On May 31st, 1886, Albert Ballin first took part in a joint meeting of the Board of Trustees and the Board of Directors of the Packetfahrt. On this occasion two proposals were put forward by him: one, to provide new premises for the work connected with the booking of passengers at an annual rent of 5,000 marks; the other, to start a direct service from Stettin to New York via Gothenburg. This latter proposal was prompted by the desire to reduce the influence of the British lines competing for the Hamburg business. Such a reduction could only be brought about if it were proved to the British lines that their position was by no means unassailable. The Scandinavian emigrant business to the United States which for long had been a source of great profit to the British, lent itself admirably to such purposes. Ballin’s proposal was agreed to by the Company’s management, with the result that in July, 1886, a pool agreement was concluded between the Packetfahrt (on behalf of a Stettin Line of steamers) and the Danish Thingvalla Line. Steamers now began to call at Gothenburg and Christiansand on their voyages from Stettin to the United States. The new line was known as the “Scandia Line"; and in later years, when a similar object was aimed at, it was called into existence once more. The aim was not to establish a new steamer service for its own sake, but rather to create an object for compensation which, in the negotiations with the British lines, could be given up again in exchange for concessions on the part of the latter regarding the Hamburg business. If this plan failed, Ballin had another one mapped out: he threatened to attack the British in their own country by carrying steerage passengers either from Liverpool via Havre, or from Plymouth via Hamburg. People in England laughed at this idea. “Surely,” they said, “no British emigrant will travel on a German vessel.” The British lines replied to Ballin’s threat by declaring that they would again reduce to 30s. their rates from Hamburg to New York via a British port. However, the negotiations which Ballin entered into with them in England during the month of September, 1886, soon cleared the air, and led to the conclusion of an agreement towards the end of the year. The Packetfahrt promised to withdraw its Scandia Line, and the British lines, in return, agreed to raise their steerage rates from Hamburg to 85 marks gross, and those from Liverpool, Glasgow, and London to £2 10s. net. A clearing house which should be under the management of a representative of the British lines, and which was also to include the business done by the Bremen agents of the latter, was to be set up in Hamburg. This clearing house was kept on until other and more far-reaching agreements with the British lines made its continued existence superfluous.

The arrangements which Ballin made with the agents represented in the clearing house show his skill in his dealings with other people. The whole agreement, especially the fixing of the terms governing the share to be assigned to the agents—which amounted to 55 per cent, of the Hamburg business—was principally aimed at the realization of as high a rate as possible. This policy proved to be a great success. Another step forward was that the Packetfahrt now consented to accept passengers booked by the agents, thus reversing their previous policy of ignoring them altogether.

The agreement with the British lines also provided that the Union Line should raise its rates to 90 marks, the Packetfahrt to 95 marks, and the Lloyd those charged for its services to Baltimore and New York to 100 and 110 marks respectively. Henceforward both competing groups were equally interested in obtaining as high a rate as possible.

The practical working of the agreement did not fail to give satisfaction, and the Continental lines could, undisturbed by external interference, put their own house in order. A few years later, in 1890, the British lines complained that they did not succeed in getting the percentage of business to which they were entitled. Negotiations were carried on at Liverpool, during which Ballin was present. He pointed out that, considering the whole Continental position, the British lines would be ill-advised to withdraw from the agreement, and he stated that he would be prepared to guarantee them their share (33 per cent.) of the Hamburg business. The outcome was that the British lines declared themselves satisfied with these new stipulations. A few years later, when the British lines joined the Continental Pool, the Hamburg agreement ceased to be necessary, and in 1893 the clearing house was abolished.

The new Emigration Law of 1887—due to the exertions of the North German Lloyd and the Packetfahrt—strengthened the position of the lines running direct services from German ports. Another step forward was the increase of the passage rates which was agreed upon after negotiations had taken place at Antwerp and in England, and after the German, Dutch, and Belgian lines had had a conference at Cologne. Contact was also established with the chief French line concerned.

The improvement, however, was merely temporary. The termination of the struggle for the Hamburg business did not mean that all the differences between all the transatlantic lines had been settled. On the contrary, all the parties concerned gradually realized that it would be necessary to institute quite different arrangements; something to ensure a fairer distribution of the traffic and a greater consolidation of their common interests. A proposal to gain these advantages by the establishment of a pool was submitted by the representative of the Red Star Line at a conference held in the autumn of 1886, and a memorandum written by Ballin, likewise dating from 1886, took up the same idea; but an agreement was not concluded until the close of 1891.

That, in spite of Ballin’s advocacy, five years had to elapse before this agreement became perfect is perhaps to some extent due to the fact that Ballin—who at that time, after all, was only the head of the Passenger Department of his Company—could not always speak with its full authority where his own personal views were concerned. Moreover, the influence of his Company was by no means very considerable in those early days. The only passenger boat of any importance which the Company possessed in the early ’eighties, before Ballin had entered its services, was the Hammonia, and she was anything but a success. She was inferior both as regards her efficiency and her equipment. At last, however, Ballin’s desire to raise the prestige of the Company triumphed, and the building of several fast boats was definitely decided upon. In addition to a comparatively large number of passengers—especially those of the first cabin—they were to carry a moderate amount of cargo. In size they were subject to the restrictions imposed upon them by the shortcomings of the technical knowledge of that time, and by the absence of the necessary improvements in the fairway of the lower Elbe. Speed, after all, was the main consideration; and it was the struggle for the blue riband of the Atlantic which kept the attention of the travelling public riveted on these boats.

A statement giving details of the financial results obtained by the first four of the new fast steamers which were entered into 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.