The Hungarian situation became still more complicated after the receipt of some information that reached Ballin from Vienna to the effect that the Austrian Government intended to imitate the example set by the Hungarian Government by running a service from Trieste. After prolonged discussions the Austrian Government also undertook not to grant an emigration licence to the Cunard Line so long as the struggle between the two competing concerns was not settled.
Thereupon this struggle of the pool lines—both the Continental and the British ones—against the Cunard Line was started in real earnest, not only for the British but also for the Scandinavian and the Fiume business. After some time negotiations for an agreement 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 negotiations took place at Frankfort-On-Main. A definite understanding was reached towards the close of the same year, and then at last this struggle, which was really one of the indirect consequences of the establishment of the Morgan Trust, came to an end.
Looked upon from a purely business point of view, the Morgan Trust—or, to call it by its real name, the “International Mercantile Marine Company,” which in pool slang, was simply spoken of as the “Immco Lines"—was doubtless a failure. Only the World War, yielding, as it did, formerly unheard-of profits to the shipping business of the neutral and the Allied countries, brought 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 large extent due to the hesitating policy of the Hamburg company. To make business as remunerative as possible was the very object for which the Trust was formed, but the more economical working which was the means to reach this end could not be realized while such an essential factor as the Cunard Line not only remained an outsider, but even became a formidable competitor.
It can hardly be doubted that the adhesion of the Cunard Line to the Morgan Trust—or, in other words, the formation of a combine including all the important transatlantic lines without exception—would have brought about such 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, every inducement to needless competition could be eliminated, and replaced by a system of mutual participation in the net profits of each line. This was the ideal at which Ballin, taught by many years of experience, was aiming.
Over and over again the pool lines had an opportunity of finding out that it paid them better to come to a friendly understanding, even if it entailed a small sacrifice, than to put up a fight against a new competitor. Sometimes, indeed, an understanding was made desirable owing to political considerations. However, the number of participants ultimately grew so large that Ballin sarcastically 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 companies and in the one with the Booth Line, which was engaged in the service to Northern Brazil, he succeeded in developing the existing understandings into actual community of interest agreements, and it seems that these have given all-round satisfaction. The negotiations between himself and the North German Lloyd shortly before the outbreak of the war were carried on with the same object.
Throughout the endless vicissitudes in the history of the pool the formation of the Morgan Trust decidedly stands out as the most interesting and most dramatic episode. At the present time the position of the German steamship companies in those days seems even more imposing than it appeared to the contemporary observer. To-day we can hardly imagine that some big British lines should, one after the other, be offered for purchase first to some German, and then to the American concerns. Such a thing was only possible because at that time British shipping enterprise was more interested in the employment of tramp steamers than in the working of regular services, the shipowners believing that 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 public opinion to its depths, but also acted as a powerful stimulus on the shipping firms themselves. This caused a pronounced revival of regular line shipping, which went so far that tramp shipping became less and less important, and which ultimately led to a concentration of the former within the framework of a few large organizations which exercise a correspondingly strong influence on present-day British shipping in general. These organizations differ from the big German companies by the circumstance that they represent close financial amalgamations and that they have not, like the German companies, grown up slowly and step for step with the expanding volume of transatlantic traffic.
CHAPTER VI
The Expansion of the Hamburg-Amerika Linie
The principal work which fell to Ballin’s share during the period immediately following his nomination in 1888 on the Board of his company was that connected with the introduction of the fast steamers and the resulting expansion of the passenger business. Offices were established in Berlin, Dresden, and Frankfort-On-Main in 1890, and arrangements were made with the Hamburg-South American S.S. Co., the German East Africa Line, and the Hansa Line—the latter running a service to Canada—by which these companies entrusted the management of their own passenger business to the Packetfahrt. Thus, step by step, the passenger department developed into an organization the importance of which grew from year to year.
The expansion of the passenger business also necessitated an enlargement of the facilities for the dispatch of the Company’s steamers. This work had been effected until then at the northern bank of the main Elbe, but in 1888 it was transferred to the Amerika-Kai which was newly built at the southern bank; and when the normal depth of the fairway of the Elbe was no longer sufficient to enable the fast steamers of considerable draught to come up to the city, it was decided to dispatch them from Brunshausen, a small place situated much lower down the Elbe. In the long run, however, it proved very inconvenient to manage the passenger dispatch from there, and the construction of special port facilities at Cuxhaven owned by the Company was taken in hand. The accommodation at the Amerika-Kai, although it was enlarged as early as 1889, was soon found to be inadequate, so that it was resolved to provide new accommodation at the Petersen-Kai, situated on the northern bank of the Elbe, and this project was carried out in 1893.
The number of services run by the Company was augmented in those early years by the establishment of a line to Baltimore and another to Philadelphia. In 1889 a new line starting from New York was opened to Venezuelan and Colombian ports. The North Atlantic services were considerably enlarged in 1892, when the Company took over the Hansa Line.