MONOPOLIZING THE ATLANTIC The International Mercantile Marine Company and Connecticut’s finest pirate
By: GreatWesternRubbish
The International Mercantile Marine Company; it’s a name that echoes through the mind of anyone who dares to study the wonderful world that was the shipping industry of the early twentieth century. With a dominant position in the transatlantic trade, the company played a pivotal role in shaping the story of the many ships that sailed the busy route. Behind its workings lies a complex web of business interests and acquisitions that can make it challenging to understand the company’s true size and impact. At the heart of it all, stood John Pierpont Morgan Sr., a prominent American banker and financier whose influence spanned nearly every industry imaginable. In this article, we will delve into the history of the conglomerate, explore the companies it acquired over the years, and examine its business strategy to provide a comprehensive analysis of its results.
An industry fragmented
The period before the formation of the International Mercantile Marine Company was marked by intense competition and opportunism in the shipping industry. Companies operated in an environment where profitability was highly variable and fiercely contested, and the temptation to cut corners and engage in price wars was widespread. In particular, the transatlantic route emerged as a critical driver of industry growth and profitability. As demand for passenger and cargo transport across the Atlantic increased, a multitude of brokers emerged on both sides of the ocean, each seeking to secure a share of this highly lucrative market. As a result, the idea of a monopoly on the transatlantic shipping market held enormous allure, much like the monopolies on the railroads, coal, oil, and steel. Many tried to achieve this goal, but it was difficult to do so in the face of intense competition. The industry was characterized by a boom-and-bust cycle, with periods of intense profitability followed by severe downturns. It was against this backdrop that the formation of the International Mercantile Marine Company represented a significant change. The consolidation of several major companies under one umbrella would lead to increased profitability and stability. It also had significant economic implications, allowing for greater control over the transatlantic shipping market and greater influence over global trade and commerce.
The pirate from Connecticut
One man who saw the potential in consolidating the transatlantic shipping industry was John Pierpont Morgan, who had already established himself as a powerful force in railroads and steel mergers. He was born in 1837 in the city of Hartford, Connecticut, in the very same year the famed Sirius was launched, was the son of successful financier Junius Spencer Morgan and his wife Juliet Pierpont. He received his education in Boston and at the University of Göttingen, in Germany, before starting his career as an accountant with the banking firm of Duncan, Sherman & Co. This venture didn’t last very long, however, as he soon became the agent for his father’s own banking company in New York City and went on to become a partner in the firm of Drexel, Morgan & Co. in 1871. Here, he showed his worth and managed to quickly turn the firm into a major source of financing for the American government, and, in 1895, reorganized the company as J.P. Morgan and Co., which soon became one of the most powerful banking houses in the world. With such a reputation came international connections, and those with the London financial world allowed him to provide capital to rapidly growing American corporations in the 1870s. He began investing in the railroads in 1885, gaining control of about 5,000 miles (8,000 kilometres) of American railroads by 1902. Along with his work on the railroads, he also formed a syndicate to resupply the US government’s depleted gold reserve in 1893, lending a shared $65.000.000 with the Rothschild & Co to the Cleveland administration through a syndicate. After bailing the government out and averting a financial depression the world hadn’t seen the likes of before, he financed industrial consolidations that reshaped the American manufacturing sector, this included arranging the merger of General Electric (1891) and the formation of the United States Steel Corporation (1901). In 1902, he created the International Harvester Company by bringing together several leading agricultural manufacturers and initiated a conglomerate of successful transatlantic steamship lines, the International Mercantile Marine Company.
While he was a man of great wealth and an extravagant lifestyle, he was known for his philanthropy, donating large sums of money to charitable causes. Yet, despite his best efforts, he had critics who viewed him as a ruthless monopolist who used his wealth and power to consolidate control over key industries. Morgan’s savvy deals and negotiations made him a fierce businessman, with some, including 26th President Theodore Roosevelt, even going as far as comparing him to the seventeenth-century buccaneer Henry Morgan.
The International Navigation Company
After the end of the Civil War, the American Merchant Marine faced a prolonged period of decline. The industry struggled with various challenges, such as high costs compared to foreign competitors, outdated technology, and the lack of a government-backed interest. As a result, few American investors were willing to risk an investment in the merchant fleet. The potential for more profitable investments on land made the maritime industry a less attractive option and few steamers flew the American flag outside of the coastal trades guaranteed by the government, and these few were dominated by railroad-owned carriers, such as the New York Central Railroad and the Pennsylvania Railroad. The latter of which recognized the need for improvement, and began backing the creation of two companies, the US-flagged American Steamship Company and the foreign-flagged International Navigation Company, the first of which would soon be chartered by the shipbroker Peter Wright & Sons, who dealt in Quakers, and would eventually become the Atlantic Transport Line as founded by Bernard N. Baker. In less than a year, supported by large subsidies from King Leopold II of Belgium, Clement A. Griscom, chairman of the International Navigation Company, formed the Societe Anonyme de Navigation Belge Americaine, which would soon set to work on forming the Red Star Line. In addition to the Red Star Line, the International Navigation Company formed the American Line, whose ships were one of the first large liners to be registered in the United States. Yet, it was not to be, for the American Line struggled financially and never quite took off, which stood in stark contrast with the Red Star Line, whose ships were filled to the brim on every westbound crossing. It should be noted that there was little to no connection between the company founded by Baker and the company founded under Griscom except for the fact that both were subsidized by the railroads.
The first notable steamship operator that would be purchased by the International Navigation Company would be the large Inman Line, which served Liverpool with its famed steamships, all registered in England. The company had been making a steady loss since the financial crash of 1873 and was dire for a much-needed infusion of capital. Capital came in the form of the International Navigation Company, which, as the largest creditor, managed to acquire the trademark, along with its five biggest vessels, for a fraction of their worth, offering a mere $1.340.000 minus their open debts. This was just about nothing compared to the company’s actual value, but the low offer was accepted. This led Griscom to shift his interests from the Red Star Line to his newly-acquired Inman Line, for which he ordered a pair of 17.300-tonnes liners at $1.850.000 each. These ships would become the ‘City of Paris’ and the ‘City of New York’, both record holders in terms of size and speed. While it was intended to have these ships registered in Liverpool, like many of their predecessors, the second Gladstone government, currently ruling the United Kingdom, revoked the valuable mail contract from the Inman Line due to the change in ownership. This led to Griscom and his board lobbying for an American mail contract as they transferred the Inman Liners to the port of New York. Their efforts were successful, and within the year, the ships had become United States Postal Service carriers, and the Inman Line fleet was officially reorganised into the Inman and International Steamship Company, before being merged into the American Line, The American Line, proving itself to be a valuable player in the Transatlantic trade, commissioned another pair of mail steamers in 1895, worth some 15.100-tonnes, for the weekly mail service, and they would become the largest vessels built by the United States at the time. These ships, ‘St. Louis’ and ‘St. Paul’, proved to be tough competition for the European vessels at the time and became popular on the Transatlantic route, yet never quite managed to turn a large enough profit.
Forming the International Mercantile Marine Company
By the turn of the century, the International Navigation Company continued to struggle with their American Line, which never seemed to make quite enough money, especially compared to its European subsidiaries. However, the outbreak of the American war against the Spanish provided an unexpected boost to the shipping industry and the American economy in general. It triggered a surge in demand for tonnage, and an increase in American exports. While traffic grew, and profits did too, the International Navigation Company continued to struggle in keeping their reserves and paying their shareholders. Griscom was unsuccessful in lobbying Congress for improved postal subsidies and had to find an alternative solution. Meanwhile, Baker, in search of capital to capitalize on the growing transatlantic traffic, attempted to sell his Atlantic Transport Line to John R. Ellerman, the English owner of the Frederick Leyland & Co. But, to Griscom, the prospect of an even larger share of American-owned shipping in British hands was a grim one. To dissuade Baker, he had to offer an attractive alternative. He came up with a proposal where Baker’s Atlantic Transport Line would merge with Griscom’s American line, which would enable the merged steamship line, still nameless at this point, to build a fleet of new, modern vessels, funded by his good acquaintance J.P. Morgan of J.P. Morgan & Co. The plan proved attractive enough for Baker, as he sold the Atlantic Transport Line to the International Navigation Company, for an undisclosed amount. Newspapers reporting on the transaction, mention at the end that two other shipping companies are involved in the transaction, yet neither was mentioned by name, and one could only assume they were small coastal agencies. Little did the public know those two steamship lines were two of the largest in the world, having struck a deal with J. Bruce Ismay, of the Ismay, Imrie and Co. and John R. Ellerman, of the previously mentioned Frederick Leyland & Co., who himself couldn’t refrain from accepting one of Morgan’s attractive proposals.
Frederick Leyland & Co Ltd.
The Leyland Line, under the parent company of Frederick Leyland & Co Ltd., was founded by English shipping magnate Frederick R. Leyland in 1873 and played a significant role in transatlantic trade during the late 19th century. Leyland, a successful businessman, recognized the growing demand for shipping services between Britain and the United States. He established the Leyland Line as a shipping company focused on the North Atlantic route. Under Leyland’s astute leadership, the company quickly expanded its fleet, acquiring a reputation for reliable service and luxurious accommodations. By the closing years of the 1880s, the Leyland Line had become a prominent player in the industry with a fleet of modern and record-breaking steamships.
However, when Frederick R. Leyland, now one of the largest shipowners in the United Kingdom, suddenly passed away in 1892, it was John R. Ellerman, a successful British financier, who took an explicit interest in steamship lines, along with his two partners, Christopher Furness and Henry O’Hagan, acquired Leyland’s majority shares for a sum of £800.000 and assumed control of the valuable company and her 22 steamships. But it was Ellerman, who was known for his shrewd business acumen, who recognized the potential for growth in transatlantic trade and was determined to capitalize on it. Within a year, Ellerman had succeeded Furness as chairman and managing director.
Now under Ellerman at the helm, the company continued to thrive, expanding its fleet and improving its services. His ships became renowned for their speed and luxury, catering to both illustrious passengers and lucrative cargo. Ellerman’s strategic vision and deep understanding of the shipping industry, along with his financial backing, further propelled the Leyland Line to new heights. By the turn of the century, the line had acquired another 20 steamships, and the company now operated a fleet of vessels equal to just under 105,000 tonnes. Then, in 1901, after an attempted purchase of the American Atlantic Transport Line proved fruitless, Ellerman made the momentous decision to join forces with the International Mercantile Marine Company, led by American financier J.P. Morgan, and Ellerman sold the Leyland Line to Morgan’s company for a sum of $11.000.000, to be paid fully in cash. Ellerman would remain the chairman of the steamship line and, as a proviso to the sale, would retain the ownership of 20 of their foremost ships to form his London, Liverpool & Ocean Shipping Company Ltd., a venture wholly independent of the International Mercantile Marine Company.
Ismay, Imrie & Co.
The White Star Line came into existence through a series of strategic developments and acquisitions. It was in 1867 that Ismay, Imrie & Co., under the guidance of a successful English businessman of Thomas H. Ismay, purchased the struggling White Star Line, a shipping company that had primarily focused on the emigrant trade to Australia. Recognizing its potential, Ismay embarked on a mission to transform White Star Line into a prestigious and profitable transatlantic passenger service. Under his guidance, the company underwent significant expansion, introducing innovative and luxurious ships.
However, it was the ascension of J. Bruce Ismay, son of Thomas H. Ismay, to the helm after his father died in 1899 that propelled the White Star Line towards remarkable growth and a profound metamorphosis. The younger Ismay embarked on an ambitious endeavour to revitalize the fleet and elevate the quality of services offered. His visionary approach sought to usher in a new era of maritime travel, characterized by grander, more extravagant vessels that would redefine the notion of oceanic luxury. This came to a headstand in 1900 when Ismay unveiled the crown jewel of his vision, the second ‘Oceanic’ of over 17,000 tonnes. This majestic vessel, designed to surpass all others in terms of size and luxury, soon became the pride of the White Star Line, and it solidified Ismay’s strategic decision to focus on building larger ships aimed at attracting the wealthiest and most discerning passengers as successful, which in turn proved the company’s position as a leader in the transatlantic shipping industry.
Then, just under a year later, Ismay made a surprising move, entering into negotiations with the International Mercantile Marine Company and influential financier J.P. Morgan. Recognizing the potential benefits of aligning with the powerful conglomerate, Ismay agreed to sell the White Star Line to Morgan. Shares in the White Star Line were a valuable commodity, and Morgan was willing to pay for it. The original agreement called for a price per stock equal to the company’s earnings per stock for the previous fiscal year, 1900, plus the projected earning for the tonnage entering into service that very year. This would, in theory, place the price at just under $22.000.000, yet this was not accepted by Ismay, Imrie and Co., and Morgan ended up paying a third more, settling for a final price of over $32.500.000. However, this was mitigated by the fact that Ismay, Imrie and Co. agreed to settle for seventy-five per cent of their payment in preferred shares of the combine and the rest in cash. Ismay and his White Star Line added another 230.000 tonnes of ship to the ever-growing fleet that was the International Mercantile Marine Company.
The Germans and the Dutch
The impact of J.P. Morgan and his newly formed firm extended beyond the shores of the United States. Whereas the British regarded the whole enterprise as a sellout to American interests and a threat to British dominance on the high seas, a feeling that was only worsened when, along with the White Star Line and the Inman Line, the International Mercantile Marine Company purchased yet another British-flagged shipping line, the Dominion line servicing Boston, for $4.500000.
But the International Mercantile Marine Company even stronger resonated strongly throughout continental Europe, where one individual keenly recognized the financial potential of this new financial umbrella. This was Albert Ballin, the astute managing director of the Hamburg-Amerikanische Packetfahrt-Actien-Gesellschaft, known as HAPAG for brevity’s sake. While HAPAG had enjoyed substantial success, it faced intense competition from its Bremen-based counterpart, the Norddeutscher Lloyd, as well as the Dutch Holland America Line.
Within a remarkably short period, Ballin engaged in negotiations with the International Mercantile Marine Company, which would mark a crucial turning point for both parties involved. Among the numerous conditions agreed upon, two particular provisions stood out prominently. The first was purely financial, ensuring a minimum dividend of six per cent on annual earnings for each party. This arrangement bolstered their mutual financial interests.
The second condition involved the acquisition of one of HAPAG’s formidable rivals, the Holland America Line. In a remarkable display of collaboration, the International Mercantile Marine Company facilitated the financing required to secure a majority stake of fifty-one per cent in the Dutch steamship line. This unique joint ownership arrangement further solidified the alliance and set the stage for greater consolidation and expansion within the industry.
The Railroad at Sea
Now that Morgan had stakes in just about every major shipowner that server the Atlantic route, except for the English Cunard Line and the French Compagnie Générale Transatlantique, their operations showed great potential, both in terms of profit and growth. However, the company found itself being questioned about its American identity. While they certainly encompassed American-owned assets and presented itself as an all-American business, their international roots and extensive foreign holdings blurred its patriotic image. This created challenges which, over time, led to identity struggles within the company and among the public they would never quite get rid of. Yet, for now, Morgan was content with his enterprise. He had envisioned a concept where a potential passenger, regardless of nationality or standing, would theoretically be able to travel thousands of miles, over land and sea, without even having to purchase a second ticket. Clement A. Griscom was elected chairman as the first chairman of the new combine and seemed to be a promising choice, however, in 1904, J. Bruce Ismay of the White Star Line replaced Clement A. Griscom. While this move was supported by the majority of shareholders and Morgan himself, it still came as a surprise for many when news broke that Ismay would be succeeding Griscom, as most found the younger Ismay to be an arrogant and ill-mannered individual, a man stubborn to the bone. Yet, Ismay knew how to manage ships, and that was all that mattered. Upon assuming the role of chairman, Ismay wasted no time in demonstrating his dedication and ambition. He recognized the potential for growth and profitability in the shipping industry and swiftly embarked on a course of action to solidify his influence, investing in several new ships and routes, each one designed to surpass previous records and establish their respective subsidiaries as industry leaders. These new vessels included the 24.200-tonnes ‘Rotterdam’, the 17.500-tonnes ‘Lapland’ for the Red Star Line and a sextet of 14.500-tonnes liners for the Atlantic Transport Line. Rather unsurprisingly, the majority of these ships would be constructed by the firm of Harland & Wolff of Belfast, whose chairman was a prominent director of the International Mercantile Marine Company.
Despite these investments, it has been suggested that Ismay directed the holding’s resources towards enhancing the White Star Line, potentially at the expense of other subsidiaries. Yet, the White Star Line was the only subsidiary that kept a consistent flow of profits between the fiscal years of 1904 and 1914. After all, Morgan himself had established the White Star Line as the flagship subsidiary, so it was only natural that its earning power and berth capacity had substantially increased. This increase amounted to some 170,000 tons of the steamship, which included several ships sold to the White Star Line by their fellow subsidiary, the Dominion Line. The Dominion Line itself would soon come under the direction of the White Star Line, reorganizing as the White Star-Dominion Line in late 1908.
Yet, competition on the Atlantic never dies out, and in response to the mounting competition posed by the Cunard Line and their brand-new pair of 31.500-tonnes super liners, The ‘Lusitania’ and ‘Mauretania’, the White Star Line made a strategic move to invest in two new liners of unimaginable proportions. With a cost of over £1.500.000 and a size of over 52.000 tons, these liners, to be christened ‘Olympic’ and ‘Titanic’, would prove to be a milestone in maritime history in more ways than anyone could have ever imagined.
Morgan had envisioned a comprehensive transportation network that integrated his railways and his newly-acquired steamships to create a seamless global transportation system of epic proportions, one that would, in theory, allow a passenger to travel from the humblest corners of Europe to the furthest edge of the frontier in America under a single ticket. While this grand vision never quite took off as he expected, it was under his guidance that the International Mercantile Marine Company still achieved remarkable success and provided safe and reliable passage to millions of passengers. However, the story of the International Mercantile Marine Company would soon take a tragic turn, an event that would forever change the course of maritime history.
The Loss of a flagship
It was just before midnight when, just four days out of Southampton, the new steamer ‘Titanic’ came to a sudden halt, some 400 miles south of Newfoundland. The ship had just encountered an iceberg, and few onboard could imagine what the following hours would bring. Over the course of 140 minutes, 1.500 people would perish in the icy Atlantic as the ‘Titanic’ slid beneath the surface of the ocean. Amidst the chaos and confusion, acts of heroism and selflessness emerged, highlighting the indomitable spirit of humanity in the face of adversity. Noted names, including several gentlemen involved with the running of the International Mercantile Marine Company, such as Johan G. Reuchlin of the Holland-America Line, Thomas Andrews Jr. of Harland & Wolff and J. Bruce Ismay himself, were onboard the doomed liner as she met her fate.
The disaster left an indelible mark on the collective consciousness. Yet, it not only symbolized a profound loss of life but also represented a pivotal moment in the history of the International Mercantile Marine Company. For as news of the shipwreck broke, so too broke the news that J. Bruce Ismay, President and Managing Director of the International Mercantile Marine Company, had survived when so many others had perished. He would soon become the subject of intense scrutiny and criticism by the public, and his life would never be the same again.
Along with Ismay’s reputation, so did the disaster negatively impact the image of the whole International Mercantile Marine Company. The company faced harsh criticism from the press, and especially the American inquiry into the disaster, where William A. Smith, standing senator for the state of Michigan and the official overseeing the inquiry, expressed his explicit opposition to the very concept of the company, and J.P. Morgan in particular, who, before the terrible disaster, had already found himself in hot water with the United States House Committee on Financial Services in regards to the concentration of his financial power. The financial standing of the company had taken a severe beating, too, for the stock price of the company had dropped by just under four per cent when the markets opened on April 16th, just a day after the disaster, a drop of stirring magnitude.
Thirteen
In 1913, an unprecedented milestone was achieved, with over 2.600.000 ticketed passengers crossing the Atlantic, a record that had not been matched before or has been since. Of this enormous number, the White Star Line transported little over 190.000 passengers, while the Cunard Line, their foremost competitor, carried just under 200.000 passengers across the Atlantic Ocean. On average, the steamers operated by the White Star Line carried 1.048 passengers per trip across 183 crossings, while those operated by the Cunard Line carried 1.128 passengers per trip across 177 crossings. These numbers combined accounted for 7.3 per cent of the total traffic.
Yet, in 1913, another, much more saddening, milestone was set for the International Mercantile Marine Company. On the 31st of March, 1913, mere days before his 76th birthday, one of the most influential American financiers and bankers of his time, John Pierpont Morgan, passed away while abroad. Morgan’s death created an immediate sense of uncertainty within the company. Questions arose about the future direction of the company and whether it could maintain its dominant position without his guiding hand. Morgan’s intricate network of relationships and his ability to navigate complex financial waters were seen as integral to the company’s success. Furthermore, Morgan’s death came at a time when the International Mercantile Marine Company was grappling with various challenges. The loss of the Titanic, and subsequent investigations, had left them facing scrutiny from regulators and the public over monopolistic practices. This plus the evergrowing competition from other, independent, operators, marked the beginning of a challenging period for the International Mercantile Marine Company.
The Great War
The outbreak of the Great War, in the summer of 1914, brought significant challenges to Transatlantic, particularly in terms of the uncertainties and dangers faced by the unarmed civilian ships. A new menace, one in the form of naval mines, now lay dormant just below the ocean’s surface, exploding on contact whenever any vessel came into contact with it. Additionally, German raiders targeted and attacked any vessel flying the enemy’s flag, posing a constant threat to the safety and operations of the transatlantic liners. Ironically, many of these raiders were once themselves line liners, their speed being an inviting prospect for turning these floating palaces into brutal men-o’-war. Meanwhile, the International Mercantile Marine Company’s situation continued to grow more dire with every assessment year that passed. By October of 1914, while the city of Antwerp was flattened by German bombardments and the Battle of the Yser was being fought, the International Mercantile Marine Company defaulted on the payments of their 4.5 per cent bonds, and again just over a year later, in April of 1915. The outbreak of the war had worsened their financial prospects, and a planned financial reorganization was shattered by several ongoing fights, both behind the offices on Wall Street and in the mud and muck of the Western Front. Efforts were made to get the company back on its feet, and in 1915, it secured a loan worth some $50.000.000 from the British government to help alleviate some of the immediate financial pressures. However, the company’s troubles persisted, and they would continue to do so even once this conflict ended.
To meet the escalating demand for tonnage, the governments who found themselves at war requisitioned their merchant ships for services, converting them into armed auxiliary cruisers, hospital-, or troop ships. Within months, Cunard’s ‘Aquitania’ and ‘Mauretania’ had been converted to armed merchantmen, and few of the International Mercantile Marine Company’s subsidiaries would be spared from a similar fate. Before the end of the year, White Star’s ‘Oceanic’ and ‘Celtic’, along with Leyland’s ‘Californian’ and ‘Winifredian’, just to name a few, were requisitioned by the British government. At the end of the conflict, the steamers of the International Mercantile Marine Company played a crucial role in transporting troops and war supplies across the Atlantic, including carrying just over a quarter of the entire American Expeditionary Force and approximately 15 million tons of cargo.
It was against the backdrop of this war, too, that the International Mercantile Marine Company’s involvement with the Holland-America Line would come to an end. Faced with significant challenges both relating to the war and their financial situation, the company was forced to divest their majority stake in the Holland-America Line and the Dutch operator became independent from the large financial umbrella once again.
The United States Shipping Board and Owen Philipps
In April 1917, the situation for the International Mercantile Marine Company took a dramatic turn when the United States entered the war. Within ten days of the declaration, the Wilson administration established the Emergency Fleet Corporation with a capital of $50.000.000 from the United States Shipping Board. The primary objective of the Emergency Fleet Corporation was to rapidly construct, own, and operate a merchant fleet for the American government, effectively sidelining the International Mercantile Marine Company as the leading American merchant marine fleet.
The newly formed Emergency Fleet Corporation quickly seized over 430 ships under construction in American shipyards for foreign operators. Additionally, they established three large steel shipyards and made significant investments in private yards to meet the demand for tonnage. Although the full impact of this competition was not immediate, the Shipping Board's vessels required time to be prepared for service under the American flag. However, during the war, these ships were primarily used for war-related purposes with limited civilian sailings. After the war, they could be refurbished and utilized by civil operators.
The creation of the Emergency Fleet Corporation inadvertently exacerbated the perception that the International Mercantile Marine Company was not truly an American firm but a mere front for British interests. This perception intensified after the death of Morgan in 1913, as he represented a prominent symbol of American capitalism. To counter this perception, Philip A. S. Franklin, the president of the conglomerate, entertained offers from Owen Philipps’ Royal Mail organization to purchase the White Star Line, one of the seemingly British assets. However, negotiations with the U.S. Treasury were initiated due to concerns about the potential impact on the American stock market during uncertain wartime conditions.
The idea of the International Mercantile Marine Company selling off its foreign assets instead of transforming them into truly American companies raised objections from William G. McAdoo, a government official. McAdoo argued that it would be unfair for Great Britain to purchase corporations owned entirely by Americans, considering the historical reliance on British support for the American merchant marine. Negotiations to sell British interests had already been concluded, but the president intervened and requested the suspension of the sale. Yet, Owen Philipps retained his interests in the company and would never quite give up.
Simultaneously, a member of the American government proposed the purchase of the International Mercantile Marine Company by the United States Shipping Board, including the British assets. This purchase aimed to create a fully American fleet while leveraging the existing fleet and international relations of the International Mercantile Marine Company. The proposal gained traction, and discussions commenced between representatives of both parties to find a mutually beneficial arrangement that preserved American control and ownership of the shipping assets.
The proposition faced significant opposition in London, with political leaders threatening to confiscate British-built ships controlled by the International Mercantile Marine Company. To avoid this risk, the United States Shipping Board withdrew, allowing for any foreign sale to proceed. By April 1919, amidst growing American isolationism, it became increasingly urgent to sell foreign assets and dispel the perception of being a British front.
Yet, by now, Franklin’s stockholders voted against a renewed offer by the Royal Mail organization, likely having been influenced by the significant profits generated during the conflict. In addition to their profits marges, many of their British holdings were about to be released from their governmental duties, ready to provide savaged Europe with the many exports America had to offer.
Another valuable asset that America had to offer was the array of ex-German vessels that had been seized during the conflict and were now on offer for civilian buyers to purchase at very attractive prices. Naturally, this opportunity could spark a new wave of competition in the industry, and Franklin was determined to prevent anything of the sort. He placed early bids on several large and valuable vessels, including the famed ‘Leviathan’, which had been managed by the potential buyer during the conflict.
However, their bids faced opposition and Franklin was subjected to rigorous questioning in Congressional hearings regarding their assets, ownership, and the course he had in mind for the International Mercantile Marine Company, excluded from accessing German war prizes by the same government that had urged them to retain their foreign holdings. In the end, none of their many bids would be accepted and Franklin would never gain control over any of the seized vessels. In addition, it highlighted the challenges Franklin faced in his quest for dominance and the opposition he’d meet in postwar regulations and negotiations. Nonetheless, for the time being, their existing holdings continued to yield substantial profits for the company and they remained a prominent player in the industry, benefiting from the postwar economic boom and contributing to the growth of American trade and commerce.
Selling out
In January of 1927, Lord Kylsant’s persistent efforts paid off when he successfully purchased the White Star Line. This acquisition came after the International Mercantile Marine Company unexpectedly became a victim of the financial depression that followed the conflict. The company’s foreign holdings, once valuable, became politically, financially, and especially in terms of public relations, burdensome. Profits dwindled from over $13.000.000 in 1921 to just over $5.000.000 five years later. When accounting for asset depreciation and other charges, the company would have experienced a deficit from 1922 to 1927. The situation was exacerbated by heightened global competition, including a new operator that emerged from the failed purchase by the United States Shipping Board.
The majority of the profits from selling the White Star Line went toward paying outstanding debts, leaving little room for any changes in the company’s operations and policies. Subsequent liquidations followed suit, and, in 1934, the International Mercantile Marine Company sold the last of their international holdings. The consequences of the economic crash of 1929, better known as the Great Depression, further worsened their situation. Many shareholders sold during this frightful period, and Wall Street as a whole took a beating. As a result, the company was reduced to a fragmented collection of struggling American steamship operators, each trying to stay afloat amidst the financial turmoil caused by the worldwide depression. Only a few of the ex-International Mercantile Marine Company holdings would survive past the Second World War. However, the details of that story are best reserved for another article.
Morgan and his legacy today
J.P. Morgan, the visionary financier and driving force behind the creation of the International Mercantile Marine Company, has left an enduring legacy that continues to shape the world to this day. His influence extends far beyond the realm of maritime commerce, as his innovative business strategies and unparalleled acumen have had a profound impact on the global financial landscape. Yet, his legacy lies not only in his remarkable ability to orchestrate mergers and consolidate industries but also in his role as a transformative figure in shaping modern capitalism. Through his pioneering efforts, he forged a new era of corporate power and redefined the boundaries of economic influence. The International Mercantile Marine Company, with its vast network of shipping lines and strategic partnerships, served as a testament to Morgan’s unparalleled vision and business expertise.
Moreover, Morgan’s contributions to philanthropy and the arts exemplify his commitment to society’s betterment. His generous endowments and patronage of educational institutions, museums, and cultural organizations continue to enrich the lives of countless individuals and contribute to the advancement of knowledge and creativity. While the International Mercantile Marine Company eventually faced its challenges and setbacks, its creation marked a significant milestone in the evolution of global commerce. The company’s influence and Morgan’s enduring legacy can be seen in the continued consolidation and globalization of industries, as well as the intricate web of international trade that connects nations and economies.
Today, the principles of strategic business consolidation and financial innovation championed by J.P. Morgan remain integral to the functioning of modern corporations and financial institutions. His lasting impact on the world serves as a testament to his remarkable foresight, business prowess, and unwavering determination to shape the course of history.
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