MERCHANTS’ SHIPPING ASS’N
The Merchants' Shipping Association was formed in May, 1892, for the purpose of obtaining, by organized co-operation, freights from the Atlantic to San Francisco at the lowest possible cost. The organizers of the Association consisted of the following firms: Dunham, Carrigan, and Hayden Company, Baker & Hamilton, Huntington, Hopkins & Co., Miller, Sloss & Scott, A. Crawford & Co., J. W. Grace & Co., Hawley Bros., Wellman, Peck & Co., and I. S. Van Winkle & Co. L. L. Baker was first President; A. Crawford, Vice-President; and C. E. Miller Secretary. J. W. Grace & Co. were to act as Agents of the Association. Upon the death of L. L. Baker and Andrew Crawford N. T. Romaine, of Van Winkle & Co., succeeded to the Presidency and Wakefield Baker to the Vice-Presidency. The purpose in which this line had its origin being to place in the hands of its projectors independent transportation facilities, they did not start in to engage in a general transportation war; but the older clipper lines that had enjoyed a monopoly of the business for years at exorbitant rates determined that the new line should be short-lived, and lowered their rates to such an extent that the existence of the Merchants' line was threatened. It was then that the merchants of San Francisco felt the necessity of rallying to the support of the Merchants' Shipping Association. A general meeting of the merchants was held at the rooms of the Board of Trade, in August, 1892, President J. P. La Count, of the Board of Trade of San Francisco, presiding.
At this meeting most of the leading wholesale firms joined the Merchants' Shipping Association, and a guarantee fund approximating $100,000 was subscribed for the maintenance of the new line. It was decided that the business of the Association should be conducted by an Executive Committee consisting of twelve representatives from the different firms. The Committee was as follows: N. T. Romaine, of I. S. Van Winkle & Co.; Wakefield Baker, of Baker & Hamilton; B. F. Dunham, of the Dunham, Carrigan and Hayden Company; Henry Payot, of Payot, Upham & Co.; A. Cerf, of Cerf, Schloss & Co.; W. B. Wellman, of Wellman, Peck & Co.; F. W. Van Sicklen, of Dodge, Sweeney & Co.; R. B. Huie, of J. W. Grace & Co.; M. P. Jones, of Jones & Co.; H. Michaels, of Langley and Michaels Company; C. E. Miller, of Miller, Sloss & Scott, and George Hawley, of Hawley Bros. Hardware Company.
Under this management the business of the Association continued in active operation until January 1, 1894.
The "Chas. E. Moody," the first ship of the Merchants' Line arrived in San Francisco in November, 1893. It brought 2800 tons of general merchandise. It has been followed by regular monthly arrivals since then to date. The line was under the direct management of the Association until January 1, 1894, at which time Messrs. Grace & Co. undertook to continue it on their own account. The expiration of the contract between the Panama Railroad Company and the Pacific Mail Steamship Company brought the Isthmus route early in 1893 into competition with the clippers, a result which had not been anticipated. Rates by way of the Isthmus went so low that the business of the clippers was interfered with very seriously. A large amount of money was lost by both the clippers and the steamers. The older clipper lines which had pursued a war of extermination also lost heavily, but the Merchants' Lines survived, and under a guarantee of support from the merchants is today successfully conducted by W. R. Grace & Co. (April, 1895 ).
There was a lesson in these transactions which consisted principally in the demonstration that no matter how strong any compact might be made in restraint of trade to control rates and limit the volume of sea tonnage to be carried, the open ocean, by way of Cape Horn, always held out an adequate remedy for those in San Francisco who had the courage and enterprise to become carriers on their own account. The rates on sailing vessels from San Francisco to New York also declined.
Joseph S. Leeds, manager of The Traffic Association of California, attributed the collapse of The Transcontinental Association and the discontinuance of the Pacific Mail subsidy to the operation of these clippers. Merchants in San Francisco were able to secure through bills of lading from San Francisco to points in Iowa by way of Cape Horn and New York, utilizing on the Atlantic Seaboard rail lines leading inland, transporting their freights all the way around Cape Horn, and bringing them back to the Missouri River at a price which enabled them to compete with the transcontinental lines leading direct from San Francisco to the Missouri River.
In August, 1892, soon after the "Moody" arrived in San Francisco, it was carefully estimated that 42,000 tons of freights were on the way by sea for San Francisco from New York; also that about 15,300 tons were on the way via Cape Horn from Philadelphia. Twenty-four vessels were on the way, or loading, which were bound from the Atlantic to the Pacific Coast. Philadelphia businessmen were purchasing California goods to arrive by sea to distribute throughout the eastern country by rail.
The value of any undertaking of a public nature is better judged by its results in the way of public benefit than by the amount of dividends or loss shown on the balance sheet. The long journey by way of the Cape Horn from New York precluded the transportation of the higher classes of freight for which greater charges are made by the rail lines. But carriage of the lower class rates, heavier merchandise, opened the way for a competition in the transportation of all classes of freight, so much so that the old members of The Transcontinental Association not only found themselves in competition with the sea carriers, both via Cape Horn and via the Isthmus, but they also became keen competitors of each other; and the shorter water way between New York and New Orleans employed in connection with the rail lines of the sunset route of the Southern Pacific Co., incidentally became another factor in demonstrating a great truth concerning the value of competition by water. With these facilities the Southern Pacific Company was enabled successfully to compete with all other lines leading from the seaboard on the Atlantic Coast by connections to the Pacific Coast, and to secure for itself fully the "lion' s share" of all the tonnage that must move by rail, and also to continue in the possession of the "lion's share" of this traffic long after the Merchants' Association retired from active participation as carriers on their own account, and the North American Navigation Company had been succeeded on the Pacific Ocean by the Panama Railroad Company's steamship's.
Source: Pioneers of Prosperity, by David H. Walker, San Francisco, 1895. Pages 170-174.