KUSKOP.

     "It was not until my return from England that I learnt, through
     reading the _Fremdenblatt_, the news of the death of Karl
     Kuskop--news which made me feel very sad indeed. Kuskop ranked high
     among the few remaining real 'characters' of whom he was a type,
     and as I was not able to pay my last respects to him I feel a
     desire to do honour to his memory by a few words of personal
     recollection, although Dr. Obst has already done so by means of an
     excellent article of his own. For I believe I owe a few words of
     farewell to a man of whom I have heard nothing but what was good
     and generous throughout the better part of thirty years.

     "Karl Kuskop was a 'character' in the best sense of the term. He
     was as harmless as a big child; and although he could scarcely be
     said to be prominently gifted for his work, he did, indirectly at
     least, a great deal of good within his humble sphere. His
     popularity amongst all sorts and conditions of men connected with
     shipping was tremendous. My personal acquaintance with him dates
     back to the early trial trips of our steamers and similar
     occasions--occasions at which Kuskop was present as the
     'representative' of the _Fremdenblatt_. I still have a vivid
     recollection of a magnificent summer evening when we, a party of
     about eighty people, left the passenger reception halls by our
     saloon-steamer _Blankensee_ on our way to Brunshausen where we
     intended to go on board one of our new boats which was ready for
     her trial trip. Kuskop, who was wearing his yachting cap and was
     armed with a pair of huge binoculars, had taken up a position on
     deck. He stood out very conspicuously, and a port labourer who was
     working on board an English steamer as soon as he saw him, raised
     the cry of _'Fremdenblatt_.' This cry was immediately taken up by
     the people on the quay-sides, on the river-vessels, on the
     ferry-boats, on the barges, and all other vessels in the
     neighbourhood, and developed into quite an ovation which was as
     spontaneous as it was popular. The worthy Kuskop appeared to be
     visibly gaining in importance; he had taken off his cap, and the
     tears trickled down his kindly face.

     "He well deserved this popularity. For years and years he
     unfailingly saw to it that the Hamburg steamers, at whatever port
     of the globe they arrived, found a _Fremdenblatt_ waiting for them,
     thus providing a valuable and much appreciated link between the
     crews and the old home. I myself have also reaped the benefit of
     his attentive care. Years ago when I was making a trip round the
     world I found the _Fremdenblatt_ waiting for me wherever I went;
     and after having been so much out of touch with the civilized world
     for weeks, that even Kuskop's genius could not discover my
     whereabouts, I was agreeably surprised to find on arriving at
     Vancouver all the old copies of the _Fremdenblatt_ that had failed
     to reach me, carefully piled up in one of the sleeping compartments
     of the saloon carriage which had been placed at my disposal for the
     railway journey from the Pacific to the Atlantic seaboard.

     "At that time I personally experienced the pleasant sensation--of
     which our captains and the other officers had often spoken to
     me--which one feels on reading the back copies of old newspapers,
     calling up, as it does, vivid recollections of home. In company
     with my wife, and some German officers who were returning from the
     scene of unrest in China in order to complete their convalescence
     at home, I greedily devoured the contents of the old papers from
     beginning to end, thus passing in a delightful way the time taken
     by travelling the long distance from Vancouver to Montreal. The
     idea, which was afterwards made use of by Oskar Blumenthal in a
     witty article, occurred to me to edit a paper which would publish
     the news of the day a week after it had been reported, and even
     then only as much of it as had proved to be true. Such a newspaper
     would save us a great deal of unnecessary worry, as the contents of
     this 'Periodical for the Dissemination of Truthful News' would be
     sifted to a minimum.

     "But it is time to cut short this digression. When I met my friend
     Kuskop again after my trip, it was at Stettin on the occasion of a
     launch. He happened to be in especially high spirits, and even more
     communicative than usual. He then told me the tale of his friend
     Senator Petersen, and it is such a good story that it would be a
     pity not to record it here.

     "It had become customary for the ships' captains and the other
     ships' officers who could boast his friendship to treat poor Kuskop
     to the wildest canards in return for his supplying them with
     reading matter from their far-away home. One afternoon, when they
     were sitting over a bottle of old port in Hermann Bade's wine
     restaurant at Stubbenhuk and it was getting late, one of them--he
     always referred to them as 'them young fools'--told him that a
     river barge loaded with arsenic had just sprung a leak in the
     harbour, so that it might become necessary to prohibit the use of
     water for drinking purposes for some time. It was about five
     o'clock and Kuskop, according to his own account, did not even stop
     to finish his glass of port, but hurried to the offices of 'his'
     paper which, in its next edition, published it as a fact that a
     quantity of arsenic had vitiated the water of the Elbe. Next
     morning, when Kuskop was still soundly asleep, two detectives
     appeared at the house in which he lived, and escorted him to
     headquarters, where he was locked up. At ten o'clock he was taken
     up before Mr. Livonius--or whoever was the chief of police at that
     time--who, with much abuse, demanded particulars concerning the
     arsenic affair. Kuskop, seeing at once that one of 'them young
     fools' had been pulling his leg, refused to supply any information
     whatever. He was then brought before Senator Petersen, who, with a
     great display of persuasion, tried to make him reveal the name of
     his informant. Kuskop, however, remained obstinate, and the
     Senator, changing his methods from persuasion to coercion, had him
     locked up again. He remained in confinement till five o'clock in
     the afternoon, and was then taken before Senator Petersen for the
     second time, who now peremptorily demanded that he should state his
     informant's name. Kuskop replied: 'Herr Senator, if you were in my
     position, you would not give him away yourself.' The Senator turned
     round to the police officials and said: 'Mr. Kuskop is a gentleman,
     you see. We shall not get anything out of him. The best thing you
     can do is to chuck him out,' which suggestion was thereupon
     promptly and most efficiently carried out by some of those who were
     present.

     "Another of his adventures he confided to me when a trial trip had
     taken us right out into the North Sea. One of 'them young fools,'
     he said, whom he regularly met at Mutzenbecher's tavern, had told
     him as the very latest news that Captain Kier had been taken into
     custody at Rio on the unfounded allegation of having committed
     theft. Kuskop, feeling somewhat sceptical on hearing this
     intelligence, but not believing himself justified in depriving the
     readers of the _Fremdenblatt_ of such a highly interesting item of
     news, thought he would be extra careful this time, and so did not
     mention the captain by name, but merely referred to him as 'a Mr.
     K----, captain of a Hamburg steamer.' This happened in the good old
     times when there were still real winters in Hamburg, and when the
     Elbe was sometimes ice-bound for months. The Hamburg steamers were
     then compelled to take up winter quarters at Glückstadt--of all
     places--and Kuskop used to establish a 'branch office' at that town
     on such occasions. As bad luck would have it, he was fated one day
     to meet Captain Kier there, who, with some of his friends, was
     dining at his hotel. A huge tureen of soup with an enormous ladle
     stood on the table in front of the captain, who was just about to
     serve the soup when Kuskop entered the room. Without a moment's
     hesitation the captain seized the ladle, the tureen, and everything
     he could lay his hands on, and hurled them at him. He was, as the
     latter afterwards confessed to me with the most innocent
     expression, offended by the newspaper report, because, as it
     happened, he was the only captain K---- on the route from Hamburg
     to Rio at that particular time. He subsequently brought an action
     against Kuskop, who had to retire from his business for some weeks
     in order to get over the consequences of the mistake he had made.

     "These are only two of the minor adventures from Kuskop's ample
     store of reminiscences. It is a pity that our sea-faring men are so
     reticent; otherwise they would be able to furnish a volume of
     material concerning Kuskop that would far exceed that relating to
     Kirchhoff, that other well-known Hamburg 'character.' I wish
     someone would collect all the Kuskop stories; for I do not believe
     that we shall ever again come across such a perfect specimen of his
     kind as he was, and it would be sad to allow such a man to be
     forgotten.

     "Kuskop, however, was not only a 'character': he was also a 'real
     good sort,' and he has been of real service to all those who have
     ever travelled on Hamburg vessels. Because of that it is certain
     that he will long be remembered; for it is not to him that the
     following quotation can be applied: 'May each one of us--whether he
     works with his hands or with his brain to earn a living
     wage--always bear in mind that all that is best in him is gradually
     lost in the process of toil, and that, after he has departed this
     life, nobody will remember that he ever existed.'

     "Our friend Kuskop never lost his good qualities in the process of
     toil, and he was always a friend and a helpmate to all decent
     people. I am sure in saying this I have the support of all who knew
     him, and so with us his memory will always be kept green."

Ballin very frequently went to New York--which might be called the most
prominent outpost of the company--because he recognized the value of
being in constant touch with every aspect of the many activities carried
on by the Packetfahrt, and especially with those persons whose interests
it was of importance to the company to cultivate. The numerous pool
conferences often took him to London, where he always made a point of
keeping on friendly terms with the leading British shipping firms, and,
later on, with some of the leading politicians as well. There were few
people in Germany who could rival him in his knowledge of the psychology
of the American or the British mind. This knowledge resulted from his
great capacity for rapidly and correctly summing up the character of
anyone with whom he had to deal. He had developed to a high degree the
art of treating the different types of people he met according to their
different individualities. His kindness of heart, his brilliant powers
of conversation, his prodigious memory, his quickness of repartee, and
his keen sense of humour made him a favourite wherever he cared to be
one. One felt his charm as soon as one came into personal contact with
him. His wonderfully alert eye, which could express so much kindness,
the soothing tones of his melodious voice, and the firm and friendly
grip of his hand, made one forget that he was not a handsome man,
although his powerfully developed forehead and his head which, in later
years, was almost bald, were of classic perfection.

Albert Ballin would never have gained the commanding position he held if
the keenness of his intellect and the force of his character had not
been supplemented by that pleasing amiability which distinguishes all
really good men. To him was given a large measure of that noble courtesy
which springs from the heart. He who could be hard and unyielding where
the business interests entrusted to his care were at stake, was full of
generosity and sympathy towards the members of his family circle and his
friends. Nothing delighted him more than the happiness of others. Those
whom he cared for he treated with a tender regard which was deeply
touching. He loved to give presents, and did so with the most delicate
tact. He never expected any thanks; it was sufficient for him to see the
happy face of the recipient. And if he ever met with ingratitude or
spitefulness, he ignored it and dismissed it from his mind.

Personally generous to the limit of extravagance, he never spent a penny
of the funds of his company without being convinced that it would be to
its benefit. He left nothing undone when he thought he could realize a
profit to the company, or cut down expenses. Money, to him, was only a
means to an end; and the earnings of the company were in the first place
intended to be spent on increasing its scope and prosperity wherever
possible. Those who know what remuneration the heads of other concerns
receive may well be surprised to see how little Ballin made for himself
out of his position, but they would do him a great injustice if they
thought he ought to have made more out of it. He even spent the greater
part of his income for purposes of representation in the interests of
his company. His amiable charm of manner and his brilliant
conversational gifts did much towards making the entertainments he
provided the successes they invariably were; and even if so much
representation, especially that in connexion with Kiel Week, became
somewhat of a burden to him, his company reaped rich benefit from his
munificence.

But to appreciate to the full the charm of his personality one must have
been his guest at his beautiful home in Hamburg or at his beloved
country seat near Hamfelde, and have listened to his conversation while
sitting round the fire of an evening, or been his companion on his long
walks and rambles through the neighbouring Forest of Hahnheide. His
conversation was always animated, his witty remarks were always to the
point, and he was unsurpassed as a raconteur. He was excellent as a
speaker at committee meetings, and he always hit upon the right words
suitable for a political toast. The skill with which he wielded the pen
is proved by numerous newspaper articles, memoranda, and descriptions of
his travels, but above all by his voluminous correspondence. He was
probably one of the most versatile letter-writers, and yet so
conscientious in this as to be almost pedantic. In his early years he
had also tried his hand at poetry. His beautiful home, which was adorned
with pictures and sculptures by eminent masters, was a source of great
pleasure to him. He was very fond of music and congenial company, and he
knew how to appreciate the pleasures of a full and daintily arranged
table.

When I intimated to one of Ballin's old friends that I intended to write
his Life, he told me that this would not be an easy task, and that he
hoped I would not forget to depict Ballin as the amiable _charmeur_ to
which side of his character so many of his successes were due, and which
was the secret of much of his great popularity. The number of people
who claimed to be his friends, both before and after his death, but
especially when they were trying to get some advantage out of the
company, was surprisingly large. They were, in fact, so numerous that
such a claim, when put forward, was generally--and rightly--looked upon
with a great deal of suspicion. Very often, when such self-styled
friends were announced to him, Ballin would reply: "I do not know the
man," or "I do not remember him, but I may have met him." Ballin may
justly be described as a man of world-wide fame, and whenever he went
abroad the papers eagerly followed his movements. In New York especially
it required all his cunning and resourcefulness to escape from the
reporters desiring to interview him.

Owing to his prominent position before the public he received an
abundance of honours during his life. The many distinctions and presents
which the Kaiser bestowed on him were a source of gratitude and delight
to him, and he valued them because they were a symbol of the personal
ties that linked him to the Kaiser; but the foreign decorations, of
which he also received a great many, were of so little interest to him
that he did not even trouble to have those of them replaced which once
were stolen from him. It was a great disappointment to him, however, not
to be able to recover the Japanese ornamental swords which were taken on
the same occasion, and which he had always carefully treasured because
of their high artistic value. They were a present from the Marquis Ito,
whom Ballin had once helped to obtain an audience of the Kaiser--an
audience which, he hoped, would lead to the establishment on a permanent
footing of Germany's relations with the Empire of the Mikado. It would
appear, indeed, that, if the leaders of Germany's political destiny had
shown some more circumspection, the same friendly relations might have
been brought about between Germany and Japan as were entered into later
on between Great Britain and the latter country. Personal souvenirs,
like those just mentioned, were prized so highly by Ballin that no
persuasion would induce him to part with them, and even Professor
Brinckmann, the Director of the Hamburg Museum for Arts and Crafts, who
was one of the leading authorities on the subject of Japanese applied
art, and who tried hard to secure possession of them for his museum, met
with a flat refusal.

Every year Ballin spent at least six months, and often more, away from
Hamburg, and during such absences the work he had to accomplish was not
less, but rather more than that which he did when in Hamburg.
Conferences followed upon each other in quick succession at all times of
the day, and the time that was left was filled up by visits. Often the
amount of work was so great that he had to get through a whole series of
difficult problems in a single day. The number of visits he had arranged
was always considerably augmented by numerous others not allowed for in
his arrangements for the day; because wherever he went the news of his
arrival spread immediately. He could never even think of travelling
incognito. It is literally true that he was known to every hotel porter
all over the world. He was in the habit of extending his hospitality
twice a day to a larger or smaller number of business friends when he
was travelling. At first his love of congenial society had prompted him
to do this, but in after years he continued it because he wanted to
secure some benefit for his company even in his hours of relaxation.
Still, he was often quite glad when, late at night, he had come to the
close of his day's work, and when he could let the happenings of the day
pass before his mind's eye in the quiet solitude of his room, or, as he
liked to express it, "to draw the balance of the day's account."

Even before 1900 the never-tiring energy of his mind and the excessive
strain on his nervous system brought about a practically permanent
insomnia which never left him either in Hamburg or on his travels. Only
when he was on the sea, or was staying at his country house, did he
obtain any relief; and at such times he could dispense with the drugs to
the use of which he had become a victim more and more regularly and
extensively as time went on. The fact that this habit did not entirely
ruin his nervous system proves that he was possessed of an iron
constitution, which only gave way under the huge strain caused by the
war. When he saw that his life's work had been broken to fragments, and
when he felt that he had not enough strength left for a second attempt
of such magnitude, even his immense nerve force collapsed under the
blow.

The anxieties caused by the war--a war which he knew would be
lost--weighed more and more heavily on his mind the longer it lasted.
Outwardly he bore himself bravely and steadfastly, but his mind was full
of dark forebodings, especially when he was by himself. If he had not
had the unvarying sympathy of the faithful partner of his life, with
whom he shared thirty-five years of mutual happiness, and if he had not
always derived fresh consolation from his beloved adopted daughter and
from his grandchildren, he would indeed many a time have felt very
lonely. In spite of his apprehensions as to the result of the war, he
yet remained faithful to the task of his life, and he hoped against
hope. His ardent love of his work was constantly struggling with his
reason, which foretold him the ruin of the Empire and in consequence
that of German shipping.

This fact explains some apparent contradictions in his views and
actions. What was the general public to think of a man who was watching
the progress of the war with the greatest pessimism, whilst at the same
time bringing all his influence to bear on the passing of a law which
was to make possible the reconstruction of Germany's merchant fleet,
knowing that such reconstruction could only be achieved if the Empire
which was to set aside the funds were to remain intact. In this matter,
as in others, it was the intuition of the born business-man which guided
him, or perhaps a sort of instinct which made him discover new ways when
the old ones had failed. These forces of his mind had nothing in common
with logical reasoning, and they prevented him from drawing the
practical inference from the sentiment so often expressed by us during
the war: "If the Empire falls to pieces, we shall all be ruined; and if
the Empire becomes bankrupt, we shall be insolvent too." Events have
shown that this sentiment was not justified by facts. Empires and
individuals may perish; but the nations, and their trade and commerce
which are the outcome of their economic needs and of their geographical
position, will outlast them.

Neither is it likely that the life-work of those men who have left their
mark on their epoch will ever be in vain. There are two great
achievements which, it appears, will always stand out like two pillars
in the wreck of destruction that has fallen upon Germany, viz.
Bismarck's work of political unification, and--a necessary preliminary
of it--the powerful economic foundations laid with incessant toil by the
great industrial leaders of whom Germany had so many during the era of
her prosperity.

Albert Ballin was one of the most gifted among their number, and the
world-wide fame of his achievements has outlived his death. When, after
five years of isolation from the rest of the world, Germany appeared
once more amongst the nations, she did so with the knowledge that the
foundations of the proud structure which Ballin had built up were still
unshaken, and this knowledge has proved one of her greatest assets when
she entered upon the task of reconstruction.

If German shipping is to flourish again, and if German steamers are now
ploughing the oceans once more, credit is due to Albert Ballin. His work
it is from which new life is emanating, and it is to be hoped that his
spirit will continue to animate German shipping both now and in the
future.

[Illustration: Extract Annotated by William II]




INDEX


Aden, 85

Adler Line, 7

Aehrenthal, Count, 141

Agadir incident, 162

Agents, emigration, work of, 8

Alsace-Lorraine, problem of, 272

_America_, 12

_Amerika_, 25, 106, 129

Andersen, Mr., and the Danish Royal Family, 99

Anglo-American Alliance, Ballin's opinion of, 256

Anglo-German rapprochement, 134
  shipping agreement, 18
  understanding, 164, 165
    advantage of, 136
    Ballin as negotiator, 136
    failure of, 133

Anglo-Russian agreement, 137

Antwerp, 81, 82

_Aquitania_, 113

Asquith, Mr. H. H., 262
  on Lord Haldane's mission, 177
  speech on Navy, 154

Atlantic Conference, 111

Atlantic Transport-Leyland Co., enlargement of, 45

_Auguste Victoria_, 25, 27, 72, 75, 193, 196

_Australia_, 12

Austria, need of compromise with Italy, 242

Austria-Hungary, strained relations between, 251

Austro-German _Zollverein_, 251


Baden-Powell, General, and the German menace, 138

Bagdad Railway, 189

Baker, B. N., American shipping magnate, 42
  comes to Europe, 44

Baker, B. N., discusses terms of community of interest agreement, 42

Balkan States, and Germany, 251

Ballin, Albert, adopts Lord Pirrie's advice, 44
  advises peace overtures, 245
  after the war problems, 255
  agreement with Harland and Wolff, 122
  American appreciation of, 308
  an English journalist on, 293
  ancestry of, 2
  and Admiral v. Tirpitz, 237
  and Adolph Woermann, 107
  and Anglo-German rapprochement, 134
  and Carl Laeisz, 294
  and Count Tisza, 252
  and Count Waldersee, 194
  and Government subsidies, 60
  and Hamburg-Amerika Linie, 69
  and Hugo Stinnes, 280
  and Mr. Gerard, 246
  and labour questions, 297
  and politics, 131
  and North German Lloyd, 116
  and Princess Marie of Denmark, 99
  and Reichstag, 279
  and submarine warfare, 252, 254
  and the Russo-Japanese War, 104
  and Union Line, 19
  and working classes, 297
  and world war, 132
  anxiety as to Roumania, 244
  article in _Frankfurter Zeitung_ on blockade, 234
  as Anglo-German negotiator, 136
  as arbitrator, 79
  as general representative of Carr Line, 12
  as head of Packetfahrt passenger department, 18, 21
  at Constitutional Club, 140
  at Neues Palais, 204
  at the German front, 266
  attempts at mediation during war, 233
  boldness of, 289
  business principle of, 132
  capacity for work of, 300
  chairman of Pool Conference, 36
  complains of German official high-handedness, 232
  conducts London emigration discussions, 1898, 38
  death of, 286
  defends himself, 235
  dines with Danish Royal Family, 100
  disagrees with use of submarines, 229
  discusses Morgan Trust with William II, 53
  early biographical details of, 6
  education of, 3, 4
  establishes German-Japanese Bank, 204
  estimates British naval staying-power, 253
  Far East investigations, 84
  favours peace by compromise, 236
  forcing the British Lines, 36
  friendliness of William II toward, 206
  further reports on Morgan Trust negotiations, 49-50
  grave warning in 1918, 279
  Hamfelde, his country home, 310
  handling of labour troubles, 298-9
  his father's death, 5
  his life-work, 115
  his 1901 trip epitomized, 95
  his observation of details, 123
  his view on evading war, July 27, 1914, 216
  ideal in forming Pool, 66
  impressions of Paris after Morocco affair, 181
  in London discussing Austrian ultimatum, 215
  in Vienna, 1916, 249

Ballin, Albert, intense patriotism of, 291
  international services of, vii
  interview with Bethmann-Hollweg, 152
  interview with Grey, Haldane, and Churchill, 215
  last diary entry, 286
  last meeting with William II, 209, 280
  letter from William II, 175
  letter to Kiderlen-Wächter, 163
  letters to General v. Falkenhayn, 244
  made Packetfahrt Director, 27
  meets Sir Ernest Cassel, 138
  mental versatility of, 2
  mission to Vienna, 1915, 242
  negotiations with Booth Line on Brazilian trade, 83
  notes of conversations with William II, 203
  official thanks to, 141
  on Agadir incident, 163
  on _Blücher_, 60
  on death of Edward VII, 160
  on engineering problems, 121
  on foreign exchange, 274
  on _Hohenzollern_, 202
  on London in election time, 158
  on naval armaments, 147
  on neutrals, 245
  on peace problems, 239
  on sale of confiscated fleet, 230
  on Sandjak Railway, 142
  on security of William II, 241
  on Serbian situation, 214
  on war's failures, 258 _et seq._
  opinion of German Chancellor, 259
  opinion of war's duration, 237
  personal characteristics of, 287
  pioneer in steerage business, 11
  policy of, 79
  political views, 291
  premier position at twenty-nine, 19
  present from Marquis Ito, 311
  prodigious memory of, 4
  report on British attitude to Germany, 161
  report on development of German shipping, 47
  reticence of, 3
  reviews war position in 1916, 258
  ridicules submarine warfare, 268-9
  stimulating influences of his life, 2
  strain of war on health, 313
  sturdy honesty of, 309
  suggested as negotiator of peace, 286
  suggests Pool, 24
  talks with Prince Bülow, 271
  talks with William II on submarine war, 248
  threatens British traffic, 22
  trip round the world, 83
  value of wonderful memory, 35
  views on character of William II, 285
  visits London in 1914, 184
  war problems of foreign policy, 241
  William II discusses politics with, 203
  William II writes to, on Navy Bill, 183
  William II's personal interest in, 198
  wire from Leopold de Rothschild, 163
  with Prince Henry of Prussia on the _Hohenzollern_, 57
  with William II at Front, 266
  with William II in Italy, 204
  with William II on _Kaiser Wilhelm II_, 55
  work in _Reichseinkauf_, 224
  writes frank letter on war to William II, 1916, 252 _et seq._
  writes on Morgan Trust, 46
  writes to William II, April, 1917, 264

Bauer, Lieut.-Col., 280

Beck, Edward, 27

Berg, Herr von, 282

_Berliner Tageblatt_ on Anglo-Russian naval agreement, 213

Bernstorff, Count, 264

Bethmann-Hollweg, von, 151, 152, 156, 262, 270, 277
  attacked respecting Agadir, 162
  on British delegation, 166-7
  telegram to Mexico, 271

_Bismarck_, launch of, 202

Bismarck, Prince, 114

Blockade, German, futility of, 267

Blohm and Voss, 113

_Blücher_, Ballin on trial trip, 60

Boer War, European move to stop, 143
  lesson of, 139

Bohlen, Krupp v., 282

Bolten, August, 10

British argument against German naval expansion, 133
  Cabinet and German naval expansion, 182
  confiscation of German merchant fleet, 229
  convoys, how they outwitted the Germans, 267
  emigration, comparison with German, 15
  excitement over Morgan Trust, 60
  feeling in Russo-Japanese war, at German attitude, 104
  Ludendorff's promise to crush, 266
  Navy, Ballin on, 239
  opinion on shipping deals, 67
  rivalry with Germany, 133
  shipbuilding, developments in, and Hamburg-Amerika Linie, 128, 208
  shipbuilding, German move against, 17
  shipping companies, Pierpont Morgan and, 55
  shipping lines, and emigration, 7-14;
    agreement with, 23;
    join the Continental Pool, 23;
    offered to German companies, 67
  supremacy, Ballin on, 241

Bülow, Prince, 141, 247, 270


Canadian Pacific Railway, 62, 111

Cargo and steerage shipping, 13

Carr, Edward, 12

Carr Line, the, 12 _et seq._
  and Packetfahrt, 12

Cassel, Sir Ernest, 134
  and Winston Churchill, 165
  meets Ballin, 138
  on Anglo-German understanding, 165
  on naval problem, 179
  on Sandjak Railway, 142
  report of interview with, on Navy, 171
  work for reduction of naval armaments, 134 _et seq._

Cholera, epidemic at Hamburg, 36, 72

Christiansand, port of, 21

Churchill, Mr. Winston, 166
  at Kiel, 1914, 192
  complains of Germany, 180
  Sir Ernest Cassel on, 165
  speech on Navy, 175
  suggests a naval holiday, 186

Colombo, 86

_Columbia_, 77, 201

Community of interest agreement (_see_ "Pool" and "Morgan Trust")

Congo, Franco-German agreement, 162

Coolies, Chinese, 89

Cunard Line, and Austrian Government, 65
  and Hungarian Government, 63
  effect on Pool, 65
  introduces turbines, 111
  new liners, 113
  opposition to cabin Pool, 61
  refuses to join Pool, 37

Cuxhaven, development of, 69
  regatta at, 205


_Daily Telegraph_, sent to William II, 270
  the William II interview, 144

Dardanelles, the, operations in, 245
  de Freitas and Co., A. C., 79
  de Freitas Line, purchase of, 80

Denmark, emigration from, 13
  Royal Family of, their interest in shipping, 99

_Deutschland_, 25, 78, 130

Diesel engine, application to steamship, 102

Dreadnoughts, 200


Eastern Asiatic Co., 98

Edward VII, 134
  and Morgan Trust, 61

Edward VII, chances of Anglo-German war, during reign of, 139
  death of, 158
  policy of, 135
  the Kiel week, 206
  visit to Wilhelmshöhe, 136
  visits Berlin, 145
  visits Kaiser at Friedrichshof, 142

Elbe, enlargement of harbour facilities on the, 69, 70, 79

Ellerman, Mr., of Leyland Line, 45

Emden, rise of, 83

Emigrants, early accommodation of, 7, 8, 14

Emigration, anti-British action, 17
  Ballin's work for, 9
  beginnings of pooling, 12
  British and German, 15
  British rates, 22
  business, how controlled, 8
  comparisons of Carr Line and Packetfahrt, 15
  cost of, 12
  Danish, 13
  Hungarian, 63
  in the 'seventies, 8
  medical control established, 74
  on pre-paid basis, 9 _et seq._
  rate war begins, 14
  statistics of, 103
  stopped by Hamburg cholera epidemic, 36

Emigration Law, German, 23

Erzberger, Herr, 244

Esher, Lord, and the Admiralty, 138

Europe, concerted inquiry to Germany, 140
  situation in September, 1916, 262


Falkenhayn, General v., Ballin and, 244

Finland, 278

Forced draught, first vessels under, 26

Foreign exchange, Ballin on, 273

Francis Joseph, Emperor, 250
  and Count Tisza, 250

Frederick the Great on experience, viii

Frisch, Geheimrat, 223

Furness, Sir Christopher, and Morgan Trust, 61

_Fürst Bismarck_, 193

Fürstenkonzern, 110


George V, King, Ballin's letter respecting, 160

George, Mr. Lloyd, speech on Agadir incident, 162
  visits Germany, 143

Gerard, Mr., and Ballin, 246

German-British shipping agreement, 18

German emigration fleet, in 1882, 10

German Government, note to British Government, 170

German Naval Bill, 137

German Navy, the 1908 affair, 138

Germany, and Belgian Relief Committee, 231
  and the Merchant Service Bill, 228
  bad feeling among neutrals to, 245
  Ballin cries "everything is being gambled away," 257
  Ballin discusses after-the-war problems, 255
  big naval programme, 143
  British agitation against, 137
  confiscation of merchant fleet, 229
  control of trade and industries, 274
  failure of political leaders, 264
  favourable shipping situation of, 80
  feeling towards British, 143
  food problem, September, 1918, 284
  habit of premature actions, 273
  ignorance of British character, 260
  internal condition in August, 1914, 223 _et seq._
  lack of effective administration during war, 233
  mental attitude of, 134
  plans to approach President Wilson, 283

Germany, state in 1916 "like living in a madhouse," 257
  useless sacrifices of, 229
  war condition of, 257
  war-hopes in ruins, 269

Germany's industrial growth, 7

_Gigantic_, 113

Goschen, Sir Ernest, 153

Gothenburg, port of, 21

Grey, Sir Edward, 262
  on Lord Haldane's mission, 177
  on naval armaments, 157
  on the Navy, 138

Great War (_see_ World War)

Grumme, Capt. v., joins Hamburg-Amerika Linie, 199
  with William II at Morgan Trust discussion, 53.


Hague Conference, 137

Hahn, Dr. Diederich, Chairman Agrarian League, 59

Haldane, Lord, 171
  and British neutrality, 190
  Cabinet's attitude toward, 184
  explains to Ballin, 191
  German opinion respecting, 187
  success of his mission, 177
  visits Berlin, 134, 167
  William II's discussions with, 174 _et seq._

Hamburg, absorption into Prussia, 296
  birthplace of Ballin, 1
  cholera epidemic in, 36, 72
  dock strike, 299
  in the nineteenth century, 1-6

Hamburg-Amerika Linie, and Great Britain, 207
  and Persia, 107
  and Russo-Japanese war, 105
  buys foodstuffs for isolated Germany, 223
  far-reaching alterations, 98
  fate of ships when war broke out, 220
  financial stability of, 116
  fleet of, 116
  instructions to ships on eve of war, 220
  new premises, 202
  sixtieth anniversary, 117
  William II and, 195

Hamburg-Amerika Linie (_see also_ Packetfahrt)

Hamburg-Amerikanische Packetfahrt-Actien-Gesellschaft, 7

Hamburg Regattas, William II at, 201

Hamburg-South American S.S. Co., 79

Hammann, Geheimrat, 138, 141

_Hammonia_, 24

Hansa Line, 69
  taken over by Hamburg-Amerika Linie, 70

Hansemann, v., director Disconto-Gesellschaft, 55

Hansen, President, Chief of Arbitration Court Pool, 35

Harbou, Major v., 282

Harland and Wolff, 112, 121

Henckell-Donnersmarck, Prince, Kaiser's interest in, 47

Hintze, Herr v., 283

_Hohenzollern_, 194

Holland-America Line, 7

Holland, Queen of, offers mediation, 283

Holtzendorff, Admiral v., 246

Hongkong, 88

Huldermann, Bernhard, and Count Witte on averting war, 217
  and Navy Bill, 170


Immco Lines, Pool name for Morgan Trust, 65

Immigrants, Scandinavian trade, 36

_Imperator_, 31, 113, 125, 126

International Mercantile Marine Company (_see_ Morgan Trust)

Inverclyde, Lord, and Morgan Trust, 64

Italia Company, the, started, 79

Italy, agreement with, necessary to success of war, 241
  Germany's failure in, 242


Jagow, Herr v., 213, 214

Jewish ancestry of Ballin, 2

Jones, Sir A., and the Morgan Trust, 6

Jonquières, Herr v., 231

_Kaiser Wilhelm der Grösse_, 77

_Kaiser Wilhelm II_, 205

_Kaiserin_, 113

_Kaiserin Auguste Victoria_, 25, 106, 129

Kaiserin, the, and the war, 211
  opposition to private life, 285

Kiautschou, 97

Kiel Canal, widening the, 200
  Edward VII at, 206
  Week, origin of, 201

Kirchheim, Chief Inspector Emil F., viii

Köhlhrand, agreement the, 295

Kühlmann, Herr v., 189

Kunhardt, M., 27

Kuskop, Karl, 303


Laeisz, Carl, 293

Laeisz, F., 293

Laird's, orders to, 26

Law, German Emigration, of 1887, 23

Leuthold, Prof., 199

Leyland Line, acquired by Pierpont Morgan, 48

Liberal Cabinet, and naval armaments, 149

Liberal Government, and Anglo-German understanding, 136

Lichnowsky, Prince, 188
  view on Haldane's "neutrality" conversation, 191

Liners, developments in, 125 _et seq._

Lohmann, Mr., 10
  Director-General of Lloyd Line, 32

Ludendorff, and the Crown Prince, 280
  and "to her knees" promise, 266

_Lusitania_, 62, 113


Marie, Princess, of Denmark, 99

Marine engineering, Ballin's enterprise in, 122
  development of, 119
  Packetfahrt types, 125
  progress in, 127

Marschall, Bieberstein v., 188

_Mauretania_, 62, 113

Mediterranean Conference, 111

_Meteor_, 197

Metternich, Count, at St. James's, 212
  on Anglo-German understanding, 187
  predicts Great War, 188
  sees Sir Edward Grey, 178

Morgan, Pierpont, guest of William II at Kiel, 61

Morgan, Trust, the, 40 _et seq._
  agreement reached, 52
  announced to British Press, 59
  effect of freight slump, 61
  final discussions in New York, 55 _et seq._
  financial aspect, 45
  inception of, 45
  International Mercantile Marine Co., formal name of, 65
  King Edward VII and, 61
  outline of draft agreement, 51
  Pierpont Morgan at London Conference, 49
  Pierpont Morgan's operations attract public attention, 46
  telegram from William II, 56
  terms of agreement, 58
  William II discusses, 53

Morris and Co., 1 _et seq._

Mutius, Herr v., 247


Nanking, 92

Naumann, Dr., and "Berlin to Bagdad," 276

_Nautikus_, naval propaganda in, 200

Naval armaments, a cause of unrest, 133
  Ballin's report on, 146 _et seq._
  big navy propaganda, 133
  Reichstag and reduction of, 145

Naval Bill of 1912, 155
  Ballin writes to Sir Ernest Cassel on, 168
  British alarm at, 166

Naval holiday, Mr. Churchill suggests a, 186

Navy, a bigger British, 171

Navy League, German, 137

_New York_, 49

New York, emigration to, in the 'eighties, 7 _et seq._
  steerage passengers to, statistics, 29

_Normannia_, 77

North Atlantic Steamship Lines Association, history of, 32

_North German Gazette_, 157

North German Lloyd, 7, 98, 106, 111
  competes with Packetfahrt, 10
  jubilee of, 117


Oertzen, Herr v., 91

_Olympic_, 113


Packetfahrt, the, a founder of, 10
  agreement with Philadelphia Shipping Co. and Pennsylvania Railroad Co., 77
  and Ballin, 289
  and Carr Line, 12
  and emigrants, 10
  and Harland and Wolff, 121
  and Russian coal, 104
  and the Russo-Japanese War, 103
  Ballin made director of, 27
  celebration of jubilee, 74
  1886 Pool, 21
  extension of South American business, 80
  improved appointments and accommodation on vessels, 26
  increase of capital, 26
  letter from chairman of Cunard Company, 75
  more new vessels built, 25, 74
  New York branch established, 27
  passenger department created, 19
  service to Mexico, 83
  statistics (1886), 19
  (_see also_ Hamburg-Amerika Linie)

_Panther_, William II and, 210

Paris Economic Conference, 276

Passenger traffic, improvements in, 41

Peace negotiations, Ballin and, 286

Peters, Heinrich, central offices of, 34
  secretary of Pool, 31

_Philadelphia_, 49

Pirrie, Lord, 121
  advises Ballin, 44
  discusses Morgan Trust, 63

Pleasure cruises, inception of, 70 _et seq._

Pool accommodation discussions (1898), 38
  actuarial basis of, 34
  agreement on (1891), 24
  agreement with Allan Line, 74
  agreement with Italian Lines, 74
  agreement with Lloyd Line, 74
  Ballin's opinions upon, 115
  British Lines refuse (1892), 33
  cardinal principles of, 30
  Cunard Line refuses to join, 37
  details of the, 28
  Heinrich Peters, secretary of, 31
  its most dramatic episode, 67
  more internal troubles, 115
  negotiations for a greater, 35
  North Atlantic Steamship Lines Association, formal name of, 33
  proposed by Ballin, 1886, 24
  special, for Mediterranean business, 34
  terms definitely made, 33
  the General, 111
  the transatlantic, 110
  tonnage and passenger statistics, 29
  U.S.A. Railway pool compared, 28
  world war's effect upon, 111

Port Said, 85

_Pretoria_, 201

Princes' Trust, 110

_Prinzessin Victoria Luise_, 130

Prussia, Prince Henry of, 57


Rate war, the, 14, 110

Red Star Line, 7

_Reichseinkauf_, the, formation of, 223

Reuchlin, Mr., of Holland-American Line, 32

Richardson, Spence and Co., 9

Riga, fall of, 272

Roumania, anxiety regarding food from, 251
  neutrality of, 244
  supplies grain during war to Germany, 227

Rupprecht of Bavaria, Prince, 137

Russia, army of, 139

Russian East Asiatic S.S. Co., 101

Russian Press, outburst against Sandjak Railway, 141

Russian Volunteer Fleet, 111

Russo-Japanese War, 102
  coaling problems for Russian fleet, 105
  ships for, 25


_St. Louis_, 49

_St. Paul_, 49

Sandjak Railway, 141

Scandia Line, 21

Scandinavian emigration, 21

Schön, Herr v., 141

Schratt, Frau Kathi, 250
  pro-English sympathies of, 252

Schwander, Dr., 272

Shanghai, 90

Shaughnessy, Lord, 62

Shipping agreement on rates, 17
  agreements, enormous range of, 111
  British tonnage in 1901, 49
  crisis of 1907, 111
  Imperial Government's interest in, 55
  some tonnage comparisons, 49
  statistics (1881-1885), 29
  transatlantic business, trend of, 67

Ships, speed of, in 1882, 10

Singapore, 87

Skoda, Baron, 251

Sloman and Co., R. M., 18

South African War, 79

South America, development of, 82

Southampton, Packetfahrt service transferred to, 73

Spanish-American War, ships for, 25

Steinhöft, Hamburg, 1

Stettin, Vulkan Yard, 78, 113
  orders to, 26

Stinnes, Hugo, 280

Storm, Director A., viii

Strasser, Mr., of the Red Star Line, 32

Stürgkh, Count, 243
  Francis Joseph and, 250

Submarine warfare, 248, 252, 258
  amazing achievements, 268
  unrestricted, beginning of, 263

Thingvalla Line, 21

_Times, The_, on German neutrality, 104

Tirpitz, Admiral v., 151, 152, 199
  and Ballin, 237
  threatens resignation, 246

Tisza, Count, 243
  and Count Stürgkh, 250

_Titanic_, 113

Tokio, 93

Trans-Andine Railway, completion of, 82

Tsingtau, 92, 97

Tweedmouth, Lord, and the Kaiser, 137


Ukraine, the, 278

U.S.A., application of Monroe doctrine in, 82
  cholera and isolation in, 73
  devastating effects of entry into war, 255
  economic depression of the 'eighties, 9
  enters the war, 269
  German fears of intervention, 252
  immigration from Scandinavia, 21
  Railway Pool, 29
  railways and shipping co-operation, 44


_Vaterland_, 113

Versailles treaty, German view of, 208

Vienna, conditions in, 249

Vulkan Yard, Stettin, 26, 78, 113


Waldersee, General Count Georg, and Ballin, 194
  on rationing Germany, 221

_Westminster Gazette_ (article in facsimile at end), 163, 235

White Star Line, and Pierpont Morgan, 55
  new liners, 113

Wiegand, Dr. Heinrich, 119
  and Morgan Trust, 54

Wilding, Mr., Ballin's friendship for, 9

William II, and "a place in the sun," 202
  and British Navy, British feeling aroused, 137
  and _Daily Telegraph_ interview, 143
  and Nicholas, suggested talk to avert war, 220
  and President Wilson's note, 285
  and the _Bismarck_, 114
  at Hamburg, 193
  Ballin explains situation in September, 1918, 209
  Ballin reports to, on navy problem, 138
  Ballin tells him the ugly truth in 1917, 267
  blind to situation, September, 1918, 283
  "brimful of optimism," 272
  comments on _Westminster Gazette_ article, 163
  designs excursion steamer, 196
  discusses Morgan Trust with Ballin, 53
  discusses Morocco question, 205
  facsimile comments on _Westminster Gazette_ article (_see_ end of book)
  interest in German shipbuilding, 196
  interest in Morgan Trust, 197
  intervenes in shipping struggle, 106
  isolation of, 255
  last meeting with Ballin, 280
  letter on British Navy, 137
  maritime interests of, 201
  monarchical discussions, Ballin and, 285
  on balance of power, 165
  on Germany's Austro-Hungarian policy, 189
  on the Churchill speech, 183
  outspoken letter in 1916 from Ballin, 252 _et seq._
  personal interest in Ballin, 198
  persuaded to retire into private life, 285
  sees Edward VII at Friedrichshof, 142
  supports Ballin's mission of inquiry
  to U.S.A., 54
  telegram to Morgan Trust, 56
  venerated in Austria, 251
  visits Windsor, 136
  wants apology from Great Britain, 183
  writes to Ballin on Haldane interview, 175

Wilson, President, 263

Witt, Mr. Johannes, 27

Witte, Count, on situation July, 1914, 217

Woermann, Adolph, 107
  character sketch of, 108

World war, the, 213
  Ballin attempts mediation, 233
  Ballin describes 1917 situation to William II, 265
  Ballin favours a compromise, 236
  Ballin on neutrals, 245
  Ballin on the blockade, 234
  Ballin on the crisis, 215
  Bismarck's prophecy regarding, 133
  British censorship in, 225
  coal problems during, 102
  Count Witte on situation, July 24th, 1914, 217
  defection of German conscripts, 281
  effect on Pool, 111

World war, the, entry of U.S.A., effect of, 253 _et seq._
  food problems of Germany, 222
  forced upon William II, 285
  foreign policy and food during, 241
  German mistakes in, 258-9
  Germany stunned by _débâcle_, 236
  grain from Roumania, 227
  indemnities, 261
  Mexico telegram, 271
  outbreak of, 132
  peace overtures, 245
  position in 1916, 258
  provisioning Germany, 221
  shipping profits during, 65
  submarine warfare in, 229
  the British blockade, 224
  Tyrol, failure in the, 259
  Verdun and Italian campaigns, political and military failures, 258

World's shipping collapse, cause of, 229


Yang-Tse-Kiang, the, 91, 96


Zentral-Einkaufs-Gesellschaft, 226 _et seq._

   PRINTED IN ENGLAND BY CASSELL & COMPANY, LIMITED, LONDON, E. C. 4.


FOOTNOTES:

[1] Gross registered tonnage.

[2] Then British Ambassador in Berlin.

[3] This refers to the political events in Berlin immediately prior to
the outbreak of war.

[4] The head of the Press Department of the Foreign Office.

[5] The telegram which the Foreign Office sent to the German Minister
in Mexico, and which was partly responsible for the entry of the United
States into the war.

[6] Director of the Hamburg branch of the firm of Hugo Stinnes.

       *       *       *       *       *

Typographical errors corrected by the etext transcriber:

aded to their fleets=> added to their fleets {pg 48}

in the era on the machine-gun=> in the era of the machine-gun {pg 266}

aready explained=> already explained {pg 270}