My Four Years in Germany

by James W. Gerard

On the other hand, when a man desires to buy some raw material, for example, copper, cotton, leather, wheat or something of that kind, he will not be allowed to buy abroad on his own hook. The Central Einkauf Gesellschaft will see that all those desiring to buy cotton or copper put in their orders on or before a certain date. When the orders are all in, the quantities called for will be added up by this central board; and then one man, representing the board, will be in a position to go to America to purchase the four million bales of cotton or two hundred million pounds of copper.

The German idea is that this one board will be able to force the sellers abroad to compete against each other in their eagerness to sell. The one German buyer will know about the lowest price at which the sellers can sell their product. By the buyer's standing out alone with this great order the Germans believe that the sellers, one by one, will fall into his hands and sell their product at a price below that which they could obtain if the individual sellers of America were meeting the individual buyers of Germany in the open market.

When the total amount of the commodity ordered has been purchased, it will be divided up among the German buyers who put in their orders with the central company, each order being charged with its proportionate share of the expenses of the commission and, possibly, an additional sum for the benefit of the treasury of the Empire.

Before the war a German manufacturer took me over his great factory where fifteen thousand men and women were employed, showed me great quantities of articles made from copper, and said: "We buy this copper in America and we get it a cent and a half a pound less than we should pay for it because our government permits us to combine for the purpose of buying, but your government does not allow your people to combine for the purpose of selling. You have got lots of silly people who become envious of the rich and pass laws to prevent combination, which is the logical development of all industry."

The government handling of exchange during the war was another example of the use of the centralised power of the Government for the benefit of the whole nation.

In the first year of the war, when I desired money to spend in Germany, I drew a check on my bank in New York in triplicate and sent a clerk with it to the different banks in Berlin, to obtain bids in marks, selling it then, naturally, to the highest bidder. But soon the Government stepped in. The Imperial Bank was to fix a daily rate of exchange, and banks and individuals were forbidden to buy or sell at a different rate. That this fixed rate was a false one, fixed to the advantage of Germany, I proved at the time when the German official rate was 5.52 marks for a dollar, by sending my American checks to Holland, buying Holland money with them and German money with the Holland money, in this manner obtaining 5.74 marks for each dollar. And just before leaving Germany I sold a lot of American gold to a German bank at the rate of 6.42 marks per dollar, although on that day the official rate was 5.52 and although the buyer of the gold, because the export of gold was forbidden, would have to lose interest on the money paid me or on the gold purchased, until the end of the war. What the Germans thought of the value of the mark is shown by this transaction.

The only thing that can maintain a fair price after the war for the products of American firms, miners and manufacturers is permission to combine for selling abroad. There is before Congress a bill called the Webb Bill permitting those engaged in export trade to combine, and this bill, which is manifestly for the benefit of the American producer of raw materials and foods and manufactured articles, should be passed.

It was also part of our commercial work to secure permits for the exportation from Belgium of American owned goods seized by Germany. We succeeded in a number of cases in getting these goods released. In other cases, the American owned property was taken over by the government, but the American owners were compensated for the loss.

Germany took over belligerent property and put it in the hands of receivers. In all cases where the majority of the stock of a German corporation was owned by another corporation or individuals of belligerent nationality, the German corporation was placed in the hands of a receiver. The German Government, however, would not allow the inquiry into the stock ownership to go further than the first holding corporation. There were many cases where the majority of the stock of a German corporation was owned by an English corporation and the majority of the stock of the English corporation, in turn, owned by an American corporation or by Americans. In this case the German Government refused to consider the American ownership of the English stock, and put the German company under government control.

With the low wages paid to very efficient workingmen who worked for long hours and with no laws against combination, it was always a matter of surprise to me that the Germans who were in the process of getting all the money in the world should have allowed their military autocracy to drive them into war.