Because Collins had broken some records, and because it was believed that his ships would serve in case of war, and because he had reduced the cost of carrying package freight, and because Congress heartily hated everything British, the subsidy was increased to $33,000 per voyage for twenty-six voyages a year. (Act of March 3, 1854.)
For a time thereafter Collins was free to continue his extravagant career. Having luxurious furnishings, he gained in the cabin passenger trade. He also gained somewhat in the package freight business. The advent of the Crimean War (March 27, 1854, to March 31, 1856), helped him because the British government took and used several of the Cunard steamers as transports (as war-ships, even the Cunarders were a sham). The Cunard service was thereby reduced and he thus had opportunity to sail in alternate weeks with the remaining Cunarders. But even then no profits were made. The line never paid a dividend.
In the meantime, the Scotchmen were learning to race their ships, and in 1855 they built the Persia, an iron ship of 3300 tons, and 3600 actual horse-power; and with her, in September, 1856, they crossed in 9 days, 2 hours, and 40 minutes, thus making a new record.
Collins built the Adriatic, the fifth ship under the contract, and the records agree that she was a very swift ship, but by no means a profitable one. Moreover she appeared too late; for by the act of August 18, 1856, Congress gave notice to Collins that the subsidy would be reduced, a year later, to the original sum of $19,250 per voyage. At the same time it became certain that no subsidy would be paid after the end of the original term of the contract—ten years.
In the meantime the line lost the Arctic. While running at a speed of thirteen knots an hour through a heavy fog, forty miles off Cape Race, and making no sort of signal to notify other vessels of her presence in those waters, she was rammed by the French steamer Vesta, and sunk with a loss of 307 lives. It has been asserted that she went down because the modern system of bulkheads had not been invented. As a matter of fact, the Norwich liner Atlantic, a ship built in 1846, had a collision bulkhead, and other ships had been divided by several bulkheads before the time of the Arctic, but experience shows that no system of bulkheads as yet installed has been able to save a ship when rammed in the engine-room. Then on September 23, 1856, a little more than a month after Congress decided to reduce the subsidy, the Pacific sailed from Liverpool, and was never heard from afterward. The two ships thus lost were together insured for $1,250,000, chiefly in England, and the money was paid to the company.
The line continued its service after the subsidy was cut (June 30, 1857), but a financial panic swept over the commercial world in the fall of that year, and with the consequent loss of business the line failed. The last voyage was made in January, 1858. In April, following, the sheriff sold the ships (subject to claims of $657,000) for $50,000. Collins died at his home in Madison Avenue, New York City, in June, 1878, and was buried in Woodlawn Cemetery.
"I knew the Collins line very well.... They burned an immense quantity of coal; they were fitted out and fitted up in the most sumptuous manner; they had large crews, a large number of officers and a large number of engineers, for they had most powerful engines. They were run at full speed, and the company had not enough ships on the line to enable them to have proper relays so that they began to deteriorate very rapidly, and they ran them out in a very short time. They had very large buildings in New York, a great many officers and a great many people connected with them. All these had to be paid. Then there were a great many deadheads, so that I used to be astonished how they kept running at all." (Admiral Porter, H. R. Rep. 28, 41st Cong. 2 sess. p. 192.)
Two other lines, subsidized under the act of March 3, 1847, need a brief consideration. One was the Sloo Line, which, as noted, ran steamships from New York by the way of Havana, to New Orleans, with a branch line to Chagres, on the Isthmus of Panama. The subsidy paid was $290,000 a year. The first ship (the Falcon), left New York in September, 1848. The Pacific coast contract went to the Pacific Mail Steamship Company at $308,000 per year. The first ship on this line left New York on October 6, 1848.
In providing for these lines Congress had been influenced chiefly by a desire to meet the British diplomacy in establishing the Royal Mail Line to the West Indies, the Isthmus, and Mexico. But the desire to provide ships fit for war was also in mind, and some enthusiasts supposed that the line would in some way increase American commerce with the countries of the Pacific coast, especially those at the south of the Isthmus, where an American named William Wheelwright had established a coast line with British capital. It is seen now, that neither of these lines could have made money under the contracts, and that none of the hopes of Congress would have been satisfied but for the discovery of gold in California and the consequent rush of emigrants to the gold-fields. Because of the traffic thus supplied both lines were immensely profitable. The Pacific Mail made money in spite of the fact that coal cost $30 a ton (one lot $50), and there were no shops anywhere on the coast for the repair of ships until the company established works of the kind. In fact, the enormous profits brought unsubsidized steamers into competition with both the lines. Commodore C. Vanderbilt, who had earned fame as a steamship man on the Hudson River and Long Island Sound, was one of the "interlopers," and he was paid, at one time, $56,000 a month to keep his ships out of the traffic (Cong. Globe, June, 1858). The Panama railroad, which was completed at midnight, January 27, 1855, was built as a connecting link between these two lines; and one gets an idea of the extent of the traffic thereafter from the fact that in the first seven years it was operated (including the traffic on the uncompleted line beginning in 1852) the earnings amounted to $5,971,728.66 (Otis, Isthmus of Panama).
Brief space will suffice for the stories of the unsubsidized transatlantic steamships of the period. In 1848 the owners of the Black Ball Line of sailing packets attempted to substitute steam for sail by building the steamer United States, a ship of 1904 tons, which they despatched to Liverpool. But because of the competition of the subsidized ships it was not possible to make her pay. The subsidized ships were able to cut rates on all kinds of traffic, of course, and this was naturally done when the new ship was seeking cargo.