TOPICS OF THE DAY.
THE ATLANTIC STEAMSHIP COMBINE. THERE has been a great deal too much "tall talk" and exaggeration about the doings of the Atlantic Steamship Combine. To read some of the rhetoric of the Press on the subject one would imagine that Mr. Pierpont Morgan had bought the Channel Squadron and was going to remove it immediately to New York. Fortunately things are not quite so bad as that, and if the matter is looked at soberly and calmly it will, we think, be seen that there is not nearly so much cause for alarm and indignation as the public were at first inclined to believe. We do not say that there is no ground for anxiety, and we are quite sure there is cause for vigilance and care and hard work on the part of our business men ; but we are certain that -what is wrong with us will not be mended by impotent irritation and grandiloquent clamour about the oppressions and tyrannies of American capitalists, or by appeals for legislative protec- tion against their machinations. We shall not hold our own by such unworthy and un-English ways of meeting our difficulties, but only by a clear understanding of the facts, and by dealing with them in a reasonable and businesslike spirit.
In the first place, we must face and understand the whole commercial situation of which the Atlantic steamship purchase or Combine is only one of the phenomena. To begin with, it must be remembered that Mr. Morgan and the capitalists allied with him are business speculators, and not men acting with some dark and malevolent design to injure this country or to purloin its most cherished posses- sions. They are acting from business motives. On the one hand, they are not, as the Yankee speculator re- marked, "in this for their health " ; but on the other, they are not in it for any deep political purpose. They see, or think they see, a realisable profit, and they are trying to get it. That they are inclined and able to speculate in this special way is due in the first place to the fact that America has within the past ten years become what she never was before,—a capitalist and lending nation. In former days America was a borrowing nation. She had, that is, vast oppor- tunities for investing capital at home, and not enough capital of her own to use those opportunities. Gradually, however, capital accumulated in the United States, and she ceased to be a borrower. That lasted for a certain period, and then her stores of capital became so enormous that the holders began to look out for investments abroad. In a word, America has now reached the position of a lending nation. It was only natural that when she became a lend- . ing nation, and had capital seeking an outlet elsewhere than on the soil of the United. States, she should • first turn to England, and. seek to employ her surplus capital there. That is the essential cause behind the movement which has astonished the world of late. But granted that American capital was goine.b to seek an outlet here, it was inevitable that attention shoula first be turned to British shipping, and to British shipping in the Atlantic. The Americans send us every year, and every week and day in the year, a vast amount of produce, natural and manu- factured. At present nearly all that produce is transported across the ocean in ships owned by British companies. Not unnaturally, the American business men with capital asking for employment are inclined to try to get a share in the work of transport. They say : "We produce all these things in America, we carry them to the coast on American railways, and we put them on board ship at docks owned by American companies. But there at present the profit derived from handling these exclusively American products stops. Why should it stop there ? Why should we not go a step further and use our capital to get a share in the profit of the handling the goods during the period between the leaving the quays in America and reaching the consumer in England?" Needless to say, we should very much have preferred that the Americans should have left things as they were, and not have noticed the profit to be derived from following their goods a step further than the American quay ; but as they have noticed the fact, and as they possess the capital required to avail themselves of their opportunity, it is absurd to try to" take out" our exasperation in noise and annoyance. It is childish to try to repel the advance of American capital on such lines by mere clamour. The Americans are helped also in this case by the special conditions of the American Atlantic trade. Most of the ports on the American seaboard are in the hands of the railway companies. The ports, that is, are little more than their waterside termini. This means that the railway companies owning the docks can largely control the ocean traffic. They bring the produce to the coast, and they can, as it were, throw the handkerchief to any shippers they choose. Hence if, and when, the railways are controlled by the same men who control particular shipping lines, the shipping lines which do not act with the railways can be squeezed out of existence. The railways can so arrange things that the produce they bring down to the coast shall be put on board the ships allied with them and not on other ships. Of course this does not apply to the port of New York or to all the Atlantic ports, but the fact that the rail- ways are in many cases in a position to throw the handker- chief to whom they please is a very large factor in the situa- tion. It is a disagreeable fact for us, no doubt, but a fact it is, and one we had much better recognise and look full in the face. Its importance will not be diminished by pretend- ing that it does not exist. It is not a fact that need. cause us any unreasonable anxiety, and it could, we believe, if we were to be unduly pressed by the American railways, be met successfully ; but we cannot act as if the American railways have no power in deciding the conditions under which the produce first handled by them shall cross the Atlantic.
We have set forth in outline the economic conditions which, in our opinion, render it natural that America should claim, and obtain, a share of the Atlantic transport trade. They are:—(1) the vast accumulation of American capital seeking an outlet ; (2) the desire of the Americans to use that capital in the trade that lies nearest to them,- i.e., the Atlantic Ocean trade; (3) the opportunity for securing a portion of that trade offered by the exceptional posi- tion in regard to the Atlantic ports possessed by theAmerican railways and those who control them. But if we grant, as we fear we must, that America is in a position to claim and take a share of the Atlantic trade, the next question to be asked is,—What is the way least harmful to England in which such a claim can be exercised and made good ? It is clear that the thing can be done in one of three ways :— (1) the Americans can build. ships and enter them on the American register ; (2) they can buy our ships out- right and enter them on the American register ; (3) they can invest their capital in our shipping companies or in a combination of them, and so share in the profits of the Atlantic trade without making any transfer of the ships to another flag. Apparently it is the third alternative which the American capitalists have determined to adopt. Now what we have to decide is whether we should allow this, or whether we should by means of legislation force them to adopt either of the other alternatives,—i.e., to build ships of their own, or to buy certain of our ships outright and place them on the American register. We assume, of course, that Congress would pass the necessary legislation. As at present advised—the subject has not yet been enough discussed to make it wise to speak too absolutely—it seems to us that if America means to claim her share in the Atlantic transport trade, as she certainly does, it will be better for us that she should claim it in the way Mr. Morgan and his friends are claiming it. Under that plan, as we understand it, we at least keep the steamships on the British register and under the British flag. But this means that in the event of war the ships, whether under Admiralty contracts or not, could, if necessary by a special Act of Parliament, be taken up for Government purposes. They would be British vessels and amenable to British law. Hence even under the Combine we do not part with our power to use the greatest and most valuable section of our mercantile marine—i.e., the fast Atlantic steamers—for defence purposes. In our view, then, we cannot see that precipitate legisla- tive action ought to be taken to prevent the formation of the new American Shipping Trust, or that we need feel any great anxiety or perturbation about the matter. The Americans are doing what it was inevitable they would do sooner or later,—claiming a share in the Atlantic transport business, but they are claiming it in the way least likely to be injurious to England. Those who die- agree with this view, and who think that the new move- ment is very dangerous and ought to be stopped, will no doubt suggest legislative methods of prevention. We confess, however, to being very doubtful as to their success. One plan, very attractive at first, is to pay very high sub- sidies to British vessels. Now if we do this the Americans are almost certain to follow suit. Then we shall have to enter upon a war of subsidies. But America has a population of eighty millions to our forty millions, and though we may be richer per head, the aggregate is immensely in America's favour. Besides, in a subsidy war America in her reckless optimism would be certain to outbid us. Once engaged in a war of this kind, she would probably also give bounties to shipbuilders of a far more formidable kind than those now proposed to, but not likely to be excepted by, Congress, and we should have either to follow her or to see our shipbuilding industry damaged. Next we might try to fight the Combine by saying that British vessels con- trolled by a non-British company should when in British ports be subjected to heavy special taxation. But if we did that America would be sure to retaliate, with the result that we should have indirectly dealt a terrible blow at our oversea trade. In truth, we cannot think that violent or retaliatory measures would have any useful result. They would in effect be attempts to forbid a willing buyer and willing seller corning together, and. such attempts have never succeeded. "But," we can imagine an in- dignant reader exclaiming, "do you really mean to suggest that we shall do nothing ; that we are to sit down quietly and submit to this horrible tyranny ? " Well, we must confess that our advice comes to something very like—" Sit down quietly and you will probably find that there is a good deal of exaggeration about the horrible tyranny." It is in our view quite possible indeed that the American capitalists may find that they have given a good. deal too much to the shipping companies, and that the bargain is not so good for the Americans as for the Britishers. Meantime it seems to us that the one essential thing for the Government and for Parliament to do is to see that all the avenues are kept open for full and free competition with the Shipping Trust. That is the essential. If that is done we have enough faith in competition to feel sure that a healthy rivalry will sooner or later grow up. Keep the door wide open, and they will not lack competitors for long. Next, without in any way entering into a subsidy war with the -United States, and quite apart from any question of commercial subsidies, we think that the Admiralty should reconsider its atti- tude towards the merchant cruisers. We do not want any very lavish expenditure, but we do think that, placed as we are, the Admiralty might encourage exceptional speed in certain classes of ocean steamers. However, that is a matter on which we have no desire to dogmatise.
To look once more at the question broadly, we feel most strongly convinced that the matter is eminently one in regard to which people should keep their heads cool and their judgments free of prejudice. We do not like these huge Combines, and we specially regret the tendency to crush the small and elevate the big, but we must clear our minds of cant even about Trusts, and about Trusts there is always a liability to cant. To begin with, we are not by any means sure that the Trusts possess the power com- pletely to control Congress and the American Executive, as is sometimes asserted in regard to them. Their power has, we believe, always been exaggerated, and just now it is apparently on the wane. This is another reason for keeping quiet and watching developments. If, as some people believe, America is about to enter upon a period of great commercial depression, if not on an actual financial crisis, the Trusts and their shareholders are sure to be hard hit. But if that happens, the political reaction against them will be enforced by an economic reaction, and we may witness many most important new departures. Let us then do nothing rash or in a hurry in this matter of the Shipping Trust, and, above all, let us not cry out before we are hurt. We have not been hurt yet, and we are by no means sure that we are going to be,— unless we insist upon rushing head down in mad-bull fashion upon the new commercial problem that has been so suddenly developed.
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