The Illusion of Victory (12 page)

The sinking of the British steamer
Falaba
on March 29, 1915, was a good example of England’s deft combination of resistance and propaganda. The story as it was told by Wellington House for the New York newspapers portrayed a ruthless German submarine captain who sank the cargo-passenger liner without warning, killing 110 people, including one American, by triggering a “terrific explosion” in the engine room. After the war, historians found that the U-boat captain had given
Falaba’
s master three warnings to abandon ship, waiting a total of twenty-three minutes while the Englishman made excuses and radioed for assistance. Only when a British warship appeared on the horizon did the Germans unleash a torpedo, which blew up 13 tons of ammunition in the
Falaba’
s hold, accounting for the heavy casualties.
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Another British innovation that made it difficult if not impossible for the U-boats to follow cruiser rules was the Q-ship. This disguised merchantman had a well-trained crew and almost as many concealed guns on its decks as a royal navy destroyer. If a submarine surfaced and ordered one of these craft to abandon ship, the U-boat was answered with a hail of shellfire.
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In August 1915, the
Baralong,
a Q-ship flying the U.S. flag, destroyed a German submarine that had surfaced to attack another British vessel, the
Nicosian
. Adding outrage to this injury, the
Baralong’
s crew executed the submarine’s survivors. The chancellor of Germany went before the Reichstag to denounce this “bestial” high-seas murder. He called the
Baralong
a
franctireur
ship, demonstrating that the Germans still thought their execution of Belgian civilians the previous August was justified.
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Winston Churchill’s correspondence as first lord of the admiralty offers evidence that getting the United States into the war on Britain’s side was a major consideration. He urged the British government to offer the cheapest possible insurance rates to neutral shippers:“It is most important to attract neutral shipping to our shores in the hope especially of embroiling the United States with Germany.” The more neutral “traffic,” the better, Churchill insisted.“If some of it gets into trouble, better still.”
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In early October 1914, two months after the war began, Charles Schwab, the president of Bethlehem Steel, was in London, eager to do business with the British government. Bethlehem was one of the world’s biggest arms merchants. After picking up orders for millions of artillery shells, Schwab visited First Sea Lord Sir John Fisher, who told him England was desperate to acquire more submarines, fast. This stance differed a good deal from what Fisher’s government was saying about the submarine’s being an underhanded, weapon, but Schwab was not the sort to let such seeming contradictions bother him. He told Fisher he could build ten 500-ton undersea boats at crash speed. With a handshake, the deal was done.

Back in the United States, U.S. Navy inspectors at Bethlehem were distressed to discover British submarines under contract. They informed Schwab the deal violated a law that was 120 years old. In the 1790s, during the Napoleonic wars, the French government tried to outfit privateers in American ports. Fearing this would embroil the country in a war with England, Congress banned the practice. During the Civil War, the Confederate raider
Alabama,
built in Great Britain, wreaked havoc on Union shipping and brought U.S.-British relations to a low point. Schwab replied that he was not
actually
building the submarines for Great Britain. He was going to ship the parts to Canada, where they would be welded together by another company.

The navy men—and some newspapers—did not agree, and the matter soon attracted President Wilson’s attention. He asked Robert Lansing, at that time the State Department’s counselor, for a legal opinion. A Watertown, New York, lawyer who had been involved in much international litigation, Lansing was an Anglophile from his cravat to his wingtips. He quickly produced some dense legalese that sanctioned Schwab’s maneuver. Wilson wrote back, telling Lansing that he still wanted the submarines stopped. Lansing ignored him, and in June 1915, the ten 500-ton subs sailed from Quebec for the war zone. Neither President Wilson nor the U.S. Department of Justice said a word. In the next year, 1916, Bethlehem Steel earned $61 million, more money than the company’s total gross for its previous eight years.
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The Bethlehem story is a pithy summary of the evolution of the United States into a branch of the British armament industry during the thirty-two months of its neutrality. Wilson talked—and talked and talked—about neutrality and apparently convinced himself that he was neutral. But the United States he was supposedly running was not neutral, in thought, word or deed, thanks to Wellington House in London—and the international banking firm of J. P. Morgan in New York. The storied founder of the firm had died in 1913; it was now headed by his son,“Jack” Pierpoint Morgan, who spent six months of each year on his English estate and was a totally committed Anglophile. Morgan and his fellow bankers were the key players in the shift from genuine to sham neutrality. The war was barely two days old when the French government, through Morgan’s Paris branch, requested a loan of $100 million.
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Morgan replied that he feared the U.S. government would object—and he was right. Secretary of State William Jennings Bryan opposed the loan and told President Wilson:“Money is the worst of all contrabrands because it commands everything else.” He warned Wilson against letting “powerful financial interests” get involved in the war. They had the ability to influence many other parts of society, especially the press and politicians.
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In spite of Bryan’s three losing runs for president on the Democratic ticket, he still had a strong following inside the Democratic Party. Wilson had made the Nebraskan secretary of state because Bryan had switched his support to him at a crucial moment in the 1912 nominating convention. Like most Midwesterners, Bryan viewed the Great War as an outbreak of European insanity from which the United States should distance itself. Wilson asked Robert Lansing for his legal opinion of the French request for a loan. The State Department counselor produced a brief, declaring it “compatible with neutrality.”
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Bryan vociferously disagreed, and Lansing backed down. Wilson supported Bryan, personally composing a statement: “Loans by American bankers to any foreign government which is at war are inconsistent with the true spirit of neutrality.” An ecstatic Bryan thought a major threat of war had been eliminated. The Nebraskan soon discovered it was only the first inning of a long ball game. As British and French orders for ammunition and other war matériel filled the books of U.S. companies, the pressure for financial assistance to pay for them grew more and more acute.
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Meanwhile, Bryan became distracted by the dispute over submarine warfare, which British propaganda and the Anglophile tilt of Wilson’s cabinet skewed in England’s favor. Bryan’s protests against the British blockade, particularly England’s refusal to allow U.S. foodstuffs into Germany, which he found especially reprehensible, were muted by Wilson’s ambassador to London, Walter Hines Page, who totally identified with the British cause. A former editor of the
Atlantic Monthly
and a longtime Wilson friend and supporter, Page “thanked heaven he was of [English] race and blood,” and regularly presented Bryan’s protests to Foreign Secretary Grey with dismissive comments. During one of his presentations, Page said: “I have now read the dispatch but I do not agree with it; let us consider how it should be answered.”
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As the war continued, Wilson edged Bryan to the diplomatic sidelines. He sent his confidential adviser, Colonel House, to London, Paris and Berlin to explore the possibilities of a mediated peace. House was as pro-British as Page, but concealed it out of his desire to blend with Wilson’s seemingly neutral stance. In the State Department, Lansing gradually acquired more influence than Bryan, a political rival Wilson never liked or respected. Soon Lansing convinced Wilson that loans might be a violation of America’s neutral stance—but the granting of “credits” to England and France by the House of Morgan and other banks was legally justifiable. Wilson accepted this fine distinction, and by the time the United States declared war, Morgan had loaned the two belligerents $2.1 billion, the equivalent of almost $30 billion in 2002, making a neat profit of $30 million, worth $422 million in 2002 dollars. Twenty years later, when a Senate committee investigated the World War I munitions industry, J.P. Morgan was asked about the difference between loans and credits. His testimony made it clear that practically speaking, there was no difference.
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When the
Lusitania
was sunk, William Jennings Bryan was one of the few Americans who resisted the hysteria whipped up by Wellington House and its American mouthpieces. Citing the
Lusitania’
s cargo manifest, which listed the ammunition as well as material for uniforms and leather belts in its cargo, he told Woodrow Wilson:“A ship carrying contraband should not rely on passengers to protect her from attack—it would be like putting women and children in front of an army.” That was an ironic echo of the Bryce Report, which accused the Germans of doing this in Belgium.
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Wilson ignored his secretary of state and filed an angry protest with the German government, in which he baldly stated that American citizens “bound on lawful errands” had the right to travel on ships belonging to “belligerents” and Germany would be held to a “strict accountability” if it violated these rights. He followed this with a second note that virtually required Germany to abandon unrestricted submarine warfare. Rather than sign this second note, Bryan resigned, accurately predicting that Wilson’s policy was certain to embroil the United States in war with Germany.
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Bryan was succeeded by Robert Lansing. Two weeks after he took over the State Department, he wrote himself a private memorandum, which could have been excerpted from a statement by Wellington House:“I have come to the conclusion that the German Government is utterly hostile to all nations with democratic institutions because those who compose it see in democracy a menace to absolutism and the defeat of the German ambition for world dominance. . . . Germany must not be permitted to win this war or even to break even.”
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Making Lansing secretary of state was one of Wilson’s worst mistakes. The president had little or no respect for the man and seldom concealed it. Colonel House had even less respect. He told Wilson that Lansing’s “mentality” did not impress him. But the president, like many other holders of the office, considered himself the master of the nation’s foreign policy and regarded the secretary as a mere messenger. In this view, House wholly concurred. He opined that the ideal secretary of state was a person with “not too many ideas of his own.” Lansing, by no means a stupid man, resented Wilson’s (and House’s) scarcely concealed contempt for his opinions. He used the power and influence of his office to undermine Wilson’s neutrality.
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By 1916, the United States was supplying Great Britain, France and Russia with 40 percent of their war matériel. France and Russia were broke, and London was paying for everything. Of the 5 million pounds England spent on the war each day, 2 million pounds—$70 million a week—were spent in the United States. (This computes to $96,000,000 a week in 2002 dollars.) Three British missions were operating in Washington, D.C. The Ministry of Munitions had a staff of 1,600 and bought weapons and ammunition for both Britain and bankrupt France. Ministry agents were in hundreds of U.S. factories where orders were being filled; agents also rode the freight trains and supervised loading at U.S. docks to prevent sabotage. The Board of Trade and an entity called the Wheat Export Company were also hard at work buying immense amounts of civilian goods, cotton and grains.
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Simultaneously, the United States did little while the British navy slowly but steadily extended the meaning of the word
contraband
(of war) until the definition included almost every imaginable article produced by farmers or industrialists. Cotton shipped to Germany had to be unloaded in New York and x-rayed, bale by bale, at the shippers’ expense to make sure it did not carry concealed contraband. A few months later, cotton itself became contraband. American exporters and companies that did business with the English were ordered to form trade associations that solemnly promised to sell nothing to Germany or Austria. Finally, in July 1916, the British published a blacklist of 87 American and 350 South American companies that were trading with Berlin and Vienna.

Not a few American businessmen resented this arrogant restraint of trade by a foreign nation. President Wilson exclaimed to an alarmed Colonel House:“I am . . . about at the end of my patience with Great Britain and the Allies.” But Secretary of Commerce William Redfield, a passionate Anglophile, warned the president that an embargo on further business with England would be “more injurious” to the United States than to the countries at war. According to Redfield, an embargo would cost America the Triple Entente’s good will, which the United States would need badly when the war ended. This reasoning was based on the virtually invulnerable American assumption that an Allied victory was inevitable. Wilson, sharing the assumption, retreated into silence on the blacklist.
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Watching this performance, Germans in the United States and in Germany became more and more embittered and skeptical about Wilson’s protestations of neutrality.“I do not think the people in America realize how excited the Germans have become on the question of selling munitions of war . . . to the Allies,” Ambassador James Gerard reported from Berlin. When Colonel House visited Berlin in 1915 on a supposed peace mission, he told Wilson that everyone he met “immediately corner[ed] me . . . to discuss our shipment of munitions to the Allies.”
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