The International Mercantile Marine Co., originally the International Navigation Co., was a trust formed in the early twentieth century as an attempt by J.P. Morgan to monopolize the shipping trade. The end result was heavy losses for Morgan.
IMM was founded by shipping magnates Clement Griscom of the American Line and Red Star Line, Bernard N. Baker of the Atlantic Transport Line, J. Bruce Ismay of the White Star Line, and John Ellerman of the Leyland Line. The Dominion Line was also amalgamated. The project was bankrolled by J.P. Morgan & Co., led by financier J. P. Morgan. The company also had working profit-sharing relationships with the German Hamburg-Amerika and the North German Lloyd lines. The trust caused great concern in the British shipping industry and led directly to the British government's subsidy of the Cunard Line's new ships RMS Lusitania and RMS Mauretania in an effort to compete. However, IMM dramatically overpaid to acquire some of the amalgamated companies, due to overestimation of potential profits.
IMM was a holding company that controlled subsidiary corporations that had their own subsidiaries. Morgan hoped to dominate transatlantic shipping through interlocking directorates and contractual arrangements with the railroads, but that proved impossible because of the nature of sea transport, American antitrust legislation, and an agreement with the British government. One of IMM's subsidiaries was the White Star Line, which owned the RMS Titanic. Analysis of financial records shows that IMM was overleveraged and suffered from inadequate cash flow that caused it to default on bond interest payments in late 1914. As a result, a "friendly" receivership was put in effect in 1915, which allowed IMM to reorganize its finances; it emerged from the receivership in 1916.[1] Saved by World War I, IMM eventually reemerged as the United States Lines, which itself went bankrupt in 1986.[2]
A proposed subsidy bill in the United States Congress failed and the company thus was never really successful. Beginning in the 1920s, the company underwent a series of corporate acquisitions and mergers, which resulted in its becoming the United States Lines in 1943.
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While the shipping gained popularity in the late nineteenth century, the idea of trusted monopolizing of the shipping companies in the United States attracted many people. However, all negotiations in this regard in the 1890 fell short. The intervention of John Pierpont Morgan, one of the richest men in the world, would change all of that.[3]
The Atlantic Transport Line was an American shipping company owned by Bernard N. Baker, which had both passenger and cargo ships.[4] ATL was in intense competition with British and other shipping companies, and Baker tried to sell his company to John Ellerman, chairman of the Leyland Line, a well-known fleet of cargo carriers. Ellerman had tried unsuccessfully to take possession of the Cunard Line and HAPAG, two powerful European companies. Negotiations between Baker and Ellerman, although well advanced, were finally ended.[5]
Baker reportedly met J. P. Morgan during an Atlantic crossing. Morgan, at that time already concluded agreements with Clement Griscom, President of the International Navigation Company, which operated the Red Star Line and the American Line. Finally, in December 1900, after six months of negotiations, the Atlantic Transport Line joined l'INC.[6]
Subsequently, Baker, J. P. Morgan, and Simon Bettle Jr. (representative of the INC) negotiated with Ellerman, this time with a view to redeem his property. There would be two companies that would join the trust. The name of one of them is revealed: the Leyland Line.[7] The second is to be the prestigious White Star Line, which was bought by Morgan in April 1902.[8][9][10] On 1 October 1902, JP Morgan & Co. announced the founding of the International Mercantile Marine Company, more commonly called IMM. However, the IMM was already unofficially under the name of INC for several years.[5]
The role of Morgan had greatly evolved over the years. Being American, he could not own British ships, however, he took advantage of loopholes and the fact he owned the company that owned the ship itself to ensure his power to own the ships.[5] In 1902, the IMM was carrying a total of 64,738 passengers, with his companies taking advantage of the high immigration to the United States. In addition, the IMM had signed a partnership with the two most important German shipping companies, Norddeutscher Lloyd and HAPAG, carrying a total of 66,838 passengers.
The United Kingdom should therefore address these rivalries increasingly bitter. Cunard Line, one of the British shipping companies with independent significance, received grants from the British government for the construction of two great ocean liners, the Lusitania and the Mauretania.[11] For the competitive requests from the IMM in 1908 for Harland & Wolff to build the White Star Line's Olympic class ocean liner: RMS Olympic, RMS Titanic, and RMS Gigantic (later renamed HMHS Britannic).[12]
Since 1902, IMM had an agreement with James Pirrie, chairman of Harland & Wolff and member of the management of the White Star Line, stating that the vessels of the company will be built by Harland & Wolff for all the time.[5] Ships of the company were also shifting from one company to another, like the Belgic, built for the White Star Line, which was transferred to the service of the Red Star Line under the name SS Belgenland (1914), or the Regina became the Westernland.[13] This allowed the IMM to leave each day a ship from the United Kingdom, and passengers to change their tickets to a position equivalent to another vessel of the company. Baker retired from the direction of the Atlantic Transport Line shortly after its integration with the IMM, and was replaced by Philip Franklin. He later became vice president of IMM, while Griscom was replaced as president by Joseph Bruce Ismay in 1904 (who was also president of the White Star Line).[14]
The early 1910s marked a turning point for the IMM. Indeed, on April 15, 1912, the Titanic, flagship of its fleet, sank during her maiden voyage. Besides the financial and human losses, the sinking had repercussions on the organization of the trust. Through the American commission of inquiry devoted to the sinking, Senator William Alden Smith openly attacked the very principle of the company and Morgan.[15] As had been arranged before Titanic sank, J. Bruce Ismay retired as president of IMM in 1913 and was succeeded by Harold Sanderson[16] and Morgan died on March 31, 1913.[17] After the 1915-16 receivership, Sanderson was succeeded as president by Franklin, who had been the receiver.[18]
However, the sinking of the Titanic did not bring about the end of the IMM. Although theoretically powerful due to its continued influence with some of the top American, British, and German shipping companies, the overseeing company never managed to overcome its own financial problems, nor dominate the bulk of the North Atlantic shipping trade, and was therefore not as successful as expected.[5] The company went into receivership in 1915 and was placed in the hands of Franklin, who managed to save it. In the late 1920s, he received grants from the government to American ships (built in the United States or flying the flag) and in 1926 it sold the White Star Line to to the Royal Mail Steam Packet Co. for £7 million, of which £2.35 million was still unpaid when the Royal Mail Group, which was overleveraged and undercapitalized, collapsed in the early 1930's.[19] In 1930, IMM possessed 30 vessels. There were 19 in 1933 and only 11 by 1935.
By 1935, company, now having shed off most of its foreign business connections, had merged with the Roosevelt Line after the liquidation of the Red Star Line and the Atlantic Transport Line. John Franklin, son of Philip, was in fact co-founder of the Roosevelt Line.[20] Finally, with World War II raging in the early 1940s, the company was fully dissolved and its remaining American ships were transferred to the United States Lines.[5] Some businesses of the modern shipping industry still regard IMM as an early attempt at the corporate ownership of several companies under a single trust; the kind of large overseeing companies that dominate much of the maritime shipping world today.
Company merged into United States Lines, 1943[22]