Let me give you some detail on why so much treasury money was given to privately owned New York shipping companies.
Since the settlement of the colonies, American shipping interests hotly contested the British for profitable trading on ocean routes. When in 1838, a ship owned by the British Great Western Steamship company crossed the Atlantic in fifteen days, a drastic new beginning in the shipping trade was at hand. Within two years other British companies began transatlantic steam packet trade, adding a number of ships to their fleets.
Due to both governmental and private industry dissatisfaction with the emerging dominance of the British companies in the transatlantic mail packet trade, the United States government legislated a state subsidized mail service in 1845. The United States Postmaster General's Office solicited bids from US based shipping companies to initiate service from New York to European ports. Four companies submitted proposals. The eventual winner of a five year mail carrying contract for the European operation was awarded to the Ocean Steam Navigation Company, led by Edward Mills, which began service in 1846. Interestingly, it seems that Mr. Mills did not own a steam ship at the time of the award of the contract, but had New York banking ties.
In 1847 the 29th United States Congress passed the Mail Steamer Bill which which was designed to stimulate mail delivery in various directions. The Mail Steamer Bill was essentially a federal policy of mail subsidies that formed the financing of steamship investment and operation.
As a result, several steamship companies sprang up to serve the various government mail service requirements.
The United States Mail Steamship Company was formed in 1847 by George Law, Marshal Roberts and Bowes McIlvaine. The US Mail Steamship Company took over a contract for bi-weekly mail service between New York, Havana, and New Orleans. The company was contracted to provide service, employing 5 ships, and would receive approximately $300,000 in annual contract monies. After the gold discovery in 1848 and financial success, Law acquired four more ships to compete with his primary rival, William H. Aspinwall of the Pacific Company.
In 1848, William Henry Aspinwall of New York secured a ten year government contract and formed the Pacific Mail Steamship Company, of which he became President. This company was, by contract, paid $199,000 per year by the U. S. Government.
In 1856, Aspinwall retired from the position of President of the Pacific Mail Company, and in 1858, the company's contract with the government expired. At the same time, the contract of their competitor, the United States Mail Steamship Company also expired.
To properly compete with the US Mail Steamship Company, the Pacific Mail Company bought three ships, the SS Adriatic, SS Atlantic, and the SS Baltic, all of which had formerly belonged to the Collins Line.
The New York and Liverpool United States’ Mail Steamship Company, which was commonly known as the Collins Line, was formed in 1848 by I. G. Collins.
Israel Collins had an extensive seafaring background, and had originally founded his company, the Collins Line in 1818. The company was modestly successful until 1825 when it took advantage of the cotton shortage in England and chartered a schooner in order to reach Charleston and establish large contracts to ship cotton. Because of the success of this one effort, company growth allowed the purchase of a number of packet ships serving not only the New York-New Orleans market, but the New York to Liverpool. These were the SS Atlantic, SS Arctic, SS Baltic, and SS Pacific.
Federal financing enabled several companies to build large oceangoing transports as well as side-paddle steamers, and schooners for the coastal trade. The generosity of the legislation was rationalized by the stipulation that in time of war, these ships would be transferred to the Navy for service.
If you recall, a number of these ships were involved with Lincoln's attempted invasion of Charleston and Pensacola in '61.
PeaRidge:
"the United States government legislated a state subsidized mail service in 1845.
The United States Postmaster General's Office solicited bids from US based shipping companies..." And there it is: competitive bids for US mail service, hardly rank "subsidies".
Words like "bids" mean that Southerners, if they wanted to, could also participate in such business.
PeaRidge: "The generosity of the legislation was rationalized by the stipulation that in time of war, these ships would be transferred to the Navy for service."
If the contracts were truly bid, as you say, then they were not "generous", but competitive.
We know this because, for example, the Collins Line you mentioned before went bankrupt in 1857, despite "subsidies".
That suggests such shipping was far less lucrative than it was risky, and may begin to explain why most Southerners weren't so interested in doing it.
PeaRidge: "If you recall, a number of these ships were involved with Lincoln's attempted invasion of Charleston and Pensacola in '61."
The SS Baltic, for one,was not "transferred to the Navy", it was leased, for $1,500 per day in 1861, down to $1,000 in 1865.
