“Having in the meantime made it a point to go more fully into your communication, I find that the opinions which I have been able to form on your propositions meet your expressed views to a much larger extent than you 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 me to frame and bring forward my ideas more forcibly here, I think it useful to write to you this strictly confidential letter, requesting you to inform me—if feasible by cable—what you think of the following project:
“(1) You take charge of our New York Agency for the freight, and also for the passage business, etc.
“(2) You engage those of our officials now attached to our New York branch whom we may desire to retain in the business.
“(3) You take over half of our Baltimore Line in the manner that each party provides two suitable steamers fitted for the transport of emigrants. To this end I propose you should purchase at their 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 22 feet and about 450 steeragers, guaranteed to steam 11 knots, ready in October this year), and we to provide two similar steamers for this service. The earnings to be divided under a pool system.
“(4) Your concern takes up one million dollars of our shares with the obligation not to sell them so long as you control our American business. I may remark that just at present our shares are obtainable cheaply in consequence of the general depression prevailing in the European money 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 last years since we concluded the pool with the Union Line, viz. in 1886 4 per cent., 1887 6 per cent., 1888 8½ per cent., 1889 11 per cent., 1890 8 per cent. in the way of dividends, and during this time we wrote off for depreciation and added to the reserve funds about 60 per cent.
“The position of our Company is an excellent one, our fleet consisting of modern ships (average age only about five years), and the book values of them being very low.
“I should be obliged to you for thinking the matter over and informing me—if possible by cable—if you would be prepared to enter into negotiations on this basis. I myself start from the assumption that it might be good policy for our 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 project is brought into effect one of your concern should become a member of our Board. I should thank you to return me this letter which, as I think it right expressly to point out to you, contains only what are purely my individual ideas.”
It may be assumed that the writing of this letter was prompted not only by the Packetfahrt’s desire to strengthen its position in the United States, but also by its wish to obtain a foothold in Great Britain. This would enable it to exercise greater pressure on the competing British lines, which—indirectly, at least—still did a considerable portion of the Continental business. Ballin’s suggestion did not lead to any practical result at the time, but was taken up 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 to Europe so that the matter might be discussed directly. The attractiveness of the idea to Ballin was still further enhanced by the circumstance that the Atlantic Transport Line also controlled the National Line which maintained a service between New York and London, and was, indeed, the decisive factor on the New York-London route. Ballin, accordingly, after obtaining permission from the Board of Trustees, went to London, where he met Mr. Baker and Mr. Pirrie.
It soon became clear, however, that the Board of Trustees did not wish to sanction such far-reaching changes. When Ballin cabled the details of the scheme to Hamburg, it was seen that 25 million marks—half the amount 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 negotiations which were entered into in the early part of 1900 in Hamburg at the suggestion of Mr. Baker also failed to secure agreement, and shortly afterwards the American company was bought up by the Leyland Line.
At the same time a movement was being set on foot in the United States which aimed at a strengthening of the American mercantile marine by means of Government subsidies. This circumstance suggested to Mr. Baker the possibility of setting up an American shipping concern consisting of the combined Leyland and Atlantic Transport Company lines together with the British White Star Line, which was to profit by the expected legislation concerning shipping subsidies. Neither the latter idea, however, nor Mr. Baker’s project assumed practical shape; 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 dissatisfaction felt by the latter showed itself, among other things, in their refusal to come to any mutual understanding regarding the passenger business. In the end, Mr. Baker himself was so little pleased with the way things turned out in practice that he severed his connexion with the other lines shortly afterwards, and once more the question became urgent whether it would be advisable for the Packetfahrt—either alone, or in conjunction with the White Star Line and the firm of Messrs. Harland and Wolff—to purchase the Atlantic Transport Line.