United States of an arms-industry, the output of which can, in view of the existing situation, be solely to the advantage of the combatant powers.

"This industry is at present only delivering its wares to the enemies of Germany. The readiness, in theory, to do the same for Germany, even if the transport were possible, does not alter the case. If it is the desire of the American people to maintain an honorable neutrality, the United States will find the means to stop this one-sided traffic in arms, or at least to use it for the purpose of protecting legitimate commerce with Germany, particularly in respect of foodstuffs. This conception of neutrality should appeal all the more to the United States in view of the fact that they have allowed themselves to be influenced by the same standpoint in their policy in regard to Mexico. On the 4th February, 1914, President Wilson, according to a statement of a member of Congress on 30th December, 1914, before the commission for foreign affairs with regard to the withdrawal of the prohibition of the export of arms to Mexico, said: 'We shall be observing true neutrality by taking into consideration the accompanying circumstances of the case. . . . He then took up the following point of view: 'Carranza, in contrast to Huerta, has no ports at his disposal for the importation of war-material, so in his case we are bound, as a State, to treat Carranza and Huerta alike, if we are to be true to the real spirit of neutrality and not mere paper neutrality.'

"This point of view, applied to the present case, indicates prohibition of the export of arms."

Although during the war all Notes were at once made public, the American Government were very annoyed at my publishing this memorandum, which in any case would have met with no success. The agitation for the prohibition of the export of arms and munitions was

vigorously pressed, and in spite of the "Lusitania incident" never completely subsided. But the American Government held to their point of view, which they explained to me on the 21st April, as follows:

"In the third place, I note with sincere regret that, in discussing the sale and exportation of arms by citizens of the United States to the enemies of Germany, Your Excellency seems to be under the impression that it was within the choice of the Government of the United States, notwithstanding its professed neutrality and its diligent efforts to maintain it in other particulars, to inhibit this trade, and that its failure to do so manifested an unfair attitude toward Germany. This Government holds, as I believe Your Excellency is aware, and as it is constrained to hold in view of the present indisputable doctrines of accepted international law, that any change in its own laws of neutrality during the progress of a war which would affect unequally the relations of the United States with the nations at war would be an unjustifiable departure from the principle of strict neutrality by which it has consistently sought to direct its actions, and I respectfully submit that none of the circumstances urged in Your Excellency's memorandum alters the principle involved. The placing of an embargo on the trade in arms at the present time would constitute such a change and be a direct violation of the neutrality of the United States. It will, I feel assured, be clear to Your Excellency that, holding this view and considering itself in honor bound by it, it is out of the question for this Government to consider such a course.

In the meantime, Colonel House returned from Europe without having met with any success, but he had opened useful personal relations. The Governments of all the combatant Powers then held the opinion that the time had not yet come when they could welcome the mediation

of President Wilson. Colonel House, however, did not allow the lack of success of his first mission to deter him from further efforts, and remained to the last the keenest supporter of American mediation. Since this journey Colonel House and I became on very friendly and intimate terms, which should have helped to bring about such a peace,

CHAPTER IV

ECONOMIC QUESTIONS

In the preceding chapter I mentioned that Dr. Dernburg's plan for raising a loan in the United States had failed. Later the direction of all our economic and financial affairs passed into the hands of Geheimrat Albert. His original task was to organize in New York extensive shipments of foodstuffs, particular wheat and fats, which were to be exported through the New York office of the Hamburg-Amerika line. This depended, in the first place, on the possibility of raising the necessary funds, and in the second, on the possibility that England, out of regard for the neutrals, and particularly the United States, would be compelled to abide by the codified principles of international law. Neither of these premises materialized.

As the necessary means for carrying through the scheme could not be raised it might have been possible to finance it if the Government had taken over the not inconsiderable funds of the German banks and the great industrial enterprises, e.g., the chemical factories in the United States, and used them for the shipments. The suggestions we made to this effect were not answered until the end of August, when we arrived in New York and had already lost many weeks in trying to negotiate the loan. One organ, which immediately after the war had taken up these questions on its own initiative, failed, and so nothing was done in the whole wide sphere of credit, supply of raw materials and foodstuffs and shipping until my arrival with the other gentlemen, so that

the most favorable opportunity was lost. Remittances from Germany did not arrive until long afterwards, and then only to a very modest extent. Consequently the whole economic scheme was considerably narrowed and hampered from the beginning.

The second assumption, that the United States, in consideration of her great commercial connections with Germany, would maintain her rights as a neutral State to unrestricted sea trade within the provisions of international law, proved to be unfounded. The United States, at any rate according to the view of some very distinguished Americans, as, for example, in the journal New Republic, violated the spirit of neutrality when she allowed commerce of the neutrals one with another to be strangled by England. To the interest in traffic with the neutral States, and indirectly with Germany, was opposed the interest in the still greater trade with our enemies, to which was added, and indeed to a rapidly increasing extent, the supply of war material. The United States did not realize the extent of their economic power in respect of England, as the inexperienced, newly-appointed Democratic Government had no statistics to which to refer, and from a military point of view were defenceless for want of an army or fleet. So England was able, slowly and cautiously, but surely, to cut off the Central Powers from the American market, In view of this state of things the important thing was to pass all shipments off as neutral. The exporter had to be an American or a subject of neutral Europe. The financing had also to be European, at any rate outwardly. The destination could only be a port in Holland, Scandinavia, Spain or at that time-Italy. Consequently it was not long before the consignments could no longer be made through the New York representative of the HamburgAmerika line, but were taken in hand by Herr Albert