The new line soon made itself felt as a serious competitor to the Packetfahrt, especially so as by 1885 its fleet had increased from two to five steamers. The lower steerage rates charged by the Carr Line led to a general decrease of rates in the New York service, which was not confined to the lines running their services from Hamburg. The passage prices charged from the various ports are naturally closely related to each other, because each port tries to attract as much traffic as possible to itself, and this can only be brought about by a carefully thought-out differentiation. The struggle between the various lines involved which had started in Hamburg quickly extended to other seaports and affected a great many lines in addition to those of Hamburg. The rate-cutting process began in May, 1882. In the following October the Packetfahrt and the Lloyd had reduced their rates to 90 and in June, 1883, to 80 marks, whilst the British lines in February, 1884, charged so little as 30s. The Carr Line, of course, had to follow suit. It not only did so, but in proportion reduced its own rates even more than the other lines. The rates were even lower in practice than they appeared to be, owing to the constantly growing commissions payable to the agents. The agents of the competing lines, by publishing controversial articles in the newspapers, soon took the general public into their confidence; and in order to prevent such publicity being given as to their internal affairs, the managements of the various steamship lines entered into some sort of mutual contact. The worst result of the rate-slashing was that the agreements which the older lines had concluded amongst themselves for the maintenance of remunerative prices soon became unworkable. First those relating to the Westbound rates had to go down before the new competitor; and in 1883, when this competition had really commenced to make itself appreciably felt, the Packetfahrt found itself compelled to declare its withdrawal from the New York Continental Conference by which the Eastbound rate had been fixed at $30 for the passage from New York to the Continent, a rate which was so high that the Carr Line found it easy to go below it.

The Packetfahrt made great efforts to hold its own against the newcomer, but, as the following figures show, its success was but slight. In 1883 the Packetfahrt carried 55,390 passengers on 76 voyages, against 16,471 passengers carried on 29 voyages by the Carr Line, so that the traffic secured by the latter amounted to about 30 per cent. of that of the former. The figures for 1884 show that 58,388 passengers were carried by the Packetfahrt on 86 voyages, against 13,466 steeragers on 30 voyages by the Carr Line. If the figures relative to the direct and the indirect emigrant traffic from Hamburg are studied, it will be seen that a considerable decrease had taken place in the volume of the latter kind within a very few years, thus leading to an improvement in the position of the German lines as compared with that of their British competitors. These figures are as follows:

Number of Emigrants carried
Packetfahrt Carr Line via British ports
188047,000—20,000
188168,0004,00047,600
188268,00011,00031,000
188355,00016,00013,000
188458,00013,00016,000

At the same time the Packetfahrt, in order to prevent French competition from becoming too dangerous on the Havre-New York route, had to reduce its rates from Havre, and a little later it had to do likewise with regard to the Eastbound freight rates and the steerage rates. The keen competition going on between the lines concerned had led to a lowering of the Eastbound rate to Hamburg from $30 to $18; and as the commission payable to the agents had gone up to $5, the net rate amounted to $13 only. At last the shareholders of the Packetfahrt became restless, and at the annual general meeting held in 1884 one of their representatives moved that the Board of the Company should be asked to enter into an agreement with the competing firm of Edward Carr. The motion, however, was lost; and the further proposal that a pool should be established among the Hamburg emigrant agents fared no better.

It was clear that the rate-war, which continued for a long period, would considerably affect the prosperity of the Carr Line in common with the other shipping companies. This circumstance prompted the proposal of Edward Carr, when the discussions were renewed in the spring of 1885, to carry them on upon a different basis altogether. He proposed, in fact, that the Carr Line itself should be purchased by the Packetfahrt. In the course of the ensuing negotiations Albert Ballin, as the representative of Edward Carr, who was absent from Hamburg for a time, played a prominent part. The Packetfahrt, in the meantime, had received advices from its New York office to the effect that the latter had reconsidered its attitude towards the claims of the Carr Line, that it looked upon a successful termination of the struggle against this Line as hopeless, and that it therefore recommended the granting of the differential rates which formed the obstacle to peace. Nevertheless, it was not until July, 1885, that, at a conference held in Hamburg, an agreement was concluded by the Packetfahrt, the Lloyd, the Carr Line, the Dutch, Belgian, and French lines, and the representative of the British lines. All these companies bound themselves to raise their rates to 100 marks, except that the Carr Line should be entitled to fix theirs at 90 marks. Thus the latter had at length received the recognition of its claim to a differentiation, and of its right to exist side by side with the older Company, although its steamers were not of an equal quality with those of the latter. An agreement was also concluded by which the rates of commission due to the Hamburg emigrant agents were fixed, and at the continued negotiations with the other lines Albert Ballin, from that time onward, in his capacity of representative of the Carr Line, was looked upon as on an equal footing with the representatives of the other lines.

The principal subject of the discussions was the question of eliminating, as far as possible, British influence from the emigrant traffic via Hamburg. The competition of the British was, naturally, very detrimental to the business of all the Continental, but more especially the German lines, because the interests of the respective sides were utterly at variance with each other. The firm foundations of the business transacted by the British lines were laid in England, and the Continental business was merely a source of additional profit; but to the German lines it was the mainstay of their existence, and to make it pay was of vital importance to them. The German lines, therefore, did not rest until, as the result of the continued negotiations among the Continental companies, it was agreed that the uniform rates just fixed should not apply to the traffic which was carried on by the two Hamburg lines from that city. Towards the end of 1885 the first object aimed at by this step was realized: the conclusion of an agreement between the two Hamburg lines and the representatives of the British lines settling the rates and the commissions; but apart from this, no changes of fundamental importance were made in this business until after Albert Ballin, under an agreement proposed by the Packetfahrt, had entered the service of the Packetfahrt, as head of their passenger department. An important exception, however, was the amalgamation suddenly announced in March, 1886, of the Carr Line and the Union Line, which latter company was operated by Rob. M. Sloman and Co., of Hamburg. The fact of this amalgamation considerably weakened the position of the Packetfahrt in its dealings with the Carr Line, because it gave additional strength to the latter.

The details of the five years’ agreement between Ballin and the Packetfahrt were approved by the Board of Trustees of that Company about the middle of May, 1886. It was stipulated that, in conformity with the pool agreement concluded between the two lines on May 22nd, the Packetfahrt should appoint Mr. Albert Ballin sole and responsible head of its North American passenger department (Westbound as well as Eastbound services); that his work should include the booking of steeragers for the Union Company’s steamers (which, in accordance with the pool agreement, the Packetfahrt had taken over), that he should appoint and dismiss the clerks employed by his department; that he should fix their salaries and commissions; that he should sign passage agreements on behalf of the Company, and that he should issue the necessary instructions to the agents and officers of the Company. All letters and other documents were to be signed “by proxy of the Hamburg-Amerikanische Packetfahrt-Actien-Gesellschaft,” and he was required annually to submit to the directors a draft estimate of the expenses of his department. On how modest a scale the whole arrangement was drawn up may be inferred from the figures given in the first year’s draft estimate, viz. Salaries, 35,000 marks; advertisements, 50,000 marks; posters and printed matter, 25,000 marks; travelling expenses, 6,000 marks; postage and telegrams, 10,000 marks; extras and sundries, 10,000 marks. Equally modest was the remuneration of the new head who was to receive a fixed salary of 10,000 marks per annum, plus a commission under the pool agreement, allowing the inference that the total annual income of the newly appointed head of the department would work out at something like 60,000 marks, which goes to show that the Company had a high opinion of his capacity for attracting traffic to its services. The conclusion of this agreement meant that the Packetfahrt henceforth took entire control of its passenger business—which, until then, had been looked after by the firm of Aug. Bolten—and that a passenger department had to be specially created. Thus an important step forward was made which could only be undertaken by the firm because such a well-qualified man as Ballin happened to be at their service just then.

If the course of the negotiations between the Packetfahrt and the Carr Line had not already shown it, this agreement would prove without a shadow of doubt that the then head of Morris and Co. had, at the age of twenty-nine, and after twelve years of practical work, gained the premier position in the emigrant business of his native city and also a leading one in the general European emigrant business which in itself is one of the most important branches of the shipping trade. The correspondence between Edward Carr and Ballin furnishes no indication that the latter himself had insisted upon his being taken over by the Packetfahrt or that he had worked with this object.

CHAPTER III
Head of the Packetfahrt’s Passenger Department

On May 31st, 1886, Albert Ballin first took part in a joint meeting of the Board of Trustees and the Board of Directors of the Packetfahrt. On this occasion two proposals were put forward by him: one, to provide new premises for the work connected with the booking of passengers at an annual rent of 5,000 marks; the other, to start a direct service from Stettin to New York via Gothenburg. This latter proposal was prompted by the desire to reduce the influence of the British lines competing for the Hamburg business. Such a reduction could only be brought about if it were proved to the British lines that their position was by no means unassailable. The Scandinavian emigrant business to the United States which for long had been a source of great profit to the British, lent itself admirably to such purposes. Ballin’s proposal was agreed to by the Company’s management, with the result that in July, 1886, a pool agreement was concluded between the Packetfahrt (on behalf of a Stettin Line of steamers) and the Danish Thingvalla Line. Steamers now began to call at Gothenburg and Christiansand on their voyages from Stettin to the United States. The new line was known as the “Scandia Line"; and in later years, when a similar object was aimed at, it was called into existence once more. The aim was not to establish a new steamer service for its own sake, but rather to create an object for compensation which, in the negotiations with the British lines, could be given up again in exchange for concessions on the part of the latter regarding the Hamburg business. If this plan failed, Ballin had another one mapped out: he threatened to attack the British in their own country by carrying steerage passengers either from Liverpool via Havre, or from Plymouth via Hamburg. People in England laughed at this idea. “Surely,” they said, “no British emigrant will travel on a German vessel.” The British lines replied to Ballin’s threat by declaring that they would again reduce to 30s. their rates from Hamburg to New York via a British port. However, the negotiations which Ballin entered into with them in England during the month of September, 1886, soon cleared the air, and led to the conclusion of an agreement towards the end of the year. The Packetfahrt promised to withdraw its Scandia Line, and the British lines, in return, agreed to raise their steerage rates from Hamburg to 85 marks gross, and those from Liverpool, Glasgow, and London to £2 10s. net. A clearing house which should be under the management of a representative of the British lines, and which was also to include the business done by the Bremen agents of the latter, was to be set up in Hamburg. This clearing house was kept on until other and more far-reaching agreements with the British lines made its continued existence superfluous.