Last Ships from Hamburg The by Steven Ujifusa

Author:Steven Ujifusa
Language: eng
Format: epub
Publisher: HarperCollins
Published: 2023-09-26T00:00:00+00:00

Chapter 15

Revolution and Rebuilding

In politics as well as in business he held that “a lean compromise was preferable to a fat lawsuit,” as the German proverb puts it.

—BERNHARD HULDERMANN ON ALBERT BALLIN

The Russo-Japanese War was a disaster for Russia, but a bonanza for Albert Ballin and HAPAG. To avoid conscription into Nicholas II’s army, hundreds of thousands of Russian subjects tried to get out of the czar’s empire. Many who were sure to become conscripts sold everything to pay for a passage to the New World. Others already conscripted deserted their units. By train and by foot, all amassed at the Prussian border in ever greater numbers.

To stop the fighting and prevent the Japanese from dealing too great a blow to the Russian Empire, President Roosevelt called for a peace conference between the two warring nations at Portsmouth, New Hampshire. Roosevelt’s policy goal was to curb, while also appeasing, Japan’s expansionist impulses and to stabilize Russia. The resulting Treaty of Portsmouth, ratified by both nations in October 1905, recognized Japan’s territorial claims on the Korean Peninsula and ceded Port Arthur to the rising Asian power. In return, the Russians avoided having to pay costly war reparations to Japan, since the defeated country’s finances were on the brink of collapse.

The war was also good for Kuhn, Loeb & Co. in New York and M. M. Warburg & Co. in Hamburg. As a matter of principle, Jacob Schiff refused to underwrite any bond offerings to support the Russian government. But he did support the Japanese government. When Baron Korekiyo Takahashi, a high-ranking Japanese bureaucrat and financier, floated a proposal for a 10-million-pound bond issue to be offered to American and British investors to finance its war with Russia, Jacob Schiff enthusiastically volunteered to underwrite half the deal. So successful was the American offering that Kuhn, Loeb underwrote a second one. When Japan asked for a third loan, Schiff threw the deal to M. M. Warburg & Co., and it was ten times oversubscribed. All the more insulting to Czar Nicholas II was that his cousin Kaiser Wilhelm II, who had raged against the “yellow peril,” gave the deal his royal blessing.

Jacob Schiff saw the war in religious terms, calling Russia “the Northern Goliath” and Japan “the Far Eastern David.” As a Jew, Schiff felt underwriting the underdog was simply doing his part to “save the entire civilized world,” just as he tithed 10 percent of his vast income to charity to uplift the civilized world.

The war, and the failed Revolution of 1905, had not changed “the Northern Goliath” in any meaningful way, especially for its Jews. Czar Nicholas II’s autocratic regime grew increasingly isolated and out of touch. As part of a modest package of concessions to stave off further unrest, the czar had allowed the creation of a representative body known as the Duma, a watered-down version of Germany’s Reichstag. It was largely the brainchild of Nicholas II’s prime minister Serge Witte, the lead negotiator in the Portsmouth Conference and someone

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