This law increased the annual subsidy from four million marks as first proposed to four million four hundred thousand marks, of which one million seven hundred thousand was offered for the East Asian line, to China and Japan; two million three hundred thousand for the Australian line, and four hundred thousand for a branch line connecting Trieste with the Australian line at Alexandria. The contracts in accordance with it all went to the North German Lloyd Company, of Bremen. The convention between the Government and this company required that the new vessels to be furnished must be built in German yards and of German material. The coal supply was, as far as practicable, to be of German product. The chancellor was empowered to take over all the company's steamers for the mobilization of the navy, at their full value, or on hire at proper compensation. The sale or loan of a steamer to a foreign power could be made only by permission of the chancellor. The number of voyages to be made on each line yearly, and the rate of speed, were set down in careful detail. Failure to observe the table of voyages, without sufficient reason, subjected the company to heavy penalties. All persons employed in connection with the mail service were, if practicable, to be German subjects. All officers in the service of the empire, relief crews, weapons, ammunition, equipments, or supplies for the imperial navy, were to be carried at twenty per cent under the regular tariff.[[CM]]
Subsequent laws made additions to the free list of raw and manufactured shipbuilding material; and preferential rates on the State railroads were arranged for the transportation of steel, iron, timber, from the interior, where these are found at an average distance of some four hundred miles from the coast, to the ship-yards.[[CN]] Speedily large and superior steamships were designed and turned out from the enlarged ship-yards, the first ocean flyer being the Auguste Victoria for the Hamburg-American Line. In 1890 a subsidy of ninety thousand marks annually was granted for an East African line on a ten-years' contract. Within less than six years the establishment of a fortnightly Asiatic service was agitated; and in 1896 a bill granting a yearly subsidy of one million four hundred thousand marks therefor, was brought before the Reichstag. If this were forthcoming the North German Lloyd agreed, besides furnishing the fortnightly service, to increase the speed of their steamers, to send ships direct to Japan, and to meet all requirements of the Admiralty with respect to ships and crews.[[CO]]
Now the advocates of further subsidies maintained that the policy instituted with the law of 1885 had proved its effectiveness. The indirect advantages from the subventions were claimed to be quite as great as the direct. While before 1885 all large ships for German companies had been ordered in England, now all large ships for the German transatlantic lines were built in Germany.[[CO]] This condition, the increasing activity in domestic shipbuilding, and the steady growth of the empire's commercial marine, were presented as conclusive evidence of the law's effect. Germany was now pressing into sharp rivalry with England, and turning out larger and speedier steamships.[[CP]] The increased subsidy for the China service was especially urged upon these grounds: the importance of placing the German mail service in the East on a par with the services of England and France, the benefits to commerce, and the aid of the national defence.[[CQ]]
The measure met opposition at the session in which it was first introduced; but at the next session (1898), after amendment, it became law. By this act the subsidy was fixed at one million and a half marks a year for the extension of the East Asiatic service to China direct, and for making the whole service fortnightly; and the contract was extended for another fifteen years. It was conditioned that if foreign competing lines should increase the speed of their ships the North German Lloyd must do likewise, and without additional subsidy, unless the foreign companies should receive extra payments.[[CR]]
The total annual subventions for the Asiatic and Australian service had now reached five million five hundred and ninety thousand marks ($1,330,420). After January, 1899, under a contract between the North German Lloyd and the Hamburg-American Line then made, a part of this subsidy went to the latter. In 1901 the subvention to the East African line was increased to one million three hundred and fifty thousand marks. Thus Germany's grand total of annual payments in postal subventions had reached six million nine hundred and forty thousand marks.
Besides these postal subventions and the free entry to materials used in ship-construction and equipment, and the preferential railway rates on long hauls of the heavy domestic materials, barely covering the cost of handling and transportation,[[CS]] the Government bestows a special form of indirect bounty upon the subsidized steamship lines in the shape of largely reduced through freight rates. These include substantial reductions on merchandise exported from inland Germany to East Africa and the Levant. Thus the combined land and sea through rates are brought considerably below those in force on goods sent to German ports for direct importation.[[CT]]
Under these and other favoring conditions the German merchant marine has advanced in total tonnage from an insignificant place in 1880 to the third in rank among the maritime nations in 1911. Between 1885 and 1900, a period of only fifteen years, its growth was tenfold.[[CU]] In 1890 the gross tonnage stood at 928,911 tons: in 1900 it had reached a total of 2,159,919 tons. Steamers and sailing-ships were nearly equal in tonnage. German-built steamships had won the speed record in ocean liners. Thereafter the output of steamships became much the larger, and in 1906 the Government was taking measures to revive the sailing-ship trade, because of its value as a training-school for seamen for the navy.[[CV]] In 1910-11 the total tonnage was recorded at 4,333,186 tons.[[CW]]
The other influences contributing to this extraordinary growth are variously stated according to the observer's point of view. The United States consul at Hamburg sees them in the "rapid transformation of the country from a non-producing nation into one of the foremost industrial powers of Europe, a large available supply of excellent and cheap labor, and the geographical situation of the empire."[[CX]] The historian of Modern Germany sees them in German business methods:
"The astonishing success of the German shipbuilding industry is due partly to its excellent management and organization; partly to the application of science and experience to industry; * * * partly to the harmonious co-ordination and co-operation of the various economic factors which in more individualistic countries, such as Great Britain, are not co-ordinated, and often serve rather to obstruct and to retard progress by unnecessary friction than to provide it by harmonious action."[[CY]]
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