More from Bacon:
“The law of 1845 (March 3) authorized the postmaster-general to contract with American ship-owners exclusively for this service to be performed in American vessels, steamships preferred, and by American citizens, for a period of from four to ten years, with the proviso that Congress by joint resolve might at any time terminate a contract.
“The subsidy was embodied in the rates of postage thus fixed: upon all letters and packets not exceeding a half-ounce in weight,...and for every additional half-ounce or fraction of an ounce, fifteen cents; to any of the West India Islands, or islands... inland postage to be added in all cases. The postmaster-general was to give the preference to such bidder as should propose to carry the mails in a steamship rather than a sailing-ship.
“Contractors were to turn their ships over to the Government upon demand for conversion into ships of war, the Government to pay therefor the fair full value, as ascertained by appraisers. The postmaster-general was further authorized to make ten-years’ contracts for mail carriage from place to place in the United States in steamboats by sea, or on the Gulf of Mexico, or on the Mississippi River up to New Orleans, on the same conditions regarding the transfer of the ships to the Government when required for use as war ships.
“The next year, 1846, in the annual post-office appropriations act (June 19), provision was made for the application of twenty-five thousand dollars toward the establishment of a line of mail steamers between the United States and Bremen; and early in 1847 (February 3) a contract was duly concluded for a Bremen and Havre service, the first under the law of 1845.”
The Bremen and Harve service was conducted with ships owned in New York.
“This was a five years’ contract entered into with the Ocean Steam Navigation Company, upon the basis of an earlier agreement (February 1846) with Edward Mills of New York, which Mr. Mills had transferred to the new organization. The subsidy was fixed at one hundred thousand dollars a year for each ship going by Cowes to Bremen and back to New York once in two months a year, and seventy-five thousand dollars a year for each ship going by Cowes to Havre and back to New York.
“The contractors were to build within a year's time four first-class steamships of not less than 1400 tons, nor less than a thousand horsepower; and were to run their line “with greater speed to the distance than is performed by the Cunard Line between Boston and Liverpool and back.”
“Provision for the subsidy thus called for was promptly made in this item in the post-office appropriation bill for the ensuing year, approved March 2: “for transportation by steam-ships between New York and Bremen according to the contract with Edward Mills, $258,609.”
“The next step was the enactment of a law which had for its declared objects “to provide efficient mail services, to encourage navigation and commerce, and to build up a powerful fleet in case of war.”
“This measure, approved March 3, 1847, entitled “An act to provide for the building and equipment of four naval steamships,” made provision for the construction, with Government aid, of merchant mail-steamships under the supervision of the Navy Department that they might be rendered suitable if needed for war service.
“The act directed the secretary of the navy to accept on the part of the Government certain proposals that had been made for the carriage of the United States mails to foreign ports in American-built and American-owned steamships. These proposals had been submitted to the postmaster-general (March 6, 1846) by Edward K. Collins and associates (James Brown and Stewart Brown) of New York, and A.G. Sloo of Cincinnati: one for mail transportation by steamship between New York and Liverpool, semimonthly, the other between New York and New Orleans, Havana, and Chagres, twice a month.
“The secretary was directed to contract with Messrs. Collins and Sloo in accordance with the provisions laid down in this act. These required that the steamers be built under the inspection of naval constructors and be acceptable to the Navy Department; that each ship carry four passed midshipmen of the navy to serve as watch-officers, and a mail agent approved by the postmaster-general.
“Mr. Sloo’s ships for his West India service were to be commanded by officers of the navy not below the grade of lieutenant. The secretary was further directed to contract for mail-carriage beyond the Isthmus,—from Panama up the Pacific coast to some point in the Territory of Oregon, once a month each way; but this service could be performed in either steam or sailing ships, as should be deemed more expedient.”
It is clear in this passage that New York, Cincinnati, and Philadelphia companies were receiving the contracts for mail or for the purpose of making voyages on certain schedules.
The amounts received were sufficient to underwrite the costs of constructing multiple vessels. Congress required that these ships meet military specifications and be available to the Navy in time of war.
The government was financing the growth of this business.