White Star Line after the sinking of Titanic

RMS Titanic deadly accident and the consequences for White Star Line

titanic disasterSinking of the RMS Titanic wasn’t the end for the White Star Line, but it contributed for the end of J. Bruce Ismay’s career, chairman of the company, at the time of the disaster. Society blamed Ismay for leaving the RMS Titanic, unlike captain Smith who died in the tragic accident. One newspaper ironically called him “J. Brute Ismay”. Others newspapers suggested Ismay insisted on steaming the Titanic at high speed to beat Olympic’s record. Still no evidences were found supporting this theory. Ismay was found not guilty by both the US and the British inquiries.

J.B. Ismay

Joseph Bruce Ismay

Before the sinking of the RMS Titanic, Ismay had decided to retire as president of White Star Line but after, the disaster he changed his mind and asked company board to keep his position. The board declined Ismay’s appeal in June, 1913 most probably because of the too many rumors and mockeries addressing him. This decision some people argue lead to the decline of White Star Line.

By the time of the RMS Titanic disaster White Star Line had been already part of the JP Morgan’s holding International Mercantile Marine Co (IMM). Morgan purchased the White Star Line in 1902. His intention was to buy all the shipping lines and to end the price competition. He planned his trust to fix prices and maximize the profit. This was however quite unsuccessful. After the establishment of IMM, it became obvious Morgan could not handle such a holding. IMM came close to failure when Morgan asked several times Bruce Ismay to return to IMM as President and Managing director. Ismay accepted. The loyalty to his father and the company his father had saved before contributed the most for his action. Four years after the return of Ismay, IMM showed excellent financial results.

White Star Line during the World War I and the post war years

The sinking of the RMS Titanic and Ismay’s leaving wasn’t an obstacle for the White Star Line to gain global leadership in cargo and passengers lines. White Star Line lost some of its ships in the World War I and other disasters, but even the complicated financial state of IMM could not remove it from the passengers trade best performers. Nonetheless, the war was a difficult time for White Star Line and other ship lines. Incomes shrinked and most of White Star Line’s vessels were occupied for military purposes or damaged by German mine fields and submarines. The shortage of coal, coal stokers and firemen was widespread.

Problems continued to drive White Star Line down. The company suffered a series of collisions and its vessels were getting old. The company tried desperately to refit and maintain them, but it was a tough challenge. Olympic was upgraded with an oil propulsion system but still by the middle of the 1920’s passing the inspections was an immense difficulty. The period between 1880 and the first several years after 1920 are considered to be the most successful for White Star Line.

Charles Lindbergh

Charles Lindbergh

The new threat for the sea transporters came by air. Charles Lindbergh crossed the Atlantic in 1927 with his plane in 1927 and soon commercial entities followed him. In the late 1920’s zeppelins crossed the Atlantic every week and airmail commenced. Passenger airlines grew rather quickly after 1930.

New immigration restriction laws in the US were another strike at passenger sea transporters. In 1925 IMM was already searching for a buyer of White Star Line. After Ismay’s retirement the company never achieved the financial results JP Morgan expected. According to a White Star Line history expert, the company could still exist if it wasn’t acquired by Morgan’s IMM. This was however not realistic because the acquisition was strongly supported by the shipbuilders Harland and Wolff and particularly the chairman William Pirrie. They were convinced the acquisition of White Star Line and other shipping lines by IMM would grant them cost-plus contracts for building hundreds of new vessels, and they were right.

White Star Line back in British hands

The intention of IMM to sell its foreign subsidiaries including the White Star Line made a lot of British investors enthusiastic such as William Pirrie and his protege Owen Phillips (lord Kylsant). Negotiations took place but were suspended by US president Woodrow Wilson.

RMSPOwen Crosby Phillips was director of the Royal Mail Steam Packet Company (RMSP) and held interests in 40 other companies in different sectors – ship building, port development and oil. After the death of William Pirrie, lord Kylsant inherited his chairman position at Harland and Wolff.

Royal Mail Group (RMP) part of Kylsant’s conglomeration started again negotiations for acquiring the White Star Line in 1926. After a couple of months it was announced that Royal Mail Group bought the White Star Line for the amount of £7 million (approximately $ 14 million depending on the exchange rate).
Kylsant gave the company new longer name White Star Line Limited and ended the “cost-plus” with his other company Harland and Wolff. This threatened the profit margin of the latter and the quality of their ships.

Kylsant however had one major problem. He didn’t have the financial resources to pay for the White Star Line. He moved funds from one holding to another. He continued that practice with White Star, transferring company’s modest profits to other holdings of his. He repeated the scheme soon after he bought White Star Line with the acquisition of another shipper Shaw Savill Line.

These operations were of course not a solution, and RMSP was having serious debt problems. In the beginning of 1928 RMSP found itself unable to meet its obligations to the British fiscal authorities. 60, 000 ton Oceanic III was planned to be constructed at Harland and Wolff by Kylsant, but this ship’s construction only made it to laying of the keel.

Lord Kylsant

Lord Kylsant

This wasn’t a stop for RMSP purchases however. In August 1928, Australian government sold their Australian Commonwealth Line with its entire fleet and Kylsant became owner of 1/6 all British Merchant vessels with a total tonnage of 2,600, 000 tons.

Nonetheless, this wasn’t a way out. First installments for the White Star Line acquisition loan were to be paid in 1929 and Kylsant asked the loan to be extended. RMSP shares fell from 76 shillings to 44. Kylsant was blamed even by his brother Viscount St Davids for bad management. In 1930 for the first time White Star Line registered operating loss. Because of the complicated ties of holdings and shares in RMSP an internal investigation was launched. In 1931 British government began its own investigation and found Royal Mail Group reports for 1926, 1927 and 1928 problematic. Kylsant was blamed for adulterating information in reports to shareholders and government and publishing wrong information. Kylsant was found guilty and sentenced to jail for a year. Creditors on their hand insisted on getting the RMSP in asset liquidation procedure. The once mighty holding was falling apart.

In order to save jobs and keep the company alive British government assisted the establishment of a new entity Royal Mail Group Limited. This however did not help White Star Line and the other steam ship lines, that were left on their own.

Owen Crosby Phillips (lord Kylsant) was freed and went to live in his Welsh home, hiding from publicity and died in 1937.

White Star Line and Cunard merger – the end of the White Star Line

Cunard White Star Line flag combinedThe US Great Depression quickly covered the whole world. Things went so bad, that Colonel Frank Bustard, manager of White Star Line made a hopeless proposal to Joseph Bruce Ismay asking for his help. Ismay was at that time was over 70 years old but astonishingly accepted. It was however too late for White Star Line.

Cunard, the main rival of White Star Line was also pretty much in trouble too and was forced to cancel its plans for constructing “super liners”. British government in 1934 proposed the two companies £9,500,000 if they agree to merge in one corporation. Both companies were having serious financial problems. Cunard postponed the construction of Queen Mary but still had plans for building Queen Elizabeth.

White Star Line canceled the construction of Oceanic III that was designed to be the biggest ship at that time. So the former competitors comprehensively came to the conclusion that merging was the only solution. New holding was created, with Cunard owning 62% of the shares. This put an end to White Star Line history as a separate brand name was over.

Carnival corporationThe vessels of the new corporation had both White Star Line and Cunard flags with the flag of the original owner above. This however lasted till 1947 when Cunard purchased the rest of the shares. Cunard did not wait to deal with the remains of White Star Line and liquidated the majority of its holdings and vessels. The owner of ill-fated RMS Titanic completely ended its existence in 1950.

About a half a century Cunard was also acquired. It was bought by the biggest shipping line owner in the world, Carnival Corporation & PLC. Carnival PLC took over all Cunard Line Ltd assets and liabilities on the 1st of January, 2005, erasing Cunard as a single corporate name. Cunard name still could be seen on the hull of the ship RMS Queen Mary 2, but she is managed by the California based company Princess Cruises. Continued from White Star Line history before Titanic ship sinking accident.

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