South America and the War

In estimating the bearings of the great war upon these countries, it is necessary to review certain political forces and currents of public thought, which the Germans have attempted to divert to diplomatic or bellicose ends. Since these influences date in part from the era of independence or even from an earlier date, clearness of vision demands some historical retrospect.

When, upon the achievement of independence, schemes of Latin-American or of South American union were found impracticable, it was inevitable that frontier disputes and national rivalries should lead to tension and sometimes to wars between states. When it is remembered that every one of the ten South American republics was divided from several neighbours by frontiers partly traversing half-explored and imperfectly mapped regions, it is perhaps surprising that such questions have been on the whole so amicably settled, and that those which are still pending do not appear to be menacing or dangerous. Owing to the paucity of population on the ill-defined and remote interior frontiers, many of these questions did not become urgent until the latter part of the nineteenth century, when the increasing seriousness of political interests, the steadying influences of material growth, and the pressure of outside opinion favoured peaceful settlement, usually by means of arbitration. It would be possible to compile a formidable list of such disputes. Most of them are questions concerning historical and geographical delimitation, of great local interest, but hardly of world-wide significance, although for a time the world was alarmed lest the frontier dispute of Argentina and Chile should excite a conflict between the two peoples engaged in the development of the south temperate zone, the natural seat of an important trans-Atlantic European civilisation.

A good example of the character of such frontier questions, of their mode of settlement and of their possible exploitation for Teutonic purposes is to be found in the long-protracted dispute concerning the boundary between Venezuela and British Guiana-a dispute which only became acute when gold was discovered in the region under debate. In deference to external influence, the whole question was submitted to arbitration, and was decided according to historical evidence concerning the early course of settlement. This example is of further interest as illustrating the German method of seizing opportunities. For, today, German propaganda seeks to revive the bitterness of this episode, and cultivates the favour of Venezuela by holding out the prospect of the enlargement and enrichment of that republic through the absorption of British Guiana and Northern Brazil; just as the neighbouring Republic of Colombia is assured that German victory and the humiliation of the United States will mean the return of Panamá to Colombia. It would be unwise to dismiss such persuasive lures as too fantastic even for the tropical atmosphere of the Spanish Main. Wherever opportunities occur, similar efforts are made to turn to account national jealousies, resentments and ambitions, and particularly to exacerbate the relations between Brazil and Argentina, between Peru and Chile, between Mexico and the United States.

The rivalry between the Portuguese and Spanish elements in South America dates from early colonial times; and, as often happens in disputes between members of the same family, has been perhaps more warmly felt than the historic rivalry between Anglo-Saxon and Latin in America. The feeling was kept alive after emancipation by a dispute concerning the possession of the Banda Oriental (now the Uruguayan Republic), which geographically belonged rather to the Portuguese or Brazilian system, historically to the Spanish or Argentine system. During the eighteenth century Spaniards and Portuguese had disputed its dominion in a series of rival settlements, of wars and treaties, which finally left Spain in possession. The struggle for emancipation reopened the question. For three years (1825-28) Argentina and Brazil fought for possession. The quarrel was adjusted, through the mediation of British diplomacy, by the recognition of the Banda Oriental as a sovereign republic. Twenty years later, Rosas, dictator of Buenos Aires, attempted to reverse this decision by force of arms. His fall, partly brought about by Brazilian intervention, settled the question. But it has left traces upon the vivacious local sentiment of those young countries.

Again, the war which Chile waged in 1879-83 against Bolivia and Peru ended in the occupation by Chile of Western Bolivia and also of the two southern provinces of Peru. The ultimate possession of these two provinces is still under discussion. Meantime, they remain in Chilian hands; and, although a friendlier atmosphere now prevails, diplomatic relations have never been resumed between Peru and Chile.

In these inter-state questions Germany seeks her opportunity for fishing in troubled waters. German diplomacy and propaganda have striven to reopen these old sores and to impede Latin-American consolidation by setting state against state, and by fomenting or reviving latent ambitions of hegemony or aggrandisement. Those who favour Germany are to win great territorial rewards, at the expense of their misguided neighbours, upon the achievement of that German victory which is represented as certain. Particular efforts have been made to embroil Argentina with her neighbours; a prominent feature of this programme is the dismemberment of Brazil.

But the most important of these political movements and the one which seemed to offer most promise to German schemes, is the long dispute between Mexico and her northern neighbour. This is a part of that process which since the beginning of the nineteenth century has radically altered the map of the Caribbean lands and has shifted the whole weight of political influence in that region. The chief effort of Germany is to exploit the historic rivalry between Anglo-Saxon America and Latin America, and to separate north from south by reviving the smart of past incidents and by stirring up apprehensions as to the future.

Here, again, it is necessary to glance back and summarise the chief actual events of that history[2]. When Latin-American independence was achieved, between 1820 and 1824, the United States had already become the dominant power on the Mexican Gulf by the acquisition of Louisiana and Florida, and in 1826 she exercised the privileges of that position by prohibiting Mexican and Colombian designs for the emancipation of Cuba. In 1845 Texas, which nine years before had seceded from Mexico, was admitted to the Union, and in 1846-48 half the territory of the Mexican Republic was transferred to the United States by a process of conquest confirmed by purchase.

A pause in advance followed, until events showed that Isthmian control was a national necessity to the United States. It suffices here to note the conclusion of a long diplomatic history. In 1903 the United States, having failed to obtain concessions of the desired kind from Colombia, supported the province of Panamá in her secession from Colombia, and speedily obtained from the newly formed republic a perpetual lease of the canal zone, together with a practical protectorate over the Republic of Panamá. The United States then proceeded to construct and fortify the canal. She also procured from Nicaragua exclusive rights concerning the construction of any canal through Nicaraguan territory, and erected in fact a kind of protectorate over that republic.

Meanwhile, in the Antilles events were shaping towards control from the north. A long-standing trouble concerning Cuba culminated in the Spanish-American War of 1898, which brought about the annexation of Porto Rico and the Philippines to the United States, while Cuba became a republic under the tutelage of that Power. Five years later the United States, in order to save the Dominican Republic from European pressure, undertook the administration of the revenues of that state. In 1915 she interposed to suppress a revolution in Haiti. Finally last year (1917) she purchased from Denmark the islands of St Thomas and Santa Cruz. Recent rumours as to a proposed further purchase-that of Dutch Guiana-have been officially denied.

These advances have not gone beyond the Caribbean area, where geographical conditions place the United States in a dominant position. Her relations with the more distant southern countries, not touching the Mediterranean Sea of the New World, fall into a different category and do not directly concern the immediate topic.

But in the Caribbean area the United States has established a Sphere of Influence, not indeed explicitly defined as such, but recognised in effect by other governments and accepted by some at least of the republics occupying that region. The events of the last twenty years further indicate that the United States is undertaking the obligation, usual in such cases, of imposing a "Pax Americana." As in similar instances elsewhere, this Pax Americana has not quite clearly marked its geographical limit, nor is it guided by any theoretical consistency, but rather by the merits of the case and the test of immediate expediency in each instance. Thus, whereas the United States enforces peace in Haiti and definitely undertakes to maintain internal tranquillity in Cuba, she has on the other hand withdrawn from interposition in Mexico. The outside world has, on the whole, treated these matters as the concern of the United States and respected the working of the Pax Americana.

Meanwhile, geographical proximity has favoured North American commerce, and in recent years more than half the trade of Central America was carried on with the United States.

It has been necessary to define the situation, because it is accepted by the Allies, while it is at the same time jealously assailed by Germany.

For Germany, too, has won a remarkable position in the same region by her economic efforts, which have also their political side. On the one hand Central America is in a kind of dependence upon the United States: on the other hand, it has been said, with obvious exaggeration, but with some epigrammatic truth, that Guatemala before the war had become a dependency of Germany in everything but the flag. German intelligence and industry had seized the opportunity offered in the recent development of a comparatively backward region. Peaceful penetration was a work of methodical effort, of organised combination. German firms, mostly of recent origin and sprung from small beginnings, always preferred to import from Germany in order to favour German trade. Indeed they were bound to do so by the terms of the credit granted to them by German banks or Hamburg export firms for starting their business. Young men came out from Germany-serious, plodding youths, working for small pay, taking few pleasures and immersed in business. German retail houses, either newly established or formed by the insinuation of Germans into native families or native firms, worked in close contact with the importing houses. The shipping companies worked with these latter and with the Hamburg firms. The chief German achievement in this region was the control of the coffee industry, which was acquired by the usual German combination of admirable industry, patience and intelligence with unscrupulous greed and cunning. Germans advanced money to the grateful owners of coffee estates on such terms that the native owner in course of time found himself bound hand and foot by ever-increasing debt; and the properties usually passed into the hands of the exacting foreign creditor, the former owner being often kept on as paid manager. In this way, besides doing a good stroke of business for himself, the German served Germany by increasing German interests in the country, providing cargo for German ships and helping to secure for Hamburg the coffee market of Europe. Every little advantage gained by an individual German was reckoned as a national gain, as the starting-point for another German step forwards. Nor was German advance confined to Guatemala: it penetrated all Central America as well as Mexico and the Antillean Republics, especially Haiti.

But the maritime war, the British blockade and Black List and, finally, the participation of the United States have shaken the fabric thus laboriously raised. German ingenuity had overreached itself. For it was the insidious and cruel method of German land-grabbing in Guatemala which more than anything determined that republic to declare war, in order to escape from this ignominious economic dependence, this foreign control of a national industry. For it would be difficult to define a clear casus belli. But in the peculiar form of her declaration of war she told the world under which system she chose to live. For in April 1918 Guatemala announced that thenceforth she occupied the same position as the United States towards the European belligerents.

The iniquity of North American intervention in Nicaragua and the implied menace to other states were insistently preached by Germany throughout Central America; yet, a month later, Nicaragua also declared war, proclaiming at the same time her solidarity with the United States and with the other belligerent American Republics.

In Costa Rica the Germans represented the non-recognition by the United States of President Tinoco, who owed his position to a coup d'état, as a menacing insult to that Republic. Then, the same Germans intrigued to overthrow Tinoco on account of a Government proposal to tax coffee stored for future export. The upshot was that, in May 1918, Costa Rica declared war. Two months later Haiti took the same decisive step, and also Honduras.

The significance of these additions to the belligerent ranks is perhaps hardly realised in Europe. Every one of them is a serious reverse in the economic war which Germany is waging, and every one makes it more difficult for Germans in America to keep up communication with Hamburg.

Indeed, the tale of recent events reads like a mere series of German reverses, snatching away advantages already gained. In 1912, the treaty for the American purchase of the Danish Antilles was all but complete, when German influence in the Upper House of the Danish Parliament prevented ratification and thwarted, for the time, the plans of the United States. During the present war, the purchase was completed, Germany being impotent. Again, Germany, having acquired a strong position in Haiti, designed that the Haitian Republic should become a Teutonised base of activity, repudiating the Pax Americana and threatening the security of American sea-paths. The United States put out a hand, and this highly-coloured vision faded away. Cuba, Panamá, Guatemala, Nicaragua, Costa Rica, Haiti, Honduras-all of these in turn struck at Germany through the declaration of war[3].

Yet Germany, beaten from point to point, still holds her ground in Mexico. One of the curious side-scenes of the great war was the attempt of the German Foreign Office to contrive an offensive alliance of Japan and Mexico against the United States. Mexico was to be rewarded by the recovery of Texas. This underhand plot against a neutral nation at peace with Germany collapsed at its inception. Yet the present German menace in Mexico is not to be despised. The rulers in the Mexican capital exhibit an ostentatious cordiality towards Potsdam and sometimes an almost petulant impatience towards the Allies. The German is the favoured one among foreigners in the republic. Supported by the German Legation, the German banks, and the countenance of the Mexican authorities, Germans are strengthening their economic hold, particularly through the acquisition of oil and mining properties. This advance has its political side: for hopes seem to be entertained that a militant power, inspired by Germany, may press upon the long southern frontier of the United States, disturb her pacific influence in the Antilles, threaten the security of her maritime routes, and interpose a barrier between her and her scientific frontier on the Isthmus of Panamá. Such schemes may sound fanciful, and no doubt in their entirety they are impracticable. But it would be a mistake to regard Germany as powerless or to undervalue her tenacious and intelligent opportunism. And, in any case, the economic position demands attention.

A word may here be said about the German effort to hold up before the eyes of all South America the spectre of the "Yankee peril." These German efforts have not succeeded, as will be shown later. Yet it would be rash optimism to assume that they have won no temporary success. Correspondence published by the Washington authorities shows that the German Minister at Buenos Aires succeeded in inducing the Argentine Government to approach Chile and Bolivia with a view to a combination against the United States-a scheme which, if carried through, might have produced a split in the political system of the South American Republics. A similar tendency appeared in President Irigoyen's attempt to convoke a conference of neutral American states, an attempt which has had no result except the dispatch of Mexican missions to Buenos Aires. Such incidents cannot be ignored: they illustrate a movement which is not quite effete.

From what has been said above it is obvious that German designs in Central America and the Antilles are not quite recent in their inception. The same is true of another field which for a generation past has attracted German ambitions. The flourishing self-contained German-speaking communities in Southern Brazil offered an attractive goal to an empire which was feverishly building ships, pursuing a maritime future and hunting for colonies. Here was a German colony in existence and almost constituting already an imperium in imperio. German emigrants, brought out by the Brazilian Emperors between 1825 and 1860, had by thrifty and intelligent industry done much to develop the south; and their descendants-now estimated to number 400,000-inhabited German towns, with German schools, newspapers and churches, where even proclamations of the Brazilian Government were published in German. Although not a product of the modern German Empire, this Deutschtum im Ausland has been studiously cultivated by that empire through every possible agency, and especially by imperial grants to German schools, whose pupils were taught that they were Germans owing a prior allegiance to Germany. Some hope was entertained of carving a Teutonic state out of Brazil, perhaps to form nominally, at all events for a time, an independent republic. The disturbances in the south which followed the establishment of the Brazilian Republic appeared to favour this chance, which depended however on one condition, the countenance of Great Britain in order to cope with the opposition of the United States. But in any case the vigour and increase of the German element was to dominate Southern Brazil and help to bring that region into moral dependence upon Germany. That these designs were not viewed in South America as wholly imaginative, is proved by a recent incident. The Uruguayan Government, after revoking neutrality and seizing the interned German ships, asked and obtained an assurance of Argentine support, in case Uruguayan soil should be invaded by Germans from Southern Brazil. It may be added that recent German commercial penetration has been particularly active in Brazil.

Owing to their remoteness and lesser numbers, the German communities in Southern Chile-whose first founders emigrated from Germany after the troubles of 1848-did not invite such large political designs, although there is reason to think that in the earlier part of the war, when a German war fleet still kept the sea, the manifold activities of Germany included some notion of obtaining a permanent footing in the Pacific. These German-speaking settlements have been carefully cultivated, by the same methods as those used in Brazil, to become a Germanising force in Chile and a German outpost on the west coast. In 1916 a Chilian-German League was established, to include all persons in Chile of German origin and language, with the intention that the members should use their influence as Chilian citizens, especially at election time, on behalf of German interests.

Another influence which Germany strives to turn to account is the recent movement represented by the Unión Ibero-Americana, which seeks to draw together Spain and the Spanish-American republics. The German efforts to give a Teutonic tinge to the present Spanish movement of national revival look also towards Latin America, in the hope that friendship with Spain may tell against French and North American influence; and attempts are being made to exploit for that purpose the Ibero-American celebration which is to be held in Madrid in October, 1918.

Lastly, in estimating political forces which have to be reckoned as factors in the conflict, some mention should be made of the very warm sentiment towards France which has prevailed for generations among educated South Americans-a sentiment which passes the bounds of mere private or even semi-official relations. This feeling is not universal, and would hardly be admitted in clerical and military circles. But it is sufficiently strong and general to be remotely compared to the sentiment which a Greek ?ποικ?α usually entertained towards the mother-city. French thought permeates the work of Latin-American historians and political writers. French example and theory mould the form and the action of governments. Paris is felt to be the capital and the centre of inspiration for Latin civilisation. The debt of South America to France has been generously, and indeed affectionately, avowed by a succession of Argentine writers. A recent German semi-official utterance openly admits and deplores the historic attachment of South America to France. This attitude towards France can hardly fail to have some public weight; and there is no doubt that the course pursued by Brazil has been partly inspired by love of France.

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"South America is the special theatre and object of German commercial industry." This emphatic declaration-reiterated in various forms by other German authorities-is the theme treated by Professor Gast, Director of the German South American Institute at Aix-la-Chapelle, in a pamphlet entitled Deutschland und Süd-Amerika, which may be regarded as a semi-official exposition of German objects and opportunities. The pamphlet appeared in the latter part of 1915. The events which have since occurred, however damaging they may be to German hopes, do not affect the views expressed.

Since this advice from a German authority to Germans is a frank revelation of German views, it seems worth giving a very brief abstract of the main points, which the writer elaborates at great length, though he does not enter upon details of business method.

"The German Press," says Professor Gast, "has never published so much about Latin America as during this war. This proves the importance of German relations there and the need of clear ideas concerning them. An economic competition, intense beyond all example, has sprung up concerning Latin America. The chief feature is the 'Financial Offensive' of the United States. The present grouping of competitors is accidental and false. The natural conflict is between the United States on the one side, and on the other side all industrial and exporting peoples, including Japan. The United States, the most dangerous competitor, is handicapped by the higher cost of production in North America and by the want of that facility of adaptation to customers' needs in which Germany excels. Yet the war has revealed the weakness of German reputation. Everywhere the prevailing strain is antipathy to Germany. It is the duty of Germans to put aside resentment and to strengthen their economic position. For trade with the two Americas is the chief source of prosperity for modern German commerce, particularly that of Hamburg. And after the war this trans-Oceanic trade will be a matter of yet more urgent national importance."

This general survey is followed by an examination of special opportunities open to Germans. "Germany has not the many-sided relations with Latin America possessed by the Latin peoples of Europe, nor the politico-geographical advantages of the United States, nor the strong capitalist position of Great Britain. She must make the most of what she does possess. Her main asset is the German in South America. Every German abroad means the investment of interest-bearing capital for German cultural expansion. Two things are required of him, to win esteem by good work and to place his personal influence at the disposal of German national ends. The compact German communities in Brazil and in Southern Chile should be supported and organised from home, but not obtrusively, lest local feeling be aroused. They may perhaps serve Germany best by a partial mingling with the native population, so as to spread German culture and the taste for German goods. But, everywhere, all individual Germans are Germanising agents. The German merchant particularly is the missionary of cultural and political influence. So also the German soldier, particularly the German officers employed as instructors in Chile and Argentina. Most South American officers feel a professional sympathy for Germany. Hence spring useful personal friendships: to foster and enlarge these is an urgent duty. Germans exercise other professions which facilitate the patriotic diffusion of German culture. Such are physicians, who find peculiar opportunities in their intimate relations with families in their homes; the clergy, both Protestant and Roman Catholic; teachers, whose proved idealism is an admirable equipment for the spread of German culture; scientific men, journalists, surveyors, geologists, professors in training colleges. If possible they should work in combination, as they do in the German Scientific Club of Buenos Aires. Every one of them must use every professional opportunity and every item of personal influence and private friendship for the advantage of Germany.

"A knowledge of German culture must be spread by a systematic educational movement. But this must be done tactfully. The German's propensity to foreign studies will aid him. He must equip himself by assimilating Latin culture, must use his knowledge of French culture, must oppose French influence by encouraging Spanish culture. His object is to catch souls; and, next to financial strength, the first necessity is tact."

Two points stand out in this very candid statement. First, every German abroad is an item in the national balance-sheet; he must earn interest. The intimacy between the pastor and his flock, the physician's intercourse with his patient, are set down on the credit side of the national profit-and-loss account. Secondly, the most profitable method is a liberal education. There is something whimsical in the combination of inhuman material calculation with humanising influences, and one may smile at the heavy solemnity of the suggestion that the German will find it pay to acquire tact and to Latinise himself for outside intercourse. But the suggestion should not be dismissed as absurd. Whatever can be done by effort, study, and will-power the German will do. He is training himself to be a more formidable competitor than ever in the economic arena.

Indeed, the pamphlet is valuable, not only as a hint for the future, but also as an avowal of methods which are already at work. One of these is a deliberate system of politic and profitable marriages. German clerks receive promotion only on condition that they marry native girls and establish homes in the country. This policy has been so steadily pursued that everywhere German business men have entered Latin-American families and exercise a Teutonising influence. Through marriage also, accompanied by skilled and profitable management, Germans acquire control of property and of trading concerns. Again, owing to their reputation for expert efficiency and scientific competence, Germans fill many posts of influence and trust in universities, scientific institutions and government departments. Argentina is an example. In the National University Germans control the engineering and chemical sections, where their pupils are trained to use German apparatus and methods. German curators in the Geological Museum receive early information as to any discoveries of minerals or oil. Germans employed as experts in the public service learn details of any public works proposed by the government or the municipalities. Reports on such schemes pass through their hands and, since estimates are not carefully checked, they are thus able to favour German trade at the expense of the Argentine tax-payer.

In every city the German Verein unites the German community, so that Germans may avoid competition and may co-operate with one another and with Germans in the Fatherland. The bank and the merchant work in close combination and have at their disposal all the information gathered by German employees in other banks and in business firms. The German has been quick to anticipate others in occupying new ground: for example, in the remote but vast and productive region of Eastern Bolivia, watered by the three great navigable affluents of the Madeira, a region which is just beginning to awake to the promise of a great future, the German trader hitherto has scarcely had a competitor. Again, the German has won predominance in the electrical and chemical industries by applying his practical scientific aptitude to the supply of new wants. Lastly, the German is distinguished by close attention to detail and adaptation to local needs.

Yet Germans note and deplore "a constant strain of antipathy to Germany, a wave of anti-German hate." The remedies suggested are: first, a more efficient German service of news, and secondly, "a systematic cultural activity, conducted with push and comprehensive inspiration."

What is being done in Germany to realise these methods? First may be mentioned the various associations for extending German influence abroad and binding to the Fatherland all Germans living abroad, whether in South America or elsewhere. Such are the Pan-German League, the German Navy League, the League for Germanism abroad, the League for German Art abroad, the School League which gives support to German schools outside Germany, the German rifle club, with its headquarters in Nuremberg, to which rifle clubs abroad are affiliated, and, lastly, the Foreign Museum, recently founded under the highest official patronage, which arranges economic exhibitions in various German cities. Although these associations were not founded particularly for Latin-American objects, their present efforts are particularly bent in that direction, as the Pan-German League lately declared. But, besides these comprehensive agencies, Germany possesses three institutions specially devoted to Latin-American purposes. One of these existed before the war, namely the German South American Institute at Aix-la-Chapelle, to which the Imperial and Prussian authorities have entrusted "the cultivation of scientific and artistic relations with South and Central America on the lines of a general cultural policy." Its objects are to draw together German and South American students, to maintain a South American library and information bureau, to encourage in Germany the study of South American matters by prize essays, travelling scholarships and similar methods, and to use every means of making German intellectual work known to South Americans. The Institute publishes a Spanish monthly illustrated periodical, El Mensajero de Ultramar, and also a Portuguese version, O Transatlántico. These papers are well calculated to uphold German culture across the Atlantic: they are admirably got up and aim at presenting an attractive picture of German life and institutions, dwelling particularly on the steady continuance of German industry, artistic production and even sport during the war. The Institute also publishes a German periodical, strictly business-like and containing only technical illustrations, for the purpose of keeping Germans informed on Latin-American affairs.

The Institute at Aix, although its ultimate object is mainly economic, leaves business methods and matters of immediate economic concern to other agencies. Before the war there flourished already in Germany a League for Argentina and one for Brazil. In 1915 these two Associations combined in order to form a German Economic League for South and Central America. A prospectus was issued and a meeting was held in Berlin under the presidency of Herr Dernburg, who spoke of the coming economic struggle and pointed out that German trade, except in the electrical industry, was not supported by large capital investments such as their rivals possessed. The dependence of South America on other industrial nations, owing to want of coal and iron, would facilitate German investment, to supply this defect. Germans had failed to make friends through not understanding the psychology of South Americans. German strength and practical energy must avoid arrogant pedagogic ways and must make their way through a tactful and sympathetic propaganda.

At this meeting the league was inaugurated with 120 members. Very soon it numbered 1000. Among the associations which figure as members are the German Industrialist League, the German Mercantile League, the Berlin Chamber of Commerce, the South German Export League, the League for Germanism abroad, the Society for German Art abroad. The three great banks, known in Germany as the three D.'s, are members, so also the great Shipping Companies; also newspaper and publishing firms; also many of the great industrial syndicates. A notable feature in the work of the league is the maintenance of a club in Berlin where business men and other travellers from South America are welcomed. A great point is made of this work of personal cultivation. The object is to make by hospitable attentions a Germanophil convert of every Latin-American visitor to Berlin and send him back across the Atlantic a missionary for German culture and German business. But the principal aim of the league is to unite all Germans who have any business interests in any part of Latin America, so as to pool together their knowledge, their resources, and their efforts. In this economic war the Germans move, as it were, in mass formation. Branches of the league were speedily established in every one of the twenty-one American republics, and these branches co-operate actively with the parent society at home in the furtherance of German influence and economic advantage.

A third institution, the Hamburg Ibero-American League, has been formed in the metropolis of German Latin-American trade. Already before the war, besides the usual trading organisations of a great port, Hamburg possessed a Technical High School which is practically a university of trade and industry; a Seminary for Romance languages and culture, which maintains a South American library; and a singularly complete bureau of information concerning all over-sea countries, which is known as the Hamburg Colonial Institute.

But Hamburg still felt a want, which was supplied by the formation of the Hamburg Ibero-American League. Its objects are: (1) in Spain and Spanish America: to spread a knowledge of Germany's resources and to cultivate friendly relations in government departments, semi-official institutions and social, literary and scientific circles. To circulate the illustrated weekly El Heraldo de Hamburgo, also pamphlets in Spanish and Portuguese; to station confidential emissaries in appropriate posts; to encourage interchange of visits and to inculcate the advantages which Germany offers as a training-ground for every calling. (2) In Hamburg: to prepare for intercourse after the war by arranging lectures and by organising language courses in German, Spanish and Portuguese, and particularly to establish a Centro Ibero-Americano with club, reading room, and information bureau, a house fully equipped for the hospitable reception of travellers from the Peninsula and from South America. The league is to consist of twenty-two sections, one for Spain, one for Portugal, one for each of the twenty Latin-American republics, in order that all who have interests in any part of the Ibero-American world may support one another.

A fourth association, the Germanic League for South America, has been formed more recently for the purpose of uniting together persons of German speech and origin in Latin America and preserving their Germanic character, particularly by means of German schools. This institution has a special significance just at the time when the Brazilian Government has determined that all its citizens shall be Brazilians and nothing else.

The three leagues which have their headquarters in Berlin, Hamburg and Aix-la-Chapelle have been in active movement for some time, and there is evidence from South America that they do their work in a thorough and effective fashion and have won considerable success, particularly through cultivating the friendship of South American visitors to Germany.

But in estimating German designs, we must look beyond these German leagues, which are merely an incidental part of German economic organisation. That subject far transcends the present topic, but embraces it so closely that the main outlines may be indicated. Most of the German industries are consolidated into cartels or syndicates in such a way as to eliminate competition, regulate prices and output, distribute risks or losses, facilitate the export of surplus products, and apportion business between the members of the cartel. The whole body of industrialists is united in league; merchants or exporters are similarly united; a small group of great banks, practically constituting one power, manages the financial side of the national industry and commerce with a singular mixture of daring and judgment, guided by a wonderfully complete enquiry system, a veritable international secret service; the great shipping companies, which coalesce more and more into a single huge national concern, work in close co-operation with organised industry and organised trade; railway transport is managed by the state so as to dovetail into the same machine: and the whole forms altogether a carefully constructed system of co-operation, cohesion and united action. That organisation has not fallen into abeyance during the present war. On the contrary, month by month it is being perfected, rounded off. Lastly, Germany has appointed, as it were, an economic headquarters staff, a small group of expert business men who for two years past have been devoting themselves to the working out of means for transferring Germany from a war basis to a peace basis with the least possible disturbance and delay. This higher command has its hand upon the levers of the whole machine, which, upon the conclusion of peace, is at once to resume with redoubled energy its interrupted task, industrial and commercial recovery, and particularly the economic conquest of Latin America.

In order that we may know what Germany is doing, these German organisations have been noted here. It would be impertinent, in both senses of the word, to compare or to criticise British methods. The problem of British reorganisation is being studied by experts and worked out by those in authority, and it is constantly expounded in official publications. But, without attempting to give individual opinions, one may quote some of authority.

"Great nations do not imitate." We may learn much in detail from the Germans; but Englishmen could not adopt the German system unless by first turning themselves into Prussians. Our people would never submit to Prussian methods of state control. Moreover all British experience shows that in this country such control would be disastrous. Yet competent authorities agree that immediate organisation is a necessity. It cannot be beyond the wit of Englishmen to devise means whereby British individual enterprise, common sense and self-reliance may work through methods of systematic organisation, combination, united action. From the friends of Britain everywhere comes the same warning. It is most appropriate to conclude with one uttered by a South American of unimpeachable authority, Don Pedro Cosio, former Uruguayan Finance Minister, who recently represented the Republic of Uruguay in this country. In a report to his government on the organisation of labour in the United Kingdom he writes, "The nation which is the first to organise its industry for the commercial campaign will be the one which will occupy the forefront in foreign markets."

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"Economic War":-This reiterated German phrase is not mere metaphor. The Germans pursued in peace the operations of war. To them commerce meant not merely the pursuit of trade in peaceful rivalry with others, but a sustained effort to defeat and oust rivals and reduce to economic subjugation the lands penetrated. By plunging into open war, which was meant to continue and to confirm that process, the Germans have risked their previous gains. Their own weapons are turned against them.

The economic character of the actual war and the efficacy of the economic weapon in the hands of the Allies become more and more evident. In the early months of the war this weapon was not wielded with thorough decision, and Germans beyond the Atlantic were able to carry on considerable European trade. But today the German merchant is striving to defend, against an overwhelming weight of maritime pressure, the ground which he had won through a generation of laborious and patient effort.

This economic struggle covers all the shores of all the Oceans. Its Latin-American phase has a special interest owing to the remarkable position attained in those lands by the Germans, the high value which they attach to that position, and their special efforts to maintain it under present difficulties. The most varied ingenuity is called into play to circumvent the barrier which now cuts off those countries from Germany. Present risks and losses are viewed as part of the inevitable waste of war, as an outlay deliberately incurred in the all-important task of holding open the gate through which, upon the conclusion of peace, the fruits of German industry are at once to pour in an irresistible stream, in exchange for those raw materials which are urgently needed to feed the industrial life of Germany after the war. This is the constant preoccupation of German business circles-the need of raw materials. And this is the reason why Latin America, the great source of raw materials, is courted with eager hope and anxious apprehension.

It is noticeable that a very large part of the cargoes condemned by the British Prize Court, as actually intended for the enemy though consigned to other pretended destinations, consists of goods from Latin America. For example, in August 1917 the Court condemned quantities of coffee, seized on a score of neutral steamers and ostensibly consigned to Scandinavian and Dutch merchants, but in fact shipped by a German firm at Santos for the parent house in Hamburg. Two months later, it was stated in court that nearly ￡400,000 worth of wool, shipped from Buenos Aires to the Swedish Army Administration at Gothenburg, had been seized by the British as being in fact destined for Leipzig. At the same time the Court condemned a number of manufactured rubber articles which had been found concealed in a passenger's clothing. On a later occasion, coffee and cocoa valued at nearly ￡200,000 were condemned, being part cargo of a Swedish ship bound from California to Gothenburg. They were consigned by a new and insignificant firm in San Francisco to various persons in Scandinavia, but were in fact on their way from Guatemala to Hamburg through Sweden.

The elaborate webs spun by German traders and revealed by intercepted correspondence were exposed in the Prize Court. Their methods were to find persons in neutral countries as nominal consignees, to act as intermediaries for getting the goods to Germany; to set up bogus companies for the same purpose; to use false names, or names of persons having no genuine interest in the consignment, and to manufacture false documents in order to give the appearance of neutral business. This was done to evade capture by deceiving the belligerent searchers. In some instances these methods succeeded. Quantities of coffee, consigned to Scandinavia, managed to elude the allied warships and reach Hamburg.

These are cases of import into Germany. The reverse process, export from Germany through neutrals, follows similar lines. German goods, falsely labelled and described as Swiss or Dutch or Scandinavian manufactures, have found their way across the Atlantic in neutral ships.

The Post Office has also served as a channel of secret trade. Pictures in the Press have exhibited the odd ingenuity of these devices: how coffee from Brazil to Germany was found concealed in rolls of newspapers, and how thin slabs of rubber were sent by post as photographs, also how quantities of jewellery have been despatched from Germany for South America in letters and in bundles of samples or journals. Goods so sent from Germany through the Post Office are mostly such as combine small bulk with high value-especially drugs and jewellery.

These partial examples, although each instance may seem small enough, indicate collectively a good deal of enemy trade which has found devious routes under stress of war. These man?uvres may seem at first sight merely trivial curiosities or at all events to have no more than ephemeral importance, since they were improvised to overcome temporary obstacles. But, apart from their intrinsic interest as episodes in one phase of the war and as evidence of the efficacy of Sea Power, these devices merit practical attention in view of proposals to fasten economic fetters upon Germany by the terms of peace, and in view of the odium which may tell against German commerce for years to come. German business men are preparing to meet these difficulties by continuing the method of exporting through neutral agents, and are proposing in some cases to transport to a neutral country the work of completing manufacture, in order that goods so produced may appear to be indisputably of non-German origin; and the Foreign Trade Department at Berlin has advised German merchants to employ, for some years after the war, travellers and agents who can pass as French or English. It would be unwise to underrate any instance of German inventive persistency.

Before the United States came into the war, that country was the channel of much German trade with Latin America. That road is now closed. The United States Government has gone further. It refuses coal in North American ports to ships proceeding from South America to neutral countries in Europe, unless the innocence of the cargo can be conclusively proved. This regulation shows that the United States authorities have knowledge that the ultimate destination of much South American cargo, particularly from the Argentine Republic, has been Germany. The blockade becomes more stringent through the co-operation of the United States and of Brazil, and through the action of the statutory list of "persons and firms with whom persons and firms in the United Kingdom are prohibited from trading." British commerce is a big and living thing, and the prohibition hits very hard any firm placed on this Black List. One finds here not only Teutonic names, but also innocent-sounding Latin names: for if a Latin-American is found to be acting as agent or cloak for a German trader, he finds himself pilloried on the Black List beside the German. There are obvious ways of evasion. The name of a clerk or door-keeper or a lady type-writer may appear as consignee. A varied ingenuity has to be met by constant watchfulness, and the list is regularly altered and kept up to date. The Black List has been much criticised for omissions, which are sometimes due to motives of expediency. But the bitter complaints about its injustice are unsolicited testimony to its efficacy. A striking example of its working was manifested in September 1917. After the outbreak of war, such of the Chilian nitrate works as were owned by Germans were unable to sell their nitrate or even to obtain jute bags, the supply of which is in British control. The unsold stocks went on accumulating, until one by one the German nitrate works were compelled to close down. Long negotiations between Santiago and Berlin found at last a remedy for this waste. It was agreed that the large deposits of Chilian gold in Germany should be set against the German-owned nitrate in Chile. The Chilian Government bought the nitrate, and paid the German owners by drafts on Berlin, which were met out of the Chilian money deposits in Germany. Thus Germany received Chilian gold in exchange for the inaccessible nitrate, while the Chilian Government received nitrate in exchange for its inaccessible gold. Chile then sold the nitrate for American gold to the largest manufacturer of explosives in the United States. Thus, one result of the blockade and the statutory list is that this German nitrate goes to make munitions, to be hurled at the Germans on the French front from American guns. The German Government, by sanctioning this sale of explosive material to its enemies, gave evidence of its earnest desire to stand well with Chile. On the other hand, Germany was impelled to this agreement in order to obviate grave financial loss to Germans and especially to save a big Hamburg firm from disaster.

The active entry of Brazil into the war has in great part superseded the action of the statutory list in that country: for Brazil has taken decisive measures towards Germans within her borders. All enemy enterprises are in the hands of government receivers. All contracts for purchase of coffee or other Brazilian products by Germans are null and void; and in cases where payments had been made by the German purchasers, all such payments must be handed over to the official receivers. The United States also publishes a Black List of firms with whom her citizens are forbidden to deal. Evasion of allied watchfulness becomes more and more difficult: yet ingenious, and sometimes successful efforts are made to find loopholes in the wall of the blockade.

There are now in Buenos Aires nearly 150 Turkish firms-Levantines of every denomination, Mohammedan, Christian, Jewish. Some of these are long-established and well-reputed houses. But most of them have sprung up during the war. Some of them, starting with exiguous capital, have made large fortunes in a year or two of trade. This has been done by supplying to German black-listed firms goods imported direct from Manchester and Bradford. Through the close co-operation of the German bank with German trade, these Syrians and Armenians are enabled, by the Germans standing behind them, to pay cash against documents in place of the usual sixty to ninety days' credit, and thus have a great advantage over the British or allied trader. The British authorities now permit export only to certain registered Turkish firms. The restriction does something to limit the abuse of this kind of trading.

Besides these ingenious efforts to keep open communication with Europe, there is another side of the commercial war. In the neutral states of Latin America the German business man is as ubiquitous and energetic as ever, nay more so as he has greater difficulties to contend with. So far as he can, he sells from accumulated stocks of German goods, for the German importing houses before the war had gathered great stocks, especially in Chile. Where this resource fails, he repairs his stock by buying anywhere. Up to April 1917 he bought largely in New York. Now he buys where he can and what he can-American goods, French goods, British goods-anything to hold the market until the ocean shall be free once more to German keels carrying German goods.

From the Argentine Republic 6000 young Englishmen came home to serve Britain on the fields of France. The young German would have found difficulty in getting home, even had he wished to do so; so for the most part he stayed in the River Plate. Other Germans have been released from military service and sent out as commercial travellers; for the German Government regards this too as National War Service. Thus today there are three German commercial men in the River Plate to one Englishman. The resources and confidence of the German traders are surprising. They have bought great quantities of wool in the River Plate-not so much indeed as is generally supposed; for German emissaries, in order to force up the price of wool to the Allies, have methodically made specious but fictitious offers of high prices to sheep-farmers all over the Argentine Republic. Yet, even so, German traders hold large quantities both of wool and of grain. These have been purchased partly for selling at enhanced prices on the spot, but principally with a view to after-war trade and the supply of raw materials to Germany. These purchases are proof of firm belief in the future. Moreover, both in Chile and in Argentina the interned German ships await their after-war cargoes for Europe. And when the Chilian or Argentine asks whether the German will be free to use these ships when peace comes, the Englishman cannot reply. The ships are there, proof of Germany's future power to trade.

And the Germans are active not only in trade. They have learnt from British example that the road to business in Latin America is the investment of capital. And, strange as it may seem, the German has peculiar opportunities of investment at the present time. Such limited trade as can be carried on yields great profits. There is difficulty about remitting funds to Germany; and in any case "victory war loans" and other investments in the Fatherland may seem less attractive than investments in those Latin-American lands which look forward to rapidly expanding prosperity after the war. Accordingly, the German merchant is not only buying raw materials; he is also taking a share in the movement of home manufactures which now offers peculiar opportunities to foreign enterprise. Moreover, German firms in Buenos Aires have invested largely in short loans to the Argentine Government. Besides these private investments, which, like all German activities, have their official side, loans have been repeatedly pressed on the Argentine Government, ostensibly by neutral financiers (first in the United States and afterwards in Spain) but in fact by Germany, evidently for immediate political as well as for ulterior economic objects. These offers have been declined. A German loan openly offered to Uruguay has also been refused.

Obviously, the whole story of German war-efforts in Latin America cannot yet be told. Enough has been said to indicate the character and the intensity of those efforts. For this far western front Germany has mobilised a business army, specially trained for the nature of the country and for the kind of operations wherein it is to be engaged. These efforts and aspirations are best illustrated by a recent utterance from the Hamburg branch of the League for Germanism abroad:-"We should like to insist that South America, the main field of our activity for many years past, constitutes a great sphere. Wide areas, with great possibilities of development, but little cultivated hitherto, are waiting to be opened up. It must be our business to employ here all our strength in order to retain and to make useful to ourselves these countries with their markets and raw materials. What we have to do is to arm for the Peace and to collect money, in order to be able immediately to act with energy-with our whole strength and with adequate resources."

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In this "arming for the Peace" there is one weapon which demands special mention, namely the influencing of opinion by printed propaganda.

The German mobilisation of the Press is a vast business controlled by the State. Upon the outbreak of war this organisation undertook the special work of war propaganda through two newly formed departments: (1) Press Office for influencing neutrals, (2) News Service for Spanish- and Portuguese-speaking countries. This institution of a special Ibero-American service proves the prominence given to the work in the Spanish- and Portuguese-speaking lands. The last words obviously include the Peninsula as well as Latin America. Nor can the propaganda carried on in Spain be dissociated from that in Spanish America. "Spain is the way to South America," writes a Spaniard discussing this very point. The popular illustrated Spanish prints A.B.C. and Blanco y Negro, which carry on a vehement Germanophil propaganda, are carefully perused, as coming from "home," by Spanish emigrants throughout Latin America, who thus become, half unwittingly, disseminators of German views and of belief in German victory.

For the first object of this propaganda is to represent Germany as invincible in war. This military propaganda is an essential part of economic efforts. The Germans hold up a picture of German sagacity, system, thoroughness, efficiency. They desire to impress as well as to persuade. They know the effect produced by their victory in 1870. Credit and confidence are the greatest of commercial assets; and in this case economic credit is to rest upon belief in military strength.

In South America, as in Spain, the method is to capture the press, and so disseminate German war-news, pro-German articles, photographs and cartoons. But it was not enough to control or inspire existing newspapers. In many capitals the Germans started new journals, printed in the vernacular. Naturally, the chief effort was made in Buenos Aires. Early in the war, a German organ, La Unión, was founded, in order that the Porte?o, as he walked the street or travelled by train or tramway, might have the German case daily and forcibly presented to him. Throughout Latin America, a dozen or more of newspapers have been thus founded for propaganda purposes, some of them illustrated by effective cartoons. The strangest examples of this journalistic campaign are two Turkish newspapers, La Bandera Otomana of Buenos Aires and O Otomano of S?o P?olo, which urge the cause of the Central Powers among Orientals in those countries. Besides these purely German efforts, a host of newspapers, many of them the local journals of country towns, serve the German cause throughout Latin America, the newspaper offices sometimes acting as distributing agencies for periodicals printed in Germany in the Spanish tongue.

For, besides German and Germanophil periodicals published in America, others are produced in Germany for circulation in those countries. The number and the excellent quality of these Spanish productions of the German printing-press are remarkable. La Revista de la Exportación Alemana is a most effective organ for German business, exhibiting side by side, in pictures and letter-press, triumphs in the field and triumphs of industry. The monthly Mensajero de Ultramar and the weekly Heraldo de Hamburgo have been already mentioned. Hamburg also produces the well-known weekly picture-paper, Welt in Bild, with letter-press in twelve languages. These well-written and well-printed newspapers are widely circulated in Latin America in order to uphold the German cause.

In addition to these permanent publications, special war periodicals are issued, every one of them a German trumpet. Not least of these is the comic paper La Guasa Internacional, which holds up the Allies to ridicule and abhorrence in cartoons, squibs and sketches. A diary of the war with a review of political and military movements is given in the illustrated monthly Crónica de la Guerra. Another chronicle is La Guerra Europea Mirada por un Sud-Americano, a piece of war propaganda written by a Latin-American soldier, Se?or Guerrero, who was, until recently, Peruvian military attaché at Berlin. But perhaps the most effective of these war periodicals is La Gran Guerra en cuadros, which presents, in a series of pictures, the war as meant to be seen by neutral eyes. All these periodicals attribute economic blunders and financial errors or weakness to the Allies, sometimes making adroit use of British or French self-criticisms: on the other hand, they magnify German economic strength and organisation. This main object appears in an article on "After-war commercial relations between Spanish America and Europe" published in El Mensajero de Ultramar, which argues that Germany will suffer least of all the belligerents from the effects of the war; and that afterwards she will be the best purchaser and also the most capable provider for Latin America. Such is the reiterated refrain of a host of periodical publications.

In addition to periodicals, Germany pours over the Spanish-and Portuguese-speaking world a constant inundation of fly-leaves, photographs, pamphlets, books and miscellaneous war literature, preaching German strength, efficiency, humanity, and even the democratic character of German institutions.

What is the result? Has German propaganda succeeded in moulding Latin-American opinion concerning the war? Opinion in those countries has been moved by an argument more potent than all the German propaganda, and that is the German submarine. The German offers to South America with one hand persuasive self-eulogies, while with the other hand he sinks her unarmed trading ships and drowns her sailors. Unrestricted submarine warfare and the barring of zones to navigation have drawn Brazil, by successive steps, into active belligerency, and have done much to bring about rupture of relations and declarations of war by other Latin-American republics. Yet it would be a mistake to conclude that German propaganda has entirely failed. The Germans certainly think it worth while to continue it. The pavements of Buenos Aires are sometimes ankle-deep with pro-neutrality and anti-ally leaflets. But it is principally through the persistent and reiterated voice of the newspaper press, aided by the unremitting personal efforts of every German and every friend of Germany, that she wages this secondary warfare, this strategy of moral influence, which mobilises public opinion, diffuses impressions, colours events, creates an atmosphere.

A circular was lately issued to the German League in Chile urging that, if propaganda could delay the severance of diplomatic relations between Chile and Germany, even for a few weeks, it would help Germany and her allies to an extent of several millions, and cause damage to her enemies to the same amount. As the situation becomes more critical for Germany, her propaganda redoubles in intensity. "Public opinion," says Napoleon, "is a force invisible, mysterious, irresistible." The Germans recognise that force, and have done all that was in their power to sway it to their side. German persuasiveness has not wholly failed. But in this war of words one decisive word has yet to be spoken, and that word is Victory.

Yet military victory is not the final word in the economic struggle nor in the propaganda used in its support. The German South American Institute urgently emphasises the need of a more thorough and more stable system of German news supply: and official steps are now being taken in Germany to consolidate and extend such a system, in order to provide a permanent support of German influence in the future. The present aim of her propaganda is not only to exhibit victories, but to prepare for possible defeat, while representing Germany as morally invincible and as able, in any event, not only to hold her own, but to extend and strengthen her position.

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