Germany Backs Down, As Spy Scandals Erupt

The First World War was an unprecedented catastrophe that shaped our modern world. Erik Sass is covering the events of the war exactly 100 years after they happened. This is the 199th installment in the series. 

September 1, 1915: Germany Backs Down, As Spy Scandals Erupt 

The sinking of the British liner Arabic by the German submarine U-24 on August 19, 1915, resulting in the deaths of three Americans, brought the diplomatic crisis between Germany and the U.S. to a head. Previously U.S. Secretary of State Robert Lansing had warned Berlin that any further submarine attacks resulting in American deaths would be regarded as “deliberately unfriendly,” leaving little doubt President Woodrow Wilson was contemplating war. Now just such an event had occurred, and it seemed Wilson had little choice but to break off relations with Germany. 

While diplomatic telegrams flew back and forth across the Atlantic Ocean following the Arabic sinking, behind the scenes in Berlin long-simmering tension between the civilian diplomats of the Foreign Office and the hardline militarists of the German Admiralty over U-boat policy finally boiled over. In the end, the threat of war with the world’s most powerful neutral country forced Kaiser Wilhelm II to intervene and overrule the naval faction – for now. 

Panic in Berlin 

In the immediate aftermath of the Arabic sinking, testimony from multiple American and British survivors seemed to leave little doubt that U-24 had attacked the Arabic without warning, giving civilian passengers no chance to evacuate to lifeboats, as the U.S. had previously demanded.

On August 24, 1915, the German ambassador to the U.S., Johann Heinrich von Bernstorff, pleaded with Lansing to hold off judgment until all the facts were known – adding this could take up to two weeks, as the German Admiralty usually didn’t have direct communications with U-boats at sea, meaning they might have to wait for U-24 to return to port (the British Admiralty added to the confusion by claiming, mistakenly, that a British ship had sunk U-24 shortly after the Arabic sinking). However on August 26 Lansing turned up the heat, warning Bernstorff that he didn’t see the point in further exchanges of notes.

Washington Times via Chronicling America

Meanwhile in Berlin there was already a fierce political struggle underway between the Foreign Office and the Admiralty, reaching all the way up to the highest levels of the Kaiser’s government. Both sides tried to lay blame on the other, with the Foreign Office pointing to the obvious impact of the Lusitania and other sinkings on U.S. public opinion, while the Admiralty attacked the Foreign Office for failing to stop American munitions shipments to France and Britain. 

On August 26, as Lansing dismissed Bernstorff’s latest statement as pointless, Chancellor Bethmann-Hollweg convened a meeting with Grand Admiral Alfred von Tirpitz, the architect of Germany’s prewar naval buildup and the most powerful advocate of unrestricted U-boat warfare; Admiralty chief of staff Admiral Gustav Bachmann, War Minister and chief of the general staff Erich von Falkenhayn; and representatives of the Foreign Office.

Amid growing acrimony Bethmann-Hollweg argued that relations with the U.S. were strained to the breaking point, and something had to give, complaining, “I cannot stay forever on the top of a volcano.” Tirpitz proposed moving the submarine war to the Mediterranean, away from U.S. shipping lanes, but this wouldn’t have solved the problem posed by the presence of American civilian passengers on British ships. At the same time Bethmann-Hollweg noted that Germany’s success on the Eastern Front held out the possibility of a negotiated peace with Russia, splitting the Allies; it made no sense to add a powerful new enemy just as ultimate victory might be within reach. Falkenhayn agreed and Kaiser Wilhelm II, previously an enthusiastic supporter of unrestricted U-boat warfare, backed up his chancellor and war minister.

Thus Bethmann-Hollweg approved the Foreign Office’s request to send a conciliatory note to Washington, in which Germany disavowed the sinking of the Arabic (though not the Lusitania) and offered meaningful compromises on U-boat warfare. Unsurprisingly the text of the note sent to Lansing left the Admiralty livid, as the German Foreign Office assured their American counterparts that the sinking was “condemned by the German Government” and confided that Berlin was “most anxious to maintain amicable relations with the United States, would express its deep regret and make full reparation.” 

Humiliated by these diplomatic obsequies, Tirpitz and Bachmann offered their resignations to Kaiser Wilhelm II, but at a stormy interview on August 30, 1915 the monarch furiously refused Tirpitz’s offer, accusing him (with some justice) of behaving like a prima donna during a time of national emergency, bitterly adding at a later meeting, “If I must kowtow to Wilson I will.” He did however accept Bachmann’s resignation.

In any event the crisis wasn’t over quite yet: while the White House expressed pleasure at the promises of compromise in the German note sent on August 27, Wilson insisted on an official, comprehensive commitment that German U-boats would stop sinking merchant ships without warning. On August 30, after delivering a new note insisting on these terms the U.S. ambassador to Berlin, James Watson Gerard, reported that Bethmann-Hollweg had definitively prevailed with the Kaiser’s support. Two days later, on September 1, Bernstorff presented a note to Lansing declaring: “Liners will not be sunk by our submarines without warning and without safety of the lives of noncombatants, provided the liners do not try to escape or offer resistance.”

Although the main diplomatic crisis had passed, the controversy over German U-boat warfare would drag on. For one thing Bernstorff had jumped the gun with his promise, which Berlin only later officially approved, creating some additional confusion. Then on September 4, 1915, U-20 (which sank the Lusitania) sank the British passenger liner Hesperian, outbound from Liverpool to Quebec, without warning, resulting in the loss of 32 people when a lifeboat overturned.

The Germans said this shouldn’t be of concern to the U.S., since no American lives were lost, but Washington responded that the Germans were missing the point, since the Hesperian was a civilian commercial ship, of the kind they had just promised not to sink.  In fact the Hesperian was carrying defensive armament and was zigzagging – the same maneuver which allegedly caused U-24’s captain to think the Arabic was trying to ram him – all of which made the situation even more complicated, as these were the main justifications cited by the Germans for conducting submarine attacks without warning. 

But having just settled matters with America the Germans weren’t taking any chances: captain Schwieger was officially reprimanded and on September 18 (over two weeks after Bernstorff’s unauthorized promise to Lansing) the German Admiralty finally ordered the end of unrestricted U-boat warfare around the British Isles. The U-boat controversy was over – for now.

Spy Scandals Erupt 

As one self-inflicted diplomatic crisis ended, Germany promptly found itself facing another – this time over revelations of espionage in the United States, including deliberate efforts to stir up labor unrest in order to sabotage munitions production.

Rumors of spying by agents of the Central Powers went back to the very beginning of the war, when the U.S. government suspected the Germans of operating a wireless station broadcasting to German ships in the Atlantic from Long Island, followed by the discovery of a second wireless station in the Maine woods in November 1914 (to be fair the government also discovered a covert wireless station operated by the British on a yacht in New York City Harbor).

NJ.com

The cloak-and-dagger campaign soon escalated to actual sabotage, although it wasn’t always apparent at the time that the perpetrators were actually German agents, rather than German immigrants inspired to become “lone wolves.” In December three Germans were arrested in New Orleans for plotting to blow up Allied merchant ships at sea, and in January a munitions factory in Trenton, NJ owned by John A. Roebling’s Sons Co., which supplied arms to the Allies, was destroyed in a suspected case of arson (above). Then in February a German national, Werner Horn, tried unsuccessfully to blow up the Canadian Pacific Railway bridge at Vanceboro, Maine – in a plot later found to be organized by the German military attaché in Washington, D.C., Franz von Papen (who later served as vice-chancellor under Adolf Hitler). And in July Eric Muenter, a German instructor at Cornell University, planted a bomb in the U.S. Senate antechamber and then tried to murder J.P. Morgan. 

Other plots were less violent but more successful. July 24, 1915, agents with the U.S. Secret Service picked up a briefcase full of papers accidentally left on a train by Heinrich Albert, a German national, which detailed a wide-ranging conspiracy to hinder U.S. munitions production by buying up all the supplies of phenol, or carbolic acid, a key chemical precursor used in the manufacture of explosives. The papers, published by the anti-German New York World on August 15, 1915, didn’t provide enough evidence to prosecute Albert, but did force him to suspend his activities.

New York World via Wikimedia Commons

An even more damaging spy scandal came to light on August 30, 1915, when British authorities arrested an American correspondent, James A. Archibald, after he disembarked from the steamer Rotterdam in Falmouth, England, on charges of espionage. British intelligence agents searched Archibald and found secret correspondence from the German and Austro-Hungarian embassies in the U.S., intended for spymasters in Berlin and Vienna. 

One of the letters seized by the British had been written by the Austro-Hungarian ambassador, Konstantin Dumba, to Foreign Minister Burian in Vienna, and revealed the existence of a massive covert campaign to foment labor unrest in American factories, in the hopes of provoking strikes to disrupt production. Dumba had also been orchestrating a secret publicity campaign which involved, among other things, bribing well-known journalists and columnists to write articles sympathetic to the Central Powers.

Infuriated by Dumba’s participation in espionage, Wilson demanded the Austria-Hungary recall the ambassador, which the Habsburg court finally did on September 27, 1915. Dumba departed the U.S. on November 4, 1915, and was replaced by Adam Graf Tarnowski von Tarnow – the last Austro-Hungarian ambassador to the U.S.

Wilson Shifts Stance on Loans 

Beyond the immediate negative effects on U.S. public opinion, the tensions over U-boat warfare and then spying may have had much more significant long-term effects, by making President Woodrow Wilson more sympathetic towards the Allies. Indeed, it’s probably not a coincidence that around this time Wilson revised his earlier stance against U.S. banks making loans to the Allies.

In declaring U.S. neutrality on August 19, 1914, Wilson had stated, “We must be impartial in thought, as well as action, must put a curb upon our sentiments, as well as upon every transaction that might be construed as a preference of one party to the struggle before another.” This accorded with the views of Secretary of State William Jennings Bryan, a pacifist who was a strong advocate of American neutrality.

However Bryan’s replacement, Lansing, who was more in tune with the interests of Wall Street financiers, pointed out that Allied purchases of munitions were driving the U.S. economy’s recovery from its prewar slump, and argued that U.S. banks should be allowed to extend loans to the Allies in order to keep this business going. On August 26, 1915, Wilson finally acceded to this suggestion in policy in a confidential note to Lansing, advising the Secretary to henceforth state that “Parties would take no action either for or against such a transaction.” 

This opened the floodgates to funds that Britain and France (and through them, the other Allies) could use to pay for U.S. munitions and agricultural goods, deepening the rift between the U.S. and the Central Powers. Because billions dollars of loans were at stake if the Allies should suffer defeat and default, it also gave the U.S. an enormous financial incentive to help secure their victory.

See the previous installment or all entries.