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28 MARINE REVIEW AND MARINE RECORD. example; in conjunction with the national railroads through 'rates must be given on German produce to all markets reached by. the subsidized steamers. fee ». .Whenever the time comes for the subsidization of American steamships, the contracts of the German government with its two great ocean carrying corporations ought to be carefully studied by practical business men. : eg _ Compared with the above list of specific stipulations the con- tract made by Great Britain with the Cunard line is a very poor affair. It imposes on the conmipany three obligations, all very 'general in character. ° The government is to have the right to 'charter or purchase all or any of the Cunard ships at agreed prices, but as yet no indication has been given of the process by which the agreement is to be arrived at. 'temain. "purely British' in ownership and management, but if any guarantee of its doing so is contained in the contract, the fact has not. been mentioned in the debates in the house of com- 'mons. 'The company might easily remain "purely British" although all its bonds and stock were in the hands of a "holding "corporation" owned by foreigners, although registered in Eng- and as a joint stock company. The Cunard must' not "un- duly raise freights or give preferential rates to foreigners." As yet, however, neither the British legislature' nor the tax- payers have been informéd as to what would constitute "undue raising." . In addition, they are still in the dark as to who 'isto be the judge of preferential rates." It is not unfair to say that .the portions of the contract which have reached the press are 'sufficiently vague to call to mind certain well known wills made: by the testators without legal assistance. Se ~The Morgan combine could not capture the North German Lloyd as it did the White Star line, because such a contingency 'had been fully provided against in the company's mail contract. Had the English mail contracts been of the same business-like character as those made by the Germans both the White' Star 'and the Cunard lines would have beén safe from purchase by non-Britishers. The lesson taught years ago by the sale of the "Inman Line to the International Navigation Co. was not taken to heart by John Bull, whose only consolation is that since its Americanization it has never paid a dividend on its stock. ' The British government had not thought it necessary to stipulate for the permanent nationality of its ocean mail contractors, con- "sequently when a foreign buyer appeared in the market it -had 'no hold' on them. 'The best transatlantic lines' were, in reality, sold to Mr. Morgan, with one exception. This excep- 'tion, the Cunard, remained British on the understanding that it, among other privileges, received an annuity of $750,000 for twenty years. : : : The Morgan combine found it necessary. to: purchase: an alliance with the German lines and to pay a handsome price for it--a guarantee of 6 per cent. per annum on their paid-up capital. In addition it had virtually to submit to all the com- "mercial conditions of their contracts with the government, such as uniform rates, which in operation will mean that the rates of the combine as well as those of the German lines must be ap- 'proved by the German government. ae The agreement which the combine succeeded in making with the British government is very different. |The general effect of it, according to the president of the department known as the board of trade, is to secure that the British companies. in the Atlantic combine "shall remain British not merely in name but in reality." The majority of their directors are to be British sub- jects, their ships are to fly the British flag, to be officered by British officers and to be manned in reasonable proportions by British crews. 'They are to be as British as the Cunard fleet itself, and it seems a little unreasonable that the Cunard com- pany should be paid $750,000 a year for what the combine gives for nothing. It is true, of course, that the British government agrees to place the British companies in the combine on a foot- "ing of equality with other British shipping companies. This may mean a great deal or it may mean nothing at all. The proof will be in the application. In matters of detail the probab- ality is that all the companies will do very much as they like, for nothing is more certain than that the aristocrats who are at the head of the present English administration are no match in shrewdness for any business men. 'The members of the Morgan firm ought to be thankful that they have not always to deal with methodical people like the Germans, who know exactly what they want and insist upon having everything written in accurate lan- guage... _ The ultimate result of all the negotiations of the past year -is that the German and British mail service with the United States is now subject to three separate agreements--a German- American agreement, under which the combine guarantees _ $1,500,000 a year to the German companies; a British-American -agreement, under which the British government agrees to give \ the combine equality of treatment with its own citizens ; and the Cunard agreement, under which the British government is to pay that company $750,000 a year not to join the combine. Why .the combine should be required to pay the Germans for what it - gets from the British as a gift; why the Cunard line should be _ well paid for what the White Star agrees to do without payment ; -and why the British taxpayers should be required to pay for _ services. which the German taxpayers get as a part of their mail The company is to . sels will be idle. dull during the past year. 'this moment. [Feb, 19, subsidy are matters beyond the comprehension of any investiga- tor on this side of the Atlantic. The whole matter is settled for. the present, and all the ordinary observer can do is to wait and see-how the three incongrous agreements will-work. A slight indication has already been given that the public will not at present benefit by any of them. Last October both the Morgan and Cunard companies--perhaps some others as well-- raised the second-class passenger rates from New York to Europe. This is good evidence that the "community of interests" plan is not being neglected: 'According to both Mr. Morgan and Mr. Ismay of the White Star line, the future policy of the combine is "to do away with unremunerative competition," which means that rates are to be raised. The British government may have supposed that its annuity to the Cunard company would pre- vent this, but it did not take many weeks to demonstrate the error of that idea. 'The answer would, no doubt, be that the English contract does not specifically prohibit any reasonable increase. ~ Although there is harmony at present, it would be rash to prophesy that it will last for an indefinite period. Circum- stances and économic conditions are sometimes too strong for even the greatest financiers. If there are more ships in the combine than freight can be found for, the rate from both American and British ports will go down--or some of the ves- ' The Atlantic shipping business has been very It is now meeting with the worst winter season that it has had for a number of years. Both freight and passenger business are poor, and as usual the poorer it is the greater will be the competition for it. Tramp steamers are numerous; they are not controlled by any "community of interests,' and as their expenses are less than those of the regu- lar liners, they can carry freight at a lower price. This condi- tion of affairs may account for the conciliatory tone which the combine has assumed towards its rivals. The results of last summer's business were disappointing to all transatlantic com- panies, especially to those which use New York as their port. The first act of the combine at that city was to raise saloon rates to Europe about 25 per cent. in honor of the king of England's coronation. A rush for accommodation was expected, but in- stead of a great increase in numbers during the tourist season there was a very decided decrease as compared with 1901 or 1900. There is little doubt that a further increase in first-class fares had been planned, but after the above-named experience this was not carried out. Finding that the second-cabin was getting more than its usual share of patronage, the price of this part of the ship was increased $5 per head. There is a probability that 'next sttimmer many passengers for Europe will go to Boston, Philadelphia, Baltimore and the Canadian ports. - As soon as the Canadian Pacific service is started, New York will have one more rival. The traveling public are learning that the fastest steamers are the most expensive without being the most com- _fortable. - It is in the freight business, however, that the friendly rivals will find it difficult to avoid competition. The export boom from this country caused by several splendid harvests in succession culminated in roor. In 1902 the crops were not exceptionally good. Europe had a:smaller deficit than usual to make up with foreign wheat. During the eleven months ended in November last only only 9.844,167 bu. of corn were exported, as compared with 100,254,471 bu..in the corresponding period of toot. Such a reduction of exports as this means a heavy loss of freight to Atlantic steamers. The friends of the combine tell us that it will always have 2 great advantage over its competitors through its connection with the great railroads. They figure out the thousands of miles of railroad which Mr. Morgan controls, and they add that the east- bound freight will all be given to the combine. But this control is chiefly connected with New York. It does not extend 'o New Orleans nor to Galveston, nor to the Canadian ports. 'The freight war of the future is to be a war not only of railroads and steamers but of ports. New routes are -being opened up in the southwest in order to. divert western and Pacific coast traffic from eastern ports alto- gether. . These are changes which no financier, however power- ful, nor any combine can control. Mr. Morgan may be omnipo- tent in New York, but if trans-Mississippi freight should seek other outlets, as it is doing, his steamers will suffer to some ex- tent. The story that the International Mercantile Marine Co. is in a position to keep freight intended for non-combine steam- ers off the docks at all ports of the United States as a result of these docks being owned by railroads under Morgan control is not believed by anybody who has investigated the situation. The Cunard company at Boston is getting its share of freight at Moreover, the senders and consignees have the right to say what route their goods shall take. It is only uncon- signed freight that-a railroad can route as it likes. If British vessel owners send their agents to the west, where a great deal of freight originates, and canvass for it with American energy, they will get all they are justly entitled to. It is simply a mat- ter of "hustling." Fortunately for British ship owners, the battle has not to be fought out all on one line. There are quite a number of distinct lines--fast passenger service, cheap passenger service,