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1903. ] MARINE REVIEW AND MARINE RECORD. 27 TRANSATLANTIC SHIPPING BUSINESS. Discussion Regarding Effect of the Morgan Combine and Cunard Agree- ment with the British Government--Criticism of the Cunard Agreement. [By an Occasional Correspondent. ]} Agreements which the government of Great Britain has en- tered into with the Cunard company and the Atlantic shipping combination have been fully set forth in the columns of the Review, together with a general resume of the comment heard in British shipping circles since the agreements were effected. It would seem, however, that there is still much of interest to be said regarding the effect of the Morgan combination and the Cunard agreement on transatlantic shipping business. Briefly the Cunard company is to receive a loan of a sum of money suffi- cient to enable it to build the two large and very fast steamers for which contracts have just been let. The amount is not de- finitely fixed, but it will probably be about £1,500,000, upon which interest at the rate of 234 per cent. per annum is to be paid, and the principal is to be refunded in instalments extending over twenty years. 'The company is also to receive an annual payment cf $750,000 until the expiration of the agreement in 1922. In consideration of these benefits the Cunard company undertakes. "until the expiring of the agreement to remain a purely British undertaking, and that under no circumstances shall the management of the company be in the hands of or the shares or the vessels of the company be held by other than British subjects." The usual undertaking to hold at the dis- 'posal of the government the whole of its fleet, as well as the right to charter or purchase all or any of the vessels at agreed rates is, of course, given, and there is an engagement not to "unduly raise freights or to give preferential rates to foreigners." This agreement differs from the various arrangements made by Great Britain with the steamship companies since about the year 1860, and on that account a detailed criticism of it appears desirable. For the past forty years all mail contracts have been open to public competition, and each contract has been given to the lowest bidder. | Since 1891, payments have been made to certain steamship companies to enable the admiralty to take their vessels in time of war. The total sum paid under this heading has not exceeded some £50,000 per annum. 'The amount paid for carrying mails to all parts of the world being about £700,000, it will be seen that the Cunard company will soon have at its disposal about one-sixth of the yearly payment made by Great Britain to all steamship owners for all purposes. The gov- ernment may tell the numerous English shipping magnates that the Cunard subsidy is not to be made a precedent, and is to be regarded as an exceptional case, but this is not likely to be con- sidered a satisfactory statement. Even if it is said that the Cu- nard concern had to be saved from the Morgan combine at any cost, the ship owners left out in the cold might reply that Mr. Morgan is not the only foreigner who has been buying up steam lines in order to capture the British trade they command. The Germans have been doing the same thing all over the world. Little has been said concerning their purchases in the news- papers, but they have nevertheless acquired British lines of ships trading with Mexico, Jamaica, Singapore, and elsewhere. Every point of advantage which any German wrests from England either on sea or land at once becomes a center of anti-British activity. Hose The argument was used in the London journals that if Mr. Morgan had been allowed to carry out his plans American com- petition would have become so irresistible that the British com- mercial flag would have been swept off the Atlantic. This idea is hardly worthy of a serious answer, and it is rebutted by the fact 'that out of 411 ships which entered the port of New York last October, 189 carried the British flag, and eighty-one the American. But if it had been true that the combine was going to capture the Atlantic trade, an arinuity of $750,000 a year paid to a single competing company could not have gone far towards preventing it. It is only one-half of the annual guarantee which the com- bine has given to the German steam lines, which have the "working agreement" with the International Mercantile Marine Co. The British government is now in somewhat of a dilemma, although nothing appears to have been written upon the subject. One of two events must happen in the transatlantic trade--either the Morgan competition will prove formidable in spite of the Cunard subsidy, or it will turn out a false alarm. In the former event, it may extend to other parts of the world where defensive measures of an equally heroic kind may have to be taken against it. In the other event, the British taxpayer will have almost thrown away $750,000 a year for twenty years. And in the meantime most of the British ship owners will regard the Cunard agreement as giving them a right to appeal to the national treas- ury whenever they are threatened with any new form of foreign competition. Even admitting that the English government was obliged to do something in the emergency, and also admitting that the Cunard agreement may perhaps be the best that could have been made in the circumstances. no business man can possibly accept "it as anything more than a makeshift. The suggestion of its being a permanent development of the maritime policy of the British nation is unworthy of consideration, because it deals with one special case only, and because it is merely provisional in its character. There will, no doubt, be some permanent develop- ment in the shipping policy of Great Britain in order to meet the new exigencies which have arisen and are still arising. © This point should be kept in mind by ship owners on this side of the Atlantic. John Bull may have been asleep, but he is waking up very rapidly. While the total exports from the United States for eleven months of 1902 showed a decrease of $150,000- ooo as compared with the same period of 1901, those of Great Britain show an increase, small, it is true, of about $15,000,000. The best use that can be made of the Cunard agreement for American purposes is to treat it as an experiment--as a standard by which to judge kindred measures of the future. A practical question to ask is: "Can this agreement serve as a model for the United States government in its contracts with ocean mail steam- ship companies?" The answer must be an emphatic "no." It is not even a model for the United Kingdom to follow. British shipping contracts were complicated in the past. The Cunard. contract makes them still more complex, for it brings into them another government department--the board of trade. Original- ly the steamship companies had to deal with the post office alone. Next they were invited by the admiralty to enrol themselves as a naval reserve with special retainers. Then the colonial office came in with a special postal service for certain colonies. And now the board of trade puts in an appearance to counteract the Morgan combine. It is safe to say that the government of the United States will not muddle its shipping subsidies by in- volving four separate departments of the administration. The Germans have done much better. They have not spread any- thing over four departments that could be done by one. | Thanks to the late Prince Bismarck, who negotiated the original con- tracts with the North German Lloyd company, the arrangements between the German government and the shipping companies are models of comprehensiveness and exactness. There is no desire in England, however, to copy anything German, although the ad- vantages of so doing are in some cases quite evident. Under the new arrangement the Cunard company will re- ceive from the British government nearly as much per annum as the North German Lloyd: receives from the German. government. The mail steamers of the latter corporation, it must be remem- bered, go to almost all parts of the world. For a yearly pay- ment of a little less than $1,500,000 the North German Lloyd has to give a much greater aggregate of public service than will be obtained by the British post office, admiralty, colonial office and board of trade. The general belief that the English company surrenders its former contracts upon acceptance of the new agree- ment is an error, the truth being that the latter does not affect its existing arrangements with departments of the government other than the board of trade. [he German corporations in the shipping business are required to submit to obligations which are far more rigorous than any that have been sugges- ted either here or in England. The mail. contracts stip- ulate not only for a minimum speed but for a minimum size of vessel, a proviso which has been very successful in opera- tion. It has helped to secure for the German mail steamers an important part of the passenger business to China and Austra- lasia. 'The ships must be built in German yards, as far as pos- sible with German materials. The plans must be according to the requirements of the German admiralty. In case of mobiliza- tion the mail steamers may be bought or requisitioned by the government. Their sale or hire to foreign countries is not al- lowed without permission. Even this is not all. No disposi- tion whatever can be made of them without government au- thority. The rates for both passengers and freight must be authorized by the superintendent of mercantile marine, and they must not be higher from the German ports, Hamburg and Brem- en, than from other ports of call. The imperial chancellor may forbid the steamship companies to import into Germany any agricultural products which would compete with German pro- ducers. Rebates of 20 per cent. on the conveyance of arms, ammunition and stores for the government are provided for, as are reduced passenger rates for all German officials. Every employe of the steamship corporations must, as far as possible, be German. 'This regulation includes agents in foreign coun- tries. All adult deck hands and members of the engine-room staff engaged in Germany must consist of men belonging to the naval reserve or of persons under written contract to serve in the navy if steamers are requisitioned, hired or bought by the government. 'This last condition is so strictly enforced that the companies are obliged to submit the list of every ship's crew to the superintendent of marine. Any nation is fortunate which can induce steamship owners to agree to contracts like the one described, which make the North German Lloyd and Hamburg-American fleets portions of the German navy. 'The government has a large number of auxiliary cruisers as completely under its control as if they were actually a part of the navy. They are bound to it as tightly as ironclad contracts can bind them, a fact which Mr. Morgan's firm discovered very quickly when it contemplated including certain lines in the so-called trust. In time of peace important services have to be rendered to the German government. For