That was the time when Mr. Pierpont Morgan’s endeavours to create the combine, which has since then become known as the Morgan Trust, first attracted public attention. Ballin’s notes give an exhaustive description of the course of 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 the opportunity thus presented of setting up an all-embracing organization promoting the interests of all the transatlantic steamship concerns seemed too good to be lost. Ballin’s notes for August, 1901, contain the following entry:
“The grave economic depression from which Germany is suffering is assuming a more dangerous character every day. It is now spreading to other countries as well, and only the United States seem to have escaped so far. In addition to our other misfortunes, there is the unsatisfactory maize-crop in the States which, together with the other factors, has demoralized the whole 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 creation of trusts is an event of everyday occurrence. The banker, Pierpont Morgan—a man of whom it is said that he combines the possession of an enormous fortune with an intelligence which is simply astounding—has already created the Steel Trust, the biggest combination the world has ever seen, and he has now set about to lay the foundations for an American mercantile marine.”
A short report on the position then existing which Ballin made for Prince Henckell-Donnersmarck, who had himself called into being some big industrial combinations, is of interest even now, although the situation has entirely changed. But if we want to 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 abilities, and who had watched with lively interest the American shipping projects from the start, because he anticipated that they would produce an adverse effect on the future development of the German shipping companies. The report is given below:—
“In 1830 about 90 per cent. of the United States sea-borne trade was still carried by vessels flying the American flag. By 1862 this percentage had gone down to 50 per cent., and it has shown a constant decrease ever since. In 1880 it had dwindled down to 16 per cent., and in 1890 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 Government subsidies. No practical steps of importance, however, have been taken so far; all that has been done is that subsidies have been granted to run a North Atlantic mail service maintained by means of four steamers, but no success worth mentioning has been achieved until now.
“Quite recently the well-known American banker, Mr. J. Pierpont Morgan, conjointly with some other big American capitalists, has taken an interest in the plan. The following facts have become known so far in connexion with his efforts:
“Morgan has acquired the Leyland Line, of Liverpool, which, according to the latest register, owns a fleet of 54 vessels, totalling 155,489 gross register tons. This purchase includes the West India and Pacific Line, which was absorbed into the Leyland Line as recently as a twelvemonth 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 effect that the American Line and the Red Star Line are also going to join the combine. The shares of the two last-named lines are already for the most part in American hands, and both companies are being managed from New York. Both lines together own 23 steamers representing 86,811 tons.
“A correct estimate of the size of the undertaking can only be formed if the steamers now building for the various companies, and those that have been added to their fleets since the publication 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 a fleet representing 430,000 gross register tons. The corresponding figures for the Hamburg-Amerika Linie and for the Lloyd, including steamers building, are 650,000 and 600,000 tons respectively.
“The proper method of rightly appreciating the importance of the American coalition is to restrict the comparison, as far as the two German companies are concerned, to the amount of tonnage which they employ in 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 regards the amount of tonnage employed, the Morgan Trust is superior to the two German companies on the North Atlantic route. It can also challenge comparison with the regular British lines—grand total, 438,566 G.R.T.
“In all the steps he has taken, Morgan, no doubt, has been guided by his confidence in his ability to enforce the passing of a Subsidy Act by Congress in favour of his undertaking. So long as he does not succeed in these efforts of his he will, of course, 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 the remaining vessels of the American Line, and those of the Leyland, the West India and Pacific, the American Transport, the National, and the Furness-Boston lines, are sailing under the British, and those of the Red Star Line under the Belgian flag.
“The organization which Mr. Morgan either has created, or is creating, is not in itself a danger to the two German shipping companies; neither can it be said that the Government subsidies—provided they do not exceed an amount that is justified by the conditions actually existing—are in themselves detrimental to the German interests. The real danger, however, threatens from the amalgamation of the American railway interests with those of American shipping.