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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:

	Percentage
North German Lloyd	33·45
North German Lloyd (Baltimore Line)	14·80
Packetfahrt	27·00
Union Line	5·53
Red Star Line	12·26
Holland American Line	6·96

It was, however, justly pointed out at a meeting of the Conference that the amount of tonnage must also be taken into account in laying down the principles which were to govern the distribution of the profits. The average figures of such tonnage employed by the six lines during the same period were:

	Tons	Percentage
North German Lloyd	275,520	33·91
North German Lloyd (Baltimore Line)	63,000	7·76
Packetfahrt	199,500	24·55
Union Line	42,840	5·27
Red Star Line	149,600	18·41
Holland American Line	82,080	10·10
Total tonnage	812,540

The average of both sets of percentage figures worked out as follows:

	Percentage
North German Lloyd	33·68
North German Lloyd (Baltimore Line)	11·28
Packetfahrt	25·77	½
Union Line	5·40
Red Star Line	15·33	½
Holland American Line	8·53

“It would be necessary,” the memorandum continued, “to calculate each Company’s share annually on the basis of the average figures obtained for the five years immediately preceding, so that, for instance, the calculation for 1887 would be based on the figures for the five years from 1882 to 1886; that for 1888 on those for the period from 1883 to 1887, and so on. Uniform passage rates and uniform rates of commission would have to be agreed upon. To those lines which, like the North German Lloyd, maintained a service which was run by fast steamers exclusively, would have to be conceded the right to charge in their separate accounts passage money up to 10 marks in excess of the normal rates, seeing that their expenses were heavier than those of the other lines. Those Companies, however, claiming differential rates below the general ones agreed upon would have to make up the difference themselves, which was not to exceed the amount of 30 marks—i.e. they would have to contribute to the common pool a sum equal to the general rate without deduction.”

The two cardinal principles lying at the root of this proposal were (1) the assigning to each line of a definite percentage of the total traffic on the basis of the average figures ascertained for a definite period of time, and (2) the possibility of further grading these percentages by taking into account the amount of tonnage which each line placed at the disposal of the joint undertaking. This latter provision—which was known during the early stages of the movement as the tonnage clause—was intended to prevent any single line from stagnation, and to give scope to the spirit of enterprise.

The tonnage clause was not maintained for the whole time during which the pool agreement was in force. It was afterwards abolished at the instance of the North German Lloyd. This event led, in the long run, to the last big crisis which the pool had to pass through by the notice of withdrawal given by the Hamburg-Amerika Linie. When this Company proposed to considerably enlarge its steerage accommodation through the addition to its service of the three big boats of the Imperator class, it demanded a corresponding increase of its percentage figure, and, when this claim fell through owing to the opposition of the North German Lloyd, it gave formal notice of its withdrawal from the pool. Precautions taken to counteract this led to negotiations which had to be discontinued when the war broke out. Nevertheless, the pool, which was first proposed in 1886, and which came into existence in 1892, did a great deal of good. More than once, however, the agreement ceased to be effective for a time, and this was especially the case on the occasion of the struggle with the Cunard Line which followed upon the establishment of the Morgan Trust in 1903.

The secretary of the pool was Heinrich Peters, the former head of the passenger department of the Lloyd. The choice of Mr. Peters is probably not unconnected with the fact that it was he who, at a moment when the negotiations for establishing a pool had reached a critical stage, appeared on the scene with a clearly-defined proposal, so that he, with justice, has been described as “the father of the pool.” Shortly before his death in the summer of 1921 Mr. Peters wrote to me concerning his proposal and the circumstances of its adoption:—

“The history of the events leading up to the creation of the ‘North Atlantic Steamship Lines Association,’ ” he wrote in his letter, “was not without complications. So much so that after the Conference at Cologne, at which it had been found impossible to come to an understanding, I went to bed feeling very worried about the future. Shortly afterwards—I don’t know whether I was half awake or dreaming—the outline of the plan which was afterwards adopted stood out clearly before my mind’s eye, its main features being that each line should be granted a fixed percentage of the traffic on the basis of ‘Moore’s Statistics’ (reports issued periodically and showing the number of passengers landed in New York at regular intervals), and that the principle of compensation should be applied to adjust differences. When I was fully awake I found this plan so obviously right that, in order not to let it slip my memory, I jotted down a note concerning it on my bedside table. Next morning, when Ballin, Reuchlin (of the Holland American Line), Strasser (of the Red Star Line), and myself met again in the smoking-room of the Hotel du Nord, I told them of my inspiration, and my plan was looked upon by them with so much favour that Ballin said to me: ‘Well now, Peters, you have discovered the philosopher’s stone.’ We then left, previously agreeing amongst ourselves that we would think the matter over at our leisure, and that we should refrain from taking any steps leading to a conflict, at least for the time being. On my return to Bremen I went straight to Lohmann (who was director general of the Lloyd at that time), but he immediately threw a wet blanket over my enthusiasm. His objection was that such an agreement would interfere with the progressive development of the Lloyd. A few days later a meeting of the Board of Trustees was held at which I entered into the details of my proposal; but I am sorry to say that my oratorical gifts were not sufficient to defend it against the objections that were raised, nor to prevent its rejection. I can hardly imagine what the representatives of the other lines must have felt on hearing that it was the Lloyd itself which refused to accept the proposal which had been put forward by its own delegate, although the share allotted to it was very generous. Thus the struggle went on for another eighteen months, and it was not until January, 1892, that the principal lines concerned definitely concluded a pool agreement closely resembling the draft agreement I had originally proposed.

“The North Atlantic Steamship Lines Association was originally intended to remain in existence for the period of five years; but as it was recognized by all parties that it was necessarily a step in the dark, people had become so doubtful as to the wisdom of what they had done that a clause was added to the effect that it could be cancelled after the first six months provided a fortnight’s notice was given by any partner to it. Nevertheless, the agreement successfully weathered a severe crisis during the very first year of its existence, when the disastrous cholera epidemic paralysed the Hamburg trade and shipping.”

That this account is correct is confirmed by the minutes of the Cologne meeting of February 6th, 1890.

The British lines definitely declined in March, 1892, to join the pool. Thus the plan finally agreed upon in 1892 was subscribed to by the Continental lines alone, with the exception of the French line. In contrast with previous proposals, the eastbound traffic was also to be parcelled out by the lines forming the pool.

This so-called North Atlantic Steamship Lines Association, the backbone of the later and greater pool, was built up on the following percentages:

	Westbound traffic (p.c.)	Eastbound traffic (p.c.)
North German Lloyd	46·16	44·53
Packetfahrt (including the Union Line)	28·84	18·47
Red Star Line	15·70	20·68
Holland American Line	9·30	16·32

These percentages were subject to the effect of the tonnage clause by which it was provided that 50 per cent. of the tonnage (expressed in gross registered tons) which any line should possess at any time in excess of that possessed in 1890 should entitle such line to an increase of its percentage.

It has already been stated that Mr. Heinrich Peters was appointed secretary of the pool. He, in compliance with the provision that the secretariat should be domiciled at a “neutral” place, chose the small university town of Jena for his residence. Thus this town, so famous in the literary annals of Germany, became, for more than twenty years, the centre of an international organization with which few, if any, other places could vie in importance, especially since the four lines which had just concluded the original pool were joined, in course of time, by the British lines, the French line, the Austrian line, and some Scandinavian and Russian lines as well. Later on a special pool was set up for the Mediterranean business which, in addition to the German, British, and Austro-Hungarian lines, also comprised the French Mediterranean, the Italian, and the Greek lines, as well as one Spanish line. The business of all these lines was centred at Jena.