In the year 1892 the transcontinental railroads determined to dissolve the transcontinental railroad association. The reasons alleged were the withdrawal of the Northern Pacific Railroad from the association, and the announcement by the Canadian Pacific of reduced rates to take effect September 10. The dissolution of the association meant the termination of the subsidy which the railroads had been paying to the Pacific Mail, and notice of cancellation was promptly given. The Pacific Mail was then paying to the Panama Railroad $55,000 per month, an amount that was more than 70 per cent of the sum which it received from the association. In spite of the termination of its own relations with the transcontinental railroads, the Pacific Mail offered to continue the payment of a subsidy to the Panama Railroad, but the two companies proved unable to agree on terms. Mr. Stubbs later explained the break as follows: When the contract between the Panama Railroad Company and the Pacific Mail Company expired, they found it impossible to agree on terms for continuing the business. The transcontinental railroad companies had quarreled, and freight rates were demoralized. The Panama Railroad insisted on the former basis of traffic, and the Pacific Mail refused to go ahead on that understanding. Then there was some bad management, and the two companies began to throw mud. The trouble got into the courts, and finally it was called to the attention of Congress. The Panama road and the Pacific Mail consequently found themselves to be bitter enemies, and it didn’t seem that they could agree.[439] Independent Steamship Line Now it appears that a San Francisco shipping firm, the Johnson-Locke Mercantile Company, which was participating in the anti-railroad fight in 1891 and 1892 to the extent of operating a line of steamships around the Horn, noticed telegraphic advices in the San Francisco newspapers announcing the termination of relations between the Pacific Mail and the Panama Railroad. Describing the episode, Mr. Johnson later said: I felt this was our opportunity, and immediately wired General Newton, of the Panama Railroad, suggesting that, in view of their determination to throw open the Isthmus and put on a line of their own steamers from New York to Colon, I thought we could secure the co-operation of the merchants of San Francisco, in this movement; that we had some steamers we were running between San Francisco and New York via Cape Horn, and asking, in the event of our organizing a company here, if they would join this company in maintaining a through line from San Francisco to New York.[440]