Nor were the Shipowners of the United States in any better position. They, too, had overbuilt themselves. Their exclusive Californian trade had offered so many inducements, and, in fact, such large fortunes had been realised out of it, that many more vessels than could be profitably employed were built in the Northern States between 1849 and 1854. Some of these were placed on the trade with Europe. A very large amount of capital had been invested in the famous ships thus employed; but even these, before the close of 1854, were becoming unremunerative, owing to the competition of British iron screw-steamers, which I shall very fully describe hereafter, as they were the main weapon, whereby we bade defiance to the competition of all other nations, in the general ocean race then just commenced. As these splendid iron ships soon commanded all the passenger traffic, and, at the same time, secured the preference by shippers of high-classed and valuable goods, which could afford to pay the heaviest rates of freight, many of the American clippers were obliged to seek employment elsewhere. As the Great Republic[177] was one of the finest, as well as the largest of these famous vessels—indeed, she was the largest sailing vessel in the world, I furnish an illustration of her at page 360. But though this vessel and a large number of the American liners found temporary employment in the French transport service, they on the cessation of hostilities were obliged to seek employment elsewhere; and, so great was the depression, that American shipowners, in 1857, suffered quite as much as did the generality of those persons who owned sailing vessels in Great Britain. Indeed, on the 1st January of the following year, there was not a single vessel building on the stocks of New York for the mercantile marine, and, for many months previously, the shipbuilders throughout the United States had been at a complete standstill.
THE “GREAT REPUBLIC.”
Disastrous years of 1857 and 1858.
But all branches of trade throughout the world were now suffering to a greater or less extent, and 1857 and 1858 will long be remembered as gloomy years. The outbreak of the mutiny in India, the consequent suspension of remittances from the East, and the demand for specie, together with an uninterrupted outflow of the precious metals to the Continent, led to an alarming drain of the bullion in the Bank of England.
Many banks stop payment.
After a long struggle to maintain cash payments without pressing unduly on the mercantile classes, the rate of discount rose so high as to render necessary, for the second time, the temporary suspension of the Bank Charter Act of 1844. The effect of this twice-repeated measure was disastrous to many merchants engaged in the trade of the United States; not a few of whom were obliged to suspend payment. The stoppage of the Northumberland and Durham district Bank, with liabilities amounting to 3,000,000l. sterling; as well as those of the Western Bank of Scotland, which had been engaged in wild speculations in the United States and elsewhere, with liabilities to the extent of 8,911,000l., and that also of the City of Glasgow Bank for 6,000,000l., tended materially to increase the depression.
The Liverpool Borough Bank, which had been previously drained by the insolvency of various mushroom speculators in ships, failed for 5,000,000l., and the Wolverhampton Bank followed for 1,000,000l. Many private mercantile firms, also, whose liabilities alone were variously computed at a sum not far short of 20,000,000l., were, at the same period, obliged to suspend payment.
Shipowners’ Society still attribute their failures to the repeal of the Navigation Laws.
Through such overwhelming disasters, it was hardly to be expected that the Shipowners of Great Britain would pass unscathed, especially after the prosperity they had enjoyed during the Crimean War. Nevertheless, the General Shipowners’ Society of London, in the report of the annual meeting, held on the 25th June, 1858, does not appear to have attributed the cause of the depression under which Shipowners were suffering to the revulsion in commercial affairs. On the contrary, they still held the strange delusion, that, so far as they were concerned, the repeal of our Navigation Laws, together with the absence of reciprocity on the part of foreign nations, were the main causes of suffering: curiously enough, too, the report attributed some portion of their misfortunes to the Merchant Shipping Act of 1854, and the Passenger Act of the following year.