The negotiations with the North German Lloyd which Ballin had undertaken to enter upon proved to be very difficult, the Director General of that company, Dr. Wiegand, not sharing Ballin’s views with respect to the American danger and the significance of the American combination. After Ballin, however, had explained the proposals in detail, the Lloyd people altered their previously held opinion, and in the subsequent London discussions, which were resumed in November, the President of the Lloyd, Mr. Plate, also took part. 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 agreed to by Dr. Wiegand. The Lloyd people, however, were still afraid that the proposed understanding would jeopardize the independence of the German lines; but Ballin, by giving detailed explanations of the points connected with the financial provisions, succeeded in removing these fears, and the Board of Trustees of the Lloyd expressed themselves satisfied with these explanations. They insisted upon the omission of the clauses dealing with the financial participation, but agreed to the proposals in every other respect.
The arrangements for such mutual exchange of shares were thereupon dropped in the final drafting of the agreement, and were replaced by a mutual participation in the distribution 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 owed its origin to a proposal put forward by Mr. v. Hansemann, the Director of the Disconto-Gesellschaft, who had taken an active interest in the development of the whole matter.
In the course of the negotiations the Lloyd made a further proposal by which it was intended to safeguard the German national character of the two great shipping companies. It was suggested that a corporation—somewhat similar 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 defeat any attempts at destroying their national character. Ballin, however, to whom any kind of Government interference in shipping matters was anathema, would have nothing to do with this plan, and thus it fell through.
Ballin thereupon having informed the Kaiser in Kiel on board the battleship Kaiser Wilhelm II regarding the progress of the negotiations, a further meeting with the Lloyd people took place early in December, which led to a complete agreement among the two German companies as to the final proposals 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 the Hamburg-Amerika Linie, and President Plate and Dr. Wiegand on that of the Lloyd. Meanwhile, Morgan’s negotiations with the White Star Line and other British companies had also led to a successful termination. Concerning the New York meetings we find an interesting entry in Ballin’s diary:
“In the afternoon of February 13th, 1902, Messrs. Griscom, Widener, Wilding, and Battle, and two sons of Mr. Griscom met us in conference. Various suggestions were put forward in the course of the proceedings which necessitated further deliberations in private between ourselves and the Bremen gentlemen, and it was agreed to convene a second general meeting at the private office of Mr. Griscom on the 15th floor of the Empire Building. This meeting was held in the forenoon of the following day, and a complete agreement 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 the option of purchasing 51 per cent. of the shares of the Holland American Line. Morgan undertook to negotiate with the Cunard Line through the intermediary of some British friends. It has been settled that, if the control of the two companies in question is secured to the combine, one half of it should be exercised by the American group, and the other half should be divided between the Lloyd and ourselves. This arrangement will assure the German lines of a far-reaching influence on the future development of affairs.
“On the following Thursday the agreements, which were meanwhile ready in print, were signed. We addressed a joint telegram to the Kaiser, informing him of the definite conclusion of the agreement, to which he sent me an exceedingly gracious reply. The Kaiser’s telegram was dispatched from Hubertusstock, and its text was as follows:
“‘Ballin, Director General of the Hamburg-Amerika Linie, New York. Have received your joint message with sincere satisfaction. Am especially pleased that it reached me in the 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 recognition of your untiring efforts and of the success of your labours I confer upon you the Second Class of my Order of the Red Eagle with the Crown. Remember me to Henry.—Wilhelm I.R.’
“Morgan gave a dinner in our honour at his private residence which abounds in treasures of art of all descriptions, and the other gentlemen also entertained us with lavish hospitality. Tietgens and I returned 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 & Co., who had been Morgan’s opponents in the conflict concerning the Northern Pacific. During the following week the Lloyd provided a big dinner on board the Kronprinz Wilhelm for about 200 invited guests.
“Prince Henry of Prussia was one of the passengers of the Kronprinz Wilhelm which, owing to the inclemency of the weather, arrived in New York one day behind her scheduled time. On the day of her arrival—Sunday, February 23rd—I had dinner on board the Hohenzollern. We also took part in a 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 of the same day the press dinner took place which 1,200 newspaper men had arranged in honour of the Prince. Mr. Schiff introduced me to Mr. Harriman, the chairman of the Union Pacific, with whom I entered into discussions concerning our participation in the San Francisco-Far East business.”
At the request of the American group the publication of the agreement was delayed for some time, because it was thought desirable to wait for the final issue of the Congress debates on the Subsidies Bill. A report which Ballin, after some further discussion with Morgan and his London friends had taken place, made for the German Embassy in London, describes the situation as it appeared in April, 1902. It runs as follows: