This belief of the Germans and Helfferich is one of the notable fallacies of the war. The German war loans have been subscribed mainly by the great companies of Germany; by the Savings Banks, the Banks, the Life and Fire Insurance and Accident Insurance Companies, etc.
Furthermore, these loans have been pyramided; that is to say, a man who subscribed and paid for one hundred thousand marks of loan number one could, when loan number two was called for, take the bonds he had bought of loan number one to his bank and on his agreement to spend the proceeds in subscribing to loan number two, borrow from the bank eighty thousand marks on the security of his first loan bonds, and so on.
There is an annual increment, not easily ascertainable with exactness, but approximately ascertainable to the wealth of every country in the world. Just as when a man is working a farm there is in normal years an increment or accretion of wealth or income to him above the cost of the production of the products of the soil which he sells, there is such an annual increment to the wealth of each country taken as a whole. Some experts have told me they calculated that, at the outside, in prosperous peace times the annual increment of German wealth is ten billion marks.
Now when we have the annual interest to be paid by Germany exceeding the annual increment of the country, the social and even moral bankruptcy of the country must ensue. If repudiation of the loan or any part of it is then forced, the loss naturally falls upon those who have taken the loan. The working-man or small capitalist, who put all his savings in the war loan, is without support for his old age, and so with the man who took insurance in the Insurance Companies or put his savings in a bank. If that bank becomes bankrupt through repudiation of the war loan, you then have the country in a position where the able-bodied are all working to pay what they can towards the interest of the government loan, after earning enough to keep themselves and their families alive; and the old and the young, without support and deprived of their savings, become mere poor-house burdens on the community.
Already the mere interest of the war loan of Germany amounts to four billions of marks a year; to this must be added, of course, the interest of the previous indebtedness of the country and of each political subdivision thereof, including cities, all of which have added to their before-the-war debt, by incurring great debts to help the destitute in this war; and, of course, to all this must be added the expenses of the administration of the government and the maintenance of the army and navy.
It is the contemplation of this state of affairs, when he is convinced that indemnities are not to be exacted from other countries, that will do most to persuade the average intelligent German business man that peace must be had at any cost.
CHAPTER XIV
WORK FOR THE GERMANS
The interests of Germany in France, England and Russia were placed with our American Ambassadors in these countries. This, of course, entailed much work upon our Embassy, because we were the medium of communication between the German Government and these Ambassadors. I found it necessary to establish a special department to look after these matters. At its head was Barclay Rives who had been for many years in our diplomatic service and who joined my Embassy at the beginning of the war. First Secretary of our Embassy in Vienna for ten or twelve years, he spoke German perfectly and was acquainted with many Germans and Austrians. Inquiries about Germans who were prisoners, negotiations relative to the treatment of German prisoners, and so on, came under this department.
One example will show the nature of this work. When the Germans invaded France, a German cavalry patrol with two officers, von Schierstaedt and Count Schwerin, and several men penetrated as far as the forest of Fontainebleau, south of Paris. There they got out of touch with the German forces and wandered about for days in the forest. In the course of their wanderings they requisitioned some food from the inhabitants, and took, I believe, an old coat for one of the officers who had lost his, and requisitioned a wagon to carry a wounded man. After their surrender to the French, the two officers were tried by a French court martial, charged with pillaging and sentenced to be degraded from their rank and transported to Cayenne (the Devil's Island of the Dreyfus case). The Germans made strong representations, and our very skilled Ambassador in Paris, the Honourable William C. Sharp, took up the matter with the Foreign Office and succeeded in preventing the transportation of the officers. The sending of the officers and men, however, into a military prison where they were treated as convicts caused great indignation throughout Germany. The officers had many and powerful connections in their own country who took up their cause. There were bitter articles in the German press and caricatures and cartoons were published.