Mises Daily Articles
The Merchant of Death: Basil Zaharoff
[From Men of Wealth, pages 337–372.]
If the Lord God Jehovah had not created Basil Zaharoff, some novelist sooner or later would certainly have got around to the job. Indeed, it is by no means certain that Zaharoff, as we have him, is not the joint product of God and the fiction writers.
Lieutenant Colonel Walter Guinness, member for Bury St.Edmonds, committed the blunder against history of referring to Zaharoff in the House of Commons in 1921 as the "Mystery Man of Europe." Having fixed upon him that fascinating label, the figure of Zaharoff became thereafter a costumer's dummy upon which the news caricaturists of Europe draped whatever garments would vindicate his reputation.
Mysterious indeed he is and still more mysterious he became at the hands of the sensational news portrait painters. The mystery begins with his birth. A French biographer, Roger Menevee? records that he was born in Moughliou, or Mugla, on the Anatolian coast. But a German, Robert Neumann, asserts that Zaharoff, testifying in a London court as a young man, said he was born in the Tatavla or poor section of Constantinople, and he notes that the Mugla nativity is attested by an affidavit of a Greek priest made forty-two years after the event and was based upon memory.
It was never known with complete certainty to what country he owed allegiance. He was a Greek, born in Turkey, who lived in Paris. His right to the ribbon of the Grand Cross of the Legion of Honor was questioned in the Chamber of Deputies and M. Clemenceau had to assure the Chamber that "M. Zaharoff is a Frenchman." But also he was throughout his life the guiding genius of a great British armament concern, acted as a British agent, was a Knight of the Bath, known in England as Sir Basil Zaharoff.
Journalists said he spoke fluently fourteen languages — which is probably an extravagant exaggeration. They reported how he had confided to a written record the story of his life, filling fifty-eight volumes which he ordered to be burned at his death, while others told how he had himself destroyed the record, two days being consumed in reducing it to ashes in the furnace of his Paris home. Extravagant tales were told of his habits, his amours, his dinners, and the exotic dishes brought fresh by plane from immense distances for his table. But, in fact, the reporters and the historians have produced but little about the personal life and affairs of the man. Searching the extensive but empty records, one fails to discover any documents or letters or speeches or records or meetings or conferences or instances in which the man is actually present. Always one hears that he is somewhere in the background, off in the shadows, pulling the strings, supplying the stratagems and the money.
Yet it is certain that he remains the most considerable figure in that feverish world of the munitions makers that has had so much advertisement since the Great War. Only a few names take first rank among this dubious company — old Alfred Krupp, the cannon king of Essen, the Schneiders of Creusot, Thomas Vickers, the English gun maker of Sheffield, Skoda, du Pont de Nemours, the American powder king, Colt and Winchester and Remington and Maxim. They were all, as Messrs. Englebrecht and Hanighen have called them, "Merchants of Death." But the mightiest "merchant" among them, the man who played the largest role in the "merchandising" of munitions, the greatest market maker, was Basil Zaharoff.
It was his melancholy good fortune to come upon the scene when the world went in for arms on an unprecedented scale and it was he who, more than any other man, developed the international market for arms. He did not invent it, to be sure. Old Alfred Krupp had played off Turkish orders against his native Prussia when Zaharoff was a mere fireman in Tatavla. And long before either of them — centuries before — old Andries Bicker, Burgomaster of Amsterdam, had built and supplied and provisioned and even financed a complete navy for Spain when the Spanish king was waging war upon Holland. He then explained to the outraged Dutch that if Holland had not armed the Spanish enemy, the Danes would have done it and reaped the profit.
But Zaharoff played a leading, if not the leading, role in that strange world comedy of the arms makers leading the double life of chauvinists and internationalists. They gave us the spectacle of Boers mowing down English regiments with Vickers' pom-poms, Prussian surgeons picking out of Prussian wounded Austrian shrapnel fired by Krupp's cannon, French poilus massacred by shot poured out of guns made in Le Creusot, English Tommies killed by weapons produced by Armstrong and Vickers, and American ships sent to the bottom by U-boats built on models supplied by American submarine builders. Zaharoff was the master of what one biographer has called the "principle of incitement,"under which war scares were managed, enemies created for nations,airplanes sold to one nation and antiaircraft guns to her neighbors, submarines to one and destroyers to another. He did what the cigarette people did, what the liquor industry, the beauty industry did — created a demand for his merchandise. The armament industry became a game of international politics, the arms salesman a diplomatic provocateur, the munitions magnates of all nations partners in cartels, combines, consolidations; exchanging plans, secrets, patents. He was the greatest of all the salesmen of death, and, as one commentator has observed, if you would see his monument, look about you at the military graveyards of Europe.
Zacharias Basileios Zacharias — later to be known as Basil Zaharoff — was born October 6, 1849, apparently in Mugla, near the Turkish capital of Angora. His people were Greeks who had lived in Constantinople, fled to Odessa during the Turkish persecutions in 1821, returned to Mugla, and then, when Basileios was three years old, took up their home again in the Tatavla or poor district of Constantinople. The boy went to school until he was sixteen, when some disaster to his father forced him to go to work. He worked, we are told, as a fireman, a guide, a moneychanger. There is more than a hint that these early years were passed amid rough surroundings and that this impulsive and somewhat lawless boy — like one of our prominent labor racketeers, to use his own explanation of his twisted ethics — suffered from lack of "bringing-up."
When he was twenty-one he found work with an uncle in Constantinople who had some sort of mercantile business. One day Basileios disappeared, taking with him money from the cash drawer. The infuriated uncle traced him to London where he was arrested. How or why he was arrested in London for a crime committed in Turkey is not made clear. It was perhaps a stage in the process of extradition. In any event Zaharoff pleaded that he was a partner, not an employee, of his uncle, producing a paper attesting that fact — a paper he had miraculously discovered in his trouser pocket on his way to the courthouse — and was let off. This episode is by no means clear. But what there is of it reveals the more or less dark cloud in which he began his career.
As in all things relating to Zaharoff, there are other versions of this flight. Robert Neumann, who spent some time investigating the story, but unfortunately envelopes all that he writes in a cloud of luminous smoky words, insists that it was not money, but goods that Zaharoff stole and not from an uncle but from a Mr. Hiphentides; and, having converted the merchandise into money, fled to London where he was arrested on the complaint of Mr. Hiphentides, after which he was not acquitted but let off with a reprimand on his promise to make amends.
Zaharoff, after this narrow escape, went to Greece, Turkey being "no thoroughfare" to him. In Athens he made his Basileios Zacharias into Basil Zaharoff. He remained in Athens from 1873 to 1877, living by odd jobs of all sorts. Somehow stories of Zaharoff's unsavory past leaked out in Athens. The atmosphere chilled for him among the youthful compatriots with whom he fraternized. Apparently Athens became too unpleasant, and the harassed youth moved on. A singular piece of good fortune overtook him at this point. Shortly after his disappearance a brief newspaper story told how a prisoner, Basileios Zaharoff, in an attempt to escape from the old prison of Garbola in Athens, had been shot and killed by a sentry. Zaharoff had made one friend in Athens — Stephen Skouloudis, later the compliant premier of King Constantine in his attempt to put Greece on the side of Germany, and then well on his way to riches. He had taken a fancy to Zaharoff and he was shocked at this story of his death.
Skouloudis went to Garbola, got a description of the prisoner who had been killed, had the body exhumed, and satisfied himself that it was not his maligned young friend. He traced the incident farther and learned that the shameful calumny had been printed by a reporter who hated Zaharoff. Having fled to England once more — this time to Manchester — Zaharoff returned to Athens as soon as he heard of Skouloudis' vindication of him to take advantage of the sympathy created for him by this shocking injustice. This seemingly happened in 1877. He needed work and Skouloudis added another claim upon his gratitude by recommending him to the representative of a Swedish gun maker, who was leaving Greece and looking for a successor. Zaharoff got that job, rushed in a frenzy of gratitude to Skouloudis' home, fell upon his knees, covered his hands with kisses and tears, and swore eternal friendship. Thus the first phase of the career of this young Monte Cristo ended. Strangely, one does not hear of further contact with Skoulbudis until 1915, when Skouloudis was made Prime Minister of King Constantine and Zaharoff was the brains and moneybag behind the conspiracy of France and Britain to dethrone Constantine and bring the Greeks in on the side of the Allies.
Zaharoff — twenty-eight years old — was now in the munitions industry in which he spent the remainder of his eventful life. Torsten Vilhelm Nordenfeldt, a small Swedish manufacturer, commissioned Zaharoff as his agent for the whole Balkan territory at a salary of five pounds a week, later augmented by commissions. It was a small beginning, but in a most opportune time. The whole face of the munitions industry was changing — due to the pressure of inventors, politicians, and merchants.
There was, of course, nothing new about the arms industry. It was not invented before the World War or by the German junkers. It is a business, like any other. Man, in his discussions with other men about questions of religion, statecraft, geography, trade, has always reached a point in the discussion where it has seemed wise to reply to his opponent by disemboweling him or knocking his brains out. The demand for instruments of discussion of this type, from the day of the leathern armor and the flint spear, has always, quite naturally, inspired thrifty entrepreneurs to provide them for profit. It is a business like law or prostitution or hanging or banking or making shoes. Before the conqueror can lift his sword the armorer must make one for him in his forge. Before armies can march there must be men — thousands, hundreds of thousands of them — who will make guns and cannon and tanks and trucks and uniforms and shoes and food. It is a business and must be run as such. It must have a producing department and a finance department and a sales department. And as it is the function of the production department to develop and produce better and deadlier means of slaughter, it is the function of the sales department to find buyers, nay more, to stimulate consumer demand.
And so behind every great warrior and war has loomed the figure of the sutler, perhaps just a poor peddler following the troops with rum, or some magnificent gentleman in his countinghouse doing business not with the private in the field, but with the chief of staff in his bureau. Behind Pericles was the shield maker Cleon. Behind Caesar was the banker Crassus and the war contractors of Rome. Behind Maximilian was Jacob Fugger and his rich copper mines in the Tirol. Behind Jeanne d'Arc was Jacques Coeur, who, like a true patriot, supplied the Maid with arms and funds, and, like a true munitioneer, sold arms, against the law of God Himself, to the infidel and was stripped of his wealth and clothed in sackcloth and made to murmur on his knees that he "had wickedly sent armor and arms to the Sultan, enemy of the Christian faith and of the King." Cromwell had to have his army provisioned the pious Thomas Papillon. Behind Louis XIV was Sam Bernard the banker and the Brothers Paris de Montmartel; behind Napoleon stood Ouvrard.
It is a strange business, indeed a little weird. Like any other business it calls for a special kind of man with a special kind of talent and a special kind of ethics. It is, indeed, in the words of an American agent of a large submarine manufacturer, "a hell of a business, where you have always to be hoping for trouble in order to prosper."
I do not pretend to fathom the depths of its ethics. Let someone unriddle for me this human enigma: M. de Wendel, Frenchman, built a great blast furnace in Briey. Briey lies on the German frontier; on the other side, in Germany, is Thionville with its huge German blast furnaces. There they are on either side of the frontier — Briey in France, Thionville in Germany. Briey belongs to M. de Wendel; Thionville to the Germans. The Great War begins. The French do not attack Thionville; they do not defend Briey. They withdraw their lines and permit Briey to fall into the hands of the Germans. Then throughout the war Briey and Thionville are operated as one huge war production unit by the Germans. They turn out iron and steel that is hurled in huge Big Berthas and little German machine guns at French poilus who are mowed down by the hundreds of thousands. First one officer and then another asks why France does not attack and silence Briey and Thionville. General Malleterre demanded an attack. M. Pierre Etienne Flandin, one day to be premier, an officer then, urged it at the front. Bombardment was begun by General Guillaumat, but stopped instantly by headquarters. Deputies clamored for its destruction. A committee of the Senate urged it. Even the Cabinet asked why Briey and Thionville were not stopped. But nothing was done. They went ahead pumping out materials for Krupp's throughout the whole war. When the war was over Briey was handed back to M. de Wendel unscathed. Who is M. de Wendel? What manner of man is he? What goes on underneath his vest? What goes on inside the heads of the men, the officers, the politicians who protect "property" that is flooding its iron and steel to Krupp's to slaughter French boys in a war for the very life of France? Are they monsters? Are they demons? Unfortunately they are not. And that is what makes it all so mysterious and so difficult to deal with.
It was into this strange business that Basil Zaharoff stepped, carrying with him an almost ideal spiritual equipment for the job. It was not then a huge industry. Best known perhaps was Alfred Krupp, the cannon maker of Essen. At ten he inherited a modest iron foundry from old Frederick Krupp who had started it in 1823. At fourteen Alfred went into the business and slowly took over its direction. Cannon were made of copper. Alfred perfected a solid crucible steel block from which he made cannon. But he had not yet perfected any projectile capable of penetrating the intransigent mentality of military bureaucrats. Cannon were made of copper, had always been, must always be! Herr Krupp learned from the start that the way to sell cannon to the Prussian king was to sell them also to Prussia's neighbors and enemies. He made his first sales to Egypt, then to Austria. When the Austro-Prussian War began, both armies fired Krupp's cannon balls at each other, and his guns would have been working in both armies in the Franco-Prussian War but for Napoleon Ill's refusal to buy them. Krupp's cannon made Bismarck's swift victory possible. After that Krupp made and sold his cannon everywhere in 1877 when Zaharoff entered the arms field.
In England Thomas Vickers developed the little engineering plant of his late father into first a prosperous iron foundry making car wheels, cast-steel blocks and cylinders. He then turned to making gun barrels and armor plate and finally a growing line of weapons.
In France, Joseph Eugene Schneider, a small banker, bought Le Creusot, an iron foundry and arms plant that had made weapons for France since Louis XIV. Schneider was on the verge of bankruptcy when Napoleon Ill's adventures saved him, rehabilitated him, and made him rich. Schneider was trying desperately to break into the international arms business but was meeting determined and successful resistance from Krupp.
Over in America, the du Ponts, Colts, Winchesters, and Remington were prospering as a result of the impetus from the Civil War. Eleuthere Irenee du Pont, son of the famous French radical, Pierre du Pont, emigrated to America, found the powder for hunting quite poor, established a powder mill patronized by Napoleon, and supplied most of the powder used in the War of 1812. He was the friend of Jefferson, suffered the inevitable after-the-war slump, and got aid in France from Madame de Stael and Talleyrand. He then found rich markets in Spain and in South America when dictators and revolutionists fought it out, refused to sell to Cuba during our Mexican War because he feared his powder would go to Santa Anna (though he hated that war), grew rich when railroads and frontiersmen needed dynamite to blast the Western prairies and mountains and forests, sold all he could make to England, France, and Turkey during the Crimean War, and was the mainspring of the Union in the war between the states. In 1877 the du Ponts were already the dominating figures in the powder combinations being formed in America, and by 1897 they were powerful enough to enter into an international arrangement by which the powder makers of America and Europe divided the world among themselves.
Colt made revolvers, sold them to the soldiers and frontiersmen who conquered the Texas plains, failed, but grew rich through the Crimean and Civil Wars.
Remington made a fortune with his guns in the Civil War but was ruined by the peace. But Remington recovered from the Civil War by diversifying his products, going into typewriters and sewing machines, and in 1877 he again had his agents in Europe contending for the business of the armies there.
Winchester, whose guns had created a sensation at the London Fair in 1851, made a sensational repeating rifle during the Civil War, had thirty-eight establishments making small guns, when Zaharoff became a munitioneer, and had in the field one of the first of the world's arms salesmen extraordinary, Colonel Tom Addis, who equipped Juarez in Mexico and whose guns sealed the fate of Maximilian.
There were other smaller firms. But taken as a whole the munitions industry was not a vast affair. The men who made fortunes out of arms in earlier times — the Brothers Paris, Chatelain, Ouvrard, Rothschild, Bicker, Jacques Coeur — were not producers of arms or powder and ball. These things had always until the first half of the nineteenth century been made in small shops, by individual craftsmen, in little foundries, the largest of which hired only a few hundred men at most. The fortunes were made by contractors, middlemen, and brokers who assumed the function of collecting weapons, food, grain, clothing for the armies. But with the growth of Krupp and Schneider and Vickers and du Pont and the others, the business of producing weapons and explosives had taken on larger shape.
All the drifts in the world were moving in the direction of the magic business into which young Mr. Zaharoff had stumbled. The customer of the munitions maker is the soldier. And Europe was learning how to produce many customers for him. France had begun it — republican France — with her mass conscription during the Revolution. But the practice had died out when, after 1815, liberalism once more swept over Europe, until, with Napoleon III, the whole dark movement of militarism took on life once more. Bismarck made almost every German a soldier. And after the Franco-Prussian War, every monarch in Europe was eager to copy the junker model. Then the nation did not wait for a war to raise an army, a small mercenary army. In every country armies were formed during peacetime, far outnumbering any that had ever fought in war. In short, every able-bodied man in Europe was a customer for the gun makers, and peace became as flourishing a period for them as ever war had been. Europe became an armed camp, and the Krupps and Schneiders and Vickers did not have to wait for war to do big business. France, sullen, mourning her "lost provinces"; Italy, nourishing the dream of "Italia Irridenta"; Germany, preparing against France's effort for revenge, Russia, with her pan-Slavic dreams, the Balkans, waiting for the day to free her enslaved peoples from Austria, Turkey, Germany — all made a perfect climate for the trade of the sellers of rifles and cannon and powder.
Moreover, the manufacturers of death did not sit still. New and more terrible weapons were being fabricated. Smokeless powder, small-bore magazine rifles for accuracy and distance, rifling of gun bores, the French mitrailleuse blossoming into the machine gun, Krupp's breach-loading monoblock guns, recoil appliances, the armored warship that began with the Merrimac and Monitor and the submarine — all these gave to the arms drummers a line of goods that introduced into armament the stimulating element of style and quality obsolescence and kept the ordnance departments busy junking old weapons and buying new ones.
This last element was one that told heavily on the side of the new arms salesman in Athens — Nordenfeldt's new Balkan drummer. For Nordenfeldt, though small, had an attractive collection of lethal gadgets. He had the eccentric screw breach, the mechanical time fuse, an excellent quick-firing gun, and, wonder of wonders, a submarine that he had invented.
Zaharoff had to look for business in the Balkans. The Turko- Russian War had just ended. Greece saw herself left out of the division of loot and she determined to arm. She planned an army of 100,000 instead of 20,000 — 100,000 customers for the young arms drummer instead of 20,000. Of course, Zaharoff had to meet the competition of Krupp and others. But he was a Greek and, by this time, we may be sure, burning with patriotism and sales pressure.
But he did not sell a submarine until 1885 when he planted one in the Greek navy. Having done this, the Greek patriot went to Greece's enemy, Turkey, and sold two. By this time Hiram Maxim, the American, was running away with the business in quick-firing guns, for his Maxim machine gun outdistanced all rivals. He was going about Europe demonstrating it himself and getting orders. This was a serious matter for Nordenfeldt and his man Zaharoff. Just how it came about and who managed it, no one knows, but in 1886 Maxim and Nordenfeldt joined forces. But Zaharoff now held a substantial interest in the Nordenfeldt firm.
With this development, Zaharoff began to range over a territory wider than the Balkans. He had established relations with many of the most influential persons in European war departments, ministries, and noble social circles. He was the dominating sales force of the Nordenfeldt-Maxim combination. Gradually Nordenfeldt vanished out of the business, Zaharoff took his place as Maxim's partner, and the firm took the name of the Maxim Guns and Ammunition Company, Ltd. It is a singular fact that Hiram Maxim in his autobiography makes no reference to Zaharoff.
The next step was another combination with Vickers, Thomas Vickers — the second largest English manufacturer of arms. Maxim became a member of the Vickers board of directors. Zaharoff's name did not figure in the organization at all. But he and Maxim, in some proportion unknown to history, got for their company from Vickers £1,353,334, or over six and a half million dollars, partly in cash and partly in stock in the Vickers company. Zaharoff thus became a substantial stockholder in Vickers and would one day be the largest of all. He also became the chief salesman of Vickers which, unlike Krupp and Schneider, had remained up to this point out of the international market. But Zaharoff showed the way into this bountiful field, and thereafter he moved about Europe with a card announcing him as the delegate of Thomas Vickers & Sons.
But Vickers was in no sense a great business. Its principal function had been supplying guns for the British navy. It was prosperous and imposing after the modest standards of that day. Its great growth dates from the absorption of the Nordenfeldt company, with Nordenfeldt's submarine, Maxim's machine gun, and the shrewd, dynamic salesmanship of Zaharoff.
Nothing was wanting but romance now to complete the equipment of Basil Zaharoff for the principal role in a Dumas novel. And this he supplied upon a pattern perfectly in keeping with his character. In 1889, while he was ranging Europe — particularly Russia — for orders, he met Maria del Pilar Antonia Angela Patiocinio Simona de Muguiro y Berute, the Duchess of Villafranca. She was the wife of a young man closely connected with the royal family of Spain. She proved useful to Zaharoff in arranging connections in Spain that enabled him to sell many millions of dollars of arms to the war department. But Zaharoff fell in love with her and urged her to divorce her husband, who was ill and on the verge of dementia. The Duchess, a good Catholic, would not consider divorce, but she became Zaharoff's mistress, confident that her husband was destined for a speedy death. His mind failed completely, he was put into an insane asylum, and proceeded to disappoint the Duchess and her lover by continuing to live for another thirty-five years. She continued as ZaharofFs mistress; he remained attached to her with singular devotion and in 1924, when her husband died, the two lovers — then aged and near the end of their lives, he seventy-five and she over sixty — were married in a little town outside Paris. They had had two daughters. The Duchess, however, survived this marriage by only eighteen months and her death left the aged bridegroom inconsolable.
About the time he met the Duchess, Zaharoff established a home in Paris. He was rich and a man of striking, distinguished appearance; a small mustache and imperial and drooping eyelids added an expression of inscrutability to his grave countenance. He cultivated the habit of silence. He avoided displays, public appearances. He took up his place in that foggy, ill-lighted world so fascinating to the readers of newspapers — the world of Behind the Scenes. He had acquaintances, if not friends, among the most important people in Europe. He was now a part owner, sales delegate, guiding spirit of a growing British armament firm, but with his home in France. He spoke Turkish, Greek, French, Italian, German, and probably various Balkan dialects. And the world was unfolding auspiciously if not beautifully before him in the grim business in which he flourished.
As for Vickers, it now began to expand upon an impressive scale. By 1890 England set out upon a more ambitious naval program than ever. Vickers, which had been a builder of guns, now went into naval construction, as did Krupp in Germany. It acquired a controlling interest in Beardmore's great shipbuilding firm in Glasgow. It took over the Naval Armaments Company with its dockyards, the Woolsey Tool & Motor Company and the Electric & Ordnance Accessories Company. It became a great department store of lethal weapons and could supply its customers with anything from a rifle to a battleship. Sir Vincent Caillard became its financial genius as Zaharoff was its sales genius. They made an excellent team. Caillard knew how to mix the hard, cruel funcBASIL ZAHAROFF 351 tions of gun-making finance with the more delicate and spiritual values of versemaking, like another and earlier munitioneer, Bonnier de la Mosson, who accumulated a fortune as an army contractor in the time of Louis XV and exercised his leisure by writing verses so bad that Voltaire said they ought to be crowned by the Academy. Sir Vincent made music too and he found time amidst the dark sophistications of munitions finance to set to music Blake's Songs of Innocence.
Events favored them — the Spanish-American War, the Chinese- Japanese War, the English-Boer War, in which the Tommies, armed with Vickers rifles, were scientifically mowed down with Maxim's pom-pom, or quick-firing cannon, supplied to the Boers by M. Zaharoff of Vickers. But the greatest opportunity was the Russo-Japanese War. When it ended all Europe's war ministries awoke. The war had been a great proving ground for guns and ships — a laboratory for militarists. Above all, Russia had to start at the bottom and completely rebuild her shattered armies. The Czar provided over $620,000,000 for rearming. All the armament makers in the world flocked to St. Petersburg. Zaharoff, representing Vickers, arrived first on the scene. He spoke Russian fluently. He was a member of the Orthodox Greek Church. He had spent much time in Russia. He knew his way around.
The Schneider-Creusot firm felt it had a special claim on Russian business. Was not Russia France's ally? Were not French bankers financing Russia? There developed swiftly a struggle between Schneider and Vickers out of which Zaharoff emerged with the largest share of the booty. Indeed, this particular episode established him definitely as the great master arms merchant of the world.
This fight centered upon two projects — the Putilov munitions works and a plan to erect a new and comprehensive artillery plant somewhere in Russia.
The contest became somewhat complicated, as all armament contests in Europe are. Behind Schneider was the Banque de l'Union Parisienne, in which he held a large interest. Oddly enough, allied with Vickers was another French bank — the Societe Generale.
The Putilov works had been heavily financed by Schneider with TUnion Parisienne funds. But Putilov needed more funds. And to make matters worse, Putilov was out of favor. Schneider, despairing of continuing successfully to find an outlet for French arms through Putilov, conceived the idea of building for Russia an entirely new plant in the Urals. But Zaharoff was at work on the same idea, got the inside track, and came off with an arrangement to build for Russia the huge arsenal of Zarizyn at a cost of $12,500,000 — the largest in Russia. Besides that, Zaharoff and certain English interests with whom he was working got large contracts through the St. Petersburg Iron Works and the Franco- Russian Company. With the Russian Shipbuilding Company he got contracts to build two battleships, while Beardmore, Vickers' subsidiary, got a dockyard and a cannon factory. This was a severe blow to Schneider. And all the time that Zaharoff was working for this he had a paper in Paris, Excelsior, which was pumping out propaganda continuously for more French loans to Russia — French loans that Russia could spend with Vickers.
Schneider now turned his attention again to salvaging the Putilov works and strengthening his hold upon it. He could get no more financing from l'Union Parisienne, because it already had too much tied up in Putilov and frozen in Balkan investments. He appealed in desperation to the Societe Generale, which was secretly allied with Zaharoff and the English, though a French bank. He was, of course, refused. Indeed the Societe Generale took advantage of Schneider's embarrassment, doubtless assisted by Zaharoff, to force Schneider out of Putilov altogether. It became a fight between two French banks and a French munitions magnate for Russian business. But at this point Mr. Schneider executed one of those tactical movements we encounter in an Oppenheim international mystery novel.
One day Paris read in the Echo de Paris a brief dispatch, datelined in St. Petersburg. "There is a rumor," it reported, "that the Putilov factories at St. Petersburg will be bought by Krupp. If this information is well founded, it will cause great concern in France. It is known indeed that Russia has adopted French types of guns and munitions for her naval artillery and coast defenses. The greater part of the material produced at this time by Putilov was made in collaboration with the Creusot factories and the technical staff which the latter sent to the spot."
Here was a provocative item packed away in this little paragraph. Putilov made French guns from French plans. Krupp would get Putilov. Into the German hands would fall all the French ordnance secrets. This was the alarming message in that dispatch. Most disturbing of all, France's great secret gun — her carefully guarded 7 5-millimeter — would now come into the possession of Krupp's engineers. The little item swelled rapidly to a press sensation. Krupp denied the story. Vickers, also linked with the sale in some papers, denied it. France must not suffer this disaster. Russia wanted a loan of $25,000,000 for railway rehabilitation. The ministry appealed to patriotic Frenchmen to band together to make the Russian loan and as a condition perpetuate Schneider's hold on Putilov. The pressure was too great to withstand. The loan was made. Schneider got his financing for Putilov. Even the Societe Generate had to help Schneider.
It was some years before France learned that the whole dispatch incident was a hoax. Mr. Albert Thomas, director of the International Labor Office in Geneva, in 1921 made a speech there describing how French industrialists boasted to him that they had forged the St. Petersburg dispatch in the office of Echo one night at ten o'clock, and how they had done it not because Putilov was threatened by Krupp but by another French group. They did not hesitate, in this contest for control of a Russian plant, to stir up public opinion against Germany, to set the old chauvinist pot to boiling.
Zaharoff had failed in his maneuvers to drive the French out of Russia altogether, but he captured for Vickers and other English arms makers the largest share of Russia's munitions millions.
Thus the arms makers drove Europe along up to 1914. The airplane had arrived, and Vickers added airplane production to its growing interests. In Paris M. Zaharoff endowed a chair of aviation at the Sorbonne. Indeed, M. Zaharoff, for all his pains to elude the spotlight, found that revealing beam playing upon him at intervals and to his discomfiture. Who is this M. Zaharoff? What is he? To what country does he owe allegiance? He was born in Turkey. He is a Greek. He is a French citizen. He is an English businessman. But what country does he serve? And what sort of game is he playing in France? These were not pleasant questions for one who, indeed, had what Mr. Roosevelt calls a passion for anonymity. Hence the endowed chair at the Sorbonne. And then a home for French soldiers. His name appeared upon subscription lists for all good French causes. And then the French ministry conferred upon him the rosette of an officer of the Legion of Honor — a reward for the chair at the Sorbonne.
Vickers grew, spread out — plants in Britain, Canada, Italy, Africa, Greece, Turkey, Russia, New Zealand, Ireland, Holland; banks, steelworks, cannon factories, dockyards, plane factories, subsidiaries of all sorts; an arms empire. It had share capital larger than Krupp's and had more extensive connections and possessions than Krupp's. And this growth was chiefly the work of the French citizen of Greek blood who, acting the role of ambassador- salesman, had planted the Vickers standard all over the world, from Ireland to Japan and from the North Sea to the Antipodes.
It was done with the aid of British-government backing and pressure, the immense financial resources of British finance; by means of bribery and chicanery, by the purchase of military and naval authorities and the press wherever newspapers could be bought. It is a dark, sordid story of ruthless money getting without regard for honor, morals, and either national or humane considerations, while the Europe which they upset with their conspiracies and terrorized with their war scares, and to which they sold hatred as the indispensable condition of marketing guns, slid along with the certainty of doom into the chasm of fire and death in 1914.
On March 18, 1914, on the very brink of the coming disaster, Philip Snowden, disease-wracked, crippled socialist labor leader rose in Commons to make a speech. When he had done, he had rocked the British Empire with his disclosures. For two years a young Quaker socialist named Walton Newbold had been tracing with infinite pains the tortuous trail of the international arms makers. And Philip Snowden had in his possession the fruits of that long quest when he rose to speak. One by one he pointed out cabinet ministers, members of the House, and named high-ranking officials in army and navy circles, persons of royal position, who were large holders of shares in Vickers and Armstrong, in John Brown and Beardmore, shipbuilders.
The profits of Vickers and Armstrong had been enormous, and the most powerful persons in the state and the church and the nobility had bought into them to share in the profits. Vickers had among its directors two dukes, two marquesses, and family members of fifty earls, fifteen baronets, and five knights, twenty-one naval officers, two naval government architects, and many journalists. Armstrong had even more — sixty earls or their wives, fifteen baronets, twenty knights, and twenty military or naval architects and officers, while there were thirteen members of the House of Commons on the directorates of Vickers, Armstrong, or John Brown. "It would be impossible," said Snowden, "to throw a handful of pebbles anywhere upon the opposition benches without hitting members interested in these arms firms."
Ministers, officers, technical experts moved out of the government, out of the cabinet, the navy, the army, the war office, the admiralty, into the employ of the munitions manufacturers.
Snowden quoted Lord Welby, head of the Civil Service, who only a few weeks before had denounced the arms conspirators. "We are in the hands of an organization of crooks," said Lord Welby. "They are politicians, generals, manufacturers of armaments and journalists. All of them are anxious for unlimited expenditure, and go on inventing scares to terrify the public and to terrify the Ministers of the Crown."
Every business attracts to itself men who have the taste, talent, and the morals suited to its special requirements. This armament world of Europe was a behind-the-scenes world of intrigue, chicanery, hypocrisy, and corruption. It involved a weird marriage between burning patriotism and cold, ruthless realism. And the men who rose to leadership in it were men who combined the vices of the spy, the bribe giver, the corruptionist. They played with an explosive far more volatile and dangerous than anything made in their laboratories — chauvinism — and they did it with ruthless realism. There was, indeed, something singularly brutal about their realism.
The trail of that vast armament effort between 1877 and 1914 is stained by a record of bribery of admirals and generals, civil servants of all degrees ranging from cabinet ministers to messengers. One German armament maker said that "Krupp employs hundreds of officers on leave or withdrawal at high salaries for doing nothing much at all. For some families Krupp factories are a great sinecure where nephews and poor relations of officials whose influence in war is great find themselves jobs."
In 1913, a year before Snowden's exposures in the House of Commons, Dr. Karl Liebknecht, socialist leader in the Reichstag, made a series of grave charges against German armament leaders that resulted in the trial and conviction of the secretary-superintendent of the Ministry of War, four arsenal officials, and four lieutenants and others, including Brandt, the Berlin agent of Krupp. A year later, about the time that Snowden was shocking his colleagues in Parliament, Liebknecht again brought a series of charges against the corruption of Japanese officials by Siemens-Schuckert, another German arms concern. This led to the scandal unearthed by the Japanese Diet and showing that M. Zaharoff's firm of Vickers, along with the Mitsui Bussan Kaisha, had paid out $565,000 in bribes to Japanese officials to clinch the contract for the building of the battleship Kongo. Of course no espionage could follow the numerous and devious trails of the arms makers. It is strange that even so much of their corruption came to light. But what was exposed can be taken as no more than samples of the manner in which their business was conducted.
The whole excuse of this industry was national defense. Yet these enterprises were as busy supplying the armies of their enemies as the armies of their own countries. Up to the time of Alfred Krupp's death in 1887 he had made 24,576 cannon of which only 10,666, or less than half, were sold to the fatherland for national defense. The rest went to Germany's enemies and neighbors. Some of them — Austria and China — were supposed to be her allies. But Austria's Krupp cannons sent death through German ranks in the Austro- Prussian War, and when, in the Boxer rebellion, a German warship attacked a Chinese fort, the cannons Krupp sold to Li Hung Chang dealt death and destruction to German sailors. When Italy and Turkey fought in 1911 Turkey used a fleet largely supplied by Italy. And when Italy and Germany fought in the World War, Italy had a fleet of seventeen vessels built in German shipyards. Zaharoff had got from Turkey contracts for two dreadnaughts and a fleet of destroyers to patrol the Dardanelles, which were conveniently on hand when the British soldiers were landed in 1915 to attempt to carry that stronghold. Earlier still, British Tommies in South Africa were mowed down by Maxim's quick-firing cannon — the pom-poms — which Zaharoff for Vickers had sold to the Boers. The story is an endless one. It includes even the sinking of the Lusitania, which played so large a part in bringing America into the war. For this was the feat of a German submarine built upon plans supplied before the war to Austria by the Electric Boat Company, American submarine builders.
The fame of Krupp — the part he, Alfred, and his son Fritz played in the development of the junker regime in Germany — gives to the name Krupp a kind of premiership among the Merchants of Death. And while Krupp never attained the size and expansion of the Vickers firm that Zaharoff built, and particularly of the Vickers- Armstrong firm, when these two were combined after the war, yet a special notice ought to be taken here of this vast German arms machine. Old Alfred Krupp, high-handed, overbearing, ruthless pursuer of wealth, died in 1887. The little steel plant at Essen had only about thirty employees when he began work in it. When Zaharoff entered the arms industry in Greece it had grown to a great enterprise employing over 16,000 men. Old Alfred went to his death a wretched, isolated misanthrope. He left as his heir his son Fritz, thirty-three, delicate, shy, sensitive, unpromising, who had filled various posts in the business since he was twenty in preparation for his destiny.
Fritz Krupp immediately embarked upon a policy of expansion, making armor plate, buying up shipyards at Kiel to be ready for the era of naval expansion that the youthful von Tirpitz was even then brewing.
Bismarck was let out, the last brake upon unrestrained militarism was removed, young Kaiser Wilhelm became a close friend and frequent visitor and hunting companion of Fritz Krupp. Von Tirpitz was made Secretary of the Admiralty, the first naval act was passed to spend 150 million marks on ships, and Krupp got the lion's share. The German Navy League was called into being. With the aid of large subsidies from Krupp and Stumm and other arms patriots, it unloosed upon the German people a flood of highpowered patriotic propaganda, backed by the Kaiser. The junker age was now in full career. Wilhelm ordered that half of all armament contracts be awarded to Krupp and the rest divided among the other German munitioneers. Germany kept her arms contracts at home. Krupp's mills, shipyards, and docks became indispensable to Germany, not only for war purposes but for peace. It was a vast industry that employed many men and provided still more employment among all the raw-material industries upon which it drew. When the Hague conference was discussed in Germany, looking toward disarmament, the militarist ministers asked what would become of Krupp's business if Germany disarmed. They put that in writing, and the Kaiser wrote upon the memorandum the question, "How will Krupp pay his men?" Armament had become a cornerstone of the German internal economic policy.
Fritz Krupp grew ever richer, worth 119 million marks in 1895, 187 million marks when he died in 1902. He had an income of seven million marks in 1895 and twenty-one million in 1902. He had put aside the severe manner of life of the crusty old Alfred. He had become an industrial monarch. He dwelt in three great German castles — Hugel on the Ruhr, Sayneck in the Rhine Valley, and Meineck in Baden-Baden — and was a member of the Prussian State Council, of the federal House of Lords, a Privy Councilor, surrounded by flatterers and parasites.
He was destined to a melancholy end. A man of strange tastes and mystifying behavior, he kept his wife in an insane asylum and acquired a place at Capri, the Hermitage of Fra Felicia, which he called the Holy Grotto. He had attendants clad in the gowns of Franciscan monks. He formed an "order" — an association of men, the members of which had keys to the Holy Grotto. There gargantuan feasts were spread. There the Cannon King II held wassail until the dawn sometimes — orgies, these feasts were called by the islanders. Presently Neapolitan papers printed stories about them. One German paper, the Vorwdrts, retold the tales, more than insinuating that this was a homosexual "abbey." Fritz Krupp sued the Vorwdrts. Socialist deputies flew to the charge, the episode became a national scandal in which the Kaiser felt called upon to intervene.
Then on the night of November 21, 1902, when the prosecution of the Vorworts was being prepared, Fritz Krupp died alone in his bedroom. Whether he died of a stroke or killed himself remained a subject of violent controversy in Germany for many years. Certainly, contradictory reports about his manner of death were issued. The Kaiser went to Essen and walked on foot behind the corpse to silence scandal. The prosecution of the Vorwdrts was dropped. And the widow, until Fritz' death held as an unbalanced person, assumed command of the vast enterprises and administered them for a while with drive and vigor.
When the war broke over Europe the moment of paradise for the arms makers was at hand. At first glance it may appear singular that the activities of Zaharoff during the war remain so obscure. But if ever there was a time when Europe needed no munitions salesmen it was after 1914. The salesman's work was done. The war — modern war, the greatest, most insatiable customer of the munitioneers — had come into the market. Generals and admirals clamored for more and ever more arms and explosives. The work of the salesmen of death was over, for the moment, anyway. Therefore Zaharoff's industry did not need his peculiar abilities.
But the moment came when Britain and France desired Greece as an active ally in the war. This was when England launched her attack upon the Dardanelles. The Greek government was divided. The pan-Hellenic Venizelos, his majority in the chamber, and the National Council favored joining the Allies. Constantine, King, brother-in-law of the Kaiser, pro-German, favored neutrality. He was popular in Greece because of the recent Balkan victories. The King dismissed Venizelos. In June the voters returned Venizelos to power. The chief objective of the Allies at the moment was to keep Bulgaria out of the war, hence the threat of Greek participation on the Allied side. Bulgaria mobilized in September, 1915. Venizelos ordered a countermobilization. The King permitted it until he heard that Venizelos proposed to go to the aid of Serbia. Then he dismissed the Premier again.
At this juncture Zaharoff's offices were enlisted. When Venizelos was dismissed, Constantine named Skouloudis, Zaharoff's old friend and benefactor, as Premier. Perhaps this may have accounted for Zaharoff's interest. Perhaps he would be able to work the miracle with Skouloudis. But there was another reason. The Greek problem now literally assumed the form of a conspiracy to dethrone the King and drive him out of Athens. This was a business into which France and England could not very well enter officially. They dared not supply funds for the purpose. After all, Greece was neutral and on terms of friendly intercourse with France. Briand, therefore, drew away from having any direct part in managing or financing a plan to upset the monarchy in Greece. But Zaharoff, a private citizen, could do this, particularly if he supplied his own money. Just before Christmas, 1915, therefore, Zaharoff had a conference with Briand and agreed to assume the job of bringing Greece in on the side of the Allies or of ousting Constantine. Briand notified Venizelos of this good fortune. And Zaharoff set about his task.
Just how much he did personally, what steps he actually originated, and what pressures he organized and directed are not known. The money for the campaign is supposed to have been supplied by him and it is also reported to have run into many millions. Whether it was furnished by him or Vickers or various other interests is also not known. The propaganda in Greece, handled by a French naval attache, had been execrable. He was relieved of his clumsy performances, and an instrument called the Agence Radio was set up to go to work upon the Grecian mind. It resorted to all the familiar devices of international propaganda. It subsidized newspapers, bribed editors, issued pamphlets, financed meetings, and generally managed all the standard techniques of underground activity. For one thing it played heavily upon Allied successes. In Europe every small country wanted to be on the winning side. And Zaharoff's Agence Radio pumped up such endless whoppers about French and English victories that the Russian minister in Athens protested that it was absurd.
Zaharoff, if he tried to do anything with his old friend Skouloudis, failed, for the Premier stuck to the King and worked incessantly for neutrality. But Constantine was growing weaker and Venizelos stronger. Finally, when the time was ripe, Venizelos went to Salonika, where the Allies had landed, and organized a revolutionary government which resulted in the abdication of Constantine in June, 1917. Greece joined the Allies and the following year threw 2 50,000 men into the great Macedonian offensive that forced the surrender of Bulgaria.
This was an important service, for the defeat of Bulgaria, with which Greece's participation had much to do, was the first great crack in the enemy front. Zaharoff was busy in other directions. He endowed a chair of aviation at the University of St. Petersburg and made $125,000 available in England for the study of aviation problems. He subscribed 200,000 francs for a war hospital at Biarritz. Mr. Lewinsohn, his most industrious biographer, credits him, upon the authority of the Paris Temps, with contributing not less than 50 million francs (about $10,000,000 at prewar value) to the cause of England and France during the war.
But Zaharoff was not done with Greece. The armistice did not end the dreams of that relentless Cretan patriot, Venizelos, for the realization of his pan-Hellenic dreams. Zaharoff met Venizelos for the first time in 1918. And at Zaharoff's villa the two Greeks planned great gains for Greece out of the victory about to be won. The story, much oversimplified, runs about as follows. Zaharoff, Greek to the core despite his many other national encrustations, proposed to finance Venizelos in the realization of his dreams of expansion in Asia Minor. In May, 1919, Venizelos won from the allied statesmen their consent to occupy Smyrna. In August, 1920, the Treaty of Sevres gave to Greece Smyrna, its hinterland and a large territory in Asia Minor. With Zaharoff's funds Venizelos began to occupy these territories. Lloyd George, British premier, supported Venizelos completely in these adventures.
But quickly a series of misfortunes overtook the great Greek statesman. First, France lost interest in her Greek ally. Then unrest spread rapidly through Greece against Venizelos. The reprehensible behavior of his subordinates in Athens, while he worked with the powers in Paris, produced profound dissatisfaction, which the agents of the absent Constantine skillfully exploited. However, Constantine's son, Alexander, was King and Venizelos seemed secure with him. Then suddenly, young Alexander, bitten by a monkey, died of the infection, and the whole Greek political situation was thrown into chaos. Venizelos, absent so much at the Paris conferences, had lost control and in an election forced in November, 1920, his ministry was defeated. Within a month Constantine returned to power, Venizelos was an exile, and Zaharoff s plans were in the fire.
But the end was not yet. Constantine pressed on with Venizelos' grandiose plans, launched an ambitious Greek offensive in July, 1921, suffered a decisive defeat at Sakaria, and in September was driven from Smyrna by a revamped and refurbished Turkish army under Kemal Pasha, which burned that hapless city to the ground in one of the great disasters of history. Constantine was forced again to retire. By this time Lloyd George was being bitterly assailed in England for accepting the advice of Zaharoff, and, in the end, the ministry of Lloyd George was wrecked upon the rock of the Grecian debacle. Zaharoff, we are assured, lost an immense slice of his fortune in this daring and ambitious design to create a great Hellenic empire in Asia Minor.
But this scarcely tells the whole story. Lord Beaverbrook had said that "the destinies of nations are Zaharoff's sport." It was not all sport. It was the kind of sport — gamble is the better word — in which the wily old schemer played for high stakes. As early as 1918 Zaharoff began to plan for certain undisclosed adventures. While the armies of the world strained on to the last scene of the war, Zaharoff laid plans for the coming peace. He bought a bank in Paris — the Banque Mayer Freres — renamed it the Banque de la Seine, reorganized it, capitalized it at 12 million francs, and very quickly increased this to 30 million. This was about the time he met Venizelos and concocted with him the Grecian program.
Later, in 1920, the Greeks had occupied Smyrna and the Allies were in possession of Constantinople. At that time, as the Greeks prepared for their offensive in Asia Minor, he founded a new bank in Constantinople — the Banque Commerciale de la Mediterranee. Had not Beaverbrook said, "In the wake of war this mysterious figure moves over tortured Europe." This bank was capitalized at 30 million francs, its ownership resting in the Banque de la Seine. It set up for business in the quarters of the Deutsche Orientbank. Next he organized the Societe Frangaise des Docks et Ateliers de Constructions Navales and planned to take over the docks of the Societe Ottoman. For whom? All these companies were French in name at least — there was no smell of the hated Briton anywhere. But this would have given Zaharoff control of the most important naval docks in Turkey. Could it be for Vickers? For whom else? But the Turks refused to let M. Zaharoff have these valuable properties. And when this occurred did not the British government demand that Kemal Pasha turn them over to Vickers and Armstrong?
There was something more than Greek patriotism in Zaharoff's league with Venizelos. Beaverbrook said: "The movement of armies and the affairs of governments are his special delight." He had inspired the movements of the Greek armies. He had insinuated himself as the adviser of Lloyd George in Asia Minor. The British Prime Minister had made Zaharoff's plans part of his policy. Zaharoff had spent, it was said, four million pounds — $20,000,000 — on the Greek campaign. But there is really no evidence of this. So far as I can find, the statement rests upon a single question, by a member of the British Commons, Mr. Aubrey Herbert in 1921, during an interpolation — a question which Mr. Bonar Law parried. How much Zaharoff spent and whether it was his money or that of the English armament firms under his leadership, who were using the disturbed state of eastern Europe to get possession of valuable properties there, remain completely unriddled. Their plans did not turn out well. The collapse of what is called M. Zaharoff's personal war with Turkey — the Greco-Turkish War of 1920-22 — the disastrous defeat of the Greeks, the awful tragedy of Smyrna, and the execution of most of the Greek cabinet ruined all Zaharoff's plans and brought him the loss of millions.
But long before the disaster the name of Zaharoff was being whispered around the clubs in London as the author of Lloyd George's highly unpopular policy in Greece and Turkey. Mr. Walter Guinness attacked the Prime Minister in the House on this score in August, 1920, when the Turks started their vigorous counterattack. The next year Lloyd George was again assailed in Commons with greater effect by Mr. Aubrey Herbert. And when the great catastrophe at Smyrna shocked Europe, Lloyd George found himself at the end of his rope and resigned.
These Turkish enterprises were not the only fields into which Zaharoff's Banque de la Seine ventured. Very quietly, without fuss or trumpets, the Banque de la Seine became the owner of a company called the Societe Navale del'Ouest — a shipping company equipped to transport oil. Then another company appeared — the Societe Generale des Huiles de Petrole. Fifty-five per cent of its stock belonged to the Societe Navale de l'Ouest, the Banque de la Seine, and Zaharoff, and forty-five per cent to the British government-owned Anglo-Persian Oil Company. This Societe Generale was no small affair. Its capital in 1922 came to 227 million francs. It took over or formed other corporations with refineries, so that by 1922 Zaharoff had organized in France a British-owned integrated oil industry.
These projects were typical of the Zaharoff technique. In both cases he was acting as a Frenchman, a citizen of France, organizing what seemed to be French companies — one group to exploit the armament possibilities of Turkey and Greece for Vickers, the other group to exploit French territory for the Anglo-Persian oil interests of the British government. Always a large part of the working machinery and certainly the meaning of Zaharoff projects were underground. He was the mysterious entrepreneur, the schemer moving in the dark, playing with behind-the-door intrigues, twisting silently along tortuous routes for undisclosed agents. Various writers have woven different surmises out of all these performances. But unfortunately most of the factors in the problem of Zaharoff's designs remain unknown. The most that can be said with assurance of certainty is that he, accepted as a citizen of France, honored by the ministry, and enjoying the confidence of her most powerful ministers, used France — as indeed he had always done — as a base for managing an English trade offensive, trade in arms and in oil in France and the Near East, in direct conflict at many points with the French government's own objectives. He is credited with immense losses in the fatal Greco-Turkish War. Doubtless he lost heavily, but doubtless also, his losses were shared by his colleagues in Vickers.
He is also credited with being able to offset these losses with his new profitable oil investments. What these investments were worth to him must also remain a mystery. In the end his Banque de la Seine fell upon troubled days and he let it go. After a brief effort to adjust it to the new conditions, he saw, doubtless with complacence, others take it over. It is an extraordinary feature of these Grecian and Turkish and Anglo-Persian oil transactions that, though they form part of the history of the period that has been raked over by historians, and though Zaharoff beyond doubt was the field marshal directing them in France, his personal movements throughout remain in complete obscurity. No major figure has succeeded so completely in cloaking his movements as this master-intriguer.
Zaharoff suffered losses, staggering ones. Seemingly the war had brought a magnificent harvest for the war profiteers. In America firms like Calumet and Hecla Copper had had, at the peak, as much as 800 per cent profit on their capital stock. In the two years of 1916 and 1917 the United States Steel Corporation showed a profit of $1,100,000,000. The Bethlehem Steel Company averaged profits of $48,000,000 a year during the four years of the war. In the year before the war Vickers had a profit of roughly $5,000,000.
During the war, of course, it drove forward in a hot frenzy of production. It delivered to the armies and navies 100,000 machine guns, 2528 naval and field guns, thousands of tons of armor plate, built four battleships, three armored cruisers, fifty-three submarines, three subsidiary vessels, and sixty-two smaller boats. Under a British act its earnings could not exceed by more than twenty per cent the average of the two years preceding the war. But its capital was greater and its production was greater and earnings were calculated proportionately on production.
A day came, however, when all those thousands of guns that Vickers and Armstrong and Krupp and the rest had made for the warmakers went terribly silent. The greatest disaster of all had fallen upon the arms makers — the disaster of peace. As one writer has put it, Krupp's immense tangle of machines in Essen "stopped with an audible jerk." Suddenly there was nothing for the 165,000 employees of Essen to do. It was the same in Sheffield. It took the men who ruled these great mills a little time to realize what had happened to them. The great expansion of plant during the war was now no longer needed. And, for that matter, the expansion that preceded the war was, for the moment, excessive.
But apparently Vickers believed it could survive. How far Zaharoff's counsels ruled in this error no one has told. He was the driving spirit of expansion always. He was directing in France the extension of operations into the Near East. He went to Rumania to bargain with the government. Representing Vickers, he offered a loan of three million pounds to save Rumania from a currency collapse, asking in return a mortgage upon the Rumanian railroad revenues. This has a bearing upon his attitude toward the expansionist policy of Vickers after the war. A new arms concern was started in Poland in combination with Schneider, a shipyard was built on the Baltic, munitions factories were taken over in Rumania, the British Westinghouse Company was absorbed, the company went into the production of railroad equipment. It actually increased its investment in new plants by $85,000,000.
Doubtless they believed there was life in the old militarist carcass yet. There were the new nations just formed which had to have weapons. Then their greatest competitor was literally wiped out. Krupp was required by the Allies to destroy 801,000 tools and appliances, 157,000 cubic yards of concrete and earthworks, 9300 machines of all sorts, 379 installations, and 159 experimental guns, and was forbidden to manufacture arms. Krupp became a huge warehouse and miscellaneous fabricator of all sorts of things. And so Vickers and doubtless Zaharoff believed there would be plenty of orders again when the world settled down to its routine of business, diplomacy, intrigue, treaty violations, ancient hatreds and new ones again. And they were right. But it would not come in time. For the time being the game was up.
Vickers went from loss to loss and from crisis to crisis. A committee had to be named to look into its affairs. The report was a dark one. It called for drastic reorganization, shrinkage, liquidation of stock. The alternative was bankruptcy. The reorganization was effected. Two thirds of the stock was wiped out. Douglas Vickers was eliminated. Sir Herbert Lawrence became its head. Zaharoff, sustaining a huge stock loss, doubtless slid quietly out of any important place in the control thereafter. This was in 1925. A little after this, Armstrong was in even worse trouble. It suffered reorganization which ended in a combination with Vickers, and Vickers took the lion's share. The firm became Vickers-Armstrong. This was in 1927, just fifty years after Basil Zaharoff in Athens had become a five-pound-a-week salesman for Nordenfeldt, later to be merged with Vickers. And so Vickers' directors met and presented to Sir Basil Zaharoff a cup on the completion of his half century of service with the firm and "as a mark of their great appreciation of the valuable work he has done for them and of their sincere gratitude and concern."
The frowns of Sir Basil's war god, however, did not leave him destitute. He had lost a few hundred million francs. But there were BASIL ZAHAROFF 369 many millions left. What he had lost, of course, was his place at the center in the great game of moving armies, gambling statesmen, scheming gun peddlers. He lived in his mansion in the Rue Hoche in Paris for some months each year, then in his Chateau Balincourt on the Riviera and the Hotel de Paris in Monte Carlo in the severe winter months. He had been an old patron of the beautiful Blue Coast. The Casino in Monte Carlo, after the war, was in trouble. Its old owner, Camille Blanc, somehow had lost touch with the changed world, particularly the changed world of money. The Prince of Monaco, in whose domain the great Casino nestled, wanted to get rid of Blanc, to bring in a business management of the institution that supplied him with his revenue and his small principality with its support. He approached Zaharoff and, for some reason, the aging munitioneer was interested. He got hold of the shares and, with the aid of the Prince, shouldered Blanc out of the place and became its master. The Casino was a natural moneymaker. It called not for any special magic but merely for money and a thorough business administration. This Zaharoff supplied. He did not manage it himself. He put in his own men. And it paid him golden dividends.
It was not altogether an unbecoming spot to end his strange career — this singular little nation of twenty thousand souls, living on a rock in the Mediterranean, a Prince ruling the tiny entity with his little army of a hundred and twenty men, a single business enterprise, the Casino, paying all the bills, supporting most of the population. There they ruled, two old nabobs — one the civil despot, the other the economic despot, owning the economic fountain out of which all the taxes and wages of the place came; the Prince of Monaco and Sir Basil Zaharoff, twin rulers in a comic-opera state that lived by gambling. Zaharoff's wise administration brought him rich profits, and when he had made enough and was weary of the business — and perhaps of all business — he sold out at a great profit.
Meantime on September 22, 1924, in the little village of Arronville outside Paris, he and the Duchess of Villafranca, who had been his unwedded consort for nearly forty years, were married. And then eighteen months later, in 1926, his new wife, his affinity of forty years, died at Balincourt. And this was the end of Zaharoff. The tedious business of straightening out the affairs of Vickers had to be got through with. This was done the next year.
After that Sir Basil Zaharoff continued to grow older, but did not die until 1936. There came a time when he grew feeble and had to be wheeled around Nice and Monte Carlo in a chair. What does such a man think, sitting feebly in a chair, pushed around like an infant, as he surveys the days of his power when he strode the earth like a titan, had his hand on the wires in the ministries of Europe, and felt a hundred hills shake in the roar of his cannon. Zaharoff's world was done, at least for the time being. The armament makers had proved, beyond all peradventure of doubt, the futility of their weapons and the folly of the regimes upon which they flourished. Their whole crazy world had come down in fragments around their ears. But then, after a brief interval of remorse and penitence, as the old gun man grew grayer and feebler, the dark industry he had helped to build got back its wind and its energy and grew bigger and mightier than ever. In the year that he died, the gun mills were grinding faster and more furiously than they were in 1913, the nations that had slaughtered each other with the guns of Zaharoff and company were preparing to repeat the crime with other and deadlier weapons.
The munitions industry, of course, was and is nothing more than another way of making money. Its techniques differ only in that its direct customers are governments and its sales practices are adapted to that necessity. Its dark sins have been in the region of selling. But even in this, it has resembled many of those other industries that must find their clients among public officials. It used bribery of officers, penetration of cabinets and bureaus, intimacy with the powerful. All these weapons Zaharoff knew how to employ with consummate skill. We find him on terms of intimate collaboration at one time or another with the most powerful men in the state — with Clemenceau in France and Lloyd George in Britain, with Briand, foreign minister, and, of course, with war and navy ministers everywhere, with Venizelos in Greece and his opponent Skouloudis, with Bratianu in Rumania, where also we find him entertained by the Queen, who actually intercedes with him to assist the tottering throne of Greece upon which her daughter sits as consort. Such a man as Lord Sandhurst, Undersecretary of State for War in England, is trustee for Vickers bonds, and Arthur Balfour is trustee for the bonds of Vickers7 affiliate, Beardmore. In Paris, Zaharoff is a director of the Bank of France.
It is this side of the munitions business that brings it into disfavor. For it is not content to corrupt officials as public contractors do, but mixes up in state policy to create disturbance. It flourishes only in a world where hatreds and controversies, dynastic and economic and racial and religious differences between peoples flourish. Hence it has spared no pains to keep these mortal quarrels alive, to alarm peoples and ministers with war scares, to breed suspicion and distrust. First among all the practitioners of this dark art was Zaharoff. There is little doubt that he loved the game. He was the troublemaker feeding upon trouble — the neighborhood provocateur raised to the dubious dignity of free-lance statesman. Beaverbrook was right — "The destinies of nations were his sport; the movement of armies and the affairs of government his special delight. In the wake of war this mysterious figure moved over tortured Europe."
He cared nothing for acclaim, apparently, or if he did he realized it did not run well with his business. He did not advertise himself with magnificence like Morgan or Krupp; he did not go in for pageantry like William H. Vanderbilt or Fugger. He hired no shirt stuffers to blow up his fame like the Rothschilds and Rockefeller. But he did find it necessary to establish credentials of respectability and power. The name Zaharoff was passed around coated with odium in more than one critical period. And so he contrived at the proper moments to have put upon him the hallmark of governments. In 1908 he was made a Knight of the Legion of Honor in France. In 1913 he was promoted to be an Officer of the Legion of Honor, having endowed a chair of aviation at the Sorbonne. The next year, at the very hour when Paris police were thrown about his house to guard him against the possible anger of the radical groups because of the assassination of Jaures and when his lifework was about to flower into the most murderous of all wars, he was raised to be a Commander of the Legion of Honor. Then in 1918, before the war ended, and doubtless to advance the ill-starred campaign he was organizing in Asia Minor, he was awarded the Grand Cross of the Order of the British Empire and became a Knight of the Bath — Sir Basil Zaharoff. A little later France again elevated him to the dignity of Grand Officer of the Legion. She was not done with her eminent citizen. In 1919 he was given the Grand Cross of the Legion, the highest decoration the republic had to offer. Thus, two crosses gleamed upon his breast — the cross of Britain and the cross of France — and, incidentally, the cross of Christ, the Prince of Peace, upon the bosom of this angel of war and blood.
Benefactions, nicely placed, preceded these honors — a chair of French literature named for Marshal Foch at Oxford, a chair of English literature named for Marshal Haig at the Sorbonne. And, of course, Oxford made him a doctor of civil law, though his specialty was the highly uncivil law of war. He gave 200,000 francs to enable the French athletes to participate in the Antwerp Olympics, endowed the Prix de Balzac — a literary prize — established the Pasteur Institute in Athens, and put 25,000 pounds at the disposal of the clinic for poor children there, provided a becoming Greek legation building in Paris, and showed some other evidences of an interest in his native Greece. These benefactions need not be exaggerated. A twenty-five-thousand-pound contribution by a man into whose pockets countless millions are rolling is no more than a dollar bill that the ordinary Christian tosses into the plate on Sunday or the ten-dollar donation to the Salvation Army at Christmas. The good Sir Basil never pinched himself or denied himself anything to aid any cause. On the contrary, most of his gifts were investments in good will when good will was sorely needed.