The competition now became sharper. Still the Collins Line maintained its record sailings, and continued to beat the English. Then it was sharply checked by a grave disaster. On the twenty-fourth of September, 1854, the Arctic, when forty miles off Cape Race, rushing through a fog, was rammed by a French steamer, and sunk with three hundred and seven souls. This calamity had a depressing effect on the company's affairs. Two years later, in 1856, Congress determined to reduce the subsidy, and notice of the discontinuance of the extra allowance of 1852 was ordered.[[GQ]] Only a few weeks after this action another disaster, even more appalling than the first one, befell the company. On September 23 the Pacific sailed from Liverpool for her homeward voyage with a full complement of passengers; passed to sea out of sight; and was never more heard of. She was replaced by the Adriatic, the fifth ship called for by the contract, which was launched the year before, the largest, finest, swiftest, and most luxurious then afloat; and the company struggled on against accumulating odds.
At length, in 1858, Congress abandoned the subsidy system and returned to the method of payment for foreign mail-carriage according to the actual service rendered, with a proviso, however, favoring American ships, such to receive the inland-postage plus the sea postage, while foreign ships were to have the sea postage only.[[GR]]
This was the final blow. The last voyage of the Collins Line was made in January, 1859. Then it perished. In April following, the ships were seized by the mortgagees and sold. So closed the career of the pioneer United States ship company in the transatlantic service. The splendid Adriatic passed to English ownership and the American flag gave way to the British. For several years this ship "held the transatlantic record with a passage of five days nineteen hours from Galway to St. John's."[[GS]]
Of the other subsidized lines, the ships of the Bremen service were withdrawn and laid up after the subsidy ceased. The Havre line continued a while longer with two ships that had replaced the Humboldt and the Franklin, both of which had been lost,—the Humboldt wrecked at Halifax on December 5, 1853; the Franklin stranded on Montauk Point on July 17, 1854. Then with the charter of the two new steamers by the Government in 1861 for use in the Civil War, the Havre line also disappeared.
The cost to the Government of this first steamship subsidy venture, covering the thirteen years between 1845 and 1858, was approximately fourteen and a half million dollars.[[GT]]
Meanwhile, within this period, the American wooden sailing-ships continued to be the glory of the seas, and the American clippers reached their highest development. The appearance of steamships on the North Atlantic and the Pacific had inspired the producers of the "wonderful American sailing-ships" to greater efforts for their perfection; and the clipper, surpassing all other types of sailers in size, sea-qualities, and speed, was the result of the intensified rivalry of canvas and steam.[[GU]] The American clipper-ship era fairly opened with the advent of the Collins Steamship Line.[[GV]] Between 1850 and 1855 clipper-ships were built for nearly every trade,[[GW]] and they were on every sea. Some of the first were employed in the transatlantic packet service. More became engaged particularly in the "booming" trade to California, in the long-voyage traffic to China and India.[[GX]] "When John Bull came floating into San Francisco, or Sydney, or Melbourne, he used to find Uncle Sam sitting carelessly, with his legs dangling over the wharf, smoking his pipe, with his cargo sold and his pockets full of money."[[GY]] The Crimean War, 1853-56, opened a new and prosperous market for American fast sailing-ships, as transports. To meet the demand American ship-yards produced in 1855 more tonnage than they had ever built before.[[GZ]] The sailing-ship interests strenuously opposed the subsidy system. They denounced it as class legislation unjustly favoring the few, and urged its abolishment.[[HA]] How strong this influence was in bringing about the change in policy is a mooted question.
No further move for fostering the American merchant marine with State aid directly or indirectly, was made till 1864. Then the steamship-subsidizing policy was revived, first with a proposition for the establishment of an American mail-line to Brazil. A subsidy of two hundred and fifty thousand dollars per year was proposed, one hundred and fifty thousand to be paid by the United States and one hundred thousand by the Brazilian Government. Congress endorsed the scheme. The act embodying it (May 28)[[HB]] authorized the postmaster-general to contract for a monthly service between the two countries, touching at St. Thomas, W.I., by first-class American sea-going steamships of not less than 2000 tons. The steamers were to be built under naval inspection, and to be subject to taking for war service. Bids were to be openly advertised for. The contract was to run for ten years. Thus was established the pioneer American line between Philadelphia and Rio de Janeiro, which continued from 1865 to 1876, and was then abandoned.
In the same session of Congress a bill was introduced, authorizing an annual subsidy of five hundred thousand dollars for an ocean mail-steamship service to Japan and China via Hawaii. This also received favorable consideration, and was passed February 17, 1865. The service was to be monthly, performed by American-built ships of not less than 3000 tons, also constructed under naval inspection. Tenders for the contract were to be advertised for, but bids only from United States citizens were to be entertained. The contract was to run for ten years. Only one bidder appeared (as was evidently expected)—the Pacific Mail Steamship Company. The contract went to that company, and under it, in 1867, their prosperous Asiatic service began. At the outset they were released from the obligation of stopping at Hawaii, and Congress voted another subsidy—seventy five thousand dollars per annum—for a distinct Hawaiian service.[[HC]] The contract for this service, also advertised for, went to the California, Oregon, and Mexican Line.