Chapter X · The War (continued 2)

“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.