shipbuilding six years earlier (1879), when Bismarck, in introducing the
general protective system, exempted this industry, and free entry was
permitted to German ship-yards of materials used in the construction and
equipment of merchant as well as of war-ships, which then were only on
the domestic stocks.[CK] Bismarck's proposal of 1881, to meet French
subsidies with German subsidies, was avowedly with the single object of
promoting with State aid a German mercantile marine.

The project was brought before the Reichstag early in 1884 and warmly
discussed. Earnest protests were raised against it by shipping merchants
of the chief German seaports;[CL] while earnest support came from other
merchants and varied interests. The initial proposal was for the
establishment of a subsidized mail service by German steamships. It
contemplated an annual subsidy of four million marks, with fifteen
years' contracts, for such service between Germany and Australia and
East Asia. The measure was defeated in the Reichstag that year. Brought
forward the next year (1885), and in a new form, it was finally enacted
in April and went into effect the following July.

This law increased the annual subsidy from four million marks as first
proposed to four million four hundred thousand marks, of which one
million seven hundred thousand was offered for the East Asian line, to
China and Japan; two million three hundred thousand for the Australian
line, and four hundred thousand for a branch line connecting Trieste
with the Australian line at Alexandria. The contracts in accordance with
it all went to the North German Lloyd Company, of Bremen. The convention
between the Government and this company required that the new vessels to
be furnished must be built in German yards and of German material. The
coal supply was, as far as practicable, to be of German product. The
chancellor was empowered to take over all the company's steamers for the