Manual of Ship Subsidies | Page 6

of 1846 had advised.
Bids were now received from the Cunard, the Inman, the North German Lloyd, and other lines. The Inman Company had previously offered to perform the service, and had done so for sea-postage only.[AQ] Contracts were finally concluded with the three named. The contract with the Inman Line was for a fortnightly Halifax service, for seven hundred and fifty pounds the round trip, nineteen thousand five hundred pounds a year, and a weekly New York service for sea-postage. That with the Cunard Line was for a weekly service to New York at a fixed subsidy of eighty thousand pounds. That with the North German Lloyd was for a weekly service, at the sea-postage. These contracts were to run for a year only. The Cunard's subsidy, although considerably less than half the amount that the company had received the previous ten years, showed a loss to the Government, at sea-postage rates, of forty-four thousand one hundred and ninety-six pounds, since the amount actually earned at sea-postage rates was twenty-eight thousand six hundred and eighty-six pounds.[AR]
When advertisements for tenders were next issued, it was found that the Cunard and Inman companies had formed a "community of interests," with an agreement not to underbid each other. They asked a ten years' contract on the basis of fifty thousand pounds fixed subsidy for a weekly service. Instead, they were awarded seven years' contracts: the Cunard for a semi-weekly service, seventy thousand pounds subsidy; the Inman, for a weekly service, thirty-five thousand pounds subsidy.[AR] At the same time contracts were made with the North German Lloyd and the Hamburg-American lines for a weekly service for the sea-postage.
The Cunard and Inman grants were sharply criticised, and a Parliamentary committee was appointed to investigate them. The committee's report sustained the critics. It observed that "the payments to be made when compared with those made by the American Post Office for the homeward mails are widely different, inasmuch as the American Post Office has hitherto paid only for actual services rendered at about half the rate of the British Post Office when paying by the quantity of letters carried." The committee recommended that these contracts be disapproved, and that the system of fixed subsidies be abolished. "Under all circumstances," they concluded, "we are of the opinion that, considering the already large and continually increasing means of communication with the United States, there is no longer any necessity for fixed subsidies for a term of years in the case of this service."[AS] This recommendation, however, was not accepted, and the contracts were duly ratified.
The report of this Parliamentary committee is significant in the evidence it indirectly affords, confirming the declaration of 1853,[AT]--that the postal subsidies were not as assumed, payments solely for services rendered, but in fact were concealed bounties.
In 1871-72, when a renewed effort was made to establish an American line of American-built ships,[AU] the British subsidies were again increased. Then, also, was instituted by the Admiralty the naval subvention system--the payment of annual retainers to certain classes of merchant steamers, the largest and swiftest, in readiness for quick conversion into auxiliary naval ships in case of war, and to preclude their becoming available for the service of any power inimical to British interests.
At the expiration of the Cunard and Inman seven years' contracts the postmaster-general applied the principle of payment according to weight throughout for the carriage of the North American mails. But preference was given to British ships, these receiving higher rates per pound than the foreign. In 1887 an arrangement was entered into by which the Cunard and Oceanic lines were to carry all mails except specially directed letters, and the pay was reduced.[AV] This method of payment continued till 1903.
Then another sharp change was made in the subsidy system to meet another, and most threatening American move. In 1902 was formed by certain American steamship men, through the assistance of J. Pierpont Morgan, the "International Mercantile Marine Company," in popular parlance, the "Morgan Steamship Merger," a "combine" of a large proportion of the transatlantic steam lines.[AW] Upon this, in response to a popular clamor, subsidy, and in a large dose, was openly granted to sustain British supremacy in overseas steam-shipping. To keep the Cunard Line out of the American merger, and hold it absolutely under British control and British capitalization, and, furthermore, to aid the company immediately to build ships capable of equalling if not surpassing the highest type of ocean liners that had to that time been produced (the highest type then being German-built steamers operating under the German flag), the Cunard Company were resubsidized with a special fixed subsidy of three-quarters of a million dollars a year, instead of the Admiralty subvention of about seventy-five thousand dollars, and in addition to their regular mail pay, the subsidy to run for