Albert Ballin

ss. The pool agreements that were concluded between the interested companies covered only the cargo business and the steerage traffic. The condition which

e, to the mutual profit of the associated lines. Each company knew that the addition of new steamers to its fleet would only pay if part of a carefully consi

comfort of its boats, in order to attract to its own services as many passengers as possible-the number of first-class boats increased out of all proportion to the actual requirements, and frequent and regular services were maintained by each line throughout the year. There was hardly a day on which first-class steamers did not enter upon voyages across the Atlantic from either side, and the result was that the boats were fully booked during the season only, i.e. in the spring and early part of summer on their East-bound, and in the latter part of summer and in the autumn on their Westbound, voyages. During the remaining months a n

f Europe. The steerage business, of course, relied in the main on the capacity of the United States for absorbing European immigrants, which capacity, though fluctuating, was practically unlimited. The degree of prosperity of the cabin business, however, was determined by the number of people who travelled from the States to Europe, either on business, or on pleasure, or to recuperate their health at some European watering-place, a

ossess evidence of this in the form of a letter which he wrote in 1891 to Mr. B. N. Baker, who was at the head of one of the few big American shipping companies, the Atlantic Transport Company, the headquarters of which were at Ba

ct that in consonance with your expressed suggestion one of the Directors will proceed

will probably have supposed. I have not yet had an opportunity of talking the matter over with my colleagues, and I therefore do not know how far they will be prepared to fall in with my views. But in order to enable

ork Agency for the freight, and a

ow attached to our New York branch whom

cost price the two steamers which are in course of construction in Hamburg at present for our Baltimore Line (320 feet length, 40 feet beam, 27 feet moulded, steerage 8 feet, carrying 3,500 tons on

ney market, and further, owing to the fact that only a small dividend is expected on account of the very poor return freight ruling from North America. I think you would be able to take the shares out of the market at an average of about 7 per cent. above par. We have paid in the l

leet consisting of modern ships (average age only about

Company to obtain in the States a centre of interest and a position similar to that held by the Red Star Line and the Inman Lines in view of their connexion with the Pennsylvania Railroad, etc. It further strikes me that if this proje

again eight years later, in 1899, on the advice of Mr. (now Lord) Pirrie, of Messrs. Harland and Wolff, of Belfast. Important interests, partly of a financial character, linked his firm to British transatlantic shipping; and his special reason for taking up Ballin's proposal was to prevent an alliance between Mr. Baker's Atlantic Transport Company and the British Leyland Line, a scheme which was pushed forward from another quarter. He induced Mr. Baker to come

mount in shares of the Packetfahrt-would be needed to carry it through. Thus the discussions had to be broken off; but the attitude which the Board had taken up was very much resented by Ballin. Subsequent negot

e; but the Atlantic Transport-Leyland concern was enlarged by the addition of a number of other British lines, viz. the National Line, the Wilson-Furness-Leyland Line, and the West Indian and Pacific Line, all of which were managed by the owner of the Leyland Line, Mr. Ellerman, the well-known British shipping man of German descent. The tonnage represented by these combined interests amounted to half a million tons, and the new combine was looked upon as an undesirable competitor, by both the Packetfahrt and the British lines. The dissati

the negotiations which lasted nearly eighteen months and were entered into in order to take precautions against the danger threatening from America, whilst at the same time they aimed at some understanding with Mr. Morgan, because

freight business within an incredibly short space of time. For a concern of the huge size of our own such a situation is fraught with the greatest danger, and our position is made still worse by another circumstance. In the States, a country whose natural resources are wellnigh inexhaustible, and whose enterprising population has immensely increased its wealth, the creati

o understand the position as it then was we must try to appreciate the views held at that time, and this the report helps us to do. Ballin had been referred to Prince Henckell-Donnersmarck by the Kaiser, who had a high opinion of the latter's business

890 to as low a figure as 9 per cent. During recent years this falling off, which is a corollary of the customs policy pursued by the United States, has given rise to a number of legislative measures intended to promote the interests of American shipping by the granting of Gove

ntly with some other big American capitalists, has taken an interest in the pl

ago. The Mediterranean service formerly carried on by the Leyland Line has not been acquired by Morgan. He has, however, added the Atlantic Transport Company. Morgan's evident intention is to form a big American shipping trust, and I have received absolutely reliable information to the

of the register from which the above figures are taken, are also taken into account. These vessels represent a total tonnage of about 200,000 tons, so that the new American concern would possess

their services to and from United States ports. If this is borne in mind, we arrive at the following figures: German lines-390,000 G.R.T.; American concern-about 430,000 G.R.T. These figures show that, as regard

urse, be obliged to operate the lines of which he has secured control under foreign flags. Up to the present only four steamers of the American Line, viz. the New York, Philadelphia, St. Louis, and St. Paul, are flying the United States flag, whereas

said that the Government subsidies-provided they do not exceed an amount that is justified by the conditions actually existing-are in themselves detrimen

ted to some British shipping men that, according to his estimates, nearly 70 per cent. of the goods which are shipped to Europe from the North Atlantic ports are carried to the latter by the railroads on Through Bills of Lading, and that their further transport is entrusted to foreign shipping companies. He and his friends, Morg

ose them to the possibility of finding their supplies from the United States hinterland cut off. This latter traffic is indispensable to the remunerative working of ou

rried on in this connexion are d

ject, but he had never indicated until then that Morgan had actually instructed him to discuss matters with me. A second meeting took place at which Ismay (the chairman of the White Star Line) was prese

me filled me with as much concern as surprise. He informed me that the syndicate intended to acquire the White Star Line, but that, owing to my relations with the Kaiser, the acquisition of the Hamburg-Amerika Linie was not contemplated. Morgan, he further told me, was willing to work on the most friendly terms with u

he essence of which was that, on the one hand, our independence should be respected, that the nationality of our company should not be interfered with, and that no American members shou

y additional shares of the Hamburg-Amerika Linie. The voting rights for the Hamburg shares should be assigned to Ballin for life, and those for the American shares to Morgan on the same terms. Instead of actually parting with its shares, the Hamburg company was to have the option of paying their equivalent in steamers. The agreement emphasized that, whilst recognizing the desirability of as far-reaching a financial participation as possible, Ballin did not believe that, with due regard to German public opinion and to the wishes of the Imperial Government, he was

the Board of Trustees unanimously expressed i

intimate intercourse with the Kaiser. The Chancellor had previously informed me that the Kaiser did not like the terms of the agreement, because Metternich had told him that the Americans would have the right to acquire 20 million marks' worth of our shares. During an after-dinner walk with the Kaiser, on which we were accompanied by the Chancellor and the Kaiser's A.D.C., Captain v. Grumme, I explained the whole proposals in detail. I pointed out to the Kaiser that whereas the British lines engaged in the North Atlantic business were simply absorbed by the trust, the proposed agreement would leave the independence of the German lines intact. This made the Kaiser inquire what was to become of the North German Lloyd, and I had to promise that I would see to it that the Lloyd would not be exposed to any immediate danger arising out of our agreement, and

erlin, this giving me a chance of discussing with the former-as I had previously done w

Nevertheless, it was found impossible to agree definitely there and then, and a further discussion between the two directors general took place at Potsdam on November 13th, both of them having been invited to dinner by the Kaiser, who was sitting between the two gentlemen at the table. Ballin's suggestion that he and Dr. Wiegand should proceed to New York in order to ascertain whether the shipping companies and the American railroads had actually entered into a combination, was heartily seconded by the Kaiser, and was a

tion of dividends, the American concern guaranteeing the German lines a dividend of 6 per cent., and only claiming a share in a dividend exceeding that figure. This change ow

imilar to the Preussische Seehandlung-should be set up by the Imperial Government with the assistance of some privately owned capital. This corporation should purchase such a part of the shares of each company as would

posals to be submitted to the American group; and shortly afterwards, at a meeting held at Cologne, agreement was also secured with Mr. Pirrie. The final discussions took place in New York early in February, Ballin and Mr. Tietgens, the chairman of the Board of Directors, acting on behalf of

was arrived at concerning the more important of the questions that were still open. I took up the position that the combine would only be able to make the utmost possible use of its power if we succeeded in securing control of the Cunard and Holland American Lines. I was glad to find that Mr. Morgan shared my view. He authorized me to negotiate on his behalf with Director Van den Toorn, the representative of the Holland American Line, and after a series of meetings a preliminary agreement was reached giving Morgan t

nt telegram to the Kaiser, informing him of the definite conclusion of the agreement, to which he sent me an ex

same place where the outlines gained form and substance in October last. You must be grateful to St. Hubertus. He seems to know something about shipping as well. In recognitio

rned the compliment by giving a dinner at the Holland House which was of special interest because it was attended not only by the partners of Morgan, but also by Mr. Jacob Schiff, of Messrs. Kuhn, Loeb &

number of other celebrations in honour of the Prince. Especially memorable and of extraordinary sumptuousness was the lunch at which Mr. Morgan presided, and at which one hundred captains of industry-leading American business men from all parts of the States-were present. On the evening o

the final issue of the Congress debates on the Subsidies Bill. A report which Ballin, after some further discussion with Morgan and his Lond

ts objected in any way to the proposed transaction for reasons connected with the national interest. He said, indeed, that he thought the syndicate should not content itself with purchasing 51 per cent. of the shares, but that it should rather absorb the whole company instead. The purchase price he n

gotiations going on at Washington with respect to the proposed subsidy legislation, Mr. Morgan now shares my view that it is not desirable to do so any longer, but that it would be wis

is agreement also provides that the White Star Line, against an annual subsidy from the Government, must place these boats at the disposal of the Admiralty in case of war. The First Lord has now asked Mr. Ismay wheth

e agreement on behalf of the combine for the three years it has still to run. This means that the steamers will continue to fly the British flag for the present, and that they must be placed at the disposition of the Admiralty in case of war. The Admiralty suggested an extension of the terms of the agreement for

combine. In compliance with the wishes emanating from prominent British quarters, the whole transaction will be represented in the light of a big Anglo-American 'community of interest' a

Germany, would be adversely affected by the agreement. The ensuing discussion showed Ballin at his best. He allayed Dr. Hahn's fears lest the American influence in the combination would be so strong as to eliminate the German influence altogether by convincing him that the whole agreement was built up on a basis of parity, and that the German interests would not be jeopardized in any way. The argument that the close connexion established between the trust and the American railroad companies would lead to Germany being fl

ich he made on the occasion of the trial trip of the s.s. Blücher, when he said: "If it were announced to me to-day that the Government s

en purchased by the American concern caused a great deal of public excite

sion. King Edward has also evinced an exceedingly keen interest in these matters of late, which goes to show that what makes people in England feel most uncomfortable is not the passing of the various shipping companies into American hands, but the fact that the German companies have done so well over the deal. Mr. Morgan has had an intervi

er to take part in the festivities connected with the Kiel Week. The American gentlemen were treated wi

llin put forward once more his suggestion that a cabin pool should be established

bined in the Morgan Trust, who were the owners of a huge amount of tonnage used in the cargo business, and whose sphere of action was restricted to the North Atlantic route. "Experience now shows," Ballin wrote in his note

he funds for the building of its two mammoth express liners, the Mauretania and the Lusitania, while at the same time granting it a subsidy suffi

Thomas Shaughnessy, the president of the Canadian Pacific. He went there on behalf of all the Continental shipping companies concerned, and the results he arrived at were so satisfactory to both parties that Ballin corresponded henceforth on terms of close personal friendship with Sir Thomas, w

make Morgan understand that nothing short of a radical improvement-i.e. a change of the leading personages-would put matters right. "Morgan," he writes, "finds it impossible to get the right men to take their places, and he he

ust. This was decided upon at meetings held in London, where Ballin stayed for

h was shared by important private quarters as well. The idea was to divert the stream of emigrants to Fiume-instead of allowing them to cross the national frontiers uncontrolled-and to carry them from that port to the United States by direct steamers. Ballin had repeatedly urged that th

and by which the Hungarian Government was to bind itself to prevent-by means of closing the frontiers or any other suitable methods-emigrants from choosing any other routes leading out of the country. Such an agreement would deprive the pool lines of the whole of their Hungarian emigrant business. Discussions between Ballin and the repr

this had never been intended by the Trust-that the Trust, indeed, had attempted to include the Cunard Line within the combination, that Lord Inverclyde himself had also made a proposal towards that end, and that the project had only come to grief

in New York, in which he described the general situation, Ballin st

n Government intended to imitate the example set by the Hungarian Government by running a service from Trieste. After prolonged discussions the Austrian G

reement were opened in London in July on the initiative and with the assistance of Mr. Balfour, who was then President of the Board of Trade. These, however, led to no result, and a basis for a compromise was not found until August, 1904, when renewed ne

t about a financial improvement, but it is still too early to predict whether this improvement will be permanent. The reasons why the undertaking was bound to be unremunerative before the outbreak of the war are not far to seek, and include the initial failure of its promoters to secure the adhesion of the Cunard Line-a failure which, as is shown by Ballin's notes, was to a

development of the pool idea as would have led to a much closer linking-up of the financial interests of the individual partners than could be achieved under a pool agreement. Under such a "community of interest" agreement, e

tically remarked: "Sooner or later the pool will have to learn how to get along without us," and he never again abandoned his plan of having it replaced by closely-knit community of interest agreements which would be worked under a centralized management, and therefore produce much better results. In other branches of his activities-e.g. in his agreements with the other Hamburg compani

greater profits could be obtained by the former method. The result was a noticeable lack of leading men fully qualified to speak with authority on questions relating to the regular business, whereas in Germany such men were not wanting. The transatlantic business threatened, in fact, to become more and more the prerogative of the German-American combination. To-day, of course, it is no longer possible to say with certainty whether the Cunard Line could have been induced to join that combination, if the right moment had not been missed. The great danger with which British shipping was threatened at that time, and the great success which the German lines achieved, not only stirred British