the service of the Company between 1889 and 1891 showed that the earnings up to and including the year 1895 did not even cover the working expenses, and that those up to 1899 were not sufficient to allow for an interest of 4 per cent, on the average book values of the steamers. It must be remembered, however, that the first of these two periods included the disastrous season of 1892-93, when Hamburg was visited by an epidemic of cholera. And a different light is shed on the matter also if we further remember that depreciation had been allowed for on a generous scale, no less than 50 per cent, of the cost price plus the expenditure incurred through an enlargement of the Auguste Victoria, the oldest of the boats, having been deducted on that account. The Packetfahrt, like all the other German shipping companies, has always been very liberal in making ample provision for depreciation. When, therefore, these steamers were sold again at the time of the Spanish-American and Russo-Japanese wars, a considerable profit was realized on the transactions which enabled the Company to replace them by a very high-grade type of vessel (the Deutschland, Amerika, and Kaiserin Auguste Victoria). It must be admitted in this connexion that perhaps no shipowner has ever been more favoured by fortune than Ballin where the sale of such difficult objects as obsolete express steamers was concerned. The value which these boats had in relation to the prestige of the Company was very considerable; for, as Ballin expressed it to me one day: “The possession of the old express steamers of the Packetfahrt certainly proved to be something like a white elephant; but just consider how greatly they have enhanced the prestige of the Company.” They attracted thousands of passengers to the Line, and acted as feeders to its other services.

The orders for the first two of these steamers were given towards the close of 1887 to the Vulkan yard, at Stettin, and to the firm of Laird respectively, at a price of £210,000 each, and the boats were to be completed early in 1889. They were the first twin-screw steamers, and were provided with the system of “forced draught” for the engines. This system had just been introduced in British yards, and Ballin’s attention had been drawn to it by his friend Wilding, who was always ready to give him valuable advice on technical matters. In order to find the means for the construction of these and of some other boats, the general meeting of the shareholders, held on October 6th, 1887, voted a capital increase of 5,000,000 marks and the issue of 6,250,000 marks of debentures. Knowing that an improvement of the services was the great need of the time, Ballin, since the time of joining the Company, had done all he could to make the latter a paying concern again, and in this he succeeded. For the year 1886 a dividend of 5 per cent. was paid, and thus it became possible to sanction an increase of the joint-stock capital.

Further foundations for later successes were laid by the reform of the organization and of the technical services of the Company. His work in connexion with the Carr Line had taught the youthful head of the passenger department that careful attention to the material comfort of the steerage passengers could be of great benefit to the Company. He continued along lines such as these, and at his suggestion the steerage accommodation on two of the Packetfahrt’s steamers was equipped with electric light, and provided with some single berths as well. This latter provision was extended still further during the succeeding year. In addition to the fast steamers, some ordinary ones were also ordered to be built. In 1888 two steamers were ordered for the Company’s West Indies service, and shortly afterwards eight units of the Union Line were bought at a price of 5,200,000 marks. All these new orders and purchases of steamers led to the joint-stock capital being raised from 20 to 30 million marks. Two more boats were laid down in the Stettin Vulkan yard, and a third with the firm of Laird. The express steamer then building at the Vulkan yard was named Auguste Victoria in honour of the young Empress.

During the summer months of 1887 Ballin, together with Mr. Johannes Witt, one of the members of the Board of Trustees, went to New York in order to discuss with the agents a reorganization of the New York representation, which was looked after by Edward Beck and Kunhardt. In consequence of the negotiations which Ballin carried on to that end, the agents undertook to submit their business for the Company to the control of an officer specially appointed by the Packetfahrt. This small beginning led, in later years, to the establishment in New York of the Company’s direct representation under its own management.

When Ballin joined the Packetfahrt, he did not strictly confine his attention to matters connected with the passenger services. When, for instance, the head of the freight department was prevented from attending a meeting called by the Board of Trustees, Ballin put forward a proposal for raising the rates on certain cargo. It was therefore only but fit acknowledgment of his many-sided talents, and recognition that his energetic character had been the guiding spirit in the Company’s affairs, that the Board of Trustees appointed Ballin in 1888 a member of the Board of Directors after two years with the Packetfahrt. This appointment really filled a long-felt gap.

CHAPTER FOUR

THE POOL

The term “pool” may be defined in a variety of ways, but, generally speaking, the root idea underlying its meaning is always the same, both in its application to business and to betting. A pool, in brief, is a combination of a number of business concerns for their own mutual interests, all partners having previously agreed upon certain principles as to the distribution of the common profits. In other words, it is a community of interests concluded upon the basis of dividing the profits realized in a certain ratio. I have been unable to discover when and where this kind of combination was first used in actual practice. Before the transatlantic steamship companies did so, the big trunk lines of the United States railway system are said to have used it in connexion with the westbound emigrant traffic, and possibly for other purposes also.

When Ballin wrote his memorandum of February 5th, 1886, the steamship lines must already have been familiar with the meaning of the term, for the memorandum refers to it as something well known. Ballin begins by stating that the “Conference of the Northern European Lines” might be looked upon as having ceased to exist, seeing that two parties were represented on it whose claims were diametrically opposed to each other. Whereas the North German Lloyd insisted on the right to lower its rates, the Red Star Line claimed that these rates should be raised, so that it might obtain a better differential rate for itself. A reconciliation of these mutually contradictory views, the memorandum went on to say, appeared to be impossible, unless all parties agreed upon an understanding which would radically alter the relations then existing between their respective interests; and a way leading out of the impasse would be found by adopting the pooling system proposed by the representative of the Red Star Line. If we take the number of steeragers carried to New York from 1881 to 1885 by the six lines concerned as a basis, the respective percentages of the total traffic are as follows: