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Authors: Daniel Allen Butler
Tags: Bisac Code 1: TRA006010
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bought outright by the American shipping combine known as IMM—International Mercantile Marine—under the leadership of Junius Pierpont Morgan, the American financier. Morgan, the greatest of a generation of trust builders, had conceived of a vast freighting monopoly that would control the shipping rates of goods and the fares of passengers being transported from Europe, from the moment they left the Old World until they arrived at their destination in the New. Since the American rail barons, especially Morgan, had already monopolized the U.S. railroads, all that remained for Morgan’s dream to become reality was to gain control of the North Atlantic shipping lines.
Morgan’s first move in that direction came in 1898, when he acquired the financially troubled Inman Line. Thomas Ismay, who had formed the White Star Line thirty years earlier and turned it into one of the powerhouses of the North Atlantic run, attempted to form a consortium of British shipowners that would keep Inman out of Morgan’s hands, but the attempt fell apart because too few of Ismay’s colleagues believed Morgan was serious. Dismayed at their lack of foresight, Ismay predicted that most of them would fall under Morgan’s sway after the American had crushed them in a fierce rate war.
He was right. In 1899, Morgan began acquiring stock in the two big German lines, Hamburg-Amerika and Norddeutscher-Lloyd, with an eye toward gaining a controlling interest in both. Within the next two years he also gained either ownership or control of the Leyland Line, the Dominion Line, and the Red Star Line, mainly by cutting fares until his lines were offering a Third Class passage to America for as little as £2. Morgan next set his sights on the two British shipping giants, the White Star Line and Cunard, the jewels in the crown of the transatlantic passenger trade.
When Morgan made his first advances to the White Star Line, Thomas Ismay’s son and successor as owner and managing director, Bruce Ismay, was at first as determined as his father had been to resist the American. But Morgan received help from an unexpected ally: Lord Pirrie, the Chairman of the Board of Harland and Wolff, the huge Belfast shipyard that was the exclusive builder of White Star’s ships. Pirrie was also, after Ismay himself, the single largest shareholder of White Star stock. Realizing that Morgan’s rate war would leave White Star with little capital for building new ships, and having made Harland and Wolff heavily dependent on White Star for new construction, Pirrie began to pressure the younger Ismay to accept Morgan’s offer to buy the line. Thomas Ismay would have told Lord Pirrie to be damned, and fought the “Yankee pirate” tooth and nail, but though Bruce Ismay was his father’s son in many ways, he didn’t possess the innate ruthlessness of his parent. Rather than stand up to Pirrie, the younger Ismay eventually caved in, and in late 1902 Morgan’s shipping combine acquired ownership of the White Star Line.
All the while, IMM had continued its overtures to Norddeutscher-Lloyd and Hamburg-Amerika, seeking a controlling interest of each company’s shares, while still allowing them to operate with a considerable degree of autonomy. The terms were carefully calculated to appeal to the German companies, which were heavily subsidized by the German government, and Morgan realized that these subsidies made them far less financially vulnerable than their British counterparts. Certainly he knew he wasn’t dealing from the same position of strength as he had been with White Star, so no attempt was made to gain outright ownership of Hamburg-Amerika and Norddeutscher-Lloyd.
Cunard, meanwhile, under the canny leadership of its chairman, Lord Inverclyde, would soon skillfully exploit Morgan’s purchase of White Star, and ultimately wring considerable concessions from the British government in order to keep the company in British hands. After almost eighteen months of intense
Morgan’s first move in that direction came in 1898, when he acquired the financially troubled Inman Line. Thomas Ismay, who had formed the White Star Line thirty years earlier and turned it into one of the powerhouses of the North Atlantic run, attempted to form a consortium of British shipowners that would keep Inman out of Morgan’s hands, but the attempt fell apart because too few of Ismay’s colleagues believed Morgan was serious. Dismayed at their lack of foresight, Ismay predicted that most of them would fall under Morgan’s sway after the American had crushed them in a fierce rate war.
He was right. In 1899, Morgan began acquiring stock in the two big German lines, Hamburg-Amerika and Norddeutscher-Lloyd, with an eye toward gaining a controlling interest in both. Within the next two years he also gained either ownership or control of the Leyland Line, the Dominion Line, and the Red Star Line, mainly by cutting fares until his lines were offering a Third Class passage to America for as little as £2. Morgan next set his sights on the two British shipping giants, the White Star Line and Cunard, the jewels in the crown of the transatlantic passenger trade.
When Morgan made his first advances to the White Star Line, Thomas Ismay’s son and successor as owner and managing director, Bruce Ismay, was at first as determined as his father had been to resist the American. But Morgan received help from an unexpected ally: Lord Pirrie, the Chairman of the Board of Harland and Wolff, the huge Belfast shipyard that was the exclusive builder of White Star’s ships. Pirrie was also, after Ismay himself, the single largest shareholder of White Star stock. Realizing that Morgan’s rate war would leave White Star with little capital for building new ships, and having made Harland and Wolff heavily dependent on White Star for new construction, Pirrie began to pressure the younger Ismay to accept Morgan’s offer to buy the line. Thomas Ismay would have told Lord Pirrie to be damned, and fought the “Yankee pirate” tooth and nail, but though Bruce Ismay was his father’s son in many ways, he didn’t possess the innate ruthlessness of his parent. Rather than stand up to Pirrie, the younger Ismay eventually caved in, and in late 1902 Morgan’s shipping combine acquired ownership of the White Star Line.
All the while, IMM had continued its overtures to Norddeutscher-Lloyd and Hamburg-Amerika, seeking a controlling interest of each company’s shares, while still allowing them to operate with a considerable degree of autonomy. The terms were carefully calculated to appeal to the German companies, which were heavily subsidized by the German government, and Morgan realized that these subsidies made them far less financially vulnerable than their British counterparts. Certainly he knew he wasn’t dealing from the same position of strength as he had been with White Star, so no attempt was made to gain outright ownership of Hamburg-Amerika and Norddeutscher-Lloyd.
Cunard, meanwhile, under the canny leadership of its chairman, Lord Inverclyde, would soon skillfully exploit Morgan’s purchase of White Star, and ultimately wring considerable concessions from the British government in order to keep the company in British hands. After almost eighteen months of intense
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