THE ECONOMIC WAR AND ITS PROPAGANDA
"Economic War":—This reiterated German phrase is not mere metaphor. The Germans pursued in peace the operations of war. To them commerce meant not merely the pursuit of trade in peaceful rivalry with others, but a sustained effort to defeat and oust rivals and reduce to economic subjugation the lands penetrated. By plunging into open war, which was meant to continue and to confirm that process, the Germans have risked their previous gains. Their own weapons are turned against them. The economic character of the actual war and the efficacy of the economic weapon in the hands of the Allies become more and more evident. In the early months of the war this weapon was not wielded with thorough decision, and Germans beyond the Atlantic were able to carry on considerable European trade. But today the German merchant is striving to defend, against an overwhelming weight of maritime pressure, the ground which he had won through a generation of laborious and patient effort.
This economic struggle covers all the shores of all the Oceans. Its Latin-American phase has a special interest owing to the remarkable position attained in those lands by the Germans, the high value which they attach to that position, and their special efforts to maintain it under present difficulties. The most varied ingenuity is called into play to circumvent the barrier which now cuts off those countries from Germany. Present risks and losses are viewed as part of the inevitable waste of war, as an outlay deliberately incurred in the all-important task of holding open the gate through which, upon the conclusion of peace, the fruits of German industry are at once to pour in an irresistible stream, in exchange for those raw materials which are urgently needed to feed the industrial life of Germany after the war. This is the constant preoccupation of German business circles—the need of raw materials. And this is the reason why Latin America, the great source of raw materials, is courted with eager hope and anxious apprehension.
It is noticeable that a very large part of the cargoes condemned by the British Prize Court, as actually intended for the enemy though consigned to other pretended destinations, consists of goods from Latin America. For example, in August 1917 the Court condemned quantities of coffee, seized on a score of neutral steamers and ostensibly consigned to Scandinavian and Dutch merchants, but in fact shipped by a German firm at Santos for the parent house in Hamburg. Two months later, it was stated in court that nearly £400,000 worth of wool, shipped from Buenos Aires to the Swedish Army Administration at Gothenburg, had been seized by the British as being in fact destined for Leipzig. At the same time the Court condemned a number of manufactured rubber articles which had been found concealed in a passenger's clothing. On a later occasion, coffee and cocoa valued at nearly £200,000 were condemned, being part cargo of a Swedish ship bound from California to Gothenburg. They were consigned by a new and insignificant firm in San Francisco to various persons in Scandinavia, but were in fact on their way from Guatemala to Hamburg through Sweden.
The elaborate webs spun by German traders and revealed by intercepted correspondence were exposed in the Prize Court. Their methods were to find persons in neutral countries as nominal consignees, to act as intermediaries for getting the goods to Germany; to set up bogus companies for the same purpose; to use false names, or names of persons having no genuine interest in the consignment, and to manufacture false documents in order to give the appearance of neutral business. This was done to evade capture by deceiving the belligerent searchers. In some instances these methods succeeded. Quantities of coffee, consigned to Scandinavia, managed to elude the allied warships and reach Hamburg.
These are cases of import into Germany. The reverse process, export from Germany through neutrals, follows similar lines. German goods, falsely labelled and described as Swiss or Dutch or Scandinavian manufactures, have found their way across the Atlantic in neutral ships.
The Post Office has also served as a channel of secret trade. Pictures in the Press have exhibited the odd ingenuity of these devices: how coffee from Brazil to Germany was found concealed in rolls of newspapers, and how thin slabs of rubber were sent by post as photographs, also how quantities of jewellery have been despatched from Germany for South America in letters and in bundles of samples or journals. Goods so sent from Germany through the Post Office are mostly such as combine small bulk with high value—especially drugs and jewellery.
These partial examples, although each instance may seem small enough, indicate collectively a good deal of enemy trade which has found devious routes under stress of war. These manœuvres may seem at first sight merely trivial curiosities or at all events to have no more than ephemeral importance, since they were improvised to overcome temporary obstacles. But, apart from their intrinsic interest as episodes in one phase of the war and as evidence of the efficacy of Sea Power, these devices merit practical attention in view of proposals to fasten economic fetters upon Germany by the terms of peace, and in view of the odium which may tell against German commerce for years to come. German business men are preparing to meet these difficulties by continuing the method of exporting through neutral agents, and are proposing in some cases to transport to a neutral country the work of completing manufacture, in order that goods so produced may appear to be indisputably of non-German origin; and the Foreign Trade Department at Berlin has advised German merchants to employ, for some years after the war, travellers and agents who can pass as French or English. It would be unwise to underrate any instance of German inventive persistency.
Before the United States came into the war, that country was the channel of much German trade with Latin America. That road is now closed. The United States Government has gone further. It refuses coal in North American ports to ships proceeding from South America to neutral countries in Europe, unless the innocence of the cargo can be conclusively proved. This regulation shows that the United States authorities have knowledge that the ultimate destination of much South American cargo, particularly from the Argentine Republic, has been Germany. The blockade becomes more stringent through the co-operation of the United States and of Brazil, and through the action of the statutory list of "persons and firms with whom persons and firms in the United Kingdom are prohibited from trading." British commerce is a big and living thing, and the prohibition hits very hard any firm placed on this Black List. One finds here not only Teutonic names, but also innocent-sounding Latin names: for if a Latin-American is found to be acting as agent or cloak for a German trader, he finds himself pilloried on the Black List beside the German. There are obvious ways of evasion. The name of a clerk or door-keeper or a lady type-writer may appear as consignee. A varied ingenuity has to be met by constant watchfulness, and the list is regularly altered and kept up to date. The Black List has been much criticised for omissions, which are sometimes due to motives of expediency. But the bitter complaints about its injustice are unsolicited testimony to its efficacy. A striking example of its working was manifested in September 1917. After the outbreak of war, such of the Chilian nitrate works as were owned by Germans were unable to sell their nitrate or even to obtain jute bags, the supply of which is in British control. The unsold stocks went on accumulating, until one by one the German nitrate works were compelled to close down. Long negotiations between Santiago and Berlin found at last a remedy for this waste. It was agreed that the large deposits of Chilian gold in Germany should be set against the German-owned nitrate in Chile. The Chilian Government bought the nitrate, and paid the German owners by drafts on Berlin, which were met out of the Chilian money deposits in Germany. Thus Germany received Chilian gold in exchange for the inaccessible nitrate, while the Chilian Government received nitrate in exchange for its inaccessible gold. Chile then sold the nitrate for American gold to the largest manufacturer of explosives in the United States. Thus, one result of the blockade and the statutory list is that this German nitrate goes to make munitions, to be hurled at the Germans on the French front from American guns. The German Government, by sanctioning this sale of explosive material to its enemies, gave evidence of its earnest desire to stand well with Chile. On the other hand, Germany was impelled to this agreement in order to obviate grave financial loss to Germans and especially to save a big Hamburg firm from disaster.
The active entry of Brazil into the war has in great part superseded the action of the statutory list in that country: for Brazil has taken decisive measures towards Germans within her borders. All enemy enterprises are in the hands of government receivers. All contracts for purchase of coffee or other Brazilian products by Germans are null and void; and in cases where payments had been made by the German purchasers, all such payments must be handed over to the official receivers. The United States also publishes a Black List of firms with whom her citizens are forbidden to deal. Evasion of allied watchfulness becomes more and more difficult: yet ingenious, and sometimes successful efforts are made to find loopholes in the wall of the blockade.
There are now in Buenos Aires nearly 150 Turkish firms—Levantines of every denomination, Mohammedan, Christian, Jewish. Some of these are long-established and well-reputed houses. But most of them have sprung up during the war. Some of them, starting with exiguous capital, have made large fortunes in a year or two of trade. This has been done by supplying to German black-listed firms goods imported direct from Manchester and Bradford. Through the close co-operation of the German bank with German trade, these Syrians and Armenians are enabled, by the Germans standing behind them, to pay cash against documents in place of the usual sixty to ninety days' credit, and thus have a great advantage over the British or allied trader. The British authorities now permit export only to certain registered Turkish firms. The restriction does something to limit the abuse of this kind of trading.
Besides these ingenious efforts to keep open communication with Europe, there is another side of the commercial war. In the neutral states of Latin America the German business man is as ubiquitous and energetic as ever, nay more so as he has greater difficulties to contend with. So far as he can, he sells from accumulated stocks of German goods, for the German importing houses before the war had gathered great stocks, especially in Chile. Where this resource fails, he repairs his stock by buying anywhere. Up to April 1917 he bought largely in New York. Now he buys where he can and what he can—American goods, French goods, British goods—anything to hold the market until the ocean shall be free once more to German keels carrying German goods.
From the Argentine Republic 6000 young Englishmen came home to serve Britain on the fields of France. The young German would have found difficulty in getting home, even had he wished to do so; so for the most part he stayed in the River Plate. Other Germans have been released from military service and sent out as commercial travellers; for the German Government regards this too as National War Service. Thus today there are three German commercial men in the River Plate to one Englishman. The resources and confidence of the German traders are surprising. They have bought great quantities of wool in the River Plate—not so much indeed as is generally supposed; for German emissaries, in order to force up the price of wool to the Allies, have methodically made specious but fictitious offers of high prices to sheep-farmers all over the Argentine Republic. Yet, even so, German traders hold large quantities both of wool and of grain. These have been purchased partly for selling at enhanced prices on the spot, but principally with a view to after-war trade and the supply of raw materials to Germany. These purchases are proof of firm belief in the future. Moreover, both in Chile and in Argentina the interned German ships await their after-war cargoes for Europe. And when the Chilian or Argentine asks whether the German will be free to use these ships when peace comes, the Englishman cannot reply. The ships are there, proof of Germany's future power to trade.
And the Germans are active not only in trade. They have learnt from British example that the road to business in Latin America is the investment of capital. And, strange as it may seem, the German has peculiar opportunities of investment at the present time. Such limited trade as can be carried on yields great profits. There is difficulty about remitting funds to Germany; and in any case "victory war loans" and other investments in the Fatherland may seem less attractive than investments in those Latin-American lands which look forward to rapidly expanding prosperity after the war. Accordingly, the German merchant is not only buying raw materials; he is also taking a share in the movement of home manufactures which now offers peculiar opportunities to foreign enterprise. Moreover, German firms in Buenos Aires have invested largely in short loans to the Argentine Government. Besides these private investments, which, like all German activities, have their official side, loans have been repeatedly pressed on the Argentine Government, ostensibly by neutral financiers (first in the United States and afterwards in Spain) but in fact by Germany, evidently for immediate political as well as for ulterior economic objects. These offers have been declined. A German loan openly offered to Uruguay has also been refused.
Obviously, the whole story of German war-efforts in Latin America cannot yet be told. Enough has been said to indicate the character and the intensity of those efforts. For this far western front Germany has mobilised a business army, specially trained for the nature of the country and for the kind of operations wherein it is to be engaged. These efforts and aspirations are best illustrated by a recent utterance from the Hamburg branch of the League for Germanism abroad:—"We should like to insist that South America, the main field of our activity for many years past, constitutes a great sphere. Wide areas, with great possibilities of development, but little cultivated hitherto, are waiting to be opened up. It must be our business to employ here all our strength in order to retain and to make useful to ourselves these countries with their markets and raw materials. What we have to do is to arm for the Peace and to collect money, in order to be able immediately to act with energy—with our whole strength and with adequate resources."
In this "arming for the Peace" there is one weapon which demands special mention, namely the influencing of opinion by printed propaganda.
The German mobilisation of the Press is a vast business controlled by the State. Upon the outbreak of war this organisation undertook the special work of war propaganda through two newly formed departments: (1) Press Office for influencing neutrals, (2) News Service for Spanish- and Portuguese-speaking countries. This institution of a special Ibero-American service proves the prominence given to the work in the Spanish- and Portuguese-speaking lands. The last words obviously include the Peninsula as well as Latin America. Nor can the propaganda carried on in Spain be dissociated from that in Spanish America. "Spain is the way to South America," writes a Spaniard discussing this very point. The popular illustrated Spanish prints A.B.C. and Blanco y Negro, which carry on a vehement Germanophil propaganda, are carefully perused, as coming from "home," by Spanish emigrants throughout Latin America, who thus become, half unwittingly, disseminators of German views and of belief in German victory.
For the first object of this propaganda is to represent Germany as invincible in war. This military propaganda is an essential part of economic efforts. The Germans hold up a picture of German sagacity, system, thoroughness, efficiency. They desire to impress as well as to persuade. They know the effect produced by their victory in 1870. Credit and confidence are the greatest of commercial assets; and in this case economic credit is to rest upon belief in military strength.
In South America, as in Spain, the method is to capture the press, and so disseminate German war-news, pro-German articles, photographs and cartoons. But it was not enough to control or inspire existing newspapers. In many capitals the Germans started new journals, printed in the vernacular. Naturally, the chief effort was made in Buenos Aires. Early in the war, a German organ, La Unión, was founded, in order that the Porteño, as he walked the street or travelled by train or tramway, might have the German case daily and forcibly presented to him. Throughout Latin America, a dozen or more of newspapers have been thus founded for propaganda purposes, some of them illustrated by effective cartoons. The strangest examples of this journalistic campaign are two Turkish newspapers, La Bandera Otomana of Buenos Aires and O Otomano of São Pãolo, which urge the cause of the Central Powers among Orientals in those countries. Besides these purely German efforts, a host of newspapers, many of them the local journals of country towns, serve the German cause throughout Latin America, the newspaper offices sometimes acting as distributing agencies for periodicals printed in Germany in the Spanish tongue.
For, besides German and Germanophil periodicals published in America, others are produced in Germany for circulation in those countries. The number and the excellent quality of these Spanish productions of the German printing-press are remarkable. La Revista de la Exportación Alemana is a most effective organ for German business, exhibiting side by side, in pictures and letter-press, triumphs in the field and triumphs of industry. The monthly Mensajero de Ultramar and the weekly Heraldo de Hamburgo have been already mentioned. Hamburg also produces the well-known weekly picture-paper, Welt in Bild, with letter-press in twelve languages. These well-written and well-printed newspapers are widely circulated in Latin America in order to uphold the German cause.
In addition to these permanent publications, special war periodicals are issued, every one of them a German trumpet. Not least of these is the comic paper La Guasa Internacional, which holds up the Allies to ridicule and abhorrence in cartoons, squibs and sketches. A diary of the war with a review of political and military movements is given in the illustrated monthly Crónica de la Guerra. Another chronicle is La Guerra Europea Mirada por un Sud-Americano, a piece of war propaganda written by a Latin-American soldier, Señor Guerrero, who was, until recently, Peruvian military attaché at Berlin. But perhaps the most effective of these war periodicals is La Gran Guerra en cuadros, which presents, in a series of pictures, the war as meant to be seen by neutral eyes. All these periodicals attribute economic blunders and financial errors or weakness to the Allies, sometimes making adroit use of British or French self-criticisms: on the other hand, they magnify German economic strength and organisation. This main object appears in an article on "After-war commercial relations between Spanish America and Europe" published in El Mensajero de Ultramar, which argues that Germany will suffer least of all the belligerents from the effects of the war; and that afterwards she will be the best purchaser and also the most capable provider for Latin America. Such is the reiterated refrain of a host of periodical publications.
In addition to periodicals, Germany pours over the Spanish-and Portuguese-speaking world a constant inundation of fly-leaves, photographs, pamphlets, books and miscellaneous war literature, preaching German strength, efficiency, humanity, and even the democratic character of German institutions.
What is the result? Has German propaganda succeeded in moulding Latin-American opinion concerning the war? Opinion in those countries has been moved by an argument more potent than all the German propaganda, and that is the German submarine. The German offers to South America with one hand persuasive self-eulogies, while with the other hand he sinks her unarmed trading ships and drowns her sailors. Unrestricted submarine warfare and the barring of zones to navigation have drawn Brazil, by successive steps, into active belligerency, and have done much to bring about rupture of relations and declarations of war by other Latin-American republics. Yet it would be a mistake to conclude that German propaganda has entirely failed. The Germans certainly think it worth while to continue it. The pavements of Buenos Aires are sometimes ankle-deep with pro-neutrality and anti-ally leaflets. But it is principally through the persistent and reiterated voice of the newspaper press, aided by the unremitting personal efforts of every German and every friend of Germany, that she wages this secondary warfare, this strategy of moral influence, which mobilises public opinion, diffuses impressions, colours events, creates an atmosphere.
A circular was lately issued to the German League in Chile urging that, if propaganda could delay the severance of diplomatic relations between Chile and Germany, even for a few weeks, it would help Germany and her allies to an extent of several millions, and cause damage to her enemies to the same amount. As the situation becomes more critical for Germany, her propaganda redoubles in intensity. "Public opinion," says Napoleon, "is a force invisible, mysterious, irresistible." The Germans recognise that force, and have done all that was in their power to sway it to their side. German persuasiveness has not wholly failed. But in this war of words one decisive word has yet to be spoken, and that word is Victory.
Yet military victory is not the final word in the economic struggle nor in the propaganda used in its support. The German South American Institute urgently emphasises the need of a more thorough and more stable system of German news supply: and official steps are now being taken in Germany to consolidate and extend such a system, in order to provide a permanent support of German influence in the future. The present aim of her propaganda is not only to exhibit victories, but to prepare for possible defeat, while representing Germany as morally invincible and as able, in any event, not only to hold her own, but to extend and strengthen her position.