December 1965 | Volume 17, Issue 1
Herr Doktor Albert was very careful with the Kaiser’s money. One day he saved a $1.25 taxi fare—and lost a million dollar’s worth of information
The most frustrated man in New York at 4 P.M. Saturday, July 24, 1915, was a very proper German lawyer named Heinrich Friedrich Albert who stood helplessly in the middle of Sixth Avenue at Fifty-second Street, watching a streetcar glide uptown with his briefcase and the details of the $40,000,000 spy, propaganda, and sabotage ring he operated. Dr. Albert, officially in America as commercial attaché and financial adviser to the Kaiser’s ambassador, Count Johann von Bernstorff, had saved a taxi fare of perhaps $1.25, but it seemed likely that he had just booted the entire structure of the elaborate German secret service network that was flagrantly violating United States neutrality in the European war.
To all appearances Albert was an impassive executive with a penchant for organization and efficiency virtually unmatched in the Kaiser’s service. However, at heart he was a penny pincher and bookkeeper, possessing virtues dear to every middle-class German. It was these virtues that brought the downfall of his splendid house of marked cards. As the German master spy, he had no business riding the Sixth Avenue el, from which his briefcase had been lifted a few minutes before, just to save a few cents.
Although he was spiritually naked without his briefcase, Dr. Albert hurried off to the German Club on Central Park South, where he held an on-the-spot conference with his ambassador’s Prussian military attaché, Captain Franz von Papen, and naval aide, Captain Carl von Boy-Ed, one of the Imperial Navy’s brightest young men. The three of them assessed the events of the afternoon. In their speculation over who now had the briefcase, Boy-Ed, von Papen, and Albert discussed several possibilities and settled finally on some common sneak thief. He would riffle through the papers, find them unintelligible, and return them in good order for a reward. Consequently, they dispatched a subordinate to the office of the New York Evening Telegram to place a classified ad, which appeared on July 27: LOST: ON SATURDAY, ON 3:30 HARLEM ELEVATED TRAIN, AT 50TH ST. STATION, BROWN LEATHER BAG, CONTAINING DOCUMENTS. DELIVER TO G. H. HOFFMAN, 5 E. 47TH ST., AGAINST $20. REWARD .
The niggling reward offer was characteristic of this organization, which had more than $38,000,000 available for the staggering assignment of secretly buying up or tying up America’s war production to prevent it from reaching the British and French. Albert had at his disposal some $27,000,000 in drafts from Germany as well as the proceeds of several successful $7,000,000 issues of short-term German treasury notes floated through a Wall Street investment house. Although lie often dashed off checks for hundreds of thousands of dollars to control munitions factories, he was also quite capable of haggling over an unaccounted-for fifty cents on an operative’s expense account. This great respect for details made Herr Dr. Albert’s group one of the best self-documented rings in the history of espionage. Acting like men who feared the Kaiser’s auditing department more than the enemy, Albert and his subordinates financed the most outrageous acts of arson and sabotage and then compulsively made complete records of persons, places, and payments. Check stubs listed details down to the last stick of dynamite. Even the ring’s chief security officer, a tough Hamburg-American Line detective named Paul Koenig, scrupulously kept double-entry books, accounting for every nickel he spent on spies, tipsters, and saboteurs.
Until the briefcase disappeared, Albeit was one of the least-known men in New York. A heavy-set six-footer with cross-cut sabre scars on his right cheek, a dimpled chin, and a stubby dark mustache streaked with gray, he was in the habit of riding back and forth on the el between his office at 45 Broadway and his comfortable quarters at the Ritz-Carlton Hotel. His bulging briefcase was always with him, crammed with telegrams from Berlin, letters and wires exchanged with hired agents, records of financial dealings, and reports from subordinates.
The spy-ring brain trust was undoubtedly correct in assuming that twenty dollars would be worth more than these papers to a common sneak thief, but unfortunately for them the thief was not common. An agent of the United States Secret Service had snitched the briefcase and not only understood the documents but was absolutely fascinated by them. They formed the link that finally proved that the German secret service was operating a spy ring in America and that it was reporting directly to the German ambassador.
The United States Secret Service had been patiently at work for months, with few tangible results to show for its efforts, since diplomatic immunity protected the really important figures in the German ring. Before President Wilson’s executive order of May 14, 1915, authorizing surveillance of German Embassy personnel in the United States, the Secret Service and its chief, William J. Flynn, had to limit their operations almost entirely to the clerks, technicians, and errand boys in the spy organization. This was hardly enough exercise for Chief Flynn, a vigorous law-enforcement officer of the hammer-swinging school.
At least Flynn had been able to apprehend some of the lesser Germans over passport forgeries. The British were in effective control of the North Atlantic in 1914 and were making it difficult for Captain von Papen to ship home for war duty the German-national reservists who were working in the United States. When the British Navy took to boarding neutral ships and taking off German passengers, von Papen determined to provide his men with neutral-country passports. A forgery bureau was opened at 11 Bridge Street, in lower Manhattan, under the direction of an enterprising German reserve officer and former New York newspaper reporter named Hans von Wedell.
In short order von Wedell spread the word among naturalized Germans that they must obtain their United States passports and deliver them to the German Club. He supplemented this supply by canvassing the Bowery for bums who qualified for American passports and who, for ten or twenty dollars, would hand them over. Mexican, Swiss, Norwegian, and South American passports were similarly obtained. At Bridge Street, where each applicant was photographed and then given a passport whose description of the bearer most closely suited the photograph, there was sometimes a line of loyal Germans waiting in the street. In a few months, von Wedell processed hundreds of passports that successfully passed the British blockade, before he was recalled to Germany for another assignment. His successor, Carl Ruroede, made the mistake of buying four passports from one of Chief Flynn’s operatives, an agent named Albert Adams. Adams collected thirty dollars per passport and also flattered Ruroede into demonstrating the process of altering them while he watched. When the Norwegian steamer Bergensfjord sailed down New York Hay a week later, it was trailed by a U.S. revenue cutter. Agents boarded her and arrested the four Germans travelling on the passports Adams had sold. Ruroede got three years in Atlanta, and the intended repatriates were fined $200 each—paid by von Papen through an intermediary. Also aboard the Bergensfjord however, were Hans von Wedell and his wife, bound for the Fatherland with passports of von Wedell’s own contrivance. These were not questioned. But von Wedell did not get safely home. Before reaching Europe, he was taken oil the liner by a British patrol boat, which then struck a mine or was torpedoed, and carried von Wedell to the bottom of the sea.
Chief Flynn came closer to big-game hunting when he poked into one of Captain Boy Ed’s major naval schemes. Boy-Ed kept an office at 11 Broadway under the alias of Nordmann, and it was here that he worked out a plan to use American ports for a big fleet of German naval auxiliaries. The objective was to provide supplies for German cruisers that had been wandering the seven seas like a dozen Flying Dutchmen, cut off from Germany by the British blockade. Boy-Ed and Dr. Karl Buenz, head of the New York branch of the Hamburg-American Line, spent $750,000 of Albert’s funds to acquire a fleet of fourteen ships in New York, Norfolk, New Orleans, and San Francisco. They were outfitted and prepared for rendezvous with the stranded cruisers. When their American agents applied to Customs for clearance papers, Chief Flynn pounced. He proved that the cargo manifests were fraudulent and that every ship in the fleet was a German naval auxiliary. Buenz and three others were tried and convicted, but Boy-Ed, swathed in diplomatic immunity, was left alone.
On May 7, 1915, the liner R.M.S. Lusitania was sunk with a loss of 1,198 lives; before she sailed, an insolent advertisement appeared in American newspapers, signed by the German Embassy, warning Americans not to travel on British ships because of the risk of being torpedoed. U-boats were becoming active against American freighters, and to top it all oil, the barrage of propaganda from German-American newspapers was getting heavier. The Fatherland , a pro-German New York weekly whose financial backing had been a subject of speculation since its appearance in the early days ol the war, carried a piece justifying the sinking of the Lusitania . The Fatherland’s editor, Munich-born George Sylvester Viereck, compounded the insult by predicting that Wilson would lose the German-American vote in 1916. In a masterpiece of bad timing, von Papen bucked the rising tide of resentment against his country and refused to cancel a performance of Lohengrin at the Metropolitan Opera for the benefit of the German Red Cross on the evening New York got the news about the Lusitania . Von Papen later wrote: “The performance duly took place amid scenes of near hysteria both inside and outside the theatre. The Ambassador decided at the last moment not to appear, and requested Boy-Ed and myself to act as official representatives. While the performance aroused scenes of great enthusiasm in the auditorium, Boy-Ed and 1 were publicly insulted during the interval by a group of British and American journalists, and the violence of the street demonstrations outside left us in no doubt about the rift that had been caused between the two countries.”
As soon as Wilson’s executive order was signed to authorize it, Chief Flynn immediately assigned a tenman squad to keep the Germans under surveillance. A young agent named Frank Burke was placed in charge of a special office for this job, on the top door of the Custom House at the Battery. Burke put shadows on all the important figures he knew about, including Viereck. Von Papen, who had been clomping conspicuously around New York, reacted by taking instructions in evasion from Paul Koenig, the Hamburg-American Line detective. He learned to lead his shadow to Macyଁs or Gimbel’s, change elevators at every floor on the way to the top, go down the same way, and leave by another door. (Sometimes the shadow stuck; sometimes not.) Koenig was an old hand at secret meetings; he was in constant contact with sailors, tug skippers, wharf rats, and longshoremen up and down the waterfront and could produce information on cargo and ship movements anywhere in the harbor. He also had informers elsewhere in New York, including a clerk in the foreign department of the National City Bank who handled the English and French drafts covering payments for war materials and other supplies bought in the United States. These communications often named the railroad moving the shipments and the vessels on which they were consigned—invaluable data for a sabotage unit. The bank clerk, Frederick Schleindl, was paid the princely sum of twenty-rive dollars a week for regularly bringing these documents to Koenig’s office, waiting while they were copied, and then returning them to the bank’s file in the morning before they could be missed.
Flynn, looking into the matter of radio communications between the European capitals and the United States, soon focussed his attention on the German-owned transatlantic radio transmitter at Sayville, Long Island. Since the beginning of the war, the Germans at Sayville had been submitting all messages, before dispatch, to a staff of U.S. Navy censors. However, the messages passed by the censors often bore little relation to those that sputtered faintly across the ocean to Berlin. A prearranged code between sender and receiver could make the pauses between letters and words more significant than the dots and dashes; thus purportedly commercial messages could conceal military information.
Sayville went on the air for four hours at 11 P.M. every night. It was monitored by government stations at Arlington, Virginia, and Fire Island, New York, and also by hundreds of radio “hams” along the North Atlantic coast line, who stayed up hall the night, receivers clamped tightly over their ears, to catch the faint dots and dashes and forward the written transcription the next morning to the government. The difficulty in gathering evidence was that the transcriptions could not show the significant pauses, and the government had no way to amplify and sound-record the feeble messages.
In June, when the German ambassador took a cottage at Cedarhurst, Long Island, as a summer embassy, and installed a direct telegraph line to Sayville, Chief Flynn set out to gather meaningful data. Through the radio bureau of the Department of Commerce (forerunner of today’s Federal Communications Commission), he learned that a Westfield, New Jersey, automobile salesman and radio hobbyist named Charles E. Apgar had recently invented a device for greatly amplifying Morse code signals. Chief Flynn at once commissioned Apgar to record all of the Sayville output for a two-week period. Beginning on June 7, Apgar filled 175 cylinders with four minutes of messages each, without missing a word. The results, when compared with the messages submitted for approval to the censor, were impressive enough to bring about several Cabinet-level meetings, and the United States decided that there were indeed enough neutrality violations in the use of the air at Sayville to justify seizing the facility. It was taken over less than two weeks after Apgar’s nightly vigil was concluded.
The Apgar recordings also led to the identification of a Lehár-operetta spy named Captain Franz von Rintelen, who had arrived in New York in April disguised as a Swiss businessman. Von Rintelen travelled with a Kaiserpass , a personally signed order from Kaiser Wilhelm that in effect gave him equal rank with von Papen and Boy-Ed. He spoke Oxford English without noticeable accent, frequented the best clubs, and almost never went out in the evening except in white tic and tails. An agent of the German Navy, he had been given an independent bank roll, and instructions to devise and carry out plans to interfere with Allied shipping. He annoyed von Papen and Boy-Ed with his romantic approach to sabotage; to the veteran attachés his plans seemed naïve and outlandish. They also feared that his cover identity would be quickly penetrated, endangering the entire German position in the United States. During his first meeting with von Papen, von Rintelen asked for an appointment with President Wilson, a request that von Papen took as evidence of nothing short of insanity. Von Papen compared notes with Boy-Ed, and not even the fact that von Rintelen had brought news from Berlin of an Iron Gross for von Papen and an Order of the House of Hohenzollern for Boy-Ed could soften their decision that he had to go. Von Papen went out to Sayville and in one of the messages recorded by Apgar asked Berlin for von Rintelen’s recall on the grounds of foolhardy recklessness.
Before this message had been relayed to the appropriate Reichsant in Berlin, von Rintelen had settled into the Great Northern Hotel, opened a $500,000 account at a downtown bank, and rented a two-room office on Cedar Street. He hired agents to foment strikes at munitions plants and conspired with a deposed Mexican dictator to bring about a border incident that might involve the United States in war with Mexico.
Von Rintelen also experimented with the more routine methods of sabotage. Aboard the North German Lloyd’s Friedrich der Grosse , which the Allied blockade had bottled up in Hoboken, he put three stranded German merchant-marine captains to work making cigar-sized incendiary bombs. Smuggled into the holds of ships bound for England and France, these bombs caused fires when the vessels were four and five days out. Thirty-three fires were traced to them; finally, four were found intact at Marseilles aboard a Norwegian freighter that had sailed from Brooklyn, and the evidence they provided allowed Chief Flynn and Agent Burke to obtain indictments against von Rintelen and the bomb craftsmen. Rut by this time, von Rintelen had been recalled to Rerun in accordance with von Papen’s request. The British took him off a ship at Falmouth and ultimately sent him back to New York. He was fined §2,000 and sat out the war in federal prison.
This, in brief, was the history of the German subversion effort in America up to Saturday, July 24, 1915, the day that Dr. Albert was separated from his briefcase. Flynn’s men were still dragging through the heat to their repetitive assignments. Frank Burke had intended to take Saturday afternoon off for a ball game, but changed his mind when he got a call at the Custom House from Bill Houghton, one of the men tailing Editor Viereck. Houghton had just followed Viereck to 45 Broadway, the offices of the Hamburg-American Line, and suggested that Burke join him in case Viereck came out of the building with another man. So Burke and Houghton were waiting when at 3 P.M. Viereck emerged with a man who had all the earmarks of a German—and an important one at that, judging from the deference shown him by Viereck. The agents followed the two aboard the uptown el at Rector Street, and when the Germans sat in a cross scat in the center of the car, Houghton sat directly opposite them and Burke just behind them. Burke suspected that the other man might be Heinrich Albert, a man they had heard of but did not know, and decided to stay with him. Viereck got off at Twenty-third Street, trailed by Houghton. A young woman came on board and took Viereck’s scat. Dr. Albert was soon absorbed in a book, his briefcase resting on a scat against the wall of the car.
The train stopped at Fiftieth Street, and was almost ready to move again when Albert realized he was supposed to get off. He sprang from his seat and shouted at the guard to wait. No sooner had he readied the platform than the woman called to him that he had left his briefcase. Burke quickly said, “No, it’s mine,” picked it up, and sprinted for the front door. Albert meanwhile was trying to push back through the rear door, but a fat woman was planted there asking directions of the guard. Burke used the other passengers for cover and was not seen by Albert. However, after the train pulled out, leaving them both on the platform, Albert was between Burke and the stairs, so Burke partially covered the briefcase with his coat, stood against the station wall, and pretended to light a cigar.
After a hasty glance at the people on the platform, Albert rushed down the stairs. Since there was no train in sight and it might be more dangerous if Albert came back up, Burke followed him down the stairs to Sixth Avenue. Albert saw his briefcase and made a dash at Burke, who ran for a rapidly moving open surface-car headed uptown and jumped on the running board near the conductor. In a conversational tone he told the conductor that the man chasing after the car was a lunatic who had just caused a scene on the el. The wild-eyed Dr. Albert, running up Sixth Avenue, seemed to corroborate the story, so the conductor called to the motorman to pass the next corner without stopping. The car continued on, leaving Albert waving helplessly.
One glance at the briefcase convinced Burke that he had done a good Saturday’s work, and he wasted no time in notifying Chief Flynn. Flynn in turn reached his boss, Secretary of the Treasury William G. McAdoo, at his summer home in North Haven, Maine, and took the briefcase up to him. McAdoo and his assistants decided that the contents gave little basis for direct action, but proved beyond doubt that the official Germans in the United States were violating the neutrality laws. After consultation with President Wilson and his adviser, Colonel House, they decided to publicize part of the sensational find in order to alert the public and forestall further activities. McAdoo and Flynn selected some of the Albert papers and turned them over to Frank I. Cobb, editor of the New York World , offering him exclusive use of the documents if he would not say where he got them.
Heinrich Albert’s debut as a New York headline personality came on Sunday, August 15, when the World pieced together the nature of his business at 45 Broadway. Starting on page 1, the paper ran three pages of stories and documents bathing the German subversives in the light of publicity. Albert was portrayed as a meticulous, bookkeeping master spy through whom all chicanery cleared and who was principally concerned about getting value for his Kaiser’s money and maybe even making a profit. An exchange of letters between Albert and Viereck published on the front page answered the question of who was backing Viereck’s newspaper, The Fatherland . Albert was paying Viereck $1,500 a month; a letter dated July 1 regretted that the June payment was being held up until Albert received a new financial statement of the condition of the paper, and stated also that before the payments could be resumed Albert must have an understanding about the future course of the paper’s policy and a voice in the financial management.
The World had a shocker for the American financial community, too. A booming, well-financed Connecticut munitions plant that had sprung up almost overnight and was placing large long-term orders with the country’s major firms for machinery, shell cases, and gunpowder, turned out to be nothing more than a German Potemkin village. The plan for the Bridgeport Projectile Company, conceived by Heinrich Albert and Franz von Papen and approved by the German general staff, called for the sheer waste of tens of millions of dollars. Bridgeport Projectile was in business merely to keep America’s leading munitions producers too busy to fill genuine orders for the weapons the French and British so desperately needed. The false-front company had ordered five million pounds of gunpowder and two million shell cases with the intention of simply storing them. An American industrialist named George Hoadley had built and operated the plant for Albert, deliberately giving the business world the impression that the company was supplying the Allies.
Overnight, Dr. Albert had been transformed from a quiet, industrious, almost unknown businessman into a notorious figure. His story made news for a whole week, and reporters were constantly at his doorstep. Toward the end of the week he issued a 2,500-word statement on the condition that it would be printed in full in the World . All 2,500 words explained that he had been misinterpreted. Mercifully for Dr. Albert’s dignity and his prestige with his home office, the story of how his briefcase had been swiped off the Sixth Avenue el didn’t make the newspapers. The United States took no official action against him, and when America entered the war he was returned to Berlin, where he was placed in charge of foreign assets in Germany. (After the hostilities, as durable as ever, he took charge of army surplus sales. In 1923 he was asked by Chancellor Stresemann to form a government in the Weimar Republic, but he was unable to unite the parties under his banner. Failing, he settled for the consolation prize of becoming very rich as lawyer and adviser to foreign corporations in Berlin. He apparently held no official job during the Hitler years, and after the Second World War he was again active in international business.)
Albert’s briefcase papers had shown that von Papen was involved in a plan to tie up all the American sources of toluol, a key ingredient of TNT, and of liquid chlorine. Just as the World was printing its sensation, von Papen marched straight into another jam. An American journalist whom he had hired for $5,000 to report the war from the German side for the American press was yanked off a ship by the British and his papers confiscated. He was carrying a pouch of letters to Berlin, among them one from von Papen to his wife, bragging that “I always tell these idiotic Yankees they had better hold their tongues.” There was also a report from the Austro-Hungarian government’s ambassador to the United States containing this sentence: “We can disorganize and hold up for months, if not entirely prevent, the manufacture of munitions, which in the opinion of the German military attaché is of great importance and amply outweighs the small expenditure of money involved.”
The Austro-Hungarian ambassador was immediately recalled, but von Papen continued on his merry way, ignoring his press notices and a British white paper on the confiscation of the correspondent’s papers. In September, finding it hard to break a habit of long standing, he dispatched Koenig to blow up a railway bridge over Canada’s Welland Canal, which carries ships around Niagara Falls. Koenig and an assistant headed for Buffalo on the New York Central, but for once Koenig forgot to stop at Macy’s. He was never out of sight of the Secret Service from the moment he left Manhattan. When the two men crossed into Canada for their operation, they were grabbed by the Canadian authorities for launching a military enterprise against His Majesty’s government.
Also in September von Papen was invited to tea by General Leonard Wood, commander of the Department of the East, at Governors Island. General Wood showed his guest plans for blowing up the New York subway and port installations and implied that the American Secret Service had found them in von Papen’s office. Von Papen shrugged off the accusation and ascribed the plans to Allied propaganda aimed at discrediting the Kaiser’s representatives. But General Wood had made his point. The interview ended with polite goodbyes and the subway safe for posterity.
Von Papen made more farewell appearances than Sarah Bernhardt. On October 7, Flynn and Company foiled a conspiracy to attach time bombs to the rudders of ships headed for Allied ports. They grabbed a former German army officer and his brother-in-law starting out on the Hudson River from Weehawken, New Jersey, in a small motorboat with several of the bombs aboard. The plot was easily traced to von Papen and Boy-Ed.
Finally, early in December, 1915, the State Department, slow to bring diplomatic matters to a boil, took another look at the thick files Chief Flynn had compiled, and decided to act. Von Papen and Boy-Ed were declared personne non gratae for unwarranted military and naval activities and ordered to leave the country.
At the end of 1915, von Papen sailed for home, aboard the Dutch liner Noordam , to his career in the army, the chancellorship of his country and, eventually, the prisoners’ dock at Nuremberg in 1946. In spite of having coped for more than a year with the British proclivity for pulling Germans off neutral ships, he let himself be caught unprepared by a British boarding party. They searched his baggage and impounded a whole suitcase of receipts, check stubs, and other mementos of Dr. Albert’s pfennig-pinching spy ring. And so, as luck would have it, the records that the meticulous spy had been saving for some future meeting with the Kaiser’s auditor not only provided the Americans with the means of ejecting German spies but also gave the British enough documentation for a new white paper. Thrift is not always a virtue, after all.