Arizona republican., 1916-11-12
ALLEGED SPY FACES CHARGE
 OF EXTORT|ON
Republican A. p. Leased WireJ

lRepuDlICdn "A. r. Leased WlreJ
 WASHINGTON, Nov. 11.-Karl ArmsaTd Graves, self-styled inter- rational spy and magazine writer, was arrested here today by agents Of .he department of justice and charged with attempting to extort $3,O00 from Countess von Bernstorff, wife of the German ambassador by threatening to publish letters alleged to contain matter showing her infirmities and failings."
 "Officials of the embassy also all lege that Graves had in his possession what apparently were confidential coded diplomatic dispatches from the German government to Count von Bernstorff. The prisoner told the fed eral agents he oD.ained all the do-u- ments from persons who smuggled then past the British Censors on the steamship oscar II. The warrant upon which he was arfaigne1 tonight and held on S2,00e bail for a further hear ing. charged him also with bling ing into the District of Columbia letters stolen in Hobekeh, N. J., where the Oscar II docks.
 In a statement after his arraign- ment ct whi h he entered a plea of not guilty, Graves asserted that he had no intention of blackmailing the countess, that he objected to the us of the word blackmail, and that the narers he mad in his possession were purely diplomatic" in character. Much interest was aroused in offi- cial quarters at the indirect exposure of tie manner in which persons and officials in Germany apparently are avoiding thh British cen. orship in communicating with the German en- hassy here.
 The arrest of Graves furnished a Sramatic conclusion to negotiations which had been in progress for a week between him and Prinz Hatz- feldt. counsellor of the German en- hassy Graves is said to have come to Washington last week and called at the embassy.
 He was known there as tie man V ho had published widely Wnat ne alleged to be important secrets of the German war office and the HohenzOl- lerns. lie also was known as a man who previously had described himself as a member of the German secret service and later as an enploye in foreign fields of the British foreign office "The master spy he called himself. Officials allege that upon entering the office of Prince Hatfield. he made it known that he had in his possession the papers which brought about his arrest today. One letter which he ex- hibited was to Countess von Bern storff from her son. an officer in the German army. Re said, according to statements made by federal officials tonight. that he had other letters that would prove "embarrassing" for the countess should they te published. | The official dispatches were said to he useless to him for the reason tlla | he could not decipher them. ell is alleged to have asked for 5000 in cash if he delivered the papers. He also is alleged to have asked Prince Hatzfeld to prepare and sign state ment that the money had been paid for services rendered the German gov ernment.
 Embassy officials said Graves threatened to turn over some of the documents to White House officials if the s3.000 were not forthcoming. Officials of the embassy were con- vinced that the letters had been ob- tained in some manner from a confi- dential messenger. whose identity still $ undisciosed. Federal officials de- clare Graves gave Prince Hatzfeldt q certain time within which he was to comply with ms cOndulOnS-
 Prince Hatzfeldt communicated with the district attorneys office here as soon as Graves left his office Anoth- CT meeting was arranged and yester- day Graves telegraphed from New York that he would present himself later in the day Prince HatzfeIdt put S3.000 into an envelope, and, with two agents of the department of jus tice, went to his home here to await Graves. He failed to make his ap- pearance. however
 This morning Graves called at the embassy and requested an appoint ment with Prince Hatzfeldt at his home. A few hours later he arrived there and conversed with the counsel Tor for half an hour. One federal agent was hiding behind a door in the room. Another was in the street outside. A police detective was near
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