In response to the proposal of the Traffic Association, nine of the larger jobbing firms in San Francisco formed in May, 1892, a so-called “Merchants’ Shipping Association.” It was the purpose of the new body to finance a line of clipper ships as proposed, and to cause it to be operated in free competition with the existing lines of William Dimond and Company, and Sutton and Beebe, concerns which, it was believed, were conducted in the interests of the Southern Pacific. This was too ambitious an undertaking for the Traffic Association to underwrite with its slender revenues of about $25,000 a year. Three months later, in August, the membership of the Shipping Association was largely increased, and a guaranty fund of from $85,000 to $100,000 was subscribed. At this time most of the leading wholesale firms of San Francisco joined. The Traffic Association lent its full moral support to the enterprise, and was reported to have contributed $10,000 to the guaranty fund just mentioned. Actual operation of the ships was entrusted to J. W. Grace and Company as agents. While the exact arrangements between the Shipping Association and these agents have never been made public, the merchants appear to have undertaken to meet all deficits, and to supply at least two-thirds of the freight. According to statements made at the time, Grace and Company were expected to find freight in the open market up to one-third of the capacity of their boats. Practical details of operation were left entirely in the agents’ hands.[431] Effect of Competition Some hint of the attitude of the older transportation companies toward this new rivalry may be found in a circular issued by the Traffic Association under date of June 22, 1892. This circular, after referring to the new Grace line, and after speaking also of the Atlantic and Pacific Steamship Company, and of a new clipper line established by Balfour, Guthrie and Company, continues as follows: It has already been given out by the old lines that these new competitors in the field will be short-lived, and that shippers who desert the old lines at this time will be remembered when the competitors are out of the way. For your information we desire to state that the new lines have been thoroughly investigated by the Committee and we are satisfied as to the reliability and stability of the enterprise, and that with our support they are here to stay and deserving of our patronage.[432]