The exertions made in Great Britain to improve merchant shipping were at once stimulated and immeasurably assisted by the gold discoveries in Australia, an island in the South Pacific more absolutely dependent on sea communication than San Francisco on the American continent had been. It was, moreover, in British territory, where no exclusive privileges could be enjoyed, and where competition was entirely unfettered. Of course the clipper fleet of the United States was prepared to do for Australia what it had done so well for California; but the prospect of the carrying trade between Great Britain and her colonies falling into alien hands aroused the spirit of the English to make a supreme effort to at least hold their own, if not to recover lost ground.

The seven seas soon became alive with rival clipper ships of great size and power, and the newspapers chronicled the runs they made to Australia and California in days, as they now record the hours consumed on steamer voyages across the Atlantic. Ancient barriers seemed to be submerged, and fusion of the ocean traffic of the world into one great whole opened the way to a new dispensation in the history of merchant shipping. Tonnage was tonnage all the world over, and became subject to the comprehensive control in which the gold and silver produced in distant countries was held by the great financial centres. But the ocean telegraph was not yet, and for twenty years more many gaps were left in the system of ocean communications, whence resulted seasons of plethora alternating with scarcity in particular lines of traffic.

There was probably no trade in which the overflow of the new output of tonnage was more quickly felt than in that of China. It became a common custom for vessels of moderate size which had carried goods and emigrants to Australia and California, whence no return cargoes were at that period to be had, to proceed to India or China in ballast—"seeking." This was a source of tonnage supply which the merchants resident in those countries had no means of reckoning upon, though such a far-reaching calculation might not be beyond the powers of a clear head posted at one of the foci of the commercial world. An example may be quoted illustrative of the local tonnage famine which occasionally prevailed during that transition period. An English ship arrived in ballast at Hongkong from Sydney in 1854. The owner's local agent, or "consignee," recommended the captain to proceed at once north to Shanghai, where, according to latest advices, he would be sure to obtain a lading at a high rate of freight. The cautious skipper demurred to taking such a risk, and refused to move unless the agent would guarantee him £6, 10s. per ton for a full cargo for London. This was agreed. The ship reached the loading port at a moment when there was no tonnage available and much produce waiting shipment, and she was immediately filled up at about £7 or £8 per ton. It fell to the lot of this particular vessel, by the way, to carry a mail from Hongkong to Shanghai, the P. and O. Company's service being then only monthly, and no other steamer being on the line. It was just after the outbreak of the war with Russia. About a couple of days after the departure of the Akbar—for that was her name—when it was considered quite safe to do so, a resident American merchant, unable to contain himself, boasted of having sent by this English vessel the despatches of the Russian admiral under sealed cover to a sure hand in Shanghai. The recipient of this confidence, like a good patriot, reported the circumstance promptly to the governor of the colony, and he to the senior naval officer, who with no less promptitude ordered a steam sloop, the Rattler, to proceed in chase of the ship. The pursuit was successful; the Russian despatches were taken out and brought back to Hongkong, where they were submitted to the polyglot governor, Sir John Bowring.

Another incident of the same period will show how it was possible for a bold operator to exploit the tonnage of the world on a considerable scale without the aid of the telegraph, or even of rapid communication by letter. One such operator in London, reckoning up the prospective supply and demand of tonnage throughout the world, foresaw this very scarcity in China of which we have just given an illustration. He thereupon proceeded to charter ships under various flags and engaged in distant voyages to proceed in ballast to the China ports, there to load cargoes for Europe. The wisdom of the operation was far from clear to the charterer's agents in China when they heard of ships coming to them from the four quarters of the world at a time when freights were low, with but little prospect of improvement, so far as they could see; but their outlook was circumscribed. Though as the ships began to arrive the difficulty of providing profitable freightage seemed to presage the ruin of the venture, yet subsequent arrivals justified the prevision of its author by earning for him highly remunerative freights. The tide had really risen as it had been foreseen; but it soon receded, and before the last charter had been fulfilled the time-factor, which is fatal to so many well-laid schemes, interposed, and probably caused the early profits to be swallowed up in the final losses.

The bulk of the China traffic, however, was carried not by these erratic outsiders but by the regular traders, which loaded in London, Liverpool, or New York with manufactured goods, coal, and metals, and returned from China with tea, silk, and other produce. It must have been a profitable business, for the average freight homeward in the 'Forties and 'Fifties seems to have been about £5 per ton; and if we allow even one-third of that for the outward voyage, it would give the shipowner somewhere about £7 for the round voyage, which was accomplished with ease within the twelve months. It must be remembered, however, that the expenses of running were proportionately high on the small vessels which were then in the trade. In the course of time, when speed and facilities of despatch at home and abroad had been further improved, the clippers from London took in Australia in the outward voyage by way of filling up the time until the tea crop was brought to market.

When the great increase in the export of silk took place a special rate was paid on it to favourite ships on account of its high value. But though this precious article could afford, when necessary, extreme rates of freight, its total bulk was too small—about one-tenth of that of tea—to affect seriously the general carrying trade of China. A certain quantity was regularly shipped by the "overland route"—that is, by P. and O. Company's steamers to Suez, and thence by rail to Alexandria, to be there reshipped for its ultimate destination, Marseilles or Southampton. But the capacity of the steamers was so small that only a pro rata allotment of space was made to applicants, and the freight charged for it was at the rate of £25 per ton. Under exceptional conditions one sailing ship in the year 1856 carried a silk cargo of 6000 bales, valued at £750,000 sterling, which was said to be the largest amount ever ventured, up to that time, in any merchant vessel. It was so unexpectedly large that the shippers were unable fully to cover their risk by insurance. A singular fatality attended the outset of this voyage, showing the fallibility of human judgment even under the most favourable circumstances. The commander of this ship had been perhaps the most successful in the China trade, and it was the extraordinary confidence that was placed in his judgment that induced the merchants to intrust to his care merchandise of such enormous value. Though much impressed with the sense of personal responsibility for its safety, he was yet tempted by a fine starlit night to break ground from the anchorage at Shanghai and drop down the river to Wusung, where he touched on the well-known bar, and was passed by the outward-bound mail-steamer the following morning. The ship was of course reported "on shore," and so the letters ordering insurance which the mail-steamer carried were rendered useless. The master, though the ship had lain but a few hours on soft mud, dared not proceed to sea with such a valuable cargo without examining the ship's bottom. To do this he had to be towed back to Shanghai, fourteen miles by river, discharge, strip off the copper, replace it, reload the cargo, and recommence the voyage. It proved much the longest she had ever made, and there was great anxiety among the merchants, especially among those of them who were only partially insured. But as fate would have it, while the ship was on the high seas her cargo was growing in value, the silk famine in Europe having in the mean time clearly declared itself; so that what with the delay of a month or two at the start and several weeks more on the passage, a time was gained for sufficient profit to accrue on the silk to lay the foundation of several respectable fortunes, and the commander, to whose error of judgment the result was due, was received in London with acclamation and with substantial gratuities from some of the fortunate owners of his cargo. The lucky craft was the Challenger, Captain Killick, which had distinguished herself in racing against the American clipper Nightingale in 1852 and 1863, and was the first sailing-vessel to load tea at Hankow in 1863,—a historic ship.

During the time of the deepest gloom in shipping circles, consequent on the repeal of the Navigation Laws, at a meeting where the ruin of the industry was proclaimed in chorus by the shipowners present, one man had the courage to rise up and stem the current of depression. "The British shipowners have at last sat down to play a fair and open game with the Americans, and, by Jove! we will trump them," were the words of Mr Richard Green, the eminent shipbuilder of Blackwall, as quoted by Mr W. S. Lindsay in his 'History of Merchant Shipping.' Mr Lindsay adds that Mr Green was as good as his word, for shortly after he built, to the order of Mr Hamilton Lindsay, a China merchant, the ship Challenger, of 600 or 700 tons, expressly to match the American Challenge, more than double her size, and thought to be the fastest ship then afloat. Though the two never met, the performances of the English, whether for speed or for dry carrying, quite eclipsed the American ship. It was with another competitor that the pioneer Blackwall clipper tried conclusions, and the circumstance suggests a somewhat whimsical association of the evolution of the China clipper with the Great Exhibition. A ship of exquisite model and finish had been built in America for the purpose of conveying visitors to that great gathering. She was put into the China trade, for which by her size she was well suited. Whether by prearrangement or not, she met the Challenger in 1852 in Shanghai, where they were both laden with tea simultaneously. Immense excitement was aroused, which took the usual form of heavy wagers between the respective partisans on the issue of the race to London. It was a close thing, as sportsmen say, the British ship coming in two days ahead of her rival. Dissatisfied, as the owner of a yacht or of a racehorse is apt to be with his defeat, certain changes were made by the owners of the Nightingale in her equipment for the next year's voyage. The race was again run from the same port, on the same conditions—and with the same result, only still more in favour of the English ship.

A general excitement about such a trivial matter as the relative speed of two ships was only to be accounted for by the awakening consciousness of the significance of the English shipping revival which was then beginning. The interest extended much beyond the circle of those directly concerned. The deck of a mail steamer, to take an instance, became suddenly animated as the signals of a sailing-vessel were read out. Speaking a ship at sea was no such unusual occurrence, but when the name of Challenger was passed round, passengers and crew rushed to the side, gazing intently on the shapely black hull and white sails reflecting the morning sun. She was in the Straits of Malacca, on her way back to China to run her second heat. A young man among the passengers betraying ignorance of the cause of the commotion felt as small as if unable to name the last Derby winner. The world at that time seemed to have grown young. Imagination was directed to a dawn gilded with promise which the sequel has surely not belied!

Thus the China Sea became a principal battle-ground whereon the struggle for ascendancy between the ships of Great Britain and the United States was most strenuously fought out. It was, as Mr Green said, a fair and open contest, alike creditable to both sides, and an unmixed benefit to the world at large. The energy of the English shipping interest was thoroughly aroused, and the shipowners and shipbuilders of Scotland came speedily to the front. In a few years after the issue was joined between the United States and Great Britain, the shipbuilders of the latter country found a potent auxiliary in iron, which began to be used for sailing-ships.[29] The vessel that led the way in this innovation, combining great speed with the other conditions of success, was the Lord of the Isles, Captain Maxton, of Greenock, which distinguished herself by beating two of the fastest American clippers of twice her size in the run from Foochow to London in 1856. The gradual introduction of steam on long voyages, which followed the free use of iron, was also to the advantage of the British competitors; and thus from a combination of favouring circumstances and dogged efforts to turn them to account, the ascendancy of British shipping was finally established.

In sketching the performances of these vessels we have somewhat anticipated the advent of that famous fleet of tea clippers which commanded the traffic of the Far East for something like fifteen years. For the beginnings of that struggle we have to go back to the year 1851, when the Leith clipper Ganges raced two Americans, the Flying Cloud and Bald Eagle, from China to London, finishing up with an interesting tack-and-tack contest up Channel from Weymouth, the English ship passing Dungeness six hours ahead. At that period the odds in mere numbers were so overwhelming against the English vessels that such occasional victories as the above were calculated to inspire the builders with courage to persevere. The Aberdeen clippers, Stornoway, Chrysolite, and Cairngorm, worthily followed the London-built Challenger in disputing the prize of speed with the best of their American contemporaries; and after the race of 1856, won, as has been mentioned, by the iron ship Lord of the Isles of Greenock, the American flag was practically eliminated from the annual contest. Competition, however, by no means slackened on that account, but rather increased in intensity. Past achievements opened the eyes of those interested to the possibilities of indefinite improvement in the build, rig, and equipment of ships, so that the idea took root and became a passion. Each year brought forth something new, giving birth in the following year to something still newer, until a type of ship was evolved which seemed to be the acme of design and execution. British clippers raced against each other for the blue ribbon of the ocean with as great zest as they had ever done when other flags were in the field.