by Blum, Howard
This self-righteous posturing, the German general staff sneered, was the same as America’s vaunted evenhanded neutrality—pure hypocrisy. The United States knew full well that the diligent Allied navies had made it impossible for a single munitions ship to sail from New York to Germany. Woodrow Wilson talked loftily about peace, but a besieged Germany understood that American bullets were mightier than all the president’s hollow words. The United States, like the United Kingdom, France, and Russia, had taken aim against the Fatherland’s soldiers.
Worse, the American shells were cruel inventions. Ribbed and grooved, fabricated from hard steel, not cast iron like the less dependable European shells, they would hiss and whine like screeching furies as they flew toward the German lines. When they exploded, they burst into hundreds of shards, razor-sharp spears raining down in a menacing torrent. The embittered high command could never forget that each diabolical projectile was made in the neutral U.S. of A.
And the arms shipments kept coming and coming. Allied purchasing agents had signed contracts guaranteeing that they would buy all the munitions the bustling American factories could manufacture. Money was no longer a problem.
AT THE START OF THE war, it had seemed England would soon go broke. It was spending £5.5 million a day, and the nation’s cash and credit reserves were dwindling perilously. France was no less shaky, and in the early days of the fighting it had requested a $100 million loan from New York’s J. P. Morgan & Company, the world’s largest bank. Without an infusion of capital, the defeat of the Allies seemed merely a question of months.
A financial rescue, though, was impossible. Secretary of state William Jennings Bryan would not allow any loans. They were, he declared, inconsistent with “the true spirit of neutrality.” “Money,” he piously told the president, “is the worst of contrabands—it commands everything else. . . . I know of nothing that would do more to prevent war than an international agreement that neutral nations would not loan to belligerents.”
American banker and philanthropist John Pierpont “Jack” Morgan Jr., May 10, 1915.
(George Grantham Bain Collection, Library of Congress)
Only J. P. Morgan Jr.—“Jack” to kings, prime ministers, presidents, and Wall Street barons—saw things differently. He didn’t want to prevent war. He wanted the Allies to win. He was determined to find a way to get them money, and he was damn sure no one, neither the secretary of state nor the president, was going to stop him.
Morgan had not inherited only his father’s immense wealth and prestige when in April 1913 he became the senior partner of J. P. Morgan & Company. He was also heir to a haughty, patrician fondness for aristocratic England and its leisurely old-world ways.
In London he had a town house off Park Lane. In Hertfordshire he owned Wall Hall, a grand manor house with a three-hundred-acre working farm and its own cricket team, which he cheered on with uncharacteristic passion. And in Scotland he had Gannocy, where he went to shoot, ride, walk about the moors, and rhapsodically contemplate “the heather just turning brown and cloud shadows chasing each other across them.” In his self-confident heart, Morgan was as English as he was American; that is, it was as natural to him to live the comfortable, rarefied life of an entitled Englishman as it was to live the comfortable, rarefied life of an entitled American titan. It would be, Morgan felt with an unshakable Episcopal conviction, a betrayal of his proud heritage, of the values and beliefs that shored up his privileged world, if he did not do all that was in his considerable power to help England, and the Allies, win the war.
Inventively, he initiated a bold scheme that sidestepped the government’s objections to loans, signing the British Commercial Agency Agreement after a meeting with British prime minister Herbert Asquith and munitions minister David Lloyd George. J. P. Morgan & Company had become Great Britain’s purchasing agent for all the nation’s war supplies in the United States. A similar arrangement would soon be made with France.
These huge expenditures would be backed by Allied gold reserves and the sale of American securities owned by overseas investors. This was a vague, if not largely hypothetical, credit line, but Morgan for once was not too punctilious about the security he required. As for the American factories, once their gleeful owners learned they’d be doing business with Jack Morgan, they stopped worrying about getting paid. His guarantee was as good as gold—perhaps, in these unsettled times, even better.
Yet Morgan, with a dunning banker’s tenacity, had not given up on the possibility of American banks making loans to the Allies. Even as the newly created export department of J. P. Morgan started to orchestrate the purchase of American supplies for Britain and France, Morgan continued to work to change the U.S. government’s position. He preferred bullying to charm, and in his blunt, assertive way he focused his energies on Robert Lansing, then a counselor in the State Department (and within six months Bryan’s successor).
Lansing, who already saw the war as a battle between righteous democracy and evil absolutism, was sympathetic to Morgan’s arguments. Fellow conspirators, they smoked cigars in Lansing’s office and plotted. Then Lansing hurried over to the White House, where he told the president that if the prohibition on loans wasn’t lifted, Canada, Australia, Mexico, and Argentina would profit from war orders that would have gone to American factories. Wilson listened, and agreed to give the matter more thought.
Days later, Morgan, in Washington to preside at a meeting of the Advisory Board of the Federal Reserve, found time for a fifteen-minute conversation with President Wilson. Before Morgan had left the Oval Office, the president had agreed that J. P. Morgan & Company could extend $12 million in commercial credit to Russia.
President Woodrow Wilson, photographed at his desk in the Oval Office, circa 1913.
(Library of Congress Prints and Photographs Division)
A commercial credit, Wilson knew full well, was for all practical financial purposes a loan. But in another of his convenient rationalizations, the president had convinced himself that it was a different sort of transaction entirely. American neutrality, he proclaimed, had not been broken; or if it had been, he simply refused to acknowledge the cracks.
Nevertheless, a precedent had been established, and now a flurry of multimillion-dollar credits from a consortium of banks led by J. P. Morgan & Company went to the Allies. Soon after these arm’s-length agreements were in place, without much discussion or even a hint of a governmental reprimand, a direct $30 million loan was made to France. This was quickly followed by a $50 million loan to Great Britain. “This should be orally conveyed, so far as we are concerned, and not put in writing,” the president, trying once again to straddle the fence, insisted.
But these loans were insufficient. The great killing machine ran on money; capital was squandered as promiscuously as lives. All the previous credits and loans had merely been preliminaries. A desperate Anglo-French financial mission came to New York in search of a $1 billion loan.
The commission was unwilling to pledge collateral. The general credit of two great nations, it argued with a still-proud majesty, should be sufficient.
American bankers had a more cynical assessment: both countries were already tottering on the brink of financial collapse, and if the Allies lost the war, things would go from terrible to hopeless. One billion dollars was a lot to lend on nothing more substantial than friendship and good wishes.
Once again Morgan, relentless and supremely powerful, rallied his Wall Street troops. He led a nationwide banking syndicate that underwrote an unsecured Anglo-French loan of $500 million. Bonds would mature in five years and bear a steep 5 percent interest. The interest payments made it an attractive investment—if the Allies won.
With half a billion dollars at stake, plus interest, neutrality was becoming a thin and increasingly abstract philosophy for America. Yet this sum, too, was not enough. The need was constant; wartime spending was a very repetitive habit. Within three years the loans to the Allies would total $3 billion, $2.1 billion c
oming from J. P. Morgan & Company.
In England and France, Morgan was cheered as the nations’ savior.
In Germany, he was cast as the devil. “Something must be done about that man,” Nicolai brooded.
AS FORTUNES OF DOLLARS FLOWED to the Allies, von Papen, the German military attaché, received orders to assess the activity in the American munitions industry. After consulting with Heinrich Albert, the well-connected commercial attaché, he sent his report.
Koenig’s sabotage campaign lacked the organization and discipline of a Prussian military operation. It was amateurish. The bombs were too crude. The recruits were unreliable. As a result, the factories, he cabled back, were working at full capacity. Allied transports, he wrote, crowded the harbors, waiting to be loaded with arsenals of American-made shells and bullets.
“Something must be done to stop it,” he pleaded.
General Erich von Falkenhayn, the chief of the general staff, read the cable, and then wrote plaintively across the page: “Not only must something be done, as the Attaché says; something must really be done.”
Chapter 21
General Franz Gustav von Wandel made the initial approach. As the war minister, the staff officer responsible for the Prussian army’s running with its vaunted efficiency, he certainly had both sufficient authority and position. But Nicolai, who prided himself on his ability to judge men, had not chosen von Wandel simply because of his place in the military hierarchy.
In a command top-heavy with imperious Junker aristocrats, von Wandel, a general who had risen up through the infantry ranks, was the exception. He was an unfailingly gracious, instinctively friendly, almost avuncular commander. His men loved him, and perhaps that was because he loved them too.
It would’ve been easy enough to order a junior officer to accept the mission. Nicolai had no doubts he’d march dutifully off to America like a prisoner to the hangman. But Nicolai’s own tense experiences behind the lines had taught him that obedience was an insufficient guarantee of success. And the string of fiascoes orchestrated by von Bernstorff and his crew of incompetents had only reinforced his old lessons.
As Nicolai had predicted, von Wandel won the candidate over from the start. He began with a disarming ardency, insisting that he was speaking not as a general but as one patriot to another. The flattered officer already riveted, von Wandel proceeded to announce that the kaiser himself had ordered the mission he was about to share. The words carried a genuine gravity; it was impossible to doubt that they were true.
You have been chosen, von Wandel revealed, to bring discipline and ingenuity to the covert war against America. The captain would work in conjunction with the von Bernstorff network, but at the same time he had the authority to be an independent operative. He would have the funds and the power to launch any plot he deemed feasible, to recruit any agents he needed. He would be, the general said, “a spider spinning his own secret webs.”
“You cannot give us a ‘No,’ ” von Wandel concluded, nearly begging.
“Your Excellency, my train will leave on Monday morning,” Franz von Rintelen replied without a moment’s hesitation.
Captain Franz Dagobert Johannes von Rintelen, the naval intelligence officer who masterminded much of the German sabotage effort in the United States, circa 1919.
(Thomas J. Tunney, Throttled!)
ON PAPER, CAPTAIN VON RINTELEN was the perfect operative for this mission in America. He had been born in Frankfurt in 1878 to a good family, although not nearly as grand as he liked to imply, with interests in banking. After graduating from gymnasium, he did some early service in the navy and then followed his father into finance.
His first stint was as representative of the Deutsche Bank in London, where he perfected his English, learned how to dress, and, with the liberating freedom that came from being far from home, added the “von” to his name as coolly as if he’d been born to it.
In 1905 he came to America as a representative of the Disconto-Gesellschaft, Germany’s second biggest bank. He lived at the New York Yacht Club—the only other German members on its exclusive rolls were the kaiser and his brother Prince Heinrich—and had his office at the white-shoe banking firm of Ladenburg, Thalmann & Company. With his amended pedigree, continental manners, and well-cut clothes, he was considered a gentleman by those New York circles that cared about such things. Tall, rail thin, with his dark, thinning hair brushed back, a mischievous sparkle in his blue eyes, and an athlete’s grace, he was a rakish bachelor invited to dinner parties from Newport to Southampton. During his three years spent as a young banker running out and about nearly every night, he made many well-connected friends in business and society.
In 1909 he left for Mexico, and then traveled on to South America for his bank. A year later he returned to Germany, where he married a woman of considerable wealth and fathered a daughter.
With the outbreak of the war, von Rintelen rejoined the navy, serving as a captain-lieutenant attached to the admiralty staff. His initial responsibilities were financial, perfunctory assignments involving payrolls and transfers of admiralty funds to ships in foreign ports. But soon his superiors, appreciating a keen and resourceful mind, directed him into intelligence operations.
Zeppelins had been used with great success in bombing Antwerp, and he was drafted to be part of the team planning similar raids on London and Liverpool. Days and nights were spent hunched over large-scale maps specially printed on the admiralty’s own presses. Guided by his experiences in the cities, he drew ominous red circles over targets he decided would be vulnerable to an aerial attack. Only one location was off-limits to the zeppelins: the kaiser insisted that in all circumstances Buckingham Palace, home to his royal relatives, must be spared.
His next assignment took him undercover. Three hundred new machine guns, the naval corps had learned with some excitement, were sitting in a shed in Copenhagen, awaiting shipment on the first boat to Russia. He was ordered to make sure the much-needed weapons wound up instead in Germany.
Using the alias William Johnston, a London businessman, he checked into the Hotel d’Angleterre in Copenhagen and, after several happy evenings buying rounds of drinks in the hotel bar, succeeded in making friends with the Russian purchasing agents.
I’m not actually a businessman, he confessed at one evening’s end to his new drinking buddies. He revealed that he was a member of the British secret service, and that he’d been instructed to help them get machine guns to the Russian army. There were some unexpected twists and turns as his brash scheme proceeded to play itself out, but in the end the Russians, encouraged by the British agent, loaded the guns onto a steamer flying the French tricolor. The flag was one more lie, and the boat chugged across the Baltic to Hamburg.
These were the broad facts, the details all documented with military thoroughness in Captain von Rintelen’s service records. However, Nicolai, who had been keeping his eye on von Rintelen for a while, was convinced they told only part of the story. Moreover, it was largely the unrecorded qualities, the intangibles, that had convinced the Abteilung IIIB commander to snare his new recruit.
Nicolai felt he’d discovered an agent with a fox’s cunning and a seducer’s charm—a man, the spymaster predicted, who’d be able to move effortlessly around America. He’d find his way into factories and boardrooms, into waterfront saloons and labor rallies, wherever he needed to go. He’d listen to the chatter and read the rising wind of opinion and know at once whether an operation would strike deep at the American will.
At the same time von Rintelen, Nicolai was certain, would be a guiding beacon to his men. He’d recruit agents and helpers, and they’d be devoted to him. He’d truly believe in his own invincibility, and his adoring agents would feed on his colossal self-confidence. Nothing would be too bold.
All of Nicolai’s intuitive judgments were happily seconded when von Rintelen showed up for his briefing at the Königsplatz headquarters. There was much to go over, and von Rintelen took it all in undaunte
d.
His operational life would begin as soon as he got off the boat in New York Harbor. Malvin Rice, a German sympathizer who claimed to be a board member of DuPont, had sent word to a member of the Reichstag that he could arrange for Germany to purchase significant quantities of explosives. There was no hope of getting the matériel to Germany, but at least it would not be used to fill the Allies’ shells. Von Rintelen was given half a million dollars to fund the initial orders.
Even as he accepted the money, Nicolai could tell, von Rintelen was as skeptical about the scheme as, in truth, he was himself. Yet confirming his expectations, his newest operative didn’t argue, or even suggest the possibility of failure. Von Rintelen simply accepted the assignment, confident that if Rice had been truthful, he’d get the job done.
Nicolai’s faith in his new recruit soared even higher when word was passed on about the brash promise an unintimidated von Rintelen had made the following day to the powers at Wilhelmstrasse. There he was, a naval reserve captain standing before Karl Helfferich, the vice chancellor, and Arthur Zimmermann, the deputy foreign minister, and von Rintelen vowed, “I’ll buy what I can, and blow up what I can’t.” The stolid politicians could not help bursting into admiring smiles at the young officer’s bold words, and neither could Nicolai when an account of the meeting reached him too.
At Wilhelmstrasse, von Rintelen received a Kaiserpass. Signed by the foreign minister, it was an exceptional passport, issued only to officials on the most important government missions. Written in the formal, antiquated German of Frederick the Great’s imperial world, it informed all authorities, embassies, and legations, military and civil, to give the bearer every assistance he requested.
That night von Rintelen sewed it into the lining of his suit. In the morning, he left for the Stettiner Bahnhof, where he boarded a train that would take him to Norway, and to the ship that would sail for America.
