The essential facts in this agreement were that the steamship company surrendered the power of fixing the westbound rates in return for a guarantee of $735,000 a year.
Later Contracts
This feature was also characteristic of later agreements between the same parties, different as the details of the subsequent arrangements sometimes were. In 1879 the Union Pacific, Central Pacific, and Pacific Mail companies agreed that the last-named should set aside space for 600 tons of railroad freight in each of its steamers moving monthly between New York and San Francisco. The railroads were to exercise full authority over the through rates of the steamship company, and for their part were to guarantee that the earnings on the railroad freight shipped were not to be less than $48,000 monthly westbound, and $35,000 monthly eastbound. In case the earnings on the 600 tons or less of railroad freight which might be sent in each vessel exceeded the guaranteed minimum, the balance of freight money was to be paid over to the railroad, while the moneys received on all freight between New York and San Francisco and between San Francisco and New York in excess of 600 tons for each vessel were to be equally divided between the railroad and the steamship company.[353] An additional clause in this agreement bound the railroads to pay to the steamship company $5 for each passenger carried whose ticket was purchased at a point east of Ogdensburg, Suspension Bridge, Buffalo, Pittsburgh, and Wheeling, to a point west of Sacramento, and vice versa.
An agreement dated June 1, 1885, between the Transcontinental Association and the Pacific Mail does not differ strikingly from that of 1879 just summarized, except that the payments per month were to be $85,000 for a two-way service, instead of $83,000, and that there was no passenger subsidy. Moreover, the right of the steamship company to fix rates for the use of its capacity above the 600 tons mentioned in the agreement was specifically reserved. The $85,000 payment in this year represented a reduction from the figure of $110,000 contained in a contract dated March 4, 1880, and from one of $95,000 concluded in 1882. In 1887 the subsidy was set at $65,000, and in 1889, when still another arrangement between the Transcontinental Association and the Pacific Mail was signed, it was put at $75,000.[354]
From a statement made to the United States Pacific Railway Commission, it appears that the aggregate earnings guaranteed by the railroads to the Pacific Mail Steamship Company from September 30, 1871, to March 21, 1886, were $11,227,939.27. This did not include Central or South American business. Of the guaranteed sum the steamship company earned $5,854,113.06, leaving $5,373,826.21 to be made up by the guarantors. The distribution of the burden among the railroads interested may be suggested by the fact that out of $146,170.29 which had to be paid during the three months from January to March, 1886, the Union Pacific paid $34,652.94, the Central Pacific $31,927.57, the Southern Pacific $30,172.79, the Santa Fé $15,086.11, the Galveston, Harrisburg and San Antonio $11,536.82, and seven other companies smaller sums.[355]
Change in Ocean Traffic
The change which took place in the volume of water-borne commerce in and out of San Francisco coincident with the arrangements between the railroads and the Pacific Mail which have been described, is clearly indicated in the following table:[356]
Value of Commodities Shipped from New York to San Francisco and from San Francisco to New York via Panama each year from 1869 to 1884
| Year ended June 30 | Shipped from New York to San Francisco | Shipped from San Francisco to New York | Total |
| 1869 | $50,015,994 | $20,186,035 | $70,202,029 |
| 1870 | 15,334,945 | 3,259,310 | 18,594,255 |
| 1871 | 9,391,607 | 2,161,106 | 11,552,713 |
| 1872 | 6,739,563 | 3,086,874 | 9,826,437 |
| 1873 | 3,042,617 | 3,667,107 | 6,709,724 |
| 1874 | 7,049,821 | 1,752,653 | 8,802,474 |
| 1875 | 6,057,202 | 2,382,928 | 8,440,130 |
| 1876 | 4,470,594 | 1,983,261 | 6,453,855 |
| 1877 | 3,398,864 | 2,205,979 | 5,604,843 |
| 1878 | 3,976,358 | 3,211,245 | 7,187,603 |
| 1879 | 2,781,065 | 2,166,690 | 4,947,755 |
| 1880 | 2,963,065 | 2,865,237 | 5,828,302 |
| 1881 | 815,893 | 2,598,868 | 3,414,761 |
| 1882 | 1,270,900 | 3,153,902 | 4,424,802 |
| 1883 | 1,192,912 | 2,394,430 | 3,587,342 |
| 1884 | 1,040,495 | 1,264,682 | 2,305,177 |
If we compare the year 1869—probably the last in which the Pacific Mail and the Huntington interests were in active competition—with the year 1884, it appears that the value of commodities shipped in and out of San Francisco via Panama during these years declined from about seventy to about two million dollars. Doubtless this falling off was not all due to agreements between rail and water carriers. For instance the sudden decline between 1869 and 1870 was occasioned in large part by the sudden diversion of bullion shipments from the water routes when the rail lines were opened, while passengers also rapidly deserted the water for the more speedy and comfortable rail service. Moreover, at a slightly later date the special contract system played its part in limiting shipments by sea. Yet it is not unfair to credit the arrangements between the Huntington group and the Pacific Mail with a considerable share of the reduction in water tonnage so desirable from the point of view of the land carriers.