The transportation revolution in the North Atlantic: Evidence from passenger fares

Brandon Dupont, Thomas Weiss

06 November 2016

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Despite resurgent isolationist rhetoric in Europe, the US, and elsewhere, foreign tourist arrivals worldwide reached a record 1.2 billion in 2015 (UNWTO 2016). This is, of course, part of a long-term trend in overseas travel that began during the 19th century transportation revolution. In the North Atlantic, this revolution was the result of efficiency improvements in steam engines, which lowered transportation costs, increased the speed and reliability of travel, and thereby led to deeper commercial, social, and political connections between North America and Europe. By the time Mark Twain published Innocents Abroad in 1867, transatlantic shipping had already largely shifted from sail to steam-powered vessels – and the regular, predictable travel offered by the new steamships opened up new opportunities for migrant and tourist travel across the North Atlantic.

Between 1870 and 1914, 22 million Europeans migrated to the US, nearly all by steamship. European immigration to America relative to the population reached a historic high in 1882, surpassed only during the potato famine influx of 1850-51 (Keeling 2008a). Tourists were crossing the North Atlantic as well in increasing numbers, and New York and Liverpool became leading international ports anchoring the ends of the premiere long-distance travel corridor.

The commercial developments associated with the transportation revolution were clearly important, but there were other important advantages as well. As John Stuart Mill pointed out, “It is hardly possible to overrate the value…of placing human beings in contact with persons dissimilar to themselves, and with modes of thought and action unlike those with which they are familiar.”

Economic historians have to this point studied the revolution in North Atlantic shipping more from the perspective of freight cargoes, and to some extent mass immigration in the steerage class, than from the standpoint of luxury class tourism and business travel. Thanks to the work of Douglass North (1958, 1968) and C Knick Harley (1988), for example, we know a fair deal about 19th century freight rates and the forces that drove them lower for much of the 19th century. North concluded that declining ocean freight rates were primarily driven by improvements in economic organisation rather than by improvements in industrial technology. Harley challenged North’s conclusion, arguing that freight rates were in fact driven lower by advancements in mechanical and metallurgical technology as applied to ocean transportation.

We know considerably less about non-migrant overseas passenger travel, partly because tourists are not as well defined as freight – “There is no identifiable, homogeneous product; tourism does not come in easily observed units; there are no quantities of output” Weiss (2004: 291) – but also because of a lack of price data. In a new paper with Drew Keeling, we address the matter of missing price data by providing a consistent series of first class ocean travel fares between the US and the UK from 1826 to 1914 (Dupont et al. 2016).

We draw on two types of underlying sources to construct the passenger fare series—the records of the shipping companies, and advertisements appearing in newspapers like The New York Times. Company records on passenger revenues and passenger volumes can be used to calculate average revenue per passenger (Keeling 2008b). Such revenue-derived fares take into account differences in the size, speed, and vintage of the ship, as well as the location, spaciousness and degree of amenities provided on board, but they can only be generated where sufficient records have been preserved, and even that derivation can require a considerable amount of work. We have therefore also made use of advertisements in a number of newspapers and magazines to construct a consistent long-term series on first cabin passenger fares from 1826 to 1914. This has proved to be an efficient method of collecting enough evidence on fares to be representative of the industry as a whole. The newspapers – a number of which are readily available online – reported ship movements, departure schedules, and contained shipping line advertisements of fares, often on a daily or nearly daily basis across the period. Compiling fares from standardised newspaper advertisements is more feasible than excavating heterogeneous data from the archives of multiple firms, and it also represents the price signals which passengers were likely to have considered when deciding to travel, even though it does not always measure how much was actually paid.

One limitation to the advertised fares is that they stopped appearing after 1896 for reasons that seem to be associated with the contemporaneous advancement of market-sharing and rate-setting by North Atlantic passenger shipping cartels or conferences. We were, however, able to extend the series up to 1914 using minimum fares established by the cartels. Although these cartel fares were not advertised in newspapers, they were public information, and were reported in news stories and in some shipping line brochures. These fares are those that would have been advertised, if the shipping lines had continued to include fare information in the ads they did run.

Since passenger volumes varied across shipping companies, we also constructed a weighted fares series using estimates of passenger volumes from a variety of sources including the New York Commissioner of Emigration, the New York Times and other newspapers, and, in later years, records of the Transatlantic Passenger Conferences. Both the weighted and unweighted fares are illustrated in Figure 1.

Figure 1 Weighted and unweighted average minimum ad fares, 1863-1914

By 1870, the major UK lines were all providing at least weekly departures from New York, and the quality of travel was improving as well, with electric lighting and the first forms of refrigeration soon becoming standard. But as illustrated in Figure 1, first class travellers paid fares that were about 40% lower in 1890 than in 1870 even while there were considerable improvements in frequency of service, safety, and on-board amenities. The declining fares before 1890 contrasts noticeably with what took place in first class travel on the New York–UK corridor for the two and half decades after 1890, during which first cabin fares increased while first cabin passenger traffic stagnated. This might reflect increased efforts to substantially improve travel amenities as suggested by Johnson and Huebner (1920), and made evident with Cunard’s launching of the Lusitania and Mauritania in 1907. Or it might have been more a matter of passenger lines using stronger cartel price support to collect some offsetting revenue – through fare increases – for the mild cost inflation incurred since the 1890s and for enhancements provided to passengers. What is consistent for both the decades before and the decades after the 1890s is the negative correlation of first cabin fares and passenger volumes, which was stronger than might be expected given that most pre-WWI first class transatlantic passengers were wealthy tourists not especially sensitive to the prices of tickets for the oceanic transit.

Prior studies of 19th and early 20th century travel, though insightful in many ways, have been limited by a paucity of consistent and continuous data on travel costs. For first class passenger traffic between the US and the British Isles, our research shows not only that such data do exist, but that they can be gathered from various scattered sources and compiled into a reasonably reliable, representative, and informative long-term time series. The resulting fare series will help us develop a much better sense of the forces that shaped the origins of modern mass tourist travel across the North Atlantic.

References

Dupont B, D Keeling and T Weiss (2016) “First cabin fares from New York to the British Isles, 1826-1914”, NBER, Working Paper.

Harley, C K (1988) “Ocean freight rates and productivity, 1740-1913: The primacy of mechanical invention reaffirmed”, Journal of Economic History, 48(4): 851-876.

Johnson, E R and G G Huebner (1920) Principles of Ocean Transportation, D Appleton.

Keeling, D (2008a) “Transport capacity management and transatlantic migration, 1900-1914”, Research in Economic History, 25: 225-283.

Keeling, D (2008), “Why legal barriers are not critical to deterring immigrants”, VoxEU.org, 12 May. 

North, D (1958) “Ocean freight rates and economic development 1750-1913”, Journal of Economic History, 18(4): 537-555.

North, D (1968) “Sources of productivity change in ocean shipping, 1600-1850”, Journal of Political Economy, 76(5): 953-970.

Weiss, T (2004) “Tourism in America before World War II,” Journal of Economic History, 64(2): 289-327.

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Topics:  Economic history

Tags:  economic history, 19th century, transportation revolution, shipping, tourism, historical data

Associate Professor of Economics, Western Washington University

Emeritus Professor of Economics, University of Kansas

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