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+The Project Gutenberg EBook of Albert Ballin, by Bernhard Huldermann
+
+This eBook is for the use of anyone anywhere at no cost and with
+almost no restrictions whatsoever.  You may copy it, give it away or
+re-use it under the terms of the Project Gutenberg License included
+with this eBook or online at www.gutenberg.org/license
+
+
+Title: Albert Ballin
+
+Author: Bernhard Huldermann
+
+Translator: Wilhelm Johann Eggers
+
+Release Date: November 8, 2013 [EBook #44135]
+
+Language: English
+
+Character set encoding: ISO-8859-1
+
+*** START OF THIS PROJECT GUTENBERG EBOOK ALBERT BALLIN ***
+
+
+
+
+Produced by Chuck Greif and the Online Distributed
+Proofreading Team at http://www.pgdp.net (This file was
+produced from images generously made available by The
+Internet Archive)
+
+
+
+
+
+
+[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}
+
+
+
+
+
+
+End of the Project Gutenberg EBook of Albert Ballin, by Bernhard Huldermann
+
+*** END OF THIS PROJECT GUTENBERG EBOOK ALBERT BALLIN ***
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+  The Project Gutenberg eBook of Albert Ballin, by Bernhard Huldermann.
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+
+The Project Gutenberg EBook of Albert Ballin, by Bernhard Huldermann
+
+This eBook is for the use of anyone anywhere at no cost and with
+almost no restrictions whatsoever.  You may copy it, give it away or
+re-use it under the terms of the Project Gutenberg License included
+with this eBook or online at www.gutenberg.org/license
+
+
+Title: Albert Ballin
+
+Author: Bernhard Huldermann
+
+Translator: Wilhelm Johann Eggers
+
+Release Date: November 8, 2013 [EBook #44135]
+
+Language: English
+
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+*** START OF THIS PROJECT GUTENBERG EBOOK ALBERT BALLIN ***
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+<hr class="full" />
+
+<p class="figcenter">
+<img src="images/cover.jpg" width="311" height="500" alt="bookcover" title="" />
+</p>
+
+<p class="figcenter">
+<a href="images/albert_ballin_lg.jpg">
+<br />
+<img class="enlargeimage"
+src="images/enlarge-image.jpg"
+alt=""
+width="18"
+height="14" />
+<br />
+<img src="images/albert_ballin.jpg" width="330" height="500" alt="Albert Ballin photo" title="Albert Ballin photo" /></a>
+</p>
+
+<h1><span class="smcap">Albert Ballin</span></h1>
+
+<p class="cb"><small>By</small><br />
+Bernhard Huldermann<br /><br /><br />
+<i>Translated from the German<br />
+by<br />
+W. J. EGGERS, M.A. (London)</i><br /><br /><br />
+<img src="images/colophon.png" width="20" height="24" alt="decoration" title="decoration" />
+<br /><br /><br />
+Cassell and Company, Limited<br />
+London, New York, Toronto and Melbourne<br />
+1922<br /><br /><br /><br /><br />
+
+To the Memory of<br />
+A L B E R T &nbsp; B A L L I N<br />
+in true veneration and heartfelt gratitude</p>
+
+<div class="poetry">
+<div class="poem"><div class="stanza">
+<span class="i0">“<i>He was a man; take him for all in all,</i><br /></span>
+<span class="i0"><i>I shall not look upon his like again.</i>�<br /></span>
+</div><div class="stanza">
+<span class="i3"><span class="smcap">Shakespeare</span>, <i>Hamlet</i> (<i>Act I, Scene 2</i>).<br /></span>
+</div></div>
+</div>
+
+<h2><a name="PREFACE" id="PREFACE"></a>PREFACE</h2>
+
+<p class="nind">M<small>Y</small> 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&mdash;unsuccessfully, alas!&mdash;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&mdash;and, more important still, their intimate connexion
+with his economic activities&mdash;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.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>My constant endeavour has been to describe persons and events <i>sine ira
+et studio</i>, and to refrain from stating as a fact anything for which no
+documentary evidence is available.</p>
+
+<p class="r">
+<span class="smcap">The Author.</span><br />
+</p>
+
+<p><i>October, 1921.</i></p>
+
+<h2><a name="CONTENTS" id="CONTENTS"></a>CONTENTS</h2>
+
+<table border="0" cellpadding="0" cellspacing="0" summary="">
+
+<tr><td align="left" colspan="2"><small>CHAPTER</small></td>
+<td align="right"><small>PAGE</small></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_I">1.</a></td><td><span class="smcap">Morris and Co.</span></td><td align="right" valign="bottom"><a href="#page_001">1</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_II">2.</a></td><td><span class="smcap">General Representative of the Carr
+Line</span></td><td align="right" valign="bottom"><a href="#page_012">12</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_III">3.</a></td><td><span class="smcap">Head of the Packetfahrt’s Passenger
+Department</span></td><td align="right" valign="bottom"><a href="#page_021">21</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_FOUR">4.</a></td><td><span class="smcap">The Pool</span></td><td align="right" valign="bottom"><a href="#page_028">28</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_V">5.</a></td><td><span class="smcap">The Morgan Trust</span></td><td align="right" valign="bottom"><a href="#page_040">40</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_VI">6.</a></td><td><span class="smcap">The Expansion of the Hamburg-Amerika
+Linie</span></td><td align="right" valign="bottom"><a href="#page_069">69</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_VII">7.</a></td><td><span class="smcap">The Technical Reorganization of the
+Hamburg-Amerika Linie</span></td><td align="right" valign="bottom"><a href="#page_121">121</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_VIII">8.</a></td><td><span class="smcap">Politics</span></td><td align="right" valign="bottom"><a href="#page_131">131</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_IX">9.</a></td><td><span class="smcap">The Kaiser</span></td><td align="right" valign="bottom"><a href="#page_193">193</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_X">10.</a></td><td><span class="smcap">The War</span></td><td align="right" valign="bottom"><a href="#page_213">213</a></td></tr>
+
+<tr><td align="left" valign="top"><a href="#CHAPTER_XI">11.</a></td><td><span class="smcap">Personal Characteristics</span></td><td align="right" valign="bottom"><a href="#page_287">287</a></td></tr>
+
+<tr><td colspan="2"><span class="smcap">Extract Annotated by William II</span></td><td align="right" valign="bottom"><a href="#page_316">316</a></td></tr>
+
+<tr><td colspan="2"><span class="smcap"><a href="#INDEX">Index</a></span>:
+<a href="#A">A</a>,
+<a href="#B">B</a>,
+<a href="#C">C</a>,
+<a href="#D">D</a>,
+<a href="#E">E</a>,
+<a href="#F">F</a>,
+<a href="#G">G</a>,
+<a href="#H">H</a>,
+<a href="#I">I</a>,
+<a href="#J">J</a>,
+<a href="#K">K</a>,
+<a href="#L">L</a>,
+<a href="#M">M</a>,
+<a href="#N">N</a>,
+<a href="#O">O</a>,
+<a href="#P">P</a>,
+<a href="#R">R</a>,
+<a href="#S">S</a>,
+<a href="#T">T</a>,
+<a href="#U">U</a>,
+<a href="#V">V</a>,
+<a href="#W">W</a>,
+<a href="#Y">Y</a>,
+<a href="#Z">Z</a>
+
+</td><td align="right" valign="bottom"><a href="#page_317">317</a></td></tr>
+</table>
+
+<p><a name="page_001" id="page_001"></a></p>
+
+<h2>ALBERT BALLIN</h2>
+
+<h2><a name="CHAPTER_I" id="CHAPTER_I"></a>CHAPTER I<br /><br />
+<span class="smcap">Morris and Co.</span></h2>
+
+<p class="nind"><span class="smcap">Albert Ballin</span> 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&mdash;and
+still extends&mdash;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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_002" id="page_002"></a> 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.</p>
+
+<p>Ballin belonged to an old Jewish family, members of which&mdash;as is proved
+by ancient tombstones and other evidence&mdash;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<a name="page_003" id="page_003"></a> of what was beautiful&mdash;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.</p>
+
+<p>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&mdash;or perhaps for that very
+reason&mdash;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&mdash;especially an education grounded on a classical
+foundation&mdash;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&mdash;<a name="page_004" id="page_004"></a>instead of three
+years'&mdash;military service, and provided them with a general education
+which&mdash;without any reflection on their principals&mdash;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.</p>
+
+<p>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 <i>belles lettres</i>,
+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<a name="page_005" id="page_005"></a> with the approval of
+the teacher, and was once even returned with the remark, “newspaper
+German.�</p>
+
+<p>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&mdash;as already indicated&mdash;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&mdash;a rare thing in our modern days&mdash;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.</p>
+
+<p>The firm of Morris and Co., of which Ballin’s father had been one of the
+original founders in 1852, had never<a name="page_006" id="page_006"></a> 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.</p>
+
+<p>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<a name="page_007" id="page_007"></a> 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 <i>via</i> 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,<a name="page_008" id="page_008"></a> 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&mdash;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<a name="page_009" id="page_009"></a> talent for organization, for
+instance, and skill in dealing with the emigrants, could be the means of
+gaining great successes.</p>
+
+<p>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 <i>via</i> 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.</p>
+
+<p>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
+<i>via</i> 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<a name="page_010" id="page_010"></a> 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.</p>
+
+<p>It was quite impossible for the biggest Hamburg shipping company&mdash;the
+Packetfahrt&mdash;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&mdash;“Bremen-New York in 9
+days"&mdash;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<a name="page_011" id="page_011"></a> 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.</p>
+
+<p>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&mdash;which intended to run a cargo service
+from Hamburg to New York&mdash;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.<a name="page_012" id="page_012"></a></p>
+
+<h2><a name="CHAPTER_II" id="CHAPTER_II"></a>CHAPTER II<br /><br />
+<span class="smcap">General Representative of the Carr Line</span></h2>
+
+<p class="nind">T<span class="smcap">he</span> 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 <i>Australia</i> and the <i>America</i>, 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<a name="page_013" id="page_013"></a> 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.</p>
+
+<p>In one essential feature the service of the new line differed from those
+of its old-established competitors. The <i>Australia</i> and the <i>America</i>
+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<a name="page_014" id="page_014"></a>
+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.</p>
+
+<p>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<a name="page_015" id="page_015"></a> 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.</p>
+
+<p>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:<a name="page_016" id="page_016"></a></p>
+
+<table border="0" cellpadding="2" cellspacing="0" summary="">
+<tr class="sml"><td>&nbsp;</td><td align="center" colspan="3"><i>Number of Emigrants carried</i></td></tr>
+<tr class="sml"><td>&nbsp;</td>
+<td align="center"><i>Packetfahrt</i>&nbsp; &nbsp; </td>
+<td align="center"><i>Carr Line</i>&nbsp; &nbsp; </td>
+<td align="center"><i>via British ports</i></td></tr>
+<tr><td>1880</td><td align="right">47,000</td><td align="right">&mdash;</td><td align="right">20,000</td></tr>
+<tr><td>1881</td><td align="right">68,000</td><td align="right">4,000</td><td align="right">47,600</td></tr>
+<tr><td>1882</td><td align="right">68,000</td><td align="right">11,000</td><td align="right">31,000</td></tr>
+<tr><td>1883</td><td align="right">55,000</td><td align="right">16,000</td><td align="right">13,000</td></tr>
+<tr><td>1884</td><td align="right">58,000</td><td align="right">13,000</td><td align="right">16,000</td></tr>
+</table>
+
+<p>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.</p>
+
+<p>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.<a name="page_017" id="page_017"></a> 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.</p>
+
+<p>The principal subject of the discussions was the question of
+eliminating, as far as possible, British influence from the emigrant
+traffic <i>via</i> 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<a name="page_018" id="page_018"></a> 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.</p>
+
+<p>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<a name="page_019" id="page_019"></a> 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&mdash;which, until
+then, had been looked after by the firm of Aug. Bolten&mdash;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.</p>
+
+<p>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<a name="page_020" id="page_020"></a> 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.<a name="page_021" id="page_021"></a></p>
+
+<h2><a name="CHAPTER_III" id="CHAPTER_III"></a>CHAPTER III<br /><br />
+<span class="smcap">Head of the Packetfahrt’s Passenger Department</span></h2>
+
+<p class="nind">O<span class="smcap">n</span> 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 <i>via</i> 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<a name="page_022" id="page_022"></a> 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 <i>via</i> Havre, or from
+Plymouth <i>via</i> 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
+<i>via</i> 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.</p>
+
+<p>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&mdash;which amounted to 55 per cent, of the
+Hamburg business&mdash;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.<a name="page_023" id="page_023"></a></p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>The new Emigration Law of 1887&mdash;due to the exertions of the North German
+Lloyd and the Packetfahrt&mdash;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.</p>
+
+<p>The improvement, however, was merely temporary. The termination of the
+struggle for the Hamburg business did not mean that all the differences
+between all<a name="page_024" id="page_024"></a> 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.</p>
+
+<p>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&mdash;who at that time, after all, was only the head of the
+Passenger Department of his Company&mdash;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 <i>Hammonia</i>, 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&mdash;especially those
+of the first cabin&mdash;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<a name="page_025" id="page_025"></a> of the Atlantic which kept the attention of the travelling
+public riveted on these boats.</p>
+
+<p>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 <i>Auguste Victoria</i>, 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 <i>Deutschland</i>, <i>Amerika</i>, and <i>Kaiserin Auguste Victoria</i>). 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<a name="page_026" id="page_026"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_027" id="page_027"></a> 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 <i>Auguste Victoria</i> in honour
+of the young Empress.</p>
+
+<p>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.</p>
+
+<p>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.<a name="page_028" id="page_028"></a></p>
+
+<h2><a name="CHAPTER_FOUR" id="CHAPTER_FOUR"></a>CHAPTER FOUR<br /><br />
+<span class="smcap">THE POOL</span></h2>
+
+<p class="nind">T<span class="smcap">he</span> 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.</p>
+
+<p>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<a name="page_029" id="page_029"></a> 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
+<i>impasse</i> 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:</p>
+
+<table border="0" cellpadding="1" cellspacing="0" summary="">
+<tr><td>&nbsp;</td><td align="center"><i>Percentage</i></td></tr>
+<tr><td>North German Lloyd</td><td align="right">33·45</td></tr>
+<tr><td>North German Lloyd (Baltimore Line)</td><td align="right">14·80</td></tr>
+<tr><td>Packetfahrt</td><td align="right">27·00</td></tr>
+<tr><td>Union Line</td><td align="right">5·53</td></tr>
+<tr><td>Red Star Line</td><td align="right">12·26</td></tr>
+<tr><td>Holland American Line</td><td align="right">6·96</td></tr>
+</table>
+
+<p>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:</p>
+
+<table border="0" cellpadding="1" cellspacing="0" summary="">
+<tr><td>&nbsp;</td><td align="center"><i>Tons</i></td><td align="center"><i>Percentage</i></td></tr>
+<tr><td>North German Lloyd</td><td align="right">275,520</td><td align="right">33·91</td></tr>
+<tr><td>North German Lloyd (Baltimore Line)</td><td align="right">63,000</td><td align="right">7·76</td></tr>
+<tr><td>Packetfahrt</td><td align="right">199,500</td><td align="right">24·55</td></tr>
+<tr><td>Union Line</td><td align="right">42,840</td><td align="right">5·27</td></tr>
+<tr><td>Red Star Line</td><td align="right">149,600</td><td align="right">18·41</td></tr>
+<tr><td>Holland American Line</td><td align="right">82,080</td><td align="right">10·10</td></tr>
+<tr><td align="center">Total tonnage</td><td align="right" class="bt">812,540</td><td align="right" class="bt">&nbsp;</td></tr>
+</table>
+
+<p><a name="page_030" id="page_030"></a></p>
+
+<p>The average of both sets of percentage figures worked out as follows:</p>
+
+<table border="0" cellpadding="1" cellspacing="0" summary="">
+<tr><td>&nbsp;</td><td align="center"><i>Percentage</i></td></tr>
+<tr><td>North German Lloyd</td><td align="right">33·68</td></tr>
+<tr><td>North German Lloyd (Baltimore Line)</td><td align="right">11·28</td></tr>
+<tr><td>Packetfahrt</td><td align="right">25·77</td><td>½</td></tr>
+<tr><td>Union Line</td><td align="right">5·40</td></tr>
+<tr><td>Red Star Line</td><td align="right">15·33</td><td>½</td></tr>
+<tr><td>Holland American Line</td><td align="right">8·53</td></tr>
+</table>
+
+<p>“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&mdash;i.e. they
+would have to contribute to the common pool a sum equal to the general
+rate without deduction.�</p>
+
+<p>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<a name="page_031" id="page_031"></a> each line placed at the
+disposal of the joint undertaking. This latter provision&mdash;which was
+known during the early stages of the movement as the tonnage clause&mdash;was
+intended to prevent any single line from stagnation, and to give scope
+to the spirit of enterprise.</p>
+
+<p>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 <i>Imperator</i> 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.</p>
+
+<p>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<a name="page_032" id="page_032"></a> me concerning his
+proposal and the circumstances of its adoption:&mdash;</p>
+
+<p>“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&mdash;I
+don’t know whether I was half awake or dreaming&mdash;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<a name="page_033" id="page_033"></a>
+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.</p>
+
+<p>“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.�</p>
+
+<p>That this account is correct is confirmed by the minutes of the Cologne
+meeting of February 6th, 1890.</p>
+
+<p>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.</p>
+
+<p>This so-called North Atlantic Steamship Lines Association,<a name="page_034" id="page_034"></a> the backbone
+of the later and greater pool, was built up on the following
+percentages:</p>
+
+<table border="0" cellpadding="1" cellspacing="0" summary="">
+<tr class="sml"><td>&nbsp;</td>
+
+<td><i>Westbound</i><br />
+<i>traffic</i> (<i>p.c.</i>)</td>
+
+<td> <i>Eastbound</i><br />
+<i>traffic</i> (<i>p.c.</i>)</td></tr>
+<tr><td>North German Lloyd</td><td align="right">46·16</td><td align="right">44·53</td></tr>
+<tr><td>Packetfahrt (including the Union Line)</td><td align="right">28·84</td><td align="right">18·47</td></tr>
+<tr><td>Red Star Line</td><td align="right">15·70</td><td align="right">20·68</td></tr>
+<tr><td>Holland American Line</td><td align="right">9·30</td><td align="right">16·32</td></tr>
+</table>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_035" id="page_035"></a> 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&mdash;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.</p>
+
+<p>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&mdash;i.e. one comprising the<a name="page_036" id="page_036"></a> whole of
+Northern Europe, including Great Britain&mdash;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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_037" id="page_037"></a>
+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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_038" id="page_038"></a> attempt to make the whole North Atlantic business pay.</p>
+
+<p>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.</p>
+
+<p>Both these agreements&mdash;the one dealing with the steerage and the one
+dealing with the cabin business&mdash;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:</p>
+
+<table border="0" cellpadding="1" cellspacing="0" summary="">
+<tr class="sml"><td>&nbsp;</td>
+
+<td><i>Westbound</i><br />
+<i>traffic</i> (<i>p.c.</i>)</td>
+
+<td> <i>Eastbound</i><br />
+<i>traffic</i> (<i>p.c.</i>)</td></tr>
+<tr><td>North German Lloyd</td><td align="right">44·14</td><td align="right">41·53</td></tr>
+<tr><td>Packetfahrt</td><td align="right">30·71</td><td align="right">26·47</td></tr>
+<tr><td>Red Star Line</td><td align="right">15·37</td><td align="right">18·68</td></tr>
+<tr><td>Holland American Line</td><td align="right">9·78</td><td align="right">13·32</td></tr>
+</table>
+
+<p><a name="page_039" id="page_039"></a></p>
+
+<p>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.</p>
+
+<p>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.<a name="page_040" id="page_040"></a></p>
+
+<h2><a name="CHAPTER_V" id="CHAPTER_V"></a>CHAPTER V<br /><br />
+<span class="smcap">THE MORGAN TRUST</span></h2>
+
+<p class="nind">S<span class="smcap">peaking</span> 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.</p>
+
+<p>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 <i>pro rata</i> 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<a name="page_041" id="page_041"></a> the various
+companies&mdash;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&mdash;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.</p>
+
+<p>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<a name="page_042" id="page_042"></a> 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.</p>
+
+<p>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:&mdash;</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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<a name="page_043" id="page_043"></a> 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&mdash;if feasible by cable&mdash;what you think of the following project:</p>
+
+<p>“(1) You take charge of our New York Agency for the freight, and
+also for the passage business, etc.</p>
+
+<p>“(2) You engage those of our officials now attached to our New York
+branch whom we may desire to retain in the business.</p>
+
+<p>“(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.</p>
+
+<p>“(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 8½ 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.<a name="page_044" id="page_044"></a></p>
+
+<p>“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.</p>
+
+<p>“I should be obliged to you for thinking the matter over and
+informing me&mdash;if possible by cable&mdash;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.�</p></div>
+
+<p>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&mdash;indirectly, at least&mdash;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<a name="page_045" id="page_045"></a> 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.</p>
+
+<p>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&mdash;half the
+amount in shares of the Packetfahrt&mdash;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.</p>
+
+<p>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<a name="page_046" id="page_046"></a> 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&mdash;either alone, or in conjunction
+with the White Star Line and the firm of Messrs. Harland and Wolff&mdash;to
+purchase the Atlantic Transport Line.</p>
+
+<p>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:</p>
+
+<p>“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<a name="page_047" id="page_047"></a> 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&mdash;a man of whom it is said that he combines the possession of an
+enormous fortune with an intelligence which is simply astounding&mdash;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.�</p>
+
+<p>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:&mdash;</p>
+
+<div class="blockquot"><p>“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<a name="page_048" id="page_048"></a> 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.</p>
+
+<p>“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:</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“The proper method of rightly appreciating the importance<a name="page_049" id="page_049"></a> 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&mdash;390,000 G.R.T.; American concern&mdash;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&mdash;grand total, 438,566 G.R.T.</p>
+
+<p>“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 <i>New York</i>, <i>Philadelphia</i>, <i>St. Louis</i>, and <i>St.
+Paul</i>, 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.</p>
+
+<p>“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&mdash;provided they do not exceed an amount that is justified
+by the conditions actually existing&mdash;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.</p>
+
+<p>“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<a name="page_050" id="page_050"></a> 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.</p>
+
+<p>“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 <i>hinterland</i> 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.�</p></div>
+
+<p>The negotiations which Ballin carried on in this connexion are described
+as follows in his notes:&mdash;</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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 <i>en route</i> 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<a name="page_051" id="page_051"></a> 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.</p>
+
+<p>“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.�</p></div>
+
+<p>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<a name="page_052" id="page_052"></a> 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.</p>
+
+<p>Immediately after Ballin’s return to Hamburg the Board of Trustees
+unanimously expressed its agreement in principle with the proposals.</p>
+
+<p>“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<a name="page_053" id="page_053"></a> 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.</p>
+
+<p>“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&mdash;as I had previously done with the Kaiser&mdash;every question of<a name="page_054" id="page_054"></a>
+importance. On October 18th I arrived back in Hamburg.�</p>
+
+<p>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.</p>
+
+<p>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<a name="page_055" id="page_055"></a>
+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.</p>
+
+<p>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&mdash;somewhat similar to the Preussische Seehandlung&mdash;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.</p>
+
+<p>Ballin thereupon having informed the Kaiser in Kiel on board the
+battleship <i>Kaiser Wilhelm II</i> 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<a name="page_056" id="page_056"></a> termination. Concerning the New
+York meetings we find an interesting entry in Ballin’s diary:</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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:</p>
+
+<p>“‘Ballin, Director General of the Hamburg-Amerika Linie, New York.
+Have received your joint message with sincere satisfaction. Am
+especially pleased that it reached<a name="page_057" id="page_057"></a> 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.&mdash;<span class="smcap">Wilhelm I.R.</span>’</p>
+
+<p>“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 &amp; 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 <i>Kronprinz Wilhelm</i> for
+about 200 invited guests.</p>
+
+<p>“Prince Henry of Prussia was one of the passengers of the
+<i>Kronprinz Wilhelm</i> which, owing to the inclemency of the weather,
+arrived in New York one day behind her scheduled time. On the day
+of her arrival&mdash;Sunday, February 23rd&mdash;I had dinner on board the
+<i>Hohenzollern</i>. 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&mdash;leading American business
+men from all parts of the States&mdash;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.�</p></div>
+
+<p>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<a name="page_058" id="page_058"></a>
+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:</p>
+
+<div class="blockquot"><p>“(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.</p>
+
+<p>“(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&mdash;unless unexpected obstacles should intervene&mdash;will make
+its public appearance within a few weeks.</p>
+
+<p>“(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 <i>Oceanic, Teutonic,</i>
+and <i>Majestic.</i> 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<a name="page_059" id="page_059"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“(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.�</p></div>
+
+<p>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 <i>Bund<a name="page_060" id="page_060"></a> der Landwirte</i> (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.</p>
+
+<p>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. <i>Blücher</i>, 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.�</p>
+
+<p>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:<a name="page_061" id="page_061"></a></p>
+
+<div class="blockquot"><p>“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.�</p></div>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_062" id="page_062"></a> 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.�</p>
+
+<p>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 <i>Mauretania</i> and the <i>Lusitania</i>, 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.</p>
+
+<p>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.</p>
+
+<p>On the occasion of this trip to America Ballin had some interesting&mdash;or,
+as he puts it, “rather exciting"&mdash;discussions with Morgan and his
+friends. He severely criticized the management of the affairs of the
+Trust,<a name="page_063" id="page_063"></a> and tried to make Morgan understand that nothing short of a
+radical improvement&mdash;i.e. a change of the leading personages&mdash;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.�</p>
+
+<p>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.</p>
+
+<p>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&mdash;a desire
+which was shared by important private quarters as well. The idea was to
+divert the stream of emigrants to Fiume&mdash;instead of allowing them to
+cross the national frontiers uncontrolled&mdash;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.</p>
+
+<p>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&mdash;the only big transatlantic shipping
+company which had remained outside the Trust&mdash;by<a name="page_064" id="page_064"></a> 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&mdash;by means
+of closing the frontiers or any other suitable methods&mdash;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.</p>
+
+<p>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&mdash;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&mdash;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.</p>
+
+<p>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.</p>
+
+<p>The Hungarian situation became still more complicated after the receipt
+of some information that reached Ballin from Vienna to the effect that
+the<a name="page_065" id="page_065"></a> 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.</p>
+
+<p>Thereupon this struggle of the pool lines&mdash;both the Continental and the
+British ones&mdash;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.</p>
+
+<p>Looked upon from a purely business point of view, the Morgan Trust&mdash;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"&mdash;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&mdash;a failure which, as is shown by Ballin’s notes, was to
+a large extent due to the hesitating policy<a name="page_066" id="page_066"></a> 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.</p>
+
+<p>It can hardly be doubted that the adhesion of the Cunard Line to the
+Morgan Trust&mdash;or, in other words, the formation of a combine including
+all the important transatlantic lines without exception&mdash;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.</p>
+
+<p>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&mdash;e.g. in his agreements with the other
+Hamburg companies and in the one with the Booth Line, which was engaged
+in the service<a name="page_067" id="page_067"></a> 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.</p>
+
+<p>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<a name="page_068" id="page_068"></a>
+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.<a name="page_069" id="page_069"></a></p>
+
+<h2><a name="CHAPTER_VI" id="CHAPTER_VI"></a>CHAPTER VI<br /><br />
+<span class="smcap">The Expansion of the Hamburg-Amerika Linie</span></h2>
+
+<p class="nind">T<span class="smcap">he</span> 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&mdash;the latter running a service to Canada&mdash;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.</p>
+
+<p>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,<a name="page_070" id="page_070"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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
+<i>Leipziger Illustrierte Zeitung,</i> and which I reprint for curiosity’s
+sake, was found among his papers.</p>
+
+<div class="blockquot"><p class="c">
+<span class="smcap">"An Opportunity for Taking Part in a Voyage<br />
+Round the World</span><br />
+</p>
+
+<p>“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<a name="page_071" id="page_071"></a> 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, ÃŽle de France or Madagascar,
+the Cape of Good Hope, St. Helena, Ascension Island, the Azores,
+and back to Hamburg.</p>
+
+<p>“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.</p>
+
+<p>“Admission will be strictly confined to persons of unblemished
+repute and of good education, those possessing a scientific
+education receiving preference.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“Full particulars may be had on application to the undersigned, and
+a stamped envelope for reply should be enclosed.</p>
+
+<p class="r">
+<span class="smcap">“Rob. M. Sloman,</span><br />
+</p>
+
+<p class="c">“<i>Hamburg, January</i>, 1845.&nbsp; &nbsp; &nbsp;
+<i>Shipowner in Hamburg.</i>�</p></div>
+
+<p><a name="page_072" id="page_072"></a></p>
+
+<p>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
+<i>Auguste Victoria</i>. 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.</p>
+
+<p>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,<a name="page_073" id="page_073"></a> 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.</p>
+
+<p>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<a name="page_074" id="page_074"></a> Hamburg architect, Mr. Thielen,
+whose early death is greatly to be regretted.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>In 1897 the Packetfahrt celebrated the fiftieth anniversary of its
+existence&mdash;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<a name="page_075" id="page_075"></a> was addressed to one of the directors in reply
+to an invitation to attend the celebrations in person.</p>
+
+<div class="blockquot"><p>“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. <i>Auguste Victoria</i>.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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 name="page_076" id="page_076"></a> 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.�</p></div>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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.<a name="page_077" id="page_077"></a></p>
+
+<p>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&mdash;which, in its turn, had an agreement with the Pennsylvania
+Railroad Company&mdash;by which the Packetfahrt undertook to run a regular
+service of cargo steamers between Hamburg and Philadelphia.</p>
+
+<p>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,
+<i>Columbia</i> and <i>Normannia</i>, 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.</p>
+
+<p>Meanwhile a new express steamer, the <i>Kaiser Wilhelm der Grösse</i>, 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.<a name="page_078" id="page_078"></a> 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 <i>Kaiser Wilhelm der
+Grösse</i>. The new liner was built by the Stettin Vulkan yard, and
+completed in 1900. She was the <i>Deutschland</i>, 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.</p>
+
+<p>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<a name="page_079" id="page_079"></a>
+basins with the necessary quays, sheds, etc., in the district of
+Kuhwärder on the southern banks of the Elbe.</p>
+
+<p>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.</p>
+
+<p>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&mdash;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.</p>
+
+<p>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 &amp; 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.,<a name="page_080" id="page_080"></a> 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.</p>
+
+<p>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.</p>
+
+<p>Perhaps there is no country which can be served by<a name="page_081" id="page_081"></a> 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&mdash;or, rather,
+generally speaking, over Central Europe&mdash;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.</p>
+
+<p>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<a name="page_082" id="page_082"></a> 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&mdash;after the close of the South African
+War&mdash;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 <i>via</i> 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<a name="page_083" id="page_083"></a> this development by opening a special branch office for
+dealing with the Antwerp business.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_084" id="page_084"></a> 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:&mdash;</p>
+
+<div class="blockquot"><p class="r">
+“<i>On board the I.M.S.</i> ‘<i>Kiautschou</i>’<br />
+“<i>January 16th, 1901.</i><br />
+</p>
+
+<p>“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<a name="page_085" id="page_085"></a> 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 <span class="smcap">A.M.</span> 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.�</p></div>
+
+<div class="blockquot"><p class="r">
+“<i>Between</i> <span class="smcap">Aden</span> <i>and</i> <span class="smcap">Colombo</span>.<br />
+“<i>January 24th</i>, 1901.<br />
+</p>
+
+<p>“ ... 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
+<i>Kiautschou</i> 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<a name="page_086" id="page_086"></a> 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.�</p></div>
+
+<div class="blockquot"><p class="r">
+“<i>January 28th</i>, 1901.<br />
+</p>
+
+<p>“ ... 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&mdash;thus preventing me from calling on my
+business friends at that hour&mdash;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....</p>
+
+<p>“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&mdash;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;<a name="page_087" id="page_087"></a> 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....</p>
+
+<p>“ ... 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....�</p></div>
+
+<div class="blockquot"><p class="r">
+“<i>February 2nd</i>, 1901.<br />
+</p>
+
+<p>“.... 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.</p>
+
+<p>“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<a name="page_088" id="page_088"></a> 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....</p>
+
+<p>“ ... 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 2½ 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....�</p></div>
+
+<div class="blockquot"><p class="r">
+“<i>February 16th</i>, 1901.<br />
+</p>
+
+<p>“ ... 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&mdash;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&mdash;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&mdash;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.</p>
+
+<p>“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<a name="page_089" id="page_089"></a> 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&mdash;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<a name="page_090" id="page_090"></a> to late at night lying in front of a side entrance to our
+hotel, except when they had to do their work for us....</p>
+
+<p>“ ... The Chinese have only one annual holiday&mdash;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.</p>
+
+<p>“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.</p>
+
+<p>“On such days&mdash;the only holidays they possess&mdash;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....�</p></div>
+
+<div class="blockquot"><p class="r">
+“<span class="smcap">Shanghai</span>, <i>March 6th, 1901</i>.<br />
+</p>
+
+<p>“ ... 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....�</p></div>
+
+<p><a name="page_091" id="page_091"></a></p>
+
+<div class="blockquot"><p class="r">
+“<i>Between</i> <span class="smcap">Tsingtau</span> <i>and</i> <span class="smcap">Nagasaki</span>,<br />
+<i>on board the s.s</i> <i>'Sibiria</i>.’<br />
+“<i>March 18th, 1901.</i><br />
+</p>
+
+<p>“Our s.s. <i>Sibiria</i> 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 <i>Sibiria</i>, 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&mdash;as it is usually
+called for shortness’ sake&mdash;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&mdash;on account of the
+danger of the tremendous floods resulting from it&mdash;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.</p>
+
+<p>“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 <i>Sibiria</i> 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<a name="page_092" id="page_092"></a> of Nanking, and so we had to make up our minds
+to pay a visit to these parts.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“ ... 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.</p>
+
+<p>“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&mdash;especially<a name="page_093" id="page_093"></a> those who, like
+Dr. Knappe, our consul-general at Shanghai, had known the place two
+years ago&mdash;were most agreeably surprised at the progress that had
+been made.</p>
+
+<p>“Our first few days at Tsingtau were spent much as they were
+everywhere else&mdash;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. <i>Kaiserin
+Auguste</i>. 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....�</p></div>
+
+<div class="blockquot"><p class="r">
+“<span class="smcap">Tokio</span>. <i>March 31st, 1901.</i><br />
+</p>
+
+<p>“ ... 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 <i>Sibiria</i> has chosen
+such a berth that the Hapag flag merrily floating in the breeze
+gives us a friendly welcome.</p>
+
+<p>“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<a name="page_094" id="page_094"></a> 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.</p>
+
+<p>“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....</p>
+
+<p>“ ... At 9 A.M. on March 23rd we arrived at Kobe, where we had to
+spend several days.</p>
+
+<p>“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<a name="page_095" id="page_095"></a> 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....�</p></div>
+
+<p>The brief statement in which Ballin summarized the results of his trip
+from a business point of view is appended:&mdash;</p>
+
+<div class="blockquot"><p>“Among the business transacted during my trip the following items
+are of chief importance:</p>
+
+<p>“(1) The establishment of a branch of our Company at Hongkong.</p>
+
+<p>“(2) The acquisition of the Imperial Mail Packet Service to
+Shanghai, Tsingtau, and Tientsin, formerly carried on by Messrs.
+Diedrichsen, Jebsen and Co.</p>
+
+<p>“(3) The acquisition of the Yangtse Line, hitherto carried on by
+the firm of Rickmers.</p>
+
+<p>“(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.</p>
+
+<p>“(5) The establishment of temporary offices at Shanghai.</p>
+
+<p>“(6) In Japan discussions are still proceeding concerning the
+running of a line from the Far East to the American Pacific coast.</p>
+
+<p>“(7) In New York negotiations with the representative of the firm
+of Forwood are under way regarding the purchase of the Atlas Line.�</p></div>
+
+<p>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<a name="page_096" id="page_096"></a> 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:</p>
+
+<div class="blockquot"><p class="r">
+“<i>Shanghai.</i><br />
+<i>March 4th, 1901.</i><br />
+</p>
+
+<p>“I am not quite satisfied with the course which the negotiations
+concerning the possible inauguration of a Yangtse line have taken
+so far.</p>
+
+<p>“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....�</p></div>
+
+<div class="blockquot"><p class="r">
+“<i>On board the s.s. Sibiria on the Yangtse.</i><br />
+<i>March 10th, 1901.</i><br />
+</p>
+
+<p>“ ... 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<a name="page_097" id="page_097"></a> 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....�</p></div>
+
+<div class="blockquot"><p class="r">
+“<i>On board the Sibiria between</i><br />
+<span class="smcap">Tsingtau and Japan.</span><br />
+<i>March 19th, 1901.</i><br />
+</p>
+
+<p>“ ... 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....�</p></div>
+
+<div class="blockquot"><p class="r">
+“<i>On board the s.s. Empress of China between</i><br />
+<span class="smcap">Yokohama and Vancouver</span>.<br />
+<i>April 17th, 1901.</i><br />
+</p>
+
+<p>“ ... In the meantime I have had opportunities of slightly
+familiarizing myself in more respects than one with the conditions
+ruling in Japan.</p>
+
+<p>“The country is faced with an economic crisis. Encouraged by a
+reckless system of credit, she has imported far more<a name="page_098" id="page_098"></a> than
+necessary; she is suffering from a shortage of money, which is sure
+to paralyse her importing capacities for some time to come.</p>
+
+<p>“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....�</p></div>
+
+<p>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.</p>
+
+<p>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<a name="page_099" id="page_099"></a> 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&mdash;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.</p>
+
+<div class="blockquot"><p>“<span class="smcap">My Dear Sir</span>,</p>
+
+<p class="r">
+“<i>January 17th</i>, 1904.<br />
+</p>
+
+<p>“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<a name="page_100" id="page_100"></a> 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 <i>must</i> 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,</p>
+
+<p class="r">
+“I remain, Yours faithfully,<br />
+(<i>signed</i>) “<span class="smcap">Marie.</span>�<br />
+</p>
+</div>
+
+<div class="blockquot"><p>“<span class="smcap">My Dear Director</span>,</p>
+
+<p class="r">
+“<i>February 10th, 1905.</i><br />
+</p>
+
+<p>“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,</p></div>
+
+<p class="r">
+“Yours faithfully,<br />
+(<i>signed</i>) “<span class="smcap">Marie.</span>�<br />
+</p>
+
+<p>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<a name="page_101" id="page_101"></a> 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.</p>
+
+<p>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.</p>
+
+<p>Later on some sort of co-operation with the Russian<a name="page_102" id="page_102"></a> 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.</p>
+
+<p>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<a name="page_103" id="page_103"></a> 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:</p>
+
+<div class="blockquot"><p class="r">
+“<i>May, 1904.</i><br />
+</p>
+
+<p>“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 <i>Fürst
+Bismarck</i> and the <i>Belgia</i>. The <i>Auguste Victoria</i>, which is still
+in dock until the necessary repairs have been executed, has also
+been sold to Russia, and the prospects that the <i>Columbia</i> will
+follow suit are extremely good.</p>
+
+<p>“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 <i>Fürst Bismarck</i> 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 <i>Augusts
+Victoria</i> to interrupt her usual trip to the Near East, and for the
+<i>Columbia</i> to take her place....<a name="page_104" id="page_104"></a></p>
+
+<p>“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 <i>The Times</i>, 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.</p>
+
+<p>“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....</p>
+
+<p>“ ... <i>October 1st, 1904.</i> 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<a name="page_105" id="page_105"></a> 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 <i>Belgia</i> we have now sold to the Russians the <i>Palatia</i> and the
+<i>Phœnicia</i>, as well as nine other boats of our company,
+including the <i>Belgravia</i>, <i>Assyria</i>, and <i>Granada</i> (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.�</p></div>
+
+<p>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&mdash;partly new buildings and partly new purchases<a name="page_106" id="page_106"></a>&mdash;representing a
+value of 22½ 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 <i>Amerika</i> and <i>Kaiserin Auguste
+Victoria</i> 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&mdash;viz. no less than 24 million
+marks&mdash;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 <i>Amerika</i> and the <i>Kaiserin Auguste Victoria</i>. 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.</p>
+
+<p>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.<a name="page_107" id="page_107"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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&mdash;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:<a name="page_108" id="page_108"></a></p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_109" id="page_109"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_110" id="page_110"></a> 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&mdash;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.�</p></div>
+
+<p>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&mdash;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.</p>
+
+<p>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<a name="page_111" id="page_111"></a> end, the amicable relations existing between the lines
+were disturbed, e.g. when the Russian Volunteer Fleet opened a competing
+service&mdash;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.</p>
+
+<p>This network of agreements existed until it was destroyed through the
+outbreak of the war.</p>
+
+<p>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<a name="page_112" id="page_112"></a> hundreds of
+ocean-going liners lay idle in the seaports of the world.</p>
+
+<p>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&mdash;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.</p>
+
+<p>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&mdash;which was something quite unusual at the time&mdash;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&mdash;the Vulkan, of Bremen&mdash;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.</p>
+
+<p>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<a name="page_113" id="page_113"></a> the Cunard Line, the
+<i>Lusitania</i> and the <i>Mauretania</i>, had attracted many passengers, and the
+White Star Line had the mammoth liner <i>Olympic</i> building, which was to
+be followed by two others of the same type, the <i>Titanic</i> and the
+<i>Gigantic</i>. The new Cunarder, the <i>Aquitania</i>, 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 <i>Olympic</i>. 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 <i>Imperator</i>. 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 <i>Kaiserin</i>, 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 <i>Vaterland</i> 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<a name="page_114" id="page_114"></a> of the third and biggest of the three
+steamers, the <i>Bismarck</i>, 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.</p>
+
+<p>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 name="page_115" id="page_115"></a> 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&mdash;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&mdash;man’s
+innate selfishness&mdash;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.</p>
+
+<p>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<a name="page_116" id="page_116"></a> lines to Mexico and
+the West Indies, from that date to 1913 fifty new services were added to
+the existing ones.</p>
+
+<p>The fleet possessed by the Hamburg-Amerika Linie in 1886 consisted of 22
+ocean-going steamers, totalling 60,531 G.R.T.<a name="FNanchor_1_1" id="FNanchor_1_1"></a><a href="#Footnote_1_1" class="fnanchor">[1]</a> 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.</p>
+
+<p>During the same period the joint-stock capital of the company had
+increased from 15 to 157½ 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.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_117" id="page_117"></a>
+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:</p>
+
+<div class="blockquot"><p>“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<a name="page_118" id="page_118"></a> 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.</p>
+
+<p>“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 <i>rapprochement</i>,
+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.</p>
+
+<p>“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&mdash;the
+<i>Elbe</i>, the <i>Werra</i>, the <i>Fulda</i>, the <i>Saale</i>, the <i>Trave</i>, the
+<i>Aller</i>, and the <i>Lahn</i>&mdash;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<a name="page_119" id="page_119"></a> the chairman of a big British steamship company on
+board one of his steamers in New York harbour in 1888, when the
+s.s. <i>Lahn</i>, 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.</p>
+
+<p>“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
+<i>Havel</i> and the <i>Spree</i>, 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.</p>
+
+<p>“In 1888 Consul Meier retired from the chairmanship of the Lloyd,
+to be succeeded&mdash;after the short reign of Mr. Reck&mdash;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.</p>
+
+<p>“What the Lloyd has achieved under the Wiegand régime far surpasses
+anything accomplished in the past.</p>
+
+<p>“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&mdash;by far the biggest the world has
+ever seen&mdash;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.<a name="page_120" id="page_120"></a>’</p>
+
+<p>“It would not be correct to say that this atmosphere of friendship
+had never been clouded&mdash;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.�</p></div>
+
+<p><a name="page_121" id="page_121"></a></p>
+
+<h2><a name="CHAPTER_VII" id="CHAPTER_VII"></a>CHAPTER VII<br /><br />
+<span class="smcap">The Technical Reorganization of the Hamburg-Amerika Linie</span></h2>
+
+<p class="nind">I<span class="smcap">n</span> 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 <i>one</i> system throughout, and on accepting
+the views of <i>one</i> 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<a name="page_122" id="page_122"></a>
+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.</p>
+
+<p>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&mdash;especially the one who
+maintains a service of passenger boats&mdash;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,<a name="page_123" id="page_123"></a> 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&mdash;which, after all, in
+their entirety make what we call comfort&mdash;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:</p>
+
+<p>“List of Moselle purveyors wants revision&mdash;notices on board to be
+restricted as much as possible, those which are necessary to be
+tastefully framed&mdash;sailing lists and general regulations to be included
+in passengers’ lists&mdash;state cabin on board <i>Kaiser Friedrich</i>: key,
+latch, drawer; no room for portmanteaux and trunks; towels too
+small&mdash;<i>Deutschland</i>: soiled linen cupboard too small&mdash;stewards
+<i>Oceanic</i> white jackets&mdash;celery glasses&mdash;butter dishes too small&mdash;large
+bed pillows&mdash;consommé cups&mdash;playing cards: Packetfahrt complete name of
+firm&mdash;Packetfahrt complete name on Wehber’s wine bottles&mdash;toast to be
+served in a serviette (hot).�</p>
+
+<p>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<a name="page_124" id="page_124"></a> 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.</p>
+
+<p>Even where the peculiar conditions obtaining in tropical climates were
+concerned&mdash;conditions with which he was personally quite
+unacquainted&mdash;he unfailingly discovered any defects that might exist,
+and also the means by which they could be remedied.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_125" id="page_125"></a> 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.</p>
+
+<p><i>Type One</i>: Fast steamers&mdash;twin screws, 18 knots, 8,500
+G.R.T.&mdash;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 <i>Imperator</i> 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
+<i>Deutschland</i>.</p>
+
+<p><i>Type Two</i>: 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.</p>
+
+<p><i>Type Three</i>: 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.</p>
+
+<p><i>Type Four</i>: Cargo steamers without any passenger accommodation.</p>
+
+<p>The difference between the floating palaces of type No. 1 in 1913 and
+those vessels which the Hamburg-Amerika<a name="page_126" id="page_126"></a> 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 6½ 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&mdash;the ball-room&mdash;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.</p>
+
+<p>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 <i>vice versa</i>. 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 <i>Imperator</i>, 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.</p>
+
+<p>It must not be thought, however, that the first-class<a name="page_127" id="page_127"></a> 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.</p>
+
+<p>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<a name="page_128" id="page_128"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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 <i>Persia</i>, 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<a name="page_129" id="page_129"></a> 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 <i>Amerika</i> and the <i>Kaiserin Auguste
+Victoria</i>, built in 1905 and 1906 respectively, luxuriously equipped
+throughout; by their large size&mdash;they possessed a capacity of very
+nearly 25,000 G.R.T.&mdash;extremely seaworthy, and as they could travel at
+the rate of 17½ 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.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_130" id="page_130"></a> 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 <i>Prinzessin Victoria Luise</i>, and the somewhat smaller and
+less sumptuous <i>Meteor</i>, 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
+<i>Prinzessin Victoria Luise</i> she was replaced first by a British
+passenger boat that had been purchased, and then by the <i>Deutschland</i>,
+specially reconditioned for her new purpose, and renamed <i>Victoria
+Luise</i>. 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.</p>
+
+<p>“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.<a name="page_131" id="page_131"></a></p>
+
+<h2><a name="CHAPTER_VIII" id="CHAPTER_VIII"></a>CHAPTER VIII<br /><br />
+<span class="smcap">Politics</span></h2>
+
+<p class="nind">N<span class="smcap">otwithstanding</span> 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.�</p>
+
+<p>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 <i>weak</i> 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<a name="page_132" id="page_132"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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&mdash;to put it quite
+plainly&mdash;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 <i>this</i> war,� he often said when speaking of its
+immediate origin.</p>
+
+<p>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<a name="page_133" id="page_133"></a> 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.�</p>
+
+<p>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.</p>
+
+<p>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&mdash;gained, as it was, through many years of
+intercourse with the English&mdash;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&mdash;apart from
+personal motives&mdash;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<a name="page_134" id="page_134"></a> the country’s own strength combined with a
+certain ignorance regarding foreign countries.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_135" id="page_135"></a> 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:</p>
+
+<p>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.<a name="page_136" id="page_136"></a></p>
+
+<p>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.</p>
+
+<p>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&mdash;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.</p>
+
+<p>The general tenor of Anglo-German relations at that time was somewhat as
+follows.</p>
+
+<p>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<a name="page_137" id="page_137"></a> 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.</p>
+
+<p>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 <i>The Times</i> 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<a name="page_138" id="page_138"></a> of
+Parliament discussed German and British naval policy in great detail. In
+an article published by the <i>National Review</i>, 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.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_139" id="page_139"></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&mdash;the King’s&mdash;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.</p>
+
+<p>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.</p>
+
+<p><a name="page_140" id="page_140"></a>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.</p>
+
+<p>During the progress of the interview Sir Ernest&mdash;who showed that he
+possessed excellent information concerning Germany’s finances&mdash;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.</p>
+
+<p>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<a name="page_141" id="page_141"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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 <i>démarche</i> 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 <i>Novoie Vremia</i>. He declared that the Russian papers
+were absolutely mistaken when they alleged that the project was inspired
+from Berlin, and he stated that Austria,<a name="page_142" id="page_142"></a> like her German ally, pursued
+none but commercial aims in the Balkans.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p>Sir Ernest Cassel replied:</p>
+
+<div class="blockquot"><p>“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.�</p></div>
+
+<p>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<a name="page_143" id="page_143"></a> 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.</p>
+
+<p>Shortly afterwards, however, at the end of October, an event took place
+which severely compromised the Kaiser’s policy, viz. the incident of the
+<i>Daily Telegraph</i> 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.<a name="page_144" id="page_144"></a></p>
+
+<p>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.<a name="page_145" id="page_145"></a></p>
+
+<p>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.</p>
+
+<p>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<a name="page_146" id="page_146"></a>
+continued. On these latter he reported to the Kaiser as follows:</p>
+
+<div class="blockquot"><p>“My friend to whom I had intimated in a private letter written
+about a week earlier that it was my intention to visit him&mdash;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&mdash;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.</p>
+
+<p>“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&mdash;spread as it was by an unscrupulous press and fostered
+by foolish politicians&mdash;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.</p>
+
+<p>“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<a name="page_147" id="page_147"></a> 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.</p>
+
+<p>“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<a name="page_148" id="page_148"></a> but that in the long
+run Britain would be compelled to abandon her principles of Free
+Trade.</p>
+
+<p>“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.</p>
+
+<p>“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&mdash;partly, perhaps, through the fault of the German
+Government&mdash;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<a name="page_149" id="page_149"></a> that there were some flaws in that
+calculation. In view of any such intentions it was my
+opinion&mdash;which, however, was quite personal and unofficial&mdash;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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_150" id="page_150"></a> 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 <i>rapprochement</i> as politically expedient.</p>
+
+<p>“If it was admitted&mdash;and he thought this admission was implied by
+my remarks&mdash;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.</p>
+
+<p>“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<a name="page_151" id="page_151"></a> 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 <i>sine
+qua non</i>.</p>
+
+<p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p>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
+<i>faux pas</i> 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<a name="page_152" id="page_152"></a> 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&mdash;if, for instance, <i>he</i> had conducted it
+as Imperial Chancellor&mdash;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.</p>
+
+<p>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,<a name="page_153" id="page_153"></a> 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:</p>
+
+<div class="blockquot"><p>“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.�</p></div>
+
+<p>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.</p>
+
+<p>The subsequent course of events is indicated by a letter of the
+Chancellor to Ballin, dated August 21st, in which he says:</p>
+
+<div class="blockquot"><p>“I have to-day taken the official steps of which I told you. As Sir
+Ernest Goschen<a name="FNanchor_2_2" id="FNanchor_2_2"></a><a href="#Footnote_2_2" class="fnanchor">[2]</a> 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
+<i>démarche</i>, 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.�</p></div>
+
+<p>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<a name="page_154" id="page_154"></a> 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&mdash;who was a master of this art,
+as of so many others&mdash;interpreted the Chancellor’s rebuff when
+communicating it to his friend.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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.�</p></div>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<div class="blockquot"><p>“The German Government told us&mdash;I cannot complain, and I have no
+answer to make&mdash;that their procedure in this<a name="page_155" id="page_155"></a> 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&mdash;and no doubt with great
+truth&mdash;they would not have the support of public opinion in Germany
+to a modified programme.�</p></div>
+
+<p>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.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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<a name="page_156" id="page_156"></a> 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&mdash;or even superior&mdash;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&mdash;because one restricted to the European
+Powers alone could not be comprehensive enough&mdash;had to adjudicate
+on such claims.�</p></div>
+
+<p>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&mdash;viz.
+the Anglo-German rivalry&mdash;could quite well be solved without convening
+an “international congress.�</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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 <i>pourparlers</i> which have taken
+place from time to time, and which have been<a name="page_157" id="page_157"></a> 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.�</p></div>
+
+<p>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 <i>North German Gazette</i> replied that
+Germany would be quite prepared to fall in with Sir Edward’s suggestions
+if agreements such as those<a name="page_158" id="page_158"></a> 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?�</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>In the early part of 1910 he wrote:</p>
+
+<div class="blockquot"><p>“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 name="page_159" id="page_159"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_160" id="page_160"></a> 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.�</p></div>
+
+<p>From the second report, in the summer of 1910, the following is the
+salient extract:</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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&mdash;Liberals and Conservatives alike&mdash;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.</p>
+
+<p>“The attitude of the people towards the new monarch is one of
+reserve, but also&mdash;in conformity with the national character of the
+English&mdash;one of loyalty and good faith. The situation with regard
+to home politics is as difficult<a name="page_161" id="page_161"></a> 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.</p>
+
+<p>“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 <i>quantité
+négligeable</i> as far as their competition with us in the world’s
+markets is concerned.</p>
+
+<p>“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?).�</p></div>
+
+<p>Up to the summer of 1911 the feeling remained friendly. Early in July
+Ballin wrote:</p>
+
+<div class="blockquot"><p>“To-day the feeling, as far as the City is concerned, is thoroughly
+friendly towards Germany. The visit in the<a name="page_162" id="page_162"></a> 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&mdash;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.�</p></div>
+
+<p>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 <i>Panther</i>
+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.</p>
+
+<p>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<a name="page_163" id="page_163"></a> to the Secretary of State, Herr v.
+Kiderlen-Wächter, in which it is necessary to read between the lines
+here and there.</p>
+
+<div class="blockquot"><p>“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&mdash;the details of which are still
+unknown there&mdash;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.</p>
+
+<p>“I felt it my duty to draw your attention to this statement, and
+you may take it for what it is worth.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“With best wishes for a successful solution of this difficult and
+important problem, I have the honour to remain,</p>
+
+<p class="r">
+“Your Excellency’s most obedient servant,<br />
+(<i>Signed</i>) <span class="smcap">Ballin</span>.�<br />
+</p></div>
+
+<p>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.</p>
+
+<p>This article deals with the Anglo-German controversy and was published
+by the <i>Westminster Gazette</i>. It was sent to Ballin by an English friend
+with the remark that it presented a faithful picture of the views on<a name="page_164" id="page_164"></a>
+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:</p>
+
+<div class="blockquot"><p>“Quite good, except for the ridiculous insinuation that we are
+aspiring after the hegemony in Central Europe. We simply <i>are</i>
+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&mdash;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.</p>
+
+<p class="r">
+“(<i>Signed</i>) <span class="smcap">Wilhelm I.R.</span>�<br />
+</p></div>
+
+<p>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<a name="page_165" id="page_165"></a> Atlantic to the Indian Ocean.�
+Similar sentiments were expressed in a letter from Sir Ernest Cassel to
+Ballin, dated January 9th, 1912.</p>
+
+<div class="blockquot"><p>“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&mdash;Winston&mdash;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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p>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<a name="page_166" id="page_166"></a>
+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&mdash;as is borne out by
+the letter quoted above&mdash;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 <i>rapprochement</i> 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&mdash;Churchill<a name="page_167" id="page_167"></a> and Tirpitz&mdash;had met in
+conclave, the feeling of their mutual responsibility would be too strong
+to allow the negotiations to end in failure.</p>
+
+<p>Unfortunately, such a meeting never took place; all that was achieved
+was a preliminary step, viz. the visit of Lord Haldane to Berlin.</p>
+
+<p>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&mdash;whoever
+may have been its author&mdash;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&mdash;if not
+at the actual desire&mdash;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<a name="page_168" id="page_168"></a> result. If this suggestion was acceptable to Germany, the
+British Government thought the next step should be a private&mdash;and not an
+official&mdash;visit of a British Cabinet Minister to Berlin.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p class="r">
+“<span class="smcap">Berlin.</span> <i>Febr. 4th, 1912.</i><br />
+</p>
+
+<p class="nind">
+“<span class="smcap">Dear Mr. Ballin</span>,&mdash;<br />
+</p>
+
+<p>“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.</p>
+
+<p>“In great haste.</p>
+
+<p class="r">
+“(<i>Signed</i>) <span class="smcap">Bethmann-Hollweg</span>.�<br />
+</p></div>
+
+<p>The next document is a letter of Ballin to Sir Ernest Cassel, intended
+to explain the situation.</p>
+
+<div class="blockquot"><p>“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.<a name="page_169" id="page_169"></a></p>
+
+<p>“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.</p>
+
+<p>“I have now succeeded in making our gentlemen promise me&mdash;although
+not without much reluctance on their part&mdash;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 <i>bona fide</i> 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.</p>
+
+<p>“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.</p>
+
+<p>“‘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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_170" id="page_170"></a> also necessary, and it
+goes without saying that I shall be present as well.</p>
+
+<p>“P.S.&mdash;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.</p>
+
+<p>“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.</p>
+
+<p>“The bearer of this note is our general secretary, Mr. Huldermann.
+He is a past master of discretion, and fully acquainted with the
+situation.�</p></div>
+
+<p>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.</p>
+
+<p>The text of the official note is as follows:</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p><a name="page_171" id="page_171"></a></p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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<a name="page_172" id="page_172"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“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&mdash;as he
+argued with<a name="page_173" id="page_173"></a> much conviction&mdash;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.</p>
+
+<p>“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.’</p>
+
+<p>“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&mdash;provided the proposed agreement with Germany was not
+concluded&mdash;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.</p>
+
+<p>“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<a name="page_174" id="page_174"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p>The positive information which this report contained was passed on to
+the Chancellor.</p>
+
+<p>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.</p>
+
+<p>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:<a name="page_175" id="page_175"></a></p>
+
+<div class="blockquot"><p class="r">
+“<span class="smcap">The Castle, Berlin.</span><br />
+“9.2.1912. 6 <span class="smcap">P.M.</span><br />
+</p>
+
+<p class="nind">
+“<span class="smcap">Dear Ballin</span>,<br />
+</p>
+
+<p>“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):</p>
+
+<p>“(1) Because of its scope and its importance, the Agreement must be
+concluded, and it must not be jeopardized by too many details.</p>
+
+<p>“(2) Therefore, the Agreement is not to contain any reference to
+the size of the two fleets, to standards of ships, to
+constructions, etc.</p>
+
+<p>“(3) The Agreement is to be purely political.</p>
+
+<p>“(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.</p>
+
+<p>“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.</p>
+
+<p>“Please remember me to Cassel and inform him.</p>
+
+<p class="r">
+“Your sincere friend,<br />
+“(<i>Signed</i>) <span class="smcap">Wilhelm I.R.</span>�<br />
+</p></div>
+
+<p>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<a name="page_176" id="page_176"></a> 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.</p>
+
+<p>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:</p>
+
+<p class="r">
+“<span class="smcap">Berlin.</span><br />
+“2.3.1912.<br />
+</p>
+
+<p class="nind">
+“<span class="smcap">Dear Mr. Ballin</span>,<br />
+</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.</p>
+
+<p class="r">
+“Sincerely yours.<br />
+“(<i>Signed</i>) <span class="smcap">Bethmann-Hollweg.</span>�<br />
+</p></div>
+
+<div class="blockquot"><p class="r">
+“<span class="smcap">Berlin.</span><br />
+“8.3.1912.<br />
+</p>
+
+<p class="nind">
+“<span class="smcap">Dear Mr. Ballin</span>,<br />
+</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_177" id="page_177"></a> 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&mdash;as
+you are aware&mdash;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.</p>
+
+<p>“Discreet support from private quarters will be appreciated.</p>
+
+<p>“Many thanks for your news. You know that and why I was prevented
+from writing these last few days.</p>
+
+<p class="r">
+“Sincerely yours,<br />
+“(<i>Signed</i>) <span class="smcap">Bethmann-Hollweg</span>.�<br />
+</p></div>
+
+<p>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.</p>
+
+<p>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:</p>
+
+<p>(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.</p>
+
+<p>(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.<a name="page_178" id="page_178"></a></p>
+
+<p>(3) This induced the Chancellor to make an equally amicable and hopeful
+statement to the Reichstag.</p>
+
+<p>(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.</p>
+
+<p>(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&mdash;as, no doubt, Lord Haldane has
+also told you verbally&mdash;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&mdash;in terms of the
+greatest politeness, of course&mdash;to the increase in the number of the
+crews, asks questions as to our intentions with regard to torpedo boats
+and submarines, and&mdash;this is most significant&mdash;emphasizes that the
+Haldane mission has at any rate been of great use, even if the
+negotiations should not lead to any definite result.</p>
+
+<p>(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<a name="page_179" id="page_179"></a> 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.�</p>
+
+<p>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.</p>
+
+<p>My report on my conversations with Sir Ernest Cassel, which took place
+at Marseilles on March 9th and 10th, is as follows:</p>
+
+<div class="blockquot"><p>“Our friend arrived about four hours late, but he received me all
+the same at 10 <span class="smcap">P.M.</span> 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 <i>en route</i>
+from Haldane.</p>
+
+<p>“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<a name="page_180" id="page_180"></a> 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.</p>
+
+<p>“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 <i>au
+courant</i> 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<a name="page_181" id="page_181"></a> 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.</p>
+
+<p>“In the course of our conversation Sir Ernest produced the letter
+which he had received from Haldane <i>en route</i>. 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.�</p></div>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“Owing to the brief time at my disposal when I was in Paris, I
+could only learn the views of the members of the ‘<i>haute finance</i>.’
+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<a name="page_182" id="page_182"></a>
+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 <i>Matin</i> 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.�</p></div>
+
+<p>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&mdash;i.e.
+those stated in the memorandum which had been addressed to the German
+Government some time before&mdash;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<a name="page_183" id="page_183"></a> Government to make concessions in regard to the
+Navy Bill.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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?</p>
+
+<p class="r">
+“(<i>Signed</i>) <span class="smcap">Wilhelm I.R.</span>�<br />
+</p>
+
+<p><a name="page_184" id="page_184"></a></p></div>
+
+<p>That the negotiations had actually been broken off was confirmed to
+Ballin by a letter of the Chancellor of the same date:</p>
+
+<div class="blockquot"><p class="nind">
+“<span class="smcap">Dear Mr. Ballin</span>,<br />
+</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p class="r">
+“With kindest regards,<br />
+“Sincerely yours,<br />
+“(<i>Signed</i>)<span class="smcap"> Bethmann-Hollweg</span>.�<br />
+</p></div>
+
+<p>The conviction of the inherent impossibility of solving the problem was
+shared by many people in Germany&mdash;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&mdash;whose honesty and sincerity were beyond doubt&mdash;was
+disowned by his fellow-members in the Cabinet.</p>
+
+<p>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<a name="page_185" id="page_185"></a> Ballin’s own standpoint was with
+regard to the views described in the previous paragraph:</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p><a name="page_186" id="page_186"></a></p>
+
+<p>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.</p>
+
+<p>Not much need be said about the subsequent development of events up to
+the outbreak of the war.</p>
+
+<p>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, <i>si vis pacem, para bellum</i>, 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<a name="page_187" id="page_187"></a> issue instead of entrusting this task to the Secretary of
+Foreign Affairs and to Admiral Tirpitz, the Secretary for the Navy.</p>
+
+<p>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.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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&mdash;which is worse&mdash;that we have failed to show ourselves worthy
+of the great opportunity.�</p></div>
+
+<p>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&mdash;which, as
+usual,<a name="page_188" id="page_188"></a> was explained by the state of his health&mdash;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.</p>
+
+<p>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<a name="page_189" id="page_189"></a> 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
+“<i>Deutsche Weltpolitik und kein Krieg</i>� ("German World Power and No
+War"), published in 1913 by Messrs. Puttkamer &amp; Mühlbrecht, of Berlin.
+The author is Dr. Plehn, the then representative of the <i>Cologne
+Gazette</i> in London, and it partly reflects the views of Herr v.
+Kühlmann.</p>
+
+<p>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 <i>Süddeutsche Monatshafte</i> 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<a name="page_190" id="page_190"></a> 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.</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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 <i>not</i> 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<a name="page_191" id="page_191"></a>
+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.�</p></div>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>Prince Lichnowsky himself, in his pamphlet entitled “My London Mission,�
+relates the incident as follows:</p>
+
+<div class="blockquot"><p>“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.�</p></div>
+
+<p><a name="page_192" id="page_192"></a></p>
+
+<p>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 <i>Frankfurter Zeitung</i>. 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.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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.<a name="page_193" id="page_193"></a></p>
+
+<h2><a name="CHAPTER_IX" id="CHAPTER_IX"></a>CHAPTER IX<br /><br />
+<span class="smcap">The Kaiser</span></h2>
+
+<p class="nind">T<span class="smcap">he</span> 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 <i>Auguste Victoria</i>, and when he, accompanied by the Kaiserin,
+made a trip on board the newly-built express steamer <i>Fürst Bismarck</i>.
+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.</p>
+
+<p>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<a name="page_194" id="page_194"></a> 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 <i>Hohenzollern</i>,
+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 <i>Hohenzollern</i> 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.</p>
+
+<p>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<a name="page_195" id="page_195"></a> 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.</p>
+
+<p>This event, at any rate, helped to establish the reputation of the
+company’s hospitality.</p>
+
+<p>It may be presumed that this incident had shown the Kaiser&mdash;who,
+although he did not object to being contradicted in private, could not
+bear it in public&mdash;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.</p>
+
+<p>The first occasion of the Kaiser’s pleading in favour<a name="page_196" id="page_196"></a> 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. <i>Meteor</i>
+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 <i>Auguste Victoria</i>, and
+was christened after the young Empress. Launched in 1888, she
+immediately won “the blue riband of the Atlantic� on her first trip.</p>
+
+<p>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 <i>Hohenzollern</i>, 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<a name="page_197" id="page_197"></a> 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.</p>
+
+<p>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 <i>Meteor</i>. 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.’�</p>
+
+<p>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 <i>Weltpolitik</i>, 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<a name="page_198" id="page_198"></a> 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.</p>
+
+<p>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.</p>
+
+<div class="blockquot"><p>“As early as January, 1904,� Ballin remarks in his notes, “the
+Kaiser had sent a telegram inviting me to attend the <i>Ordensfest</i>
+celebrations in Berlin, and during the subsequent levee he favoured
+me with a lengthy conversation, chiefly<a name="page_199" id="page_199"></a> 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&mdash;which he had experienced in the Krupp
+case&mdash;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.�</p></div>
+
+<p>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<a name="page_200" id="page_200"></a> for propaganda purposes. During the first stage of
+the naval policy and of the naval propaganda&mdash;which at that time were
+conducted on quite moderate lines&mdash;Ballin, as he repeatedly told me,
+played a very active part. It was the time when the well-known
+periodical <i>Nautikus</i>, 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<a name="page_201" id="page_201"></a>
+unmeasured eulogy, and whom he described as the greatest enemies of the
+Hamburg-Amerika Linie.</p>
+
+<p>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&mdash;and frequently of
+the Kaiserin as well&mdash;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
+<i>Columbia</i>, and he was only prevented from doing so at the last moment.
+In the following year the Hamburg-Amerika Linie sent their s.s.
+<i>Pretoria</i> 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<a name="page_202" id="page_202"></a> visit the Kaiser on board his yacht <i>Hohenzollern</i>. 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.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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&mdash;let him be a native of Hamburg, or Bremen, or
+Lübeck&mdash;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.�</p></div>
+
+<p>In 1912 he quoted the motto from the Lübeck Ratskeller:</p>
+
+<div class="blockquot"><p>“It is easy to hoist the flag, but it costs a great deal to haul it
+down with honour.�</p></div>
+
+<p>And in 1914, after the launch of the big steamer <i>Bismarck</i>, he quoted
+Bismarck’s saying, slightly altered:</p>
+
+<p>“We Germans fear God, but nothing and nobody besides.<a name="page_203" id="page_203"></a>�</p>
+
+<p>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&mdash;as, for instance, during the
+war&mdash;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&mdash;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.</p>
+
+<p>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:<a name="page_204" id="page_204"></a></p>
+
+<div class="blockquot"><p>“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.�</p></div>
+
+<p>The following passage, referring to the Kiel Week, is taken from the
+notes of the same year:</p>
+
+<div class="blockquot"><p>“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.�</p></div>
+
+<p>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.</p>
+
+<p>The following extracts are taken from the notes of subsequent years:</p>
+
+<div class="blockquot"><p>“On December 10th (1903) I received a wire asking me to see the
+Kaiser at the <i>Neues Palais</i>. 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
+<i>Hohenzollern</i> 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.�</p>
+
+<p>(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 <i>Disconto-Gesellschaft</i>, 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<a name="page_205" id="page_205"></a> 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.�</p>
+
+<p>“On June 21st, 1904, the usual Imperial Regatta took place at
+Cuxhaven, and the usual dinner on board the <i>Blücher</i>. These events
+were followed by Kiel Week, which lasted from June 22nd to 28th. We
+stayed on board the <i>Victoria Luise</i>, and I was thus brought into
+especially close contact with the Kaiser. I accompanied him to
+Eckernförde on board the <i>Meteor</i>, and we discussed the political
+situation, particularly in its bearing on the Morocco question and
+on the attitude of Great Britain.�</p>
+
+<p>“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
+<i>Deutschland</i>, I heard the news&mdash;which the Kaiser had just
+communicated to Kaempff (the captain of the <i>Deutschland</i>)&mdash;that
+the North German Lloyd steamer <i>Kaiser Wilhelm II</i>, 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
+<i>Hohenzollern</i>, 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 <i>Deutschland</i>. The
+Kaiser was in the best of health and spirits. Owing to the
+circumstance that Burgomaster Burchard&mdash;who generally engages the
+Kaiser in after-dinner conversation&mdash;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 <i>Hohenzollern</i> 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<a name="page_206" id="page_206"></a> own house a
+dinner party was given for 36 persons. On the 23rd I changed my
+quarters to the <i>Prinzessin Victoria Luise</i>, 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. <i>Prinz Joachim</i> at his
+disposal, in addition to the <i>Prinzessin Victoria Luise</i>. We also
+supplied, for the first time, a hotel ship, the <i>Graf Waldersee</i>,
+all the cabins of which were engaged. On June 27th my wife and I,
+and a number of other visitors from the <i>Prinzessin Victoria
+Luise</i>, were invited to take afternoon tea with the Kaiser and
+Kaiserin on board the <i>Hohenzollern</i>, and I had a lengthy
+conversation with King Edward.�</p></div>
+
+<p>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.</p>
+
+<p>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&mdash;an interest which still
+continued after Ballin’s death.</p>
+
+<p>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<a name="page_207" id="page_207"></a> 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.</p>
+
+<p>If thus the effect of Ballin’s friendship with the Kaiser has frequently
+been greatly overrated in regard to politics, the same holds good&mdash;and,
+indeed, to a still greater extent&mdash;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<a name="page_208" id="page_208"></a>’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&mdash;and, I am inclined to think, quite probable&mdash;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&mdash;which was supposed to depend for its continuance
+mainly on the existence of the German monarchial system&mdash;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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_209" id="page_209"></a> 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.</p>
+
+<p>During the most critical period of the existence of the monarchy&mdash;i.e.
+during the war&mdash;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&mdash;in
+September, 1918&mdash;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.�</p>
+
+<p>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<a name="page_210" id="page_210"></a> 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 <i>Panther</i> 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&mdash;as was discovered when
+too late&mdash;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.<a name="page_211" id="page_211"></a> 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.</p>
+
+<p>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.�</p>
+
+<p>This comparison of the German Empire and its<a name="page_212" id="page_212"></a> 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.<a name="page_213" id="page_213"></a></p>
+
+<h2><a name="CHAPTER_X" id="CHAPTER_X"></a>CHAPTER X<br /><br />
+<span class="smcap">The War</span></h2>
+
+<p class="nind">A<span class="smcap">bout</span> 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:</p>
+
+<p>The <i>Berliner Tageblatt</i>, 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<a name="page_214" id="page_214"></a>
+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
+<i>casus fœderis</i> 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 <i>rapprochement</i> 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 <i>Berliner Tageblatt</i>,
+according to which the informants of the author also took a serious view
+of the situation.</p>
+
+<p>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<a name="page_215" id="page_215"></a>
+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.</p>
+
+<p>Ballin then left Berlin for Hamburg. He gave me his impressions of the
+state of political affairs&mdash;which he did not regard as critical&mdash;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&mdash;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<a name="page_216" id="page_216"></a> 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.</p>
+
+<p>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&mdash;whose untimely death was greatly
+regretted&mdash;was without any doubt one of the most capable statesmen of
+his time&mdash;perhaps the only one with a touch of genius Europe
+possessed&mdash;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<a name="page_217" id="page_217"></a> 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.</p>
+
+<div class="blockquot"><p>“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.’</p>
+
+<p>“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 <i>rapprochement</i> 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<a name="page_218" id="page_218"></a> be made to look
+small, and public opinion would calm down again.�</p>
+
+<p>“I asked Witte: ‘Do you think, Sergei Yulyevitch, that the Tsar
+would avail himself of a possible opportunity of meeting the
+Kaiser?’</p>
+
+<p>“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 manœuvres 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.’</p>
+
+<p>“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?’</p>
+
+<p>“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.<a name="page_219" id="page_219"></a> Or the
+suggestion might reach the Tsar <i>via</i> 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.’</p>
+
+<p>“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.’</p>
+
+<p>“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.’</p>
+
+<p>“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?’</p>
+
+<p>“Witte replied: ‘Certainly. At any moment.’</p>
+
+<p>“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.</p>
+
+<p>“‘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.’</p>
+
+<p>“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<a name="page_220" id="page_220"></a> 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.’�</p></div>
+
+<p>The suggestion which formed the principal subject of the above
+conversations&mdash;viz. that a personal meeting of the two Emperors should
+be arranged in order to remove the existing tension&mdash;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.</p>
+
+<p>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. <i>Imperator</i>, 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.</p>
+
+<p>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<a name="page_221" id="page_221"></a>
+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.</p>
+
+<p>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&mdash;indeed, hardly anything at all&mdash;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.</p>
+
+<p>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&mdash;a contingency which had escaped
+attention in Germany altogether&mdash;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<a name="page_222" id="page_222"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>Thus, no serious efforts of any kind had been made to grapple with the
+problem. On Sunday, August 2nd,<a name="page_223" id="page_223"></a> Geheimrat Frisch, who afterwards became
+the director of the <i>Zentral-Einkaufs-Gesellschaft</i> (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 <i>via</i> neutral countries, were the causes of a
+great deal of serious delay.</p>
+
+<p>At Ballin’s suggestion the <i>Reichseinkauf</i> (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<a name="page_224" id="page_224"></a> 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.</p>
+
+<p>Ballin took a large personal share in the actual business transacted by
+the <i>Reichseinkauf</i>. He did so, if for no other reason, because he
+needed some substitute for the work connected with the real shipping
+business<a name="page_225" id="page_225"></a> 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.</p>
+
+<p>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 <i>via</i> 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.</p>
+
+<p>After a comparatively brief period it was found too difficult to conduct
+the <i>Reichseinkauf</i> 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<a name="page_226" id="page_226"></a> 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 <i>Kriegswirtschaft</i>, and for which it will be impossible to demand
+reparation owing to the lost war and to the outbreak of the revolution.</p>
+
+<p>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 <i>Zentral-Einkaufs-Gesellschaft</i> (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<a name="page_227" id="page_227"></a> 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&mdash;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&mdash;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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_228" id="page_228"></a> 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.</p>
+
+<p>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<a name="page_229" id="page_229"></a> 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&mdash;or,
+rather, of the German naval authorities&mdash;have sacrificed enormous values
+merely for the sake of a phantom, thus necessitating the compensation
+due to the shipowners&mdash;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.</p>
+
+<p>The phantom just referred to was the foolish belief that it would be
+possible to eliminate all ocean tonnage from the high seas&mdash;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:<a name="page_230" id="page_230"></a></p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_231" id="page_231"></a> shipping companies of neutral and enemy
+countries&mdash;which have accumulated phenomenal profits&mdash;but with the
+Austrian mercantile marine as well.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“Your Excellency, I am sure, is fully aware of the fact that the
+methods of the Admiralty Staff&mdash;ignoring, as it does, all other
+considerations except its own&mdash;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&mdash;evidently with the intention of
+inconveniencing neutral countries as much as possible&mdash;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.</p>
+
+<p>“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<a name="page_232" id="page_232"></a> 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.</p>
+
+<p>“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....</p>
+
+<p>“ ... I must also protest most emphatically against the
+insinuation&mdash;which is sure to be made&mdash;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&mdash;although possessing no formal mandate&mdash;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.</p>
+
+<p>“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.�</p></div>
+
+<p><a name="page_233" id="page_233"></a></p>
+
+<p>To a man of the type of Ballin&mdash;who had, throughout his life, been
+accustomed to perform a huge amount of successful work&mdash;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&mdash;if at
+all&mdash;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.</p>
+
+<p>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<a name="page_234" id="page_234"></a> 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.</p>
+
+<p>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 <i>Frankfürter Zeitung</i> 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<a name="page_235" id="page_235"></a> 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 <i>Westminster Gazette</i>, 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.</p>
+
+<p>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.�</p>
+
+<div class="blockquot"><p>“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<a name="page_236" id="page_236"></a> 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.�</p></div>
+
+<p>It is no secret that during the war many prominent politicians and
+economists&mdash;men of sound political training&mdash;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 <i>débâcle</i>.</p>
+
+<p>The following notes, which are largely based on Ballin’s own diary, are
+intended to supplement the<a name="page_237" id="page_237"></a> information given so far as to his political
+activities during the war.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“ ... I quite agree with what you say in your welcome letter.
+Indeed, you could not view these matters<a name="FNanchor_3_3" id="FNanchor_3_3"></a><a href="#Footnote_3_3" class="fnanchor">[3]</a> with graver anxiety
+than I do myself. I hope I shall soon have the opportunity I desire
+of discussing these things with you personally.</p>
+
+<p>“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.<a name="page_238" id="page_238"></a></p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“We have had no difficulty in putting up with the French clamour
+for <i>revanche</i> 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.</p>
+
+<p>“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.</p>
+
+<p>“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&mdash;the numerical superiority
+at least&mdash;of her navy.</p>
+
+<p>“I am convinced&mdash;always supposing that we shall succeed in
+conquering France and Belgium&mdash;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.</p>
+
+<p>“The present state of things is the outcome of a <i>circulus<a name="page_239" id="page_239"></a>
+vitiosus</i>, and is bound to produce a soreness which will never
+permit of a sound understanding....</p>
+
+<p>“ ... 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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“Even a partial loss of her naval prestige would spell<a name="page_240" id="page_240"></a> ruin to
+Great Britain. It would imply the defection of the great dominions
+which now form part of her world empire. The <i>raison d’être</i> for
+Great Britain’s present position ceases to exist as soon as she has
+lost her naval supremacy....</p>
+
+<p>“ ... 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.</p>
+
+<p>“ ... 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.�</p></div>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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<a name="page_241" id="page_241"></a> 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.�</p></div>
+
+<p>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.</p>
+
+<div class="blockquot"><p>“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 <i>sine qua
+non</i> 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.</p>
+
+<p>“ ... 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<a name="page_242" id="page_242"></a> 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.�</p></div>
+
+<p>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.</p>
+
+<p>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<a name="page_243" id="page_243"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_244" id="page_244"></a> 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:</p>
+
+<div class="blockquot"><p>“ ... 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....�</p>
+
+<p>“ ... 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....</p>
+
+<p>“ ... 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.�</p></div>
+
+<p><a name="page_245" id="page_245"></a></p>
+
+<p>In a letter of July 31st, 1915, Ballin wrote as follows:</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“ ... 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&mdash;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&mdash;e.g., by an Imperial
+proclamation on the anniversary of the outbreak of war, or by some
+other suitable means&mdash;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.</p>
+
+<p>“ ... 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.�</p>
+
+<p>“ ... 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<a name="page_246" id="page_246"></a>
+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.</p>
+
+<p>“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.�</p>
+
+<p>“ ... 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.�</p></div>
+
+<p>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, <i>inter alia</i>, 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.</p>
+
+<p>The following extracts are taken from Ballin’s notes during the next few
+months:</p>
+
+<div class="blockquot"><p>“ ... October 20th, 1915. I am annoyed at the importunity with
+which some interested parties, such as<a name="page_247" id="page_247"></a> 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.</p>
+
+<p>“Prince Bülow will be leaving for Lucerne to-day where he intends
+to stay for some time, and the Prussian <i>chargé d’affaires</i>, Herr
+v. Mutius&mdash;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&mdash;has been promptly transferred to Warsaw. Evidently the
+Berlin authorities now think the danger has passed, since Prince
+Bülow has left.�</p>
+
+<p>“ ... November 23rd, 1915. Hammann<a name="FNanchor_4_4" id="FNanchor_4_4"></a><a href="#Footnote_4_4" class="fnanchor">[4]</a> 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.�</p>
+
+<p>“ ... 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.�</p>
+
+<p>“ ... On January 10th, 1916, I was commanded to dine with Their
+Majesties at the <i>Neues Palais</i>. 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<a name="page_248" id="page_248"></a> 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.</p>
+
+<p>“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:</p>
+
+<p>“‘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.</p>
+
+<p>“‘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.</p>
+
+<p>“‘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.</p>
+
+<p>“‘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.</p>
+
+<p>“‘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.</p>
+
+<p>“‘At present about two hundred ocean steamers or more<a name="page_249" id="page_249"></a> 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.</p>
+
+<p>“‘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.’�</p></div>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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&mdash;what
+I had heard from the Prince’s own lips&mdash;that he had had no official
+mission, and that he had not been engaged upon any negotiations.<a name="page_250" id="page_250"></a></p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“Banking circles, of course, view the financial situation with the
+utmost gravity, but the general public&mdash;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&mdash;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.</p>
+
+<p>“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.<a name="page_251" id="page_251"></a> 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.</p>
+
+<p>“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&mdash;whom I met last night&mdash;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.</p>
+
+<p>“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.</p>
+
+<p>“The big Austro-German <i>Zollverein</i>&mdash;or by whatever other name it
+is intended to describe the proposed customs union&mdash;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 <i>timeo Danaos, et dona
+ferentes</i>, 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.<a name="page_252" id="page_252"></a></p>
+
+<p>“ ... 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&mdash;formerly viewed with so much
+apprehension&mdash;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.</p>
+
+<p>“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.’</p>
+
+<p>“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.�</p></div>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“ ... 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.</p>
+
+<p>“The American danger seems to be averted for the moment at least. A
+severance of diplomatic relations with<a name="page_253" id="page_253"></a> 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.</p>
+
+<p>“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
+<i>volte-face</i> that he could not find a suitable basis for peace
+negotiations anywhere.</p>
+
+<p>“The entry of the United States would have been of immeasurably
+greater effect on the imagination and the obstinacy of our enemies.</p>
+
+<p>“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<a name="page_254" id="page_254"></a>
+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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_255" id="page_255"></a> can perform
+his life’s work more than once, and no one can make a fresh start
+at the age of sixty.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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....�</p></div>
+
+<p>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:<a name="page_256" id="page_256"></a></p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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<a name="page_257" id="page_257"></a> us once more to a purely Continental policy, a policy
+which we have so successfully discarded since the accession of our
+present Kaiser.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p>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<a name="page_258" id="page_258"></a>
+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:</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_259" id="page_259"></a> States as well. Therefore, we
+have only one choice left: we must force Russia, our second chief
+enemy, to her knees.</p>
+
+<p>“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.</p>
+
+<p>“With less certainty, but also, perhaps, with less exertion, it
+might have proved possible to make peace <i>via</i> 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.</p>
+
+<p>“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.</p>
+
+<p>“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&mdash;small though it has become&mdash;in favour of an
+energetic and whole-hearted offensive against Russia.<a name="page_260" id="page_260"></a></p>
+
+<p>“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.</p>
+
+<p>“ ... 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.</p>
+
+<p>“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....</p>
+
+<p>“ ... 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.�</p></div>
+
+<p>A still more serious note is struck in the following letter written in
+September, 1916:</p>
+
+<div class="blockquot"><p>“Very many thanks for your welcome letter of yesterday’s date, with
+the contents of which I agree in every detail.</p>
+
+<p>“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<a name="page_261" id="page_261"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“It is very sad that we have arrived at such an <i>impasse</i>, 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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_262" id="page_262"></a> round the Kaiser count on heavy indemnities
+even now, it shows how sadly they misjudge the real state of
+affairs.</p>
+
+<p>“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?</p>
+
+<p>“The question as to who is to succeed them, of course, abounds with
+difficulties.</p>
+
+<p>“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.</p>
+
+<p>“Constantinople, too, has only supplies for a few more weeks.</p>
+
+<p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p>In contrast to such views as were expressed in the foregoing letters,
+the men who were at the head of<a name="page_263" id="page_263"></a> 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&mdash;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&mdash;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.</p>
+
+<p>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<a name="page_264" id="page_264"></a>’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.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“<span class="smcap">Your Excellency</span>,</p>
+
+<p class="r">
+“<i>April 4th, 1917</i>.<br />
+</p>
+
+<p>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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_265" id="page_265"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_266" id="page_266"></a> 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.</p>
+
+<p>“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.�</p></div>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“After sharing the Kaiser’s repast&mdash;which was plain and on a war
+diet&mdash;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.�</p></div>
+
+<p>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:<a name="page_267" id="page_267"></a></p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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, <i>inter alia</i>, 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.</p>
+
+<p>“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.<a name="page_268" id="page_268"></a></p>
+
+<p>“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.</p>
+
+<p>“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, <i>via</i> 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.</p>
+
+<p>“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.</p>
+
+<p>“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!</p>
+
+<p>“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<a name="page_269" id="page_269"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_270" id="page_270"></a> situation
+in such a way that the vast resources of that country will be at
+our disposal.</p>
+
+<p>“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.</p>
+
+<p>“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 <i>Daily Telegraph</i> 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.�</p></div>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“ ... 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.</p>
+
+<p>“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<a name="page_271" id="page_271"></a>’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.</p>
+
+<p>“ ... 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.</p>
+
+<p>“The Mexico telegram<a name="FNanchor_5_5" id="FNanchor_5_5"></a><a href="#Footnote_5_5" class="fnanchor">[5]</a> 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.</p>
+
+<p>“ ... 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<a name="page_272" id="page_272"></a> 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.</p>
+
+<p>“ ... 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.</p>
+
+<p>“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.�</p></div>
+
+<p>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:</p>
+
+<div class="blockquot"><p class="r">
+<i>"September 6th, 1917.</i><br />
+</p>
+
+<p>“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<a name="page_273" id="page_273"></a> 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&mdash;which in my opinion can only be one of
+compromise&mdash;French diplomacy must be able to show up something
+which the man in the street can be induced to regard as a <i>succès
+d’estime</i>. 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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_274" id="page_274"></a> their dollar, instead of M 4.20,
+as they used to do, will soon discover their liking for us again.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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&mdash;in order to make these valuable sources of profit available
+for the reduction of its debts&mdash;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.</p>
+
+<p>“If I think of the lessons of the past forty years&mdash;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&mdash;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<a name="page_275" id="page_275"></a> 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.</p>
+
+<p>“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?</p>
+
+<p>“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&mdash;who are,
+moreover, but few and far between&mdash;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.</p>
+
+<p>“Another consideration is that the enemy countries would view with
+much suspicion any such institutions controlled<a name="page_276" id="page_276"></a> 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.</p>
+
+<p>“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&mdash;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.</p>
+
+<p>“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<a name="page_277" id="page_277"></a> disadvantages which
+some of these treaties involve for us are easily outbalanced by the
+advantages secured by the others.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_278" id="page_278"></a> obtaining
+interest on the capital invested. After all, even the turnpikes had
+to be abolished in the end.</p>
+
+<p>“The agitation in favour of separating from Russia the Ukraine,
+Finland, and other parts inhabited by alien peoples&mdash;an agitation
+which is becoming noisier every day&mdash;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.�</p></div>
+
+<p>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:<a name="page_279" id="page_279"></a></p>
+
+<div class="blockquot"><p>“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....</p>
+
+<p>“ ... 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.</p>
+
+<p>“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&mdash;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.�</p></div>
+
+<p><a name="page_280" id="page_280"></a></p>
+
+<p>As regards the closing months of the war&mdash;which are also the closing
+months of Ballin’s life&mdash;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:</p>
+
+<div class="blockquot"><p class="r">
+<i>"Hamfelde, August 25th (Sunday), 1918.</i><br />
+</p>
+
+<p>“Last Tuesday Herr Deters<a name="FNanchor_6_6" id="FNanchor_6_6"></a><a href="#Footnote_6_6" class="fnanchor">[6]</a> 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.</p>
+
+<p>“Next morning Herr Deters rang me up again and told me that Stinnes
+would call on me in Hamburg on Friday morning.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_281" id="page_281"></a> 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.</p></div>
+
+<div class="blockquot"><p class="r">
+<i>"Continuation. Hamburg, August 26th, 1918.</i><br />
+</p>
+
+<p>“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&mdash;more particularly the Socialists&mdash;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.</p>
+
+<p>“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).</p>
+
+<p>“This morning Stinnes informed me through Deters that he had sent
+me a wire stating that the proposed meeting<a name="page_282" id="page_282"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“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&mdash;two of whom were perfect strangers to
+him&mdash;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.</p>
+
+<p>“Stinnes was greatly depressed and took as grave a view of the
+situation as I did myself.�</p></div>
+
+<p>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.</p>
+
+<p>Concerning his interview with the Kaiser, Ballin wrote down the
+following notes:</p>
+
+<div class="blockquot"><p>“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<a name="page_283" id="page_283"></a> 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.</p>
+
+<p>“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.</p>
+
+<p>“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&mdash;which, at
+first, had depressed him very much&mdash;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.</p>
+
+<p>“He now puts his whole trust in Herr v. Hintze, whom he evidently
+looks upon as a great light.</p>
+
+<p>“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.</p>
+
+<p>“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.<a name="page_284" id="page_284"></a></p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p>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:<a name="page_285" id="page_285"></a></p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p>“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.</p>
+
+<p>“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.�</p></div>
+
+<p><a name="page_286" id="page_286"></a></p>
+
+<p>Ballin’s last entry in his diary contains the following passage:</p>
+
+<div class="blockquot"><p>“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.�</p></div>
+
+<p>This note was written on November 2nd, 1918. One short week later, on
+November 9th, his heart had ceased to beat&mdash;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.<a name="page_287" id="page_287"></a></p>
+
+<h2><a name="CHAPTER_XI" id="CHAPTER_XI"></a>CHAPTER XI<br /><br />
+<span class="smcap">Personal Characteristics</span></h2>
+
+<p class="nind">T<span class="smcap">o</span> 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.</p>
+
+<p>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.</p>
+
+<p>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&mdash;as seen by
+himself&mdash;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&mdash;the strength, the<a name="page_288" id="page_288"></a> courage,
+the daring, and the feeling of responsibility without which it would
+never have been achieved.</p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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.<a name="page_289" id="page_289"></a></p>
+
+<p>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.</p>
+
+<p>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<a name="page_290" id="page_290"></a> 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.</p>
+
+<p>This highly subjective and indissoluble relationship between himself and
+the company&mdash;which it had been the dream of his life to raise to the
+highest pinnacle of prosperity&mdash;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&mdash;i.e. the joint-stock
+company&mdash;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.</p>
+
+<p>Although he had nothing but scorn for the very suggestion<a name="page_291" id="page_291"></a> 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&mdash;and, for the matter of that, to the world in general&mdash;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.</p>
+
+<p>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<a name="page_292" id="page_292"></a> 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.</p>
+
+<p>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<a name="page_293" id="page_293"></a> 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&mdash;both
+politically and socially&mdash;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.�</p>
+
+<p>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.<a name="page_294" id="page_294"></a> Being thoroughly unconventional in his habits, Carl Laeisz&mdash;no
+less than his singularly gifted son, who was one of those rare men whom
+it was really impossible to replace&mdash;nevertheless did invaluable service
+in connexion with the establishment of new firms in Hamburg, and with
+the encouragement of existing ones.</p>
+
+<p>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:</p>
+
+<div class="blockquot"><p>“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.</p>
+
+<p class="r">
+“Sincerely yours,<br />
+“(<i>Signed</i>) <span class="smcap">Laeisz</span>.�<br />
+</p></div>
+
+<p>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<a name="page_295" id="page_295"></a> 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:</p>
+
+<div class="blockquot"><p>“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.�</p></div>
+
+<p>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.<a name="page_296" id="page_296"></a></p>
+
+<p>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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_297" id="page_297"></a> 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&mdash;at times, at
+least&mdash;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.</p>
+
+<p>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,<a name="page_298" id="page_298"></a> 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
+<i>bona fide</i> 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<a name="page_299" id="page_299"></a> 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.</p>
+
+<p>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 <i>Hafenbetriebsverein</i>. 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
+<i>Hafenbetriebsverein</i> began to conclude agreements with this
+organization by which the wages for the various categories of dock
+labourers were fixed&mdash;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<a name="page_300" id="page_300"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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.<a name="page_301" id="page_301"></a> 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.</p>
+
+<p>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<a name="page_302" id="page_302"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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.�</p>
+
+<p>Once one had learnt to understand his way of reasoning and his
+individual traits, it was not difficult to<a name="page_303" id="page_303"></a> 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 <i>Hamburger
+Fremdenblatt</i>, to the staff of which the subject of his appreciation
+might, in a sense, be said to have belonged.</p>
+
+<div class="blockquot"><p class="c">
+KUSKOP.<br />
+</p>
+
+<p>“It was not until my return from England that I learnt, through
+reading the <i>Fremdenblatt</i>, the news of the<a name="page_304" id="page_304"></a> death of Karl
+Kuskop&mdash;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.</p>
+
+<p>“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&mdash;occasions at which Kuskop was present as the
+‘representative’ of the <i>Fremdenblatt</i>. 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 <i>Blankensee</i> 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 <i>'Fremdenblatt</i>.’ 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.</p>
+
+<p>“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 <i>Fremdenblatt</i> waiting for them,
+thus providing a valuable and much appreciated<a name="page_305" id="page_305"></a> 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 <i>Fremdenblatt</i> 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 <i>Fremdenblatt</i> 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.</p>
+
+<p>“At that time I personally experienced the pleasant sensation&mdash;of
+which our captains and the other officers had often spoken to
+me&mdash;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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_306" id="page_306"></a> 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&mdash;he
+always referred to them as ‘them young fools'&mdash;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&mdash;or whoever was the chief of police at that
+time&mdash;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.</p>
+
+<p>“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<a name="page_307" id="page_307"></a> 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 <i>Fremdenblatt</i> 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&mdash;&mdash;, 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&mdash;of all
+places&mdash;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&mdash;&mdash; 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.</p>
+
+<p>“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.</p>
+
+<p>“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<a name="page_308" id="page_308"></a> 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&mdash;whether he
+works with his hands or with his brain to earn a living
+wage&mdash;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.’</p>
+
+<p>“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.�</p></div>
+
+<p>Ballin very frequently went to New York&mdash;which might be called the most
+prominent outpost of the company&mdash;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<a name="page_309" id="page_309"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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<a name="page_310" id="page_310"></a> 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.</p>
+
+<p>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.</p>
+
+<p>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 <i>charmeur</i> to
+which side of his character so many of his successes were due, and which
+was the secret of much of his great popularity.<a name="page_311" id="page_311"></a> 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&mdash;and rightly&mdash;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.</p>
+
+<p>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&mdash;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<a name="page_312" id="page_312"></a> 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.</p>
+
+<p>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.<a name="page_313" id="page_313"></a>�</p>
+
+<p>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.</p>
+
+<p>The anxieties caused by the war&mdash;a war which he knew would be
+lost&mdash;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.</p>
+
+<p>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<a name="page_314" id="page_314"></a> 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.</p>
+
+<p>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&mdash;a necessary preliminary
+of it&mdash;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.</p>
+
+<p>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<a name="page_315" id="page_315"></a> 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.</p>
+
+<p>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.<a name="page_316" id="page_316"></a>
+<a name="page_317" id="page_317"></a></p>
+
+<p class="figcenter">
+<a href="images/ill_pg_316-a_lg.png">
+<img class="enlargeimage"
+src="images/enlarge-image.jpg"
+alt=""
+width="18"
+height="14" /></a>
+<a href="images/ill_pg_316-a_huge.png">
+<img class="enlargeimage"
+src="images/enlarge-image.jpg"
+alt=""
+width="28"
+height="24" /></a>
+<br />
+<a href="images/ill_pg_316-a_lg.png">
+<img src="images/ill_pg_316-a_sml.png" width="283" height="500" alt="Extract Annotated by William II-1"
+title="Extract Annotated by William II-1" /></a>
+</p>
+
+<p class="figcenter">
+<a href="images/ill_pg_316-b_lg.png">
+<img class="enlargeimage"
+src="images/enlarge-image.jpg"
+alt=""
+width="18"
+height="14" /></a>
+<a href="images/ill_pg_316-b_huge.png">
+<img class="enlargeimage"
+src="images/enlarge-image.jpg"
+alt=""
+width="28"
+height="24" /></a>
+<br />
+<a href="images/ill_pg_316-b_lg.png">
+<img src="images/ill_pg_316-b_sml.png" width="358" height="500" alt="Extract Annotated by William II-2"
+title="Extract Annotated by William II-2" /></a>
+</p>
+
+<p class="figcenter">
+<a href="images/ill_pg_316-c_lg.png">
+<img class="enlargeimage"
+src="images/enlarge-image.jpg"
+alt=""
+width="18"
+height="14" /></a>
+<a href="images/ill_pg_316-c_huge.png">
+<img class="enlargeimage"
+src="images/enlarge-image.jpg"
+alt=""
+width="28"
+height="24" /></a>
+<br />
+<a href="images/ill_pg_316-c_lg.png">
+<img src="images/ill_pg_316-c_sml.png" width="440" height="500" alt="Extract Annotated by William II-3"
+title="Extract Annotated by William II-3" /></a>
+</p>
+
+<p class="figcenter">
+<a href="images/ill_pg_316-d_lg.png">
+<img class="enlargeimage"
+src="images/enlarge-image.jpg"
+alt=""
+width="18"
+height="14" /></a>
+<a href="images/ill_pg_316-d_huge.png">
+<img class="enlargeimage"
+src="images/enlarge-image.jpg"
+alt=""
+width="28"
+height="24" /></a>
+<br />
+<a href="images/ill_pg_316-d_lg.png">
+<img src="images/ill_pg_316-d_sml.png" width="500" height="340" alt="Extract Annotated by William II-4"
+title="Extract Annotated by William II-4" /></a>
+</p>
+
+<h2><a name="INDEX" id="INDEX"></a>INDEX</h2>
+
+<p class="cb"><a href="#A">A</a>,
+<a href="#B">B</a>,
+<a href="#C">C</a>,
+<a href="#D">D</a>,
+<a href="#E">E</a>,
+<a href="#F">F</a>,
+<a href="#G">G</a>,
+<a href="#H">H</a>,
+<a href="#I">I</a>,
+<a href="#J">J</a>,
+<a href="#K">K</a>,
+<a href="#L">L</a>,
+<a href="#M">M</a>,
+<a href="#N">N</a>,
+<a href="#O">O</a>,
+<a href="#P">P</a>,
+<a href="#R">R</a>,
+<a href="#S">S</a>,
+<a href="#T">T</a>,
+<a href="#U">U</a>,
+<a href="#V">V</a>,
+<a href="#W">W</a>,
+<a href="#Y">Y</a>,
+<a href="#Z">Z</a></p>
+
+<p class="nind">
+<a name="A" id="A"></a>Aden, <a href="#page_085">85</a><br />
+
+Adler Line, <a href="#page_007">7</a><br />
+
+Aehrenthal, Count, <a href="#page_141">141</a><br />
+
+Agadir incident, <a href="#page_162">162</a><br />
+
+Agents, emigration, work of, <a href="#page_008">8</a><br />
+
+Alsace-Lorraine, problem of, <a href="#page_272">272</a><br />
+
+<i>America</i>, <a href="#page_012">12</a><br />
+
+<i>Amerika</i>, <a href="#page_025">25</a>, <a href="#page_106">106</a>, <a href="#page_129">129</a><br />
+
+Andersen, Mr., and the Danish Royal Family, <a href="#page_099">99</a><br />
+
+Anglo-American Alliance, Ballin’s opinion of, <a href="#page_256">256</a><br />
+
+Anglo-German rapprochement, <a href="#page_134">134</a><br />
+<span style="margin-left: 1em;">shipping agreement, <a href="#page_018">18</a></span><br />
+<span style="margin-left: 1em;">understanding, <a href="#page_164">164</a>, <a href="#page_165">165</a></span><br />
+<span style="margin-left: 2em;">advantage of, <a href="#page_136">136</a></span><br />
+<span style="margin-left: 2em;">Ballin as negotiator, <a href="#page_136">136</a></span><br />
+<span style="margin-left: 2em;">failure of, <a href="#page_133">133</a></span><br />
+
+Anglo-Russian agreement, <a href="#page_137">137</a><br />
+
+Antwerp, <a href="#page_081">81</a>, <a href="#page_082">82</a><br />
+
+<i>Aquitania</i>, <a href="#page_113">113</a><br />
+
+Asquith, Mr. H. H., <a href="#page_262">262</a><br />
+<span style="margin-left: 1em;">on Lord Haldane’s mission, <a href="#page_177">177</a></span><br />
+<span style="margin-left: 1em;">speech on Navy, <a href="#page_154">154</a></span><br />
+
+Atlantic Conference, <a href="#page_111">111</a><br />
+
+Atlantic Transport-Leyland Co., enlargement of, <a href="#page_045">45</a><br />
+
+<i>Auguste Victoria</i>, <a href="#page_025">25</a>, <a href="#page_027">27</a>, <a href="#page_072">72</a>, <a href="#page_075">75</a>, <a href="#page_193">193</a>, <a href="#page_196">196</a><br />
+
+<i>Australia</i>, <a href="#page_012">12</a><br />
+
+Austria, need of compromise with Italy, <a href="#page_242">242</a><br />
+
+Austria-Hungary, strained relations between, <a href="#page_251">251</a><br />
+
+Austro-German <i>Zollverein</i>, <a href="#page_251">251</a><br />
+
+<br />
+<a name="B" id="B"></a>Baden-Powell, General, and the German menace, <a href="#page_138">138</a><br />
+
+Bagdad Railway, <a href="#page_189">189</a><br />
+
+Baker, B. N., American shipping magnate, <a href="#page_042">42</a><br />
+<span style="margin-left: 1em;">comes to Europe, <a href="#page_044">44</a></span><br />
+
+Baker, B. N., discusses terms of community of interest agreement, <a href="#page_042">42</a><br />
+
+Balkan States, and Germany, <a href="#page_251">251</a><br />
+
+Ballin, Albert, adopts Lord Pirrie’s advice, <a href="#page_044">44</a><br />
+<span style="margin-left: 1em;">advises peace overtures, <a href="#page_245">245</a></span><br />
+<span style="margin-left: 1em;">after the war problems, <a href="#page_255">255</a></span><br />
+<span style="margin-left: 1em;">agreement with Harland and Wolff, <a href="#page_122">122</a></span><br />
+<span style="margin-left: 1em;">American appreciation of, <a href="#page_308">308</a></span><br />
+<span style="margin-left: 1em;">an English journalist on, <a href="#page_293">293</a></span><br />
+<span style="margin-left: 1em;">ancestry of, <a href="#page_002">2</a></span><br />
+<span style="margin-left: 1em;">and Admiral v. Tirpitz, <a href="#page_237">237</a></span><br />
+<span style="margin-left: 1em;">and Adolph Woermann, <a href="#page_107">107</a></span><br />
+<span style="margin-left: 1em;">and Anglo-German rapprochement, <a href="#page_134">134</a></span><br />
+<span style="margin-left: 1em;">and Carl Laeisz, <a href="#page_294">294</a></span><br />
+<span style="margin-left: 1em;">and Count Tisza, <a href="#page_252">252</a></span><br />
+<span style="margin-left: 1em;">and Count Waldersee, <a href="#page_194">194</a></span><br />
+<span style="margin-left: 1em;">and Government subsidies, <a href="#page_060">60</a></span><br />
+<span style="margin-left: 1em;">and Hamburg-Amerika Linie, <a href="#page_069">69</a></span><br />
+<span style="margin-left: 1em;">and Hugo Stinnes, <a href="#page_280">280</a></span><br />
+<span style="margin-left: 1em;">and Mr. Gerard, <a href="#page_246">246</a></span><br />
+<span style="margin-left: 1em;">and labour questions, <a href="#page_297">297</a></span><br />
+<span style="margin-left: 1em;">and politics, <a href="#page_131">131</a></span><br />
+<span style="margin-left: 1em;">and North German Lloyd, <a href="#page_116">116</a></span><br />
+<span style="margin-left: 1em;">and Princess Marie of Denmark, <a href="#page_099">99</a></span><br />
+<span style="margin-left: 1em;">and Reichstag, <a href="#page_279">279</a></span><br />
+<span style="margin-left: 1em;">and submarine warfare, <a href="#page_252">252</a>, <a href="#page_254">254</a></span><br />
+<span style="margin-left: 1em;">and the Russo-Japanese War, <a href="#page_104">104</a></span><br />
+<span style="margin-left: 1em;">and Union Line, <a href="#page_019">19</a></span><br />
+<span style="margin-left: 1em;">and working classes, <a href="#page_297">297</a></span><br />
+<span style="margin-left: 1em;">and world war, <a href="#page_132">132</a></span><br />
+<span style="margin-left: 1em;">anxiety as to Roumania, <a href="#page_244">244</a></span><br />
+<span style="margin-left: 1em;">article in <i>Frankfurter Zeitung</i> on blockade, <a href="#page_234">234</a></span><br />
+<span style="margin-left: 1em;">as Anglo-German negotiator, <a href="#page_136">136</a></span><br />
+<span style="margin-left: 1em;">as arbitrator, <a href="#page_079">79</a></span><br />
+<span style="margin-left: 1em;">as general representative of Carr Line, 12<a name="page_318" id="page_318"></a></span><br />
+<span style="margin-left: 1em;">as head of Packetfahrt passenger department, <a href="#page_018">18</a>, <a href="#page_021">21</a></span><br />
+<span style="margin-left: 1em;">at Constitutional Club, <a href="#page_140">140</a></span><br />
+<span style="margin-left: 1em;">at Neues Palais, <a href="#page_204">204</a></span><br />
+<span style="margin-left: 1em;">at the German front, <a href="#page_266">266</a></span><br />
+<span style="margin-left: 1em;">attempts at mediation during war, <a href="#page_233">233</a></span><br />
+<span style="margin-left: 1em;">boldness of, <a href="#page_289">289</a></span><br />
+<span style="margin-left: 1em;">business principle of, <a href="#page_132">132</a></span><br />
+<span style="margin-left: 1em;">capacity for work of, <a href="#page_300">300</a></span><br />
+<span style="margin-left: 1em;">chairman of Pool Conference, <a href="#page_036">36</a></span><br />
+<span style="margin-left: 1em;">complains of German official high-handedness, <a href="#page_232">232</a></span><br />
+<span style="margin-left: 1em;">conducts London emigration discussions, 189<a href="#page_008">8</a>, <a href="#page_038">38</a></span><br />
+<span style="margin-left: 1em;">death of, <a href="#page_286">286</a></span><br />
+<span style="margin-left: 1em;">defends himself, <a href="#page_235">235</a></span><br />
+<span style="margin-left: 1em;">dines with Danish Royal Family, <a href="#page_100">100</a></span><br />
+<span style="margin-left: 1em;">disagrees with use of submarines, <a href="#page_229">229</a></span><br />
+<span style="margin-left: 1em;">discusses Morgan Trust with William II, <a href="#page_053">53</a></span><br />
+<span style="margin-left: 1em;">early biographical details of, <a href="#page_006">6</a></span><br />
+<span style="margin-left: 1em;">education of, <a href="#page_003">3</a>, <a href="#page_004">4</a></span><br />
+<span style="margin-left: 1em;">establishes German-Japanese Bank, <a href="#page_204">204</a></span><br />
+<span style="margin-left: 1em;">estimates British naval staying-power, <a href="#page_253">253</a></span><br />
+<span style="margin-left: 1em;">Far East investigations, <a href="#page_084">84</a></span><br />
+<span style="margin-left: 1em;">favours peace by compromise, <a href="#page_236">236</a></span><br />
+<span style="margin-left: 1em;">forcing the British Lines, <a href="#page_036">36</a></span><br />
+<span style="margin-left: 1em;">friendliness of William II toward, <a href="#page_206">206</a></span><br />
+<span style="margin-left: 1em;">further reports on Morgan Trust negotiations, <a href="#page_049">49-50</a></span><br />
+<span style="margin-left: 1em;">grave warning in 191<a href="#page_008">8</a>, <a href="#page_279">279</a></span><br />
+<span style="margin-left: 1em;">Hamfelde, his country home, <a href="#page_310">310</a></span><br />
+<span style="margin-left: 1em;">handling of labour troubles, <a href="#page_298">298-9</a></span><br />
+<span style="margin-left: 1em;">his father’s death, <a href="#page_005">5</a></span><br />
+<span style="margin-left: 1em;">his life-work, <a href="#page_115">115</a></span><br />
+<span style="margin-left: 1em;">his 1901 trip epitomized, <a href="#page_095">95</a></span><br />
+<span style="margin-left: 1em;">his observation of details, <a href="#page_123">123</a></span><br />
+<span style="margin-left: 1em;">his view on evading war, July <a href="#page_027">27</a>, 191<a href="#page_004">4</a>, <a href="#page_216">216</a></span><br />
+<span style="margin-left: 1em;">ideal in forming Pool, <a href="#page_066">66</a></span><br />
+<span style="margin-left: 1em;">impressions of Paris after Morocco affair, <a href="#page_181">181</a></span><br />
+<span style="margin-left: 1em;">in London discussing Austrian ultimatum, <a href="#page_215">215</a></span><br />
+<span style="margin-left: 1em;">in Vienna, 191<a href="#page_006">6</a>, <a href="#page_249">249</a></span><br />
+
+Ballin, Albert, intense patriotism of, <a href="#page_291">291</a><br />
+<span style="margin-left: 1em;">international services of, vii</span><br />
+<span style="margin-left: 1em;">interview with Bethmann-Hollweg, <a href="#page_152">152</a></span><br />
+<span style="margin-left: 1em;">interview with Grey, Haldane, and Churchill, <a href="#page_215">215</a></span><br />
+<span style="margin-left: 1em;">last diary entry, <a href="#page_286">286</a></span><br />
+<span style="margin-left: 1em;">last meeting with William II, <a href="#page_209">209</a>, <a href="#page_280">280</a></span><br />
+<span style="margin-left: 1em;">letter from William II, <a href="#page_175">175</a></span><br />
+<span style="margin-left: 1em;">letter to Kiderlen-Wächter, <a href="#page_163">163</a></span><br />
+<span style="margin-left: 1em;">letters to General v. Falkenhayn, <a href="#page_244">244</a></span><br />
+<span style="margin-left: 1em;">made Packetfahrt Director, <a href="#page_027">27</a></span><br />
+<span style="margin-left: 1em;">meets Sir Ernest Cassel, <a href="#page_138">138</a></span><br />
+<span style="margin-left: 1em;">mental versatility of, <a href="#page_002">2</a></span><br />
+<span style="margin-left: 1em;">mission to Vienna, 191<a href="#page_005">5</a>, <a href="#page_242">242</a></span><br />
+<span style="margin-left: 1em;">negotiations with Booth Line on Brazilian trade, <a href="#page_083">83</a></span><br />
+<span style="margin-left: 1em;">notes of conversations with William II, <a href="#page_203">203</a></span><br />
+<span style="margin-left: 1em;">official thanks to, <a href="#page_141">141</a></span><br />
+<span style="margin-left: 1em;">on Agadir incident, <a href="#page_163">163</a></span><br />
+<span style="margin-left: 1em;">on <i>Blücher</i>, <a href="#page_060">60</a></span><br />
+<span style="margin-left: 1em;">on death of Edward VII, <a href="#page_160">160</a></span><br />
+<span style="margin-left: 1em;">on engineering problems, <a href="#page_121">121</a></span><br />
+<span style="margin-left: 1em;">on foreign exchange, <a href="#page_274">274</a></span><br />
+<span style="margin-left: 1em;">on <i>Hohenzollern</i>, <a href="#page_202">202</a></span><br />
+<span style="margin-left: 1em;">on London in election time, <a href="#page_158">158</a></span><br />
+<span style="margin-left: 1em;">on naval armaments, <a href="#page_147">147</a></span><br />
+<span style="margin-left: 1em;">on neutrals, <a href="#page_245">245</a></span><br />
+<span style="margin-left: 1em;">on peace problems, <a href="#page_239">239</a></span><br />
+<span style="margin-left: 1em;">on sale of confiscated fleet, <a href="#page_230">230</a></span><br />
+<span style="margin-left: 1em;">on Sandjak Railway, <a href="#page_142">142</a></span><br />
+<span style="margin-left: 1em;">on security of William II, <a href="#page_241">241</a></span><br />
+<span style="margin-left: 1em;">on Serbian situation, <a href="#page_214">214</a></span><br />
+<span style="margin-left: 1em;">on war’s failures, <a href="#page_258">258</a> <i>et seq.</i></span><br />
+<span style="margin-left: 1em;">opinion of German Chancellor, <a href="#page_259">259</a></span><br />
+<span style="margin-left: 1em;">opinion of war’s duration, <a href="#page_237">237</a></span><br />
+<span style="margin-left: 1em;">personal characteristics of, <a href="#page_287">287</a></span><br />
+<span style="margin-left: 1em;">pioneer in steerage business, <a href="#page_011">11</a></span><br />
+<span style="margin-left: 1em;">policy of, <a href="#page_079">79</a></span><br />
+<span style="margin-left: 1em;">political views, <a href="#page_291">291</a></span><br />
+<span style="margin-left: 1em;">premier position at twenty-nine, <a href="#page_019">19</a></span><br />
+<span style="margin-left: 1em;">present from Marquis Ito, <a href="#page_311">311</a></span><br />
+<span style="margin-left: 1em;">prodigious memory of, <a href="#page_004">4</a></span><br />
+<span style="margin-left: 1em;">report on British attitude to Germany, <a href="#page_161">161</a></span><br />
+<span style="margin-left: 1em;">report on development of German shipping, <a href="#page_047">47</a></span><br />
+<span style="margin-left: 1em;">reticence of, 3<a name="page_319" id="page_319"></a></span><br />
+<span style="margin-left: 1em;">reviews war position in 191<a href="#page_006">6</a>, <a href="#page_258">258</a></span><br />
+<span style="margin-left: 1em;">ridicules submarine warfare, <a href="#page_268">268-9</a></span><br />
+<span style="margin-left: 1em;">stimulating influences of his life, <a href="#page_002">2</a></span><br />
+<span style="margin-left: 1em;">strain of war on health, <a href="#page_313">313</a></span><br />
+<span style="margin-left: 1em;">sturdy honesty of, <a href="#page_309">309</a></span><br />
+<span style="margin-left: 1em;">suggested as negotiator of peace, <a href="#page_286">286</a></span><br />
+<span style="margin-left: 1em;">suggests Pool, <a href="#page_024">24</a></span><br />
+<span style="margin-left: 1em;">talks with Prince Bülow, <a href="#page_271">271</a></span><br />
+<span style="margin-left: 1em;">talks with William II on submarine war, <a href="#page_248">248</a></span><br />
+<span style="margin-left: 1em;">threatens British traffic, <a href="#page_022">22</a></span><br />
+<span style="margin-left: 1em;">trip round the world, <a href="#page_083">83</a></span><br />
+<span style="margin-left: 1em;">value of wonderful memory, <a href="#page_035">35</a></span><br />
+<span style="margin-left: 1em;">views on character of William II, <a href="#page_285">285</a></span><br />
+<span style="margin-left: 1em;">visits London in 191<a href="#page_004">4</a>, <a href="#page_184">184</a></span><br />
+<span style="margin-left: 1em;">war problems of foreign policy, <a href="#page_241">241</a></span><br />
+<span style="margin-left: 1em;">William II discusses politics with, <a href="#page_203">203</a></span><br />
+<span style="margin-left: 1em;">William II writes to, on Navy Bill, <a href="#page_183">183</a></span><br />
+<span style="margin-left: 1em;">William II’s personal interest in, <a href="#page_198">198</a></span><br />
+<span style="margin-left: 1em;">wire from Leopold de Rothschild, <a href="#page_163">163</a></span><br />
+<span style="margin-left: 1em;">with Prince Henry of Prussia on the <i>Hohenzollern</i>, <a href="#page_057">57</a></span><br />
+<span style="margin-left: 1em;">with William II at Front, <a href="#page_266">266</a></span><br />
+<span style="margin-left: 1em;">with William II in Italy, <a href="#page_204">204</a></span><br />
+<span style="margin-left: 1em;">with William II on <i>Kaiser Wilhelm II</i>, <a href="#page_055">55</a></span><br />
+<span style="margin-left: 1em;">work in <i>Reichseinkauf</i>, <a href="#page_224">224</a></span><br />
+<span style="margin-left: 1em;">writes frank letter on war to William II, 191<a href="#page_006">6</a>, <a href="#page_252">252</a> <i>et seq.</i></span><br />
+<span style="margin-left: 1em;">writes on Morgan Trust, <a href="#page_046">46</a></span><br />
+<span style="margin-left: 1em;">writes to William II, April, 191<a href="#page_007">7</a>, <a href="#page_264">264</a></span><br />
+
+Bauer, Lieut.-Col., <a href="#page_280">280</a><br />
+
+Beck, Edward, <a href="#page_027">27</a><br />
+
+Berg, Herr von, <a href="#page_282">282</a><br />
+
+<i>Berliner Tageblatt</i> on Anglo-Russian naval agreement, <a href="#page_213">213</a><br />
+
+Bernstorff, Count, <a href="#page_264">264</a><br />
+
+Bethmann-Hollweg, von, <a href="#page_151">151</a>, <a href="#page_152">152</a>, <a href="#page_156">156</a>, <a href="#page_262">262</a>, <a href="#page_270">270</a>, <a href="#page_277">277</a><br />
+<span style="margin-left: 1em;">attacked respecting Agadir, <a href="#page_162">162</a></span><br />
+<span style="margin-left: 1em;">on British delegation, <a href="#page_166">166-7</a></span><br />
+<span style="margin-left: 1em;">telegram to Mexico, <a href="#page_271">271</a></span><br />
+
+<i>Bismarck</i>, launch of, <a href="#page_202">202</a><br />
+
+Bismarck, Prince, <a href="#page_114">114</a><br />
+
+Blockade, German, futility of, <a href="#page_267">267</a><br />
+
+Blohm and Voss, <a href="#page_113">113</a><br />
+
+<i>Blücher</i>, Ballin on trial trip, <a href="#page_060">60</a><br />
+
+Boer War, European move to stop, <a href="#page_143">143</a><br />
+<span style="margin-left: 1em;">lesson of, <a href="#page_139">139</a></span><br />
+
+Bohlen, Krupp v., <a href="#page_282">282</a><br />
+
+Bolten, August, <a href="#page_010">10</a><br />
+
+British argument against German naval expansion, <a href="#page_133">133</a><br />
+<span style="margin-left: 1em;">Cabinet and German naval expansion, <a href="#page_182">182</a></span><br />
+<span style="margin-left: 1em;">confiscation of German merchant fleet, <a href="#page_229">229</a></span><br />
+<span style="margin-left: 1em;">convoys, how they outwitted the Germans, <a href="#page_267">267</a></span><br />
+<span style="margin-left: 1em;">emigration, comparison with German, <a href="#page_015">15</a></span><br />
+<span style="margin-left: 1em;">excitement over Morgan Trust, <a href="#page_060">60</a></span><br />
+<span style="margin-left: 1em;">feeling in Russo-Japanese war, at German attitude, <a href="#page_104">104</a></span><br />
+<span style="margin-left: 1em;">Ludendorff’s promise to crush, <a href="#page_266">266</a></span><br />
+<span style="margin-left: 1em;">Navy, Ballin on, <a href="#page_239">239</a></span><br />
+<span style="margin-left: 1em;">opinion on shipping deals, <a href="#page_067">67</a></span><br />
+<span style="margin-left: 1em;">rivalry with Germany, <a href="#page_133">133</a></span><br />
+<span style="margin-left: 1em;">shipbuilding, developments in, and Hamburg-Amerika Linie, <a href="#page_128">128</a>, <a href="#page_208">208</a></span><br />
+<span style="margin-left: 1em;">shipbuilding, German move against, <a href="#page_017">17</a></span><br />
+<span style="margin-left: 1em;">shipping companies, Pierpont Morgan and, <a href="#page_055">55</a></span><br />
+<span style="margin-left: 1em;">shipping lines, and emigration, <a href="#page_007">7-14</a>;</span><br />
+<span style="margin-left: 2em;">agreement with, <a href="#page_023">23</a>;</span><br />
+<span style="margin-left: 2em;">join the Continental Pool, <a href="#page_023">23</a>;</span><br />
+<span style="margin-left: 2em;">offered to German companies, <a href="#page_067">67</a></span><br />
+<span style="margin-left: 1em;">supremacy, Ballin on, <a href="#page_241">241</a></span><br />
+
+Bülow, Prince, <a href="#page_141">141</a>, <a href="#page_247">247</a>, <a href="#page_270">270</a><br />
+
+<br />
+<a name="C" id="C"></a>Canadian Pacific Railway, <a href="#page_062">62</a>, <a href="#page_111">111</a><br />
+
+Cargo and steerage shipping, <a href="#page_013">13</a><br />
+
+Carr, Edward, <a href="#page_012">12</a><br />
+
+Carr Line, the, <a href="#page_012">12</a> <i>et seq.</i><br />
+<span style="margin-left: 1em;">and Packetfahrt, <a href="#page_012">12</a></span><br />
+
+Cassel, Sir Ernest, <a href="#page_134">134</a><br />
+<span style="margin-left: 1em;">and Winston Churchill, <a href="#page_165">165</a></span><br />
+<span style="margin-left: 1em;">meets Ballin, <a href="#page_138">138</a></span><br />
+<span style="margin-left: 1em;">on Anglo-German understanding, 165<a name="page_320" id="page_320"></a></span><br />
+<span style="margin-left: 1em;">on naval problem, <a href="#page_179">179</a></span><br />
+<span style="margin-left: 1em;">on Sandjak Railway, <a href="#page_142">142</a></span><br />
+<span style="margin-left: 1em;">report of interview with, on Navy, <a href="#page_171">171</a></span><br />
+<span style="margin-left: 1em;">work for reduction of naval armaments, <a href="#page_134">134</a> <i>et seq.</i></span><br />
+
+Cholera, epidemic at Hamburg, <a href="#page_036">36</a>, <a href="#page_072">72</a><br />
+
+Christiansand, port of, <a href="#page_021">21</a><br />
+
+Churchill, Mr. Winston, <a href="#page_166">166</a><br />
+<span style="margin-left: 1em;">at Kiel, 191<a href="#page_004">4</a>, <a href="#page_192">192</a></span><br />
+<span style="margin-left: 1em;">complains of Germany, <a href="#page_180">180</a></span><br />
+<span style="margin-left: 1em;">Sir Ernest Cassel on, <a href="#page_165">165</a></span><br />
+<span style="margin-left: 1em;">speech on Navy, <a href="#page_175">175</a></span><br />
+<span style="margin-left: 1em;">suggests a naval holiday, <a href="#page_186">186</a></span><br />
+
+Colombo, <a href="#page_086">86</a><br />
+
+<i>Columbia</i>, <a href="#page_077">77</a>, <a href="#page_201">201</a><br />
+
+Community of interest agreement (<i>see</i> “Pool� and “Morgan Trust")<br />
+
+Congo, Franco-German agreement, <a href="#page_162">162</a><br />
+
+Coolies, Chinese, <a href="#page_089">89</a><br />
+
+Cunard Line, and Austrian Government, <a href="#page_065">65</a><br />
+<span style="margin-left: 1em;">and Hungarian Government, <a href="#page_063">63</a></span><br />
+<span style="margin-left: 1em;">effect on Pool, <a href="#page_065">65</a></span><br />
+<span style="margin-left: 1em;">introduces turbines, <a href="#page_111">111</a></span><br />
+<span style="margin-left: 1em;">new liners, <a href="#page_113">113</a></span><br />
+<span style="margin-left: 1em;">opposition to cabin Pool, <a href="#page_061">61</a></span><br />
+<span style="margin-left: 1em;">refuses to join Pool, <a href="#page_037">37</a></span><br />
+
+Cuxhaven, development of, <a href="#page_069">69</a><br />
+<span style="margin-left: 1em;">regatta at, <a href="#page_205">205</a></span><br />
+
+<br />
+<i><a name="D" id="D"></a>Daily Telegraph</i>, sent to William II, <a href="#page_270">270</a><br />
+<span style="margin-left: 1em;">the William II interview, <a href="#page_144">144</a></span><br />
+
+Dardanelles, the, operations in, <a href="#page_245">245</a><br />
+<span style="margin-left: 1em;">de Freitas and Co., A. C., <a href="#page_079">79</a></span><br />
+<span style="margin-left: 1em;">de Freitas Line, purchase of, <a href="#page_080">80</a></span><br />
+
+Denmark, emigration from, <a href="#page_013">13</a><br />
+<span style="margin-left: 1em;">Royal Family of, their interest in shipping, <a href="#page_099">99</a></span><br />
+
+<i>Deutschland</i>, <a href="#page_025">25</a>, <a href="#page_078">78</a>, <a href="#page_130">130</a><br />
+
+Diesel engine, application to steamship, <a href="#page_102">102</a><br />
+
+Dreadnoughts, <a href="#page_200">200</a><br />
+
+<br />
+<a name="E" id="E"></a>Eastern Asiatic Co., <a href="#page_098">98</a><br />
+
+Edward VII, <a href="#page_134">134</a><br />
+<span style="margin-left: 1em;">and Morgan Trust, <a href="#page_061">61</a></span><br />
+
+Edward VII, chances of Anglo-German war, during reign of, <a href="#page_139">139</a><br />
+<span style="margin-left: 1em;">death of, <a href="#page_158">158</a></span><br />
+<span style="margin-left: 1em;">policy of, <a href="#page_135">135</a></span><br />
+<span style="margin-left: 1em;">the Kiel week, <a href="#page_206">206</a></span><br />
+<span style="margin-left: 1em;">visit to Wilhelmshöhe, <a href="#page_136">136</a></span><br />
+<span style="margin-left: 1em;">visits Berlin, <a href="#page_145">145</a></span><br />
+<span style="margin-left: 1em;">visits Kaiser at Friedrichshof, <a href="#page_142">142</a></span><br />
+
+Elbe, enlargement of harbour facilities on the, <a href="#page_069">69</a>, <a href="#page_070">70</a>, <a href="#page_079">79</a><br />
+
+Ellerman, Mr., of Leyland Line, <a href="#page_045">45</a><br />
+
+Emden, rise of, <a href="#page_083">83</a><br />
+
+Emigrants, early accommodation of, <a href="#page_007">7</a>, <a href="#page_008">8</a>, <a href="#page_014">14</a><br />
+
+Emigration, anti-British action, <a href="#page_017">17</a><br />
+<span style="margin-left: 1em;">Ballin’s work for, <a href="#page_009">9</a></span><br />
+<span style="margin-left: 1em;">beginnings of pooling, <a href="#page_012">12</a></span><br />
+<span style="margin-left: 1em;">British and German, <a href="#page_015">15</a></span><br />
+<span style="margin-left: 1em;">British rates, <a href="#page_022">22</a></span><br />
+<span style="margin-left: 1em;">business, how controlled, <a href="#page_008">8</a></span><br />
+<span style="margin-left: 1em;">comparisons of Carr Line and Packetfahrt, <a href="#page_015">15</a></span><br />
+<span style="margin-left: 1em;">cost of, <a href="#page_012">12</a></span><br />
+<span style="margin-left: 1em;">Danish, <a href="#page_013">13</a></span><br />
+<span style="margin-left: 1em;">Hungarian, <a href="#page_063">63</a></span><br />
+<span style="margin-left: 1em;">in the ’seventies, <a href="#page_008">8</a></span><br />
+<span style="margin-left: 1em;">medical control established, <a href="#page_074">74</a></span><br />
+<span style="margin-left: 1em;">on pre-paid basis, <a href="#page_009">9</a> <i>et seq.</i></span><br />
+<span style="margin-left: 1em;">rate war begins, <a href="#page_014">14</a></span><br />
+<span style="margin-left: 1em;">statistics of, <a href="#page_103">103</a></span><br />
+<span style="margin-left: 1em;">stopped by Hamburg cholera epidemic, <a href="#page_036">36</a></span><br />
+
+Emigration Law, German, <a href="#page_023">23</a><br />
+
+Erzberger, Herr, <a href="#page_244">244</a><br />
+
+Esher, Lord, and the Admiralty, <a href="#page_138">138</a><br />
+
+Europe, concerted inquiry to Germany, <a href="#page_140">140</a><br />
+<span style="margin-left: 1em;">situation in September, 191<a href="#page_006">6</a>, <a href="#page_262">262</a></span><br />
+
+<br />
+<a name="F" id="F"></a>Falkenhayn, General v., Ballin and, <a href="#page_244">244</a><br />
+
+Finland, <a href="#page_278">278</a><br />
+
+Forced draught, first vessels under, <a href="#page_026">26</a><br />
+
+Foreign exchange, Ballin on, <a href="#page_273">273</a><br />
+
+Francis Joseph, Emperor, <a href="#page_250">250</a><br />
+<span style="margin-left: 1em;">and Count Tisza, <a href="#page_250">250</a></span><br />
+
+Frederick the Great on experience, viii<a name="page_321" id="page_321"></a><br />
+
+Frisch, Geheimrat, <a href="#page_223">223</a><br />
+
+Furness, Sir Christopher, and Morgan Trust, <a href="#page_061">61</a><br />
+
+<i>Fürst Bismarck</i>, <a href="#page_193">193</a><br />
+
+Fürstenkonzern, <a href="#page_110">110</a><br />
+
+<br />
+<a name="G" id="G"></a>George V, King, Ballin’s letter respecting, <a href="#page_160">160</a><br />
+
+George, Mr. Lloyd, speech on Agadir incident, <a href="#page_162">162</a><br />
+<span style="margin-left: 1em;">visits Germany, <a href="#page_143">143</a></span><br />
+
+Gerard, Mr., and Ballin, <a href="#page_246">246</a><br />
+
+German-British shipping agreement, <a href="#page_018">18</a><br />
+
+German emigration fleet, in 188<a href="#page_002">2</a>, <a href="#page_010">10</a><br />
+
+German Government, note to British Government, <a href="#page_170">170</a><br />
+
+German Naval Bill, <a href="#page_137">137</a><br />
+
+German Navy, the 1908 affair, <a href="#page_138">138</a><br />
+
+Germany, and Belgian Relief Committee, <a href="#page_231">231</a><br />
+<span style="margin-left: 1em;">and the Merchant Service Bill, <a href="#page_228">228</a></span><br />
+<span style="margin-left: 1em;">bad feeling among neutrals to, <a href="#page_245">245</a></span><br />
+<span style="margin-left: 1em;">Ballin cries “everything is being gambled away,� <a href="#page_257">257</a></span><br />
+<span style="margin-left: 1em;">Ballin discusses after-the-war problems, <a href="#page_255">255</a></span><br />
+<span style="margin-left: 1em;">big naval programme, <a href="#page_143">143</a></span><br />
+<span style="margin-left: 1em;">British agitation against, <a href="#page_137">137</a></span><br />
+<span style="margin-left: 1em;">confiscation of merchant fleet, <a href="#page_229">229</a></span><br />
+<span style="margin-left: 1em;">control of trade and industries, <a href="#page_274">274</a></span><br />
+<span style="margin-left: 1em;">failure of political leaders, <a href="#page_264">264</a></span><br />
+<span style="margin-left: 1em;">favourable shipping situation of, <a href="#page_080">80</a></span><br />
+<span style="margin-left: 1em;">feeling towards British, <a href="#page_143">143</a></span><br />
+<span style="margin-left: 1em;">food problem, September, 191<a href="#page_008">8</a>, <a href="#page_284">284</a></span><br />
+<span style="margin-left: 1em;">habit of premature actions, <a href="#page_273">273</a></span><br />
+<span style="margin-left: 1em;">ignorance of British character, <a href="#page_260">260</a></span><br />
+<span style="margin-left: 1em;">internal condition in August, 191<a href="#page_004">4</a>, <a href="#page_223">223</a> <i>et seq.</i></span><br />
+<span style="margin-left: 1em;">lack of effective administration during war, <a href="#page_233">233</a></span><br />
+<span style="margin-left: 1em;">mental attitude of, <a href="#page_134">134</a></span><br />
+<span style="margin-left: 1em;">plans to approach President Wilson, <a href="#page_283">283</a></span><br />
+
+Germany, state in 1916 “like living in a madhouse,� <a href="#page_257">257</a><br />
+<span style="margin-left: 1em;">useless sacrifices of, <a href="#page_229">229</a></span><br />
+<span style="margin-left: 1em;">war condition of, <a href="#page_257">257</a></span><br />
+<span style="margin-left: 1em;">war-hopes in ruins, <a href="#page_269">269</a></span><br />
+
+Germany’s industrial growth, <a href="#page_007">7</a><br />
+
+<i>Gigantic</i>, <a href="#page_113">113</a><br />
+
+Goschen, Sir Ernest, <a href="#page_153">153</a><br />
+
+Gothenburg, port of, <a href="#page_021">21</a><br />
+
+Grey, Sir Edward, <a href="#page_262">262</a><br />
+<span style="margin-left: 1em;">on Lord Haldane’s mission, <a href="#page_177">177</a></span><br />
+<span style="margin-left: 1em;">on naval armaments, <a href="#page_157">157</a></span><br />
+<span style="margin-left: 1em;">on the Navy, <a href="#page_138">138</a></span><br />
+
+Great War (<i>see</i> World War)<br />
+
+Grumme, Capt. v., joins Hamburg-Amerika Linie, <a href="#page_199">199</a><br />
+<span style="margin-left: 1em;">with William II at Morgan Trust discussion, <a href="#page_053">53</a>.</span><br />
+
+<br />
+<a name="H" id="H"></a>Hague Conference, <a href="#page_137">137</a><br />
+
+Hahn, Dr. Diederich, Chairman Agrarian League, <a href="#page_059">59</a><br />
+
+Haldane, Lord, <a href="#page_171">171</a><br />
+<span style="margin-left: 1em;">and British neutrality, <a href="#page_190">190</a></span><br />
+<span style="margin-left: 1em;">Cabinet’s attitude toward, <a href="#page_184">184</a></span><br />
+<span style="margin-left: 1em;">explains to Ballin, <a href="#page_191">191</a></span><br />
+<span style="margin-left: 1em;">German opinion respecting, <a href="#page_187">187</a></span><br />
+<span style="margin-left: 1em;">success of his mission, <a href="#page_177">177</a></span><br />
+<span style="margin-left: 1em;">visits Berlin, <a href="#page_134">134</a>, <a href="#page_167">167</a></span><br />
+<span style="margin-left: 1em;">William II’s discussions with, <a href="#page_174">174</a> <i>et seq.</i></span><br />
+
+Hamburg, absorption into Prussia, <a href="#page_296">296</a><br />
+<span style="margin-left: 1em;">birthplace of Ballin, <a href="#page_001">1</a></span><br />
+<span style="margin-left: 1em;">cholera epidemic in, <a href="#page_036">36</a>, <a href="#page_072">72</a></span><br />
+<span style="margin-left: 1em;">dock strike, <a href="#page_299">299</a></span><br />
+<span style="margin-left: 1em;">in the nineteenth century, <a href="#page_001">1-6</a></span><br />
+
+Hamburg-Amerika Linie, and Great Britain, <a href="#page_207">207</a><br />
+<span style="margin-left: 1em;">and Persia, <a href="#page_107">107</a></span><br />
+<span style="margin-left: 1em;">and Russo-Japanese war, <a href="#page_105">105</a></span><br />
+<span style="margin-left: 1em;">buys foodstuffs for isolated Germany, <a href="#page_223">223</a></span><br />
+<span style="margin-left: 1em;">far-reaching alterations, <a href="#page_098">98</a></span><br />
+<span style="margin-left: 1em;">fate of ships when war broke out, <a href="#page_220">220</a></span><br />
+<span style="margin-left: 1em;">financial stability of, <a href="#page_116">116</a></span><br />
+<span style="margin-left: 1em;">fleet of, <a href="#page_116">116</a></span><br />
+<span style="margin-left: 1em;">instructions to ships on eve of war, <a href="#page_220">220</a></span><br />
+<span style="margin-left: 1em;">new premises, <a href="#page_202">202</a></span><br />
+<span style="margin-left: 1em;">sixtieth anniversary,&nbsp;  <a href="#page_117">117</a></span><br />
+<span style="margin-left: 1em;">William II and, 195<a name="page_322" id="page_322"></a></span><br />
+
+Hamburg-Amerika Linie (<i>see also</i> Packetfahrt)<br />
+
+Hamburg-Amerikanische Packetfahrt-Actien-Gesellschaft, <a href="#page_007">7</a><br />
+
+Hamburg Regattas, William II at, <a href="#page_201">201</a><br />
+
+Hamburg-South American S.S. Co., <a href="#page_079">79</a><br />
+
+Hammann, Geheimrat, <a href="#page_138">138</a>, <a href="#page_141">141</a><br />
+
+<i>Hammonia</i>, <a href="#page_024">24</a><br />
+
+Hansa Line, <a href="#page_069">69</a><br />
+<span style="margin-left: 1em;">taken over by Hamburg-Amerika Linie, <a href="#page_070">70</a></span><br />
+
+Hansemann, v., director Disconto-Gesellschaft, <a href="#page_055">55</a><br />
+
+Hansen, President, Chief of Arbitration Court Pool, <a href="#page_035">35</a><br />
+
+Harbou, Major v., <a href="#page_282">282</a><br />
+
+Harland and Wolff, <a href="#page_112">112</a>, <a href="#page_121">121</a><br />
+
+Henckell-Donnersmarck, Prince, Kaiser’s interest in, <a href="#page_047">47</a><br />
+
+Hintze, Herr v., <a href="#page_283">283</a><br />
+
+<i>Hohenzollern</i>, <a href="#page_194">194</a><br />
+
+Holland-America Line, <a href="#page_007">7</a><br />
+
+Holland, Queen of, offers mediation, <a href="#page_283">283</a><br />
+
+Holtzendorff, Admiral v., <a href="#page_246">246</a><br />
+
+Hongkong, <a href="#page_088">88</a><br />
+
+Huldermann, Bernhard, and Count Witte on averting war, <a href="#page_217">217</a><br />
+<span style="margin-left: 1em;">and Navy Bill, <a href="#page_170">170</a></span><br />
+
+<br />
+<a name="I" id="I"></a>Immco Lines, Pool name for Morgan Trust, <a href="#page_065">65</a><br />
+
+Immigrants, Scandinavian trade, <a href="#page_036">36</a><br />
+
+<i>Imperator</i>, <a href="#page_031">31</a>, <a href="#page_113">113</a>, <a href="#page_125">125</a>, <a href="#page_126">126</a><br />
+
+International Mercantile Marine Company (<i>see</i> Morgan Trust)<br />
+
+Inverclyde, Lord, and Morgan Trust, <a href="#page_064">64</a><br />
+
+Italia Company, the, started, <a href="#page_079">79</a><br />
+
+Italy, agreement with, necessary to success of war, <a href="#page_241">241</a><br />
+<span style="margin-left: 1em;">Germany’s failure in, <a href="#page_242">242</a></span><br />
+
+<br />
+<a name="J" id="J"></a>Jagow, Herr v., <a href="#page_213">213</a>, <a href="#page_214">214</a><br />
+
+Jewish ancestry of Ballin, <a href="#page_002">2</a><br />
+
+Jones, Sir A., and the Morgan Trust, <a href="#page_006">6</a><br />
+
+Jonquières, Herr v., <a href="#page_231">231</a><br />
+
+<i><a name="K" id="K"></a>Kaiser Wilhelm der Grösse</i>, <a href="#page_077">77</a><br />
+
+<i>Kaiser Wilhelm II</i>, <a href="#page_205">205</a><br />
+
+<i>Kaiserin</i>, <a href="#page_113">113</a><br />
+
+<i>Kaiserin Auguste Victoria</i>, <a href="#page_025">25</a>, <a href="#page_106">106</a>, <a href="#page_129">129</a><br />
+
+Kaiserin, the, and the war, <a href="#page_211">211</a><br />
+<span style="margin-left: 1em;">opposition to private life, <a href="#page_285">285</a></span><br />
+
+Kiautschou, <a href="#page_097">97</a><br />
+
+Kiel Canal, widening the, <a href="#page_200">200</a><br />
+<span style="margin-left: 1em;">Edward VII at, <a href="#page_206">206</a></span><br />
+<span style="margin-left: 1em;">Week, origin of, <a href="#page_201">201</a></span><br />
+
+Kirchheim, Chief Inspector Emil F., viii<br />
+
+Köhlhrand, agreement the, <a href="#page_295">295</a><br />
+
+Kühlmann, Herr v., <a href="#page_189">189</a><br />
+
+Kunhardt, M., <a href="#page_027">27</a><br />
+
+Kuskop, Karl, <a href="#page_303">303</a><br />
+
+<br />
+<a name="L" id="L"></a>Laeisz, Carl, <a href="#page_293">293</a><br />
+
+Laeisz, F., <a href="#page_293">293</a><br />
+
+Laird’s, orders to, <a href="#page_026">26</a><br />
+
+Law, German Emigration, of 188<a href="#page_007">7</a>, <a href="#page_023">23</a><br />
+
+Leuthold, Prof., <a href="#page_199">199</a><br />
+
+Leyland Line, acquired by Pierpont Morgan, <a href="#page_048">48</a><br />
+
+Liberal Cabinet, and naval armaments, <a href="#page_149">149</a><br />
+
+Liberal Government, and Anglo-German understanding, <a href="#page_136">136</a><br />
+
+Lichnowsky, Prince, <a href="#page_188">188</a><br />
+<span style="margin-left: 1em;">view on Haldane’s “neutrality� conversation, <a href="#page_191">191</a></span><br />
+
+Liners, developments in, <a href="#page_125">125</a> <i>et seq.</i><br />
+
+Lohmann, Mr., <a href="#page_010">10</a><br />
+<span style="margin-left: 1em;">Director-General of Lloyd Line, <a href="#page_032">32</a></span><br />
+
+Ludendorff, and the Crown Prince, <a href="#page_280">280</a><br />
+<span style="margin-left: 1em;">and “to her knees� promise, <a href="#page_266">266</a></span><br />
+
+<i>Lusitania</i>, <a href="#page_062">62</a>, <a href="#page_113">113</a><br />
+
+<br />
+<a name="M" id="M"></a>Marie, Princess, of Denmark, <a href="#page_099">99</a><br />
+
+Marine engineering, Ballin’s enterprise in, <a href="#page_122">122</a><br />
+<span style="margin-left: 1em;">development of, <a href="#page_119">119</a></span><br />
+<span style="margin-left: 1em;">Packetfahrt types, <a href="#page_125">125</a></span><br />
+<span style="margin-left: 1em;">progress in, <a href="#page_127">127</a></span><br />
+
+Marschall, Bieberstein v., <a href="#page_188">188</a><br />
+
+<i>Mauretania</i>, <a href="#page_062">62</a>, <a href="#page_113">113</a><br />
+
+Mediterranean Conference, <a href="#page_111">111</a><br />
+
+<i>Meteor</i>, 197<a name="page_323" id="page_323"></a><br />
+
+Metternich, Count, at St. James’s, <a href="#page_212">212</a><br />
+<span style="margin-left: 1em;">on Anglo-German understanding, <a href="#page_187">187</a></span><br />
+<span style="margin-left: 1em;">predicts Great War, <a href="#page_188">188</a></span><br />
+<span style="margin-left: 1em;">sees Sir Edward Grey, <a href="#page_178">178</a></span><br />
+
+Morgan, Pierpont, guest of William II at Kiel, <a href="#page_061">61</a><br />
+
+Morgan, Trust, the, <a href="#page_040">40</a> <i>et seq.</i><br />
+<span style="margin-left: 1em;">agreement reached, <a href="#page_052">52</a></span><br />
+<span style="margin-left: 1em;">announced to British Press, <a href="#page_059">59</a></span><br />
+<span style="margin-left: 1em;">effect of freight slump, <a href="#page_061">61</a></span><br />
+<span style="margin-left: 1em;">final discussions in New York, <a href="#page_055">55</a> <i>et seq.</i></span><br />
+<span style="margin-left: 1em;">financial aspect, <a href="#page_045">45</a></span><br />
+<span style="margin-left: 1em;">inception of, <a href="#page_045">45</a></span><br />
+<span style="margin-left: 1em;">International Mercantile Marine Co., formal name of, <a href="#page_065">65</a></span><br />
+<span style="margin-left: 1em;">King Edward VII and, <a href="#page_061">61</a></span><br />
+<span style="margin-left: 1em;">outline of draft agreement, <a href="#page_051">51</a></span><br />
+<span style="margin-left: 1em;">Pierpont Morgan at London Conference, <a href="#page_049">49</a></span><br />
+<span style="margin-left: 1em;">Pierpont Morgan’s operations attract public attention, <a href="#page_046">46</a></span><br />
+<span style="margin-left: 1em;">telegram from William II, <a href="#page_056">56</a></span><br />
+<span style="margin-left: 1em;">terms of agreement, <a href="#page_058">58</a></span><br />
+<span style="margin-left: 1em;">William II discusses, <a href="#page_053">53</a></span><br />
+
+Morris and Co., <a href="#page_001">1</a> <i>et seq.</i><br />
+
+Mutius, Herr v., <a href="#page_247">247</a><br />
+
+<br />
+<a name="N" id="N"></a>Nanking, <a href="#page_092">92</a><br />
+
+Naumann, Dr., and “Berlin to Bagdad,� <a href="#page_276">276</a><br />
+
+<i>Nautikus</i>, naval propaganda in, <a href="#page_200">200</a><br />
+
+Naval armaments, a cause of unrest, <a href="#page_133">133</a><br />
+<span style="margin-left: 1em;">Ballin’s report on, <a href="#page_146">146</a> <i>et seq.</i></span><br />
+<span style="margin-left: 1em;">big navy propaganda, <a href="#page_133">133</a></span><br />
+<span style="margin-left: 1em;">Reichstag and reduction of, <a href="#page_145">145</a></span><br />
+
+Naval Bill of 191<a href="#page_002">2</a>, <a href="#page_155">155</a><br />
+<span style="margin-left: 1em;">Ballin writes to Sir Ernest Cassel on, <a href="#page_168">168</a></span><br />
+<span style="margin-left: 1em;">British alarm at, <a href="#page_166">166</a></span><br />
+
+Naval holiday, Mr. Churchill suggests a, <a href="#page_186">186</a><br />
+
+Navy, a bigger British, <a href="#page_171">171</a><br />
+
+Navy League, German, <a href="#page_137">137</a><br />
+
+<i>New York</i>, <a href="#page_049">49</a><br />
+
+New York, emigration to, in the ’eighties, <a href="#page_007">7</a> <i>et seq.</i><br />
+<span style="margin-left: 1em;">steerage passengers to, statistics, <a href="#page_029">29</a></span><br />
+
+<i>Normannia</i>, <a href="#page_077">77</a><br />
+
+North Atlantic Steamship Lines Association, history of, <a href="#page_032">32</a><br />
+
+<i>North German Gazette</i>, <a href="#page_157">157</a><br />
+
+North German Lloyd, <a href="#page_007">7</a>, <a href="#page_098">98</a>, <a href="#page_106">106</a>, <a href="#page_111">111</a><br />
+<span style="margin-left: 1em;">competes with Packetfahrt, <a href="#page_010">10</a></span><br />
+<span style="margin-left: 1em;">jubilee of, <a href="#page_117">117</a></span><br />
+
+<br />
+<a name="O" id="O"></a>Oertzen, Herr v., <a href="#page_091">91</a><br />
+
+<i>Olympic</i>, <a href="#page_113">113</a><br />
+
+<br />
+<a name="P" id="P"></a>Packetfahrt, the, a founder of, <a href="#page_010">10</a><br />
+<span style="margin-left: 1em;">agreement with Philadelphia Shipping Co. and Pennsylvania Railroad Co., <a href="#page_077">77</a></span><br />
+<span style="margin-left: 1em;">and Ballin, <a href="#page_289">289</a></span><br />
+<span style="margin-left: 1em;">and Carr Line, <a href="#page_012">12</a></span><br />
+<span style="margin-left: 1em;">and emigrants, <a href="#page_010">10</a></span><br />
+<span style="margin-left: 1em;">and Harland and Wolff, <a href="#page_121">121</a></span><br />
+<span style="margin-left: 1em;">and Russian coal, <a href="#page_104">104</a></span><br />
+<span style="margin-left: 1em;">and the Russo-Japanese War, <a href="#page_103">103</a></span><br />
+<span style="margin-left: 1em;">Ballin made director of, <a href="#page_027">27</a></span><br />
+<span style="margin-left: 1em;">celebration of jubilee, <a href="#page_074">74</a></span><br />
+<span style="margin-left: 1em;">1886 Pool, <a href="#page_021">21</a></span><br />
+<span style="margin-left: 1em;">extension of South American business, <a href="#page_080">80</a></span><br />
+<span style="margin-left: 1em;">improved appointments and accommodation on vessels, <a href="#page_026">26</a></span><br />
+<span style="margin-left: 1em;">increase of capital, <a href="#page_026">26</a></span><br />
+<span style="margin-left: 1em;">letter from chairman of Cunard Company, <a href="#page_075">75</a></span><br />
+<span style="margin-left: 1em;">more new vessels built, <a href="#page_025">25</a>, <a href="#page_074">74</a></span><br />
+<span style="margin-left: 1em;">New York branch established, <a href="#page_027">27</a></span><br />
+<span style="margin-left: 1em;">passenger department created, <a href="#page_019">19</a></span><br />
+<span style="margin-left: 1em;">service to Mexico, <a href="#page_083">83</a></span><br />
+<span style="margin-left: 1em;">statistics (1886), <a href="#page_019">19</a></span><br />
+<span style="margin-left: 1em;">(<i>see also</i> Hamburg-Amerika Linie)</span><br />
+
+<i>Panther</i>, William II and, <a href="#page_210">210</a><br />
+
+Paris Economic Conference, <a href="#page_276">276</a><br />
+
+Passenger traffic, improvements in, <a href="#page_041">41</a><br />
+
+Peace negotiations, Ballin and, <a href="#page_286">286</a><br />
+
+Peters, Heinrich, central offices of, <a href="#page_034">34</a><br />
+<span style="margin-left: 1em;">secretary of Pool, <a href="#page_031">31</a></span><br />
+
+<i>Philadelphia</i>, <a href="#page_049">49</a><br />
+
+Pirrie, Lord, <a href="#page_121">121</a><br />
+<span style="margin-left: 1em;">advises Ballin, <a href="#page_044">44</a></span><br />
+<span style="margin-left: 1em;">discusses Morgan Trust, 63<a name="page_324" id="page_324"></a></span><br />
+
+Pleasure cruises, inception of, <a href="#page_070">70</a> <i>et seq.</i><br />
+
+Pool accommodation discussions (1898), <a href="#page_038">38</a><br />
+<span style="margin-left: 1em;">actuarial basis of, <a href="#page_034">34</a></span><br />
+<span style="margin-left: 1em;">agreement on (1891), <a href="#page_024">24</a></span><br />
+<span style="margin-left: 1em;">agreement with Allan Line, <a href="#page_074">74</a></span><br />
+<span style="margin-left: 1em;">agreement with Italian Lines, <a href="#page_074">74</a></span><br />
+<span style="margin-left: 1em;">agreement with Lloyd Line, <a href="#page_074">74</a></span><br />
+<span style="margin-left: 1em;">Ballin’s opinions upon, <a href="#page_115">115</a></span><br />
+<span style="margin-left: 1em;">British Lines refuse (1892), <a href="#page_033">33</a></span><br />
+<span style="margin-left: 1em;">cardinal principles of, <a href="#page_030">30</a></span><br />
+<span style="margin-left: 1em;">Cunard Line refuses to join, <a href="#page_037">37</a></span><br />
+<span style="margin-left: 1em;">details of the, <a href="#page_028">28</a></span><br />
+<span style="margin-left: 1em;">Heinrich Peters, secretary of, <a href="#page_031">31</a></span><br />
+<span style="margin-left: 1em;">its most dramatic episode, <a href="#page_067">67</a></span><br />
+<span style="margin-left: 1em;">more internal troubles, <a href="#page_115">115</a></span><br />
+<span style="margin-left: 1em;">negotiations for a greater, <a href="#page_035">35</a></span><br />
+<span style="margin-left: 1em;">North Atlantic Steamship Lines Association, formal name of, <a href="#page_033">33</a></span><br />
+<span style="margin-left: 1em;">proposed by Ballin, 188<a href="#page_006">6</a>, <a href="#page_024">24</a></span><br />
+<span style="margin-left: 1em;">special, for Mediterranean business, <a href="#page_034">34</a></span><br />
+<span style="margin-left: 1em;">terms definitely made, <a href="#page_033">33</a></span><br />
+<span style="margin-left: 1em;">the General, <a href="#page_111">111</a></span><br />
+<span style="margin-left: 1em;">the transatlantic, <a href="#page_110">110</a></span><br />
+<span style="margin-left: 1em;">tonnage and passenger statistics, <a href="#page_029">29</a></span><br />
+<span style="margin-left: 1em;">U.S.A. Railway pool compared, <a href="#page_028">28</a></span><br />
+<span style="margin-left: 1em;">world war’s effect upon, <a href="#page_111">111</a></span><br />
+
+Port Said, <a href="#page_085">85</a><br />
+
+<i>Pretoria</i>, <a href="#page_201">201</a><br />
+
+Princes’ Trust, <a href="#page_110">110</a><br />
+
+<i>Prinzessin Victoria Luise</i>, <a href="#page_130">130</a><br />
+
+Prussia, Prince Henry of, <a href="#page_057">57</a><br />
+
+<br />
+<a name="R" id="R"></a>Rate war, the, <a href="#page_014">14</a>, <a href="#page_110">110</a><br />
+
+Red Star Line, <a href="#page_007">7</a><br />
+
+<i>Reichseinkauf</i>, the, formation of, <a href="#page_223">223</a><br />
+
+Reuchlin, Mr., of Holland-American Line, <a href="#page_032">32</a><br />
+
+Richardson, Spence and Co., <a href="#page_009">9</a><br />
+
+Riga, fall of, <a href="#page_272">272</a><br />
+
+Roumania, anxiety regarding food from, <a href="#page_251">251</a><br />
+<span style="margin-left: 1em;">neutrality of, <a href="#page_244">244</a></span><br />
+<span style="margin-left: 1em;">supplies grain during war to Germany, <a href="#page_227">227</a></span><br />
+
+Rupprecht of Bavaria, Prince, <a href="#page_137">137</a><br />
+
+Russia, army of, <a href="#page_139">139</a><br />
+
+Russian East Asiatic S.S. Co., <a href="#page_101">101</a><br />
+
+Russian Press, outburst against Sandjak Railway, <a href="#page_141">141</a><br />
+
+Russian Volunteer Fleet, <a href="#page_111">111</a><br />
+
+Russo-Japanese War, <a href="#page_102">102</a><br />
+<span style="margin-left: 1em;">coaling problems for Russian fleet, <a href="#page_105">105</a></span><br />
+<span style="margin-left: 1em;">ships for, <a href="#page_025">25</a></span><br />
+
+<br />
+<i><a name="S" id="S"></a>St. Louis</i>, <a href="#page_049">49</a><br />
+
+<i>St. Paul</i>, <a href="#page_049">49</a><br />
+
+Sandjak Railway, <a href="#page_141">141</a><br />
+
+Scandia Line, <a href="#page_021">21</a><br />
+
+Scandinavian emigration, <a href="#page_021">21</a><br />
+
+Schön, Herr v., <a href="#page_141">141</a><br />
+
+Schratt, Frau Kathi, <a href="#page_250">250</a><br />
+<span style="margin-left: 1em;">pro-English sympathies of, <a href="#page_252">252</a></span><br />
+
+Schwander, Dr., <a href="#page_272">272</a><br />
+
+Shanghai, <a href="#page_090">90</a><br />
+
+Shaughnessy, Lord, <a href="#page_062">62</a><br />
+
+Shipping agreement on rates, <a href="#page_017">17</a><br />
+<span style="margin-left: 1em;">agreements, enormous range of, <a href="#page_111">111</a></span><br />
+<span style="margin-left: 1em;">British tonnage in 190<a href="#page_001">1</a>, <a href="#page_049">49</a></span><br />
+<span style="margin-left: 1em;">crisis of 190<a href="#page_007">7</a>, <a href="#page_111">111</a></span><br />
+<span style="margin-left: 1em;">Imperial Government’s interest in, <a href="#page_055">55</a></span><br />
+<span style="margin-left: 1em;">some tonnage comparisons, <a href="#page_049">49</a></span><br />
+<span style="margin-left: 1em;">statistics (1881-1885), <a href="#page_029">29</a></span><br />
+<span style="margin-left: 1em;">transatlantic business, trend of, <a href="#page_067">67</a></span><br />
+
+Ships, speed of, in 188<a href="#page_002">2</a>, <a href="#page_010">10</a><br />
+
+Singapore, <a href="#page_087">87</a><br />
+
+Skoda, Baron, <a href="#page_251">251</a><br />
+
+Sloman and Co., R. M., <a href="#page_018">18</a><br />
+
+South African War, <a href="#page_079">79</a><br />
+
+South America, development of, <a href="#page_082">82</a><br />
+
+Southampton, Packetfahrt service transferred to, <a href="#page_073">73</a><br />
+
+Spanish-American War, ships for, <a href="#page_025">25</a><br />
+
+Steinhöft, Hamburg, <a href="#page_001">1</a><br />
+
+Stettin, Vulkan Yard, <a href="#page_078">78</a>, <a href="#page_113">113</a><br />
+<span style="margin-left: 1em;">orders to, <a href="#page_026">26</a></span><br />
+
+Stinnes, Hugo, <a href="#page_280">280</a><br />
+
+Storm, Director A., viii<br />
+
+Strasser, Mr., of the Red Star Line, <a href="#page_032">32</a><br />
+
+Stürgkh, Count, <a href="#page_243">243</a><br />
+<span style="margin-left: 1em;">Francis Joseph and, <a href="#page_250">250</a></span><br />
+
+Submarine warfare, <a href="#page_248">248</a>, <a href="#page_252">252</a>, <a href="#page_258">258</a><br />
+<span style="margin-left: 1em;">amazing achievements, <a href="#page_268">268</a></span><br />
+<span style="margin-left: 1em;">unrestricted, beginning of, 263<a name="page_325" id="page_325"></a></span><br />
+
+<br />
+<a name="T" id="T"></a>Thingvalla Line, <a href="#page_021">21</a><br />
+
+<i>Times, The</i>, on German neutrality, <a href="#page_104">104</a><br />
+
+Tirpitz, Admiral v., <a href="#page_151">151</a>, <a href="#page_152">152</a>, <a href="#page_199">199</a><br />
+<span style="margin-left: 1em;">and Ballin, <a href="#page_237">237</a></span><br />
+<span style="margin-left: 1em;">threatens resignation, <a href="#page_246">246</a></span><br />
+
+Tisza, Count, <a href="#page_243">243</a><br />
+<span style="margin-left: 1em;">and Count Stürgkh, <a href="#page_250">250</a></span><br />
+
+<i>Titanic</i>, <a href="#page_113">113</a><br />
+
+Tokio, <a href="#page_093">93</a><br />
+
+Trans-Andine Railway, completion of, <a href="#page_082">82</a><br />
+
+Tsingtau, <a href="#page_092">92</a>, <a href="#page_097">97</a><br />
+
+Tweedmouth, Lord, and the Kaiser, <a href="#page_137">137</a><br />
+
+<br />
+<a name="U" id="U"></a>Ukraine, the, <a href="#page_278">278</a><br />
+
+U.S.A., application of Monroe doctrine in, <a href="#page_082">82</a><br />
+<span style="margin-left: 1em;">cholera and isolation in, <a href="#page_073">73</a></span><br />
+<span style="margin-left: 1em;">devastating effects of entry into war, <a href="#page_255">255</a></span><br />
+<span style="margin-left: 1em;">economic depression of the ’eighties, <a href="#page_009">9</a></span><br />
+<span style="margin-left: 1em;">enters the war, <a href="#page_269">269</a></span><br />
+<span style="margin-left: 1em;">German fears of intervention, <a href="#page_252">252</a></span><br />
+<span style="margin-left: 1em;">immigration from Scandinavia, <a href="#page_021">21</a></span><br />
+<span style="margin-left: 1em;">Railway Pool, <a href="#page_029">29</a></span><br />
+<span style="margin-left: 1em;">railways and shipping co-operation, <a href="#page_044">44</a></span><br />
+
+<br />
+<i><a name="V" id="V"></a>Vaterland</i>, <a href="#page_113">113</a><br />
+
+Versailles treaty, German view of, <a href="#page_208">208</a><br />
+
+Vienna, conditions in, <a href="#page_249">249</a><br />
+
+Vulkan Yard, Stettin, <a href="#page_026">26</a>, <a href="#page_078">78</a>, <a href="#page_113">113</a><br />
+
+<br />
+<a name="W" id="W"></a>Waldersee, General Count Georg, and Ballin, <a href="#page_194">194</a><br />
+<span style="margin-left: 1em;">on rationing Germany, <a href="#page_221">221</a></span><br />
+
+<i>Westminster Gazette</i> (article in facsimile at end), <a href="#page_163">163</a>, <a href="#page_235">235</a><br />
+
+White Star Line, and Pierpont Morgan, <a href="#page_055">55</a><br />
+<span style="margin-left: 1em;">new liners, <a href="#page_113">113</a></span><br />
+
+Wiegand, Dr. Heinrich, <a href="#page_119">119</a><br />
+<span style="margin-left: 1em;">and Morgan Trust, <a href="#page_054">54</a></span><br />
+
+Wilding, Mr., Ballin’s friendship for, <a href="#page_009">9</a><br />
+
+William II, and “a place in the sun,� <a href="#page_202">202</a><br />
+<span style="margin-left: 1em;">and British Navy, British feeling aroused, <a href="#page_137">137</a></span><br />
+<span style="margin-left: 1em;">and <i>Daily Telegraph</i> interview, <a href="#page_143">143</a></span><br />
+<span style="margin-left: 1em;">and Nicholas, suggested talk to avert war, <a href="#page_220">220</a></span><br />
+<span style="margin-left: 1em;">and President Wilson’s note, <a href="#page_285">285</a></span><br />
+<span style="margin-left: 1em;">and the <i>Bismarck</i>, <a href="#page_114">114</a></span><br />
+<span style="margin-left: 1em;">at Hamburg, <a href="#page_193">193</a></span><br />
+<span style="margin-left: 1em;">Ballin explains situation in September, 191<a href="#page_008">8</a>, <a href="#page_209">209</a></span><br />
+<span style="margin-left: 1em;">Ballin reports to, on navy problem, <a href="#page_138">138</a></span><br />
+<span style="margin-left: 1em;">Ballin tells him the ugly truth in 191<a href="#page_007">7</a>, <a href="#page_267">267</a></span><br />
+<span style="margin-left: 1em;">blind to situation, September, 191<a href="#page_008">8</a>, <a href="#page_283">283</a></span><br />
+<span style="margin-left: 1em;">“brimful of optimism,� <a href="#page_272">272</a></span><br />
+<span style="margin-left: 1em;">comments on <i>Westminster Gazette</i> article, <a href="#page_163">163</a></span><br />
+<span style="margin-left: 1em;">designs excursion steamer, <a href="#page_196">196</a></span><br />
+<span style="margin-left: 1em;">discusses Morgan Trust with Ballin, <a href="#page_053">53</a></span><br />
+<span style="margin-left: 1em;">discusses Morocco question, <a href="#page_205">205</a></span><br />
+<span style="margin-left: 1em;">facsimile comments on <i>Westminster Gazette</i> article (<i>see</i> end of book)</span><br />
+<span style="margin-left: 1em;">interest in German shipbuilding, <a href="#page_196">196</a></span><br />
+<span style="margin-left: 1em;">interest in Morgan Trust, <a href="#page_197">197</a></span><br />
+<span style="margin-left: 1em;">intervenes in shipping struggle, <a href="#page_106">106</a></span><br />
+<span style="margin-left: 1em;">isolation of, <a href="#page_255">255</a></span><br />
+<span style="margin-left: 1em;">last meeting with Ballin, <a href="#page_280">280</a></span><br />
+<span style="margin-left: 1em;">letter on British Navy, <a href="#page_137">137</a></span><br />
+<span style="margin-left: 1em;">maritime interests of, <a href="#page_201">201</a></span><br />
+<span style="margin-left: 1em;">monarchical discussions, Ballin and, <a href="#page_285">285</a></span><br />
+<span style="margin-left: 1em;">on balance of power, <a href="#page_165">165</a></span><br />
+<span style="margin-left: 1em;">on Germany’s Austro-Hungarian policy, <a href="#page_189">189</a></span><br />
+<span style="margin-left: 1em;">on the Churchill speech, <a href="#page_183">183</a></span><br />
+<span style="margin-left: 1em;">outspoken letter in 1916 from Ballin, <a href="#page_252">252</a> <i>et seq.</i></span><br />
+<span style="margin-left: 1em;">personal interest in Ballin, <a href="#page_198">198</a></span><br />
+<span style="margin-left: 1em;">persuaded to retire into private life, <a href="#page_285">285</a></span><br />
+<span style="margin-left: 1em;">sees Edward VII at Friedrichshof, <a href="#page_142">142</a></span><br />
+<span style="margin-left: 1em;">supports Ballin’s mission of inquiry</span><br />
+<span style="margin-left: 1em;">to U.S.A., <a href="#page_054">54</a></span><br />
+<span style="margin-left: 1em;">telegram to Morgan Trust, 56<a name="page_326" id="page_326"></a></span><br />
+<span style="margin-left: 1em;">venerated in Austria, <a href="#page_251">251</a></span><br />
+<span style="margin-left: 1em;">visits Windsor, <a href="#page_136">136</a></span><br />
+<span style="margin-left: 1em;">wants apology from Great Britain, <a href="#page_183">183</a></span><br />
+<span style="margin-left: 1em;">writes to Ballin on Haldane interview, <a href="#page_175">175</a></span><br />
+
+Wilson, President, <a href="#page_263">263</a><br />
+
+Witt, Mr. Johannes, <a href="#page_027">27</a><br />
+
+Witte, Count, on situation July, 191<a href="#page_004">4</a>, <a href="#page_217">217</a><br />
+
+Woermann, Adolph, <a href="#page_107">107</a><br />
+<span style="margin-left: 1em;">character sketch of, <a href="#page_108">108</a></span><br />
+
+World war, the, <a href="#page_213">213</a><br />
+<span style="margin-left: 1em;">Ballin attempts mediation, <a href="#page_233">233</a></span><br />
+<span style="margin-left: 1em;">Ballin describes 1917 situation to William II, <a href="#page_265">265</a></span><br />
+<span style="margin-left: 1em;">Ballin favours a compromise, <a href="#page_236">236</a></span><br />
+<span style="margin-left: 1em;">Ballin on neutrals, <a href="#page_245">245</a></span><br />
+<span style="margin-left: 1em;">Ballin on the blockade, <a href="#page_234">234</a></span><br />
+<span style="margin-left: 1em;">Ballin on the crisis, <a href="#page_215">215</a></span><br />
+<span style="margin-left: 1em;">Bismarck’s prophecy regarding, <a href="#page_133">133</a></span><br />
+<span style="margin-left: 1em;">British censorship in, <a href="#page_225">225</a></span><br />
+<span style="margin-left: 1em;">coal problems during, <a href="#page_102">102</a></span><br />
+<span style="margin-left: 1em;">Count Witte on situation, July 24th, 191<a href="#page_004">4</a>, <a href="#page_217">217</a></span><br />
+<span style="margin-left: 1em;">defection of German conscripts, <a href="#page_281">281</a></span><br />
+<span style="margin-left: 1em;">effect on Pool, <a href="#page_111">111</a></span><br />
+
+World war, the, entry of U.S.A., effect of, <a href="#page_253">253</a> <i>et seq.</i><br />
+<span style="margin-left: 1em;">food problems of Germany, <a href="#page_222">222</a></span><br />
+<span style="margin-left: 1em;">forced upon William II, <a href="#page_285">285</a></span><br />
+<span style="margin-left: 1em;">foreign policy and food during, <a href="#page_241">241</a></span><br />
+<span style="margin-left: 1em;">German mistakes in, <a href="#page_258">258-9</a></span><br />
+<span style="margin-left: 1em;">Germany stunned by <i>débâcle</i>, <a href="#page_236">236</a></span><br />
+<span style="margin-left: 1em;">grain from Roumania, <a href="#page_227">227</a></span><br />
+<span style="margin-left: 1em;">indemnities, <a href="#page_261">261</a></span><br />
+<span style="margin-left: 1em;">Mexico telegram, <a href="#page_271">271</a></span><br />
+<span style="margin-left: 1em;">outbreak of, <a href="#page_132">132</a></span><br />
+<span style="margin-left: 1em;">peace overtures, <a href="#page_245">245</a></span><br />
+<span style="margin-left: 1em;">position in 191<a href="#page_006">6</a>, <a href="#page_258">258</a></span><br />
+<span style="margin-left: 1em;">provisioning Germany, <a href="#page_221">221</a></span><br />
+<span style="margin-left: 1em;">shipping profits during, <a href="#page_065">65</a></span><br />
+<span style="margin-left: 1em;">submarine warfare in, <a href="#page_229">229</a></span><br />
+<span style="margin-left: 1em;">the British blockade, <a href="#page_224">224</a></span><br />
+<span style="margin-left: 1em;">Tyrol, failure in the, <a href="#page_259">259</a></span><br />
+<span style="margin-left: 1em;">Verdun and Italian campaigns, political and military failures, <a href="#page_258">258</a></span><br />
+
+World’s shipping collapse, cause of, <a href="#page_229">229</a><br />
+
+<br />
+<a name="Y" id="Y"></a>Yang-Tse-Kiang, the, <a href="#page_091">91</a>, <a href="#page_096">96</a><br />
+
+<br />
+<a name="Z" id="Z"></a>Zentral-Einkaufs-Gesellschaft, <a href="#page_226">226</a> <i>et seq.</i><br />
+</p>
+
+<p>&nbsp;</p>
+
+<p class="c">
+<span class="smcap">Printed in England by Cassell &amp; Company, Limited, London, E. C. 4.</span><a name="page_327" id="page_327"></a><br />
+</p>
+
+<div class="footnotes"><h3>FOOTNOTES:</h3>
+
+<div class="footnote"><p><a name="Footnote_1_1" id="Footnote_1_1"></a><a href="#FNanchor_1_1"><span class="label">[1]</span></a> Gross registered tonnage.</p></div>
+
+<div class="footnote"><p><a name="Footnote_2_2" id="Footnote_2_2"></a><a href="#FNanchor_2_2"><span class="label">[2]</span></a> Then British Ambassador in Berlin.</p></div>
+
+<div class="footnote"><p><a name="Footnote_3_3" id="Footnote_3_3"></a><a href="#FNanchor_3_3"><span class="label">[3]</span></a> This refers to the political events in Berlin immediately
+prior to the outbreak of war.</p></div>
+
+<div class="footnote"><p><a name="Footnote_4_4" id="Footnote_4_4"></a><a href="#FNanchor_4_4"><span class="label">[4]</span></a> The head of the Press Department of the Foreign Office.</p></div>
+
+<div class="footnote"><p><a name="Footnote_5_5" id="Footnote_5_5"></a><a href="#FNanchor_5_5"><span class="label">[5]</span></a> 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.</p></div>
+
+<div class="footnote"><p><a name="Footnote_6_6" id="Footnote_6_6"></a><a href="#FNanchor_6_6"><span class="label">[6]</span></a> Director of the Hamburg branch of the firm of Hugo
+Stinnes.</p></div>
+</div>
+
+<p><a name="transcrib" id="transcrib"></a></p>
+
+<table border="0" cellpadding="0" cellspacing="0" summary=""
+style="padding:2%;border:3px dotted gray;">
+<tr><th align="center">Typographical errors corrected by the etext transcriber:</th></tr>
+<tr><td align="center">aded to their fleets=> added to their fleets {pg 48}</td></tr>
+<tr><td align="center">in the era on the machine-gun=> in the era of the machine-gun {pg 266}</td></tr>
+<tr><td align="center">aready explained=> already explained {pg 270}</td></tr>
+</table>
+
+<hr class="full" />
+
+
+
+
+
+
+
+<pre>
+
+
+
+
+
+End of the Project Gutenberg EBook of Albert Ballin, by Bernhard Huldermann
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+The Project Gutenberg EBook of Albert Ballin, by Bernhard Huldermann
+
+This eBook is for the use of anyone anywhere at no cost and with
+almost no restrictions whatsoever.  You may copy it, give it away or
+re-use it under the terms of the Project Gutenberg License included
+with this eBook or online at www.gutenberg.org/license
+
+
+Title: Albert Ballin
+
+Author: Bernhard Huldermann
+
+Translator: Wilhelm Johann Eggers
+
+Release Date: November 8, 2013 [EBook #44135]
+
+Language: English
+
+Character set encoding: ASCII
+
+*** START OF THIS PROJECT GUTENBERG EBOOK ALBERT BALLIN ***
+
+
+
+
+Produced by Chuck Greif and the Online Distributed
+Proofreading Team at http://www.pgdp.net (This file was
+produced from images generously made available by The
+Internet Archive)
+
+
+
+
+
+
+[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
+Steinhoeft.
+
+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: "Adjues ook Albert, ick gah huet 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 clientele, 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 L2 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 L210,000 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. _Bluecher_, 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, Ile 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 Groesse_, 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
+Groesse_. 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
+Kuhwaerder 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 _Fuerst
+     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 _Fuerst 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 clientele 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"
+(Fuerstenkonzern) 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 Fuerstenberg. 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 regime 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 regime 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--consomme 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 clientele 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 Wilhelmshoehe 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 Buelow, the Imperial
+Chancellor, and Herr v. Schoen, 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 resume 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 _demarche_ 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 Buelow, 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 Buelow 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 Fuerstenberg, 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 Buelow, who was then staying at Norderney. Buelow, 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. Schoen, 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 Buelow 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 Buelow, 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
+     _demarche_, 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 _quantite
+     negligeable_ 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-Waechter, 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 resume 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. Kuehlmann, 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 & Muehlbrecht, 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.
+Kuehlmann.
+
+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 _Sueddeutsche 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 _Fuerst 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
+     Luebeck--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 Luebeck 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
+     Stuebel 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 _Bluecher_. 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
+     Eckernfoerde 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 Buelow, 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, Poincare and
+     Paleologue (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 Luebeck, 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. Jonquieres 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 _Frankfuerter 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 _debacle_.
+
+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 Mueller 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.
+     Mueller 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'etre_ 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
+Buelow. He not only urged the Chancellor to select Buelow 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 Buelow 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 Stuergkh,
+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 Buelow will be leaving for Lucerne to-day where he intends
+     to stay for some time, and the Prussian _charge 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. Buelow, Prussian Minister to Hamburg) for the
+     reason that he might have a watchful eye on Prince Buelow and
+     myself--has been promptly transferred to Warsaw. Evidently the
+     Berlin authorities now think the danger has passed, since Prince
+     Buelow 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 Buelow 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 Stuergkh 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 Stuergkh
+     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-Loewitz, 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 Buelow, 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 Buelow 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 Koepenick, 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 Buelow 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 _succes
+     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 Buelow in his
+     mind. I told Stinnes that Buelow, 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 Buelow, 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 Wilhelmshoehe 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 Schroeder, 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 Koehlbrand 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 Glueckstadt--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-Waechter, 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 _Bluecher_, 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 Buelow, 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
+
+_Bluecher_, 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
+
+Buelow, 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 Wilhelmshoehe, 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
+
+_Fuerst Bismarck_, 193
+
+Fuerstenkonzern, 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
+
+Jonquieres, Herr v., 231
+
+_Kaiser Wilhelm der Groesse_, 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
+
+Koehlhrand, agreement the, 295
+
+Kuehlmann, 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
+
+Schoen, 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
+
+Steinhoeft, 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
+
+Stuergkh, 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 Stuergkh, 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 _debacle_, 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}
+
+
+
+
+
+
+End of the Project Gutenberg EBook of Albert Ballin, by Bernhard Huldermann
+
+*** END OF THIS PROJECT GUTENBERG EBOOK ALBERT BALLIN ***
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