When on April 6, 1917, America declared war on Germany, there was in New York as American representative of the Deutsche Bank of Berlin, a German by the name of Hugo Schmidt. As the world now knows, it was the Deutsche Bank which financed the von Bernstorff-Bolo Pacha plot to debauch France, which formulated a scheme to corner the wool market of the world, a plot the object of which was to gain control of the after-the-war trade in South America, and which, through its agents in this country and South America, was keeping tab on the political situation in this hemisphere for the Foreign Office in Berlin. How these plots and numerous others were planned and how they were to be carried out, was disclosed in a great mass of documents which will go down in history as the “Hugo Schmidt Papers.”
Despite the fact that he was one of the first of the Kaiser’s subjects to be arrested after this country entered the war, and despite the fact that he knew the all-important nature of the papers, Schmidt failed to destroy the documents. He acted on the theory that the United States Government would not take them, and so he catalogued them and stored them away in his private office at Broadway and Rector Street, and in his living quarters in the old German Club in West Fifty-ninth Street.
It was the plotting of Bernstorff and Bolo Pacha, with Adolph Pavenstedt, the enemy alien banker of New York, acting as a go-between, that caused the seizure of Schmidt’s papers, with the unmasking of scores of German political and trade plots, involving financial backing mounting into the hundreds of millions of dollars.
The revelations which have followed the seizure of these papers have filled pages in the newspapers of the United States and the rest of the world, and yet the story has not yet been half told. The new chapters in a story, which has been pronounced by Federal officials among the most interesting of all the disclosures brought about as a result of the great war, will be issued by Deputy Attorney General Alfred L. Becker, the man who exposed Bolo.
The seizure of millions of dollars worth of German-owned property in this country has been made possible, to a large extent, by Mr. Becker’s seizure of Schmidt’s papers. But for its conclusive evidence of the true ownership of certain great properties, the Government of the United States would have had an almost impossible job in ferreting out the trade footholds of the Hun in America. To-day the Government is in control of great woolen mills, of huge plants now engaged in the manufacture of munitions of war, of splendid ocean-going steamships (not those of the Hamburg-American and North German Lloyd lines), which, until Schmidt’s papers were studied, were supposed to be neutral or American owned; not to mention numerous other important plants, all of which were proved to be of enemy ownership and of which a majority have already been auctioned off to bona fide American ownership and control.
Aside from what the future may disclose as a result of a further study and investigation of Schmidt’s papers, the following summary, prepared in the office of Mr. Becker, shows in a condensed form the results obtained to date as a result of the seizure of the German banker’s books and other data:
1. Part of documents that helped in the conviction of Bolo Pacha.
2. Furnished evidence upon which Hugo Schmidt and Adolph Pavenstedt were interned.
3. Furnished evidence disclosing German plot to hoard wools and other textiles for German account; furnished evidence enabling the Government to take control of Forstmann & Huffmann Company, and proving conclusively the German ownership of the Botany Worsted Mills.
4. Furnished evidence upon which Eugene Schwerdt was interned.