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.