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FreightWaves Classics/Leaders: JP Morgan sought a trans-Atlantic monopoly

A recent FreightWaves Classics article provided an overview of J.P. Morgan’s activities in the U.S. railroad industry. This article will provide an overview of Morgan’s attempts to create an ocean shipping trust.

J.P. Morgan. (Photo:
J.P. Morgan. (Photo:

Founding the IMM 

The shipping industry was prosperous in the late 19th century; this led some to attempt to create a trust or monopoly that would control major U.S. shipping companies. None of the efforts during the 1890s were successful, however. That changed, though, when John Pierpont Morgan, one of the richest men in the world, decided to create a shipping trust. 

Morgan concluded an agreement with the president of the International Navigation Company (INC), to buy control of the company, which operated the American Line and the Red Star Line. 

The Atlantic Transport Line was owned by Bernard N. Baker. It had both passenger and cargo ships, and competed directly with British and other shipping lines. Baker had sought to sell Atlantic Transport Line to John Ellerman, the chairman of the Leyland Line, which specialized in hauling cargo. Earlier, the Leyland Line had unsuccessfully tried to purchase the Cunard Line and HAPAG. Ultimately negotiations between Atlantic and Leyland also ended in failure.

That was followed by six months of negotiations that ended with the Atlantic Transport Line becoming part of INC in December 1900. Later, INC negotiated with Ellerman to purchase his company. The Leyland Line came under control of INC in April 1901. Next, and after lengthy negotiations, the prestigious White Star Line was bought by Morgan in April 1902. 

On October 1, 1902, JP Morgan & Co. announced the formation of the International Mercantile Marine Company, which became known as IMM. Bankrolled by Morgan and J.P. Morgan & Co., 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 controlled by IMM. The company also had profit-sharing relationships with the German Hamburg-Amerika and the North German Lloyd lines. 

A Red Star line ship. (Image:
The Red Star line ship Westernland. (Image:

IMM was a holding company that controlled the various shipping lines listed above as subsidiary corporations that had their own subsidiaries. While IMM was a holding company, it was also a trust, formed by Morgan in an attempt to dominate the shipping trade on trans-Atlantic routes. Morgan used interlocking directorates and contractual arrangements with railroads, but creating a monopoly proved impossible for several reasons – the nature of sea transport, American antitrust legislation and an agreement with the British government. 

Early 1900s

As a U.S. citizen Morgan could not directly own British ships; however, he could own a company that owned the ships, which is another reason the IMM was formed. 

During 1902, IMM carried nearly 65,000 passengers (in part because of continued immigration to the United States). The IMM had signed a partnership with Norddeutscher Lloyd and HAPAG,  the two most important German shipping companies. Together, they had conveyed nearly 67,000 passengers in 1902. The agreement was signed in New York on February 20, 1902; it was a major step in the formation of IMM, but did not fully address the “long-standing competitive friction between and amongst the major German and British transatlantic shipping companies.”

Meanwhile Cunard Line, an independent British shipping line, received government grants to construct two ocean liners, the Lusitania and the Mauretania, which had their first voyages in late 1907. This led to a competitive response from IMM in 1908; the shipbuilding company Harland & Wolff was authorized to build three Olympic-class ocean liners for the White Star Line – the RMS Olympic, RMS Titanic and HMHS Britannic.

In addition to the new ships, IMM was also shifting ships from one company to another. This allowed IMM to schedule a ship each day from the United Kingdom. In addition, passengers were allowed to change their tickets to another IMM vessel. 

A photo of the Titanic sailing from Southampton, England. (Photo:
A photo of the Titanic sailing from Southampton, England. (Photo:

The 1910s

During the early 1910s IMM was hurt badly by several key events. On April 15, 1912, the Titanic, flagship of the White Star Fleet (and the IMM), sank while sailing from Great Britain to New York on her maiden voyage. In addition to the human and financial losses, the sinking of the Titanic had repercussions for the trust. Using the American commission of inquiry into the sinking, U.S. Senator William Alden Smith of Michigan openly attacked the IMM trust as well as J.P. Morgan. 

Shortly thereafter, the president of IMM retired in 1913 and was followed by Harold Sanderson. Then Morgan died on March 31, 1913.  

World War I 

As bad as the sinking of the Titanic was, it did not cause IMM to fail. However, the company could not overcome its own financial problems, nor dominate the North Atlantic shipping trade as had been Morgan’s plan. The outbreak of World War I in August 1914 caused passenger and cargo bookings to nosedive, hurting all the companies that competed in the trans-Atlantic trade.

The White Star Line's Olympic. (Image:
The White Star Line’s Olympic. (Image:

Forensic accounting of IMM’s financial records showed that it was overleveraged and suffered from inadequate cash flow (exacerbated by World War I) that caused it to default on bond interest payments in late 1914. As a result, a “friendly” bankruptcy was put in effect in 1915; IMM was then led by Philip Franklin, who was able to save the company by reorganizing its finances. IMM emerged from the receivership in 1916. IMM was then able to profit from the wartime demand to ship cargo and war materiel (and later troops) to Europe .

Philip Franklin. (Image:
Philip Franklin. (Image:

The 1920s-1930s

In 1926 Franklin arranged the sale of the White Star Line to the Royal Mail Steam Packet Co. for £7 million. Unfortunately, £2.35 million was still owed to IMM when the Royal Mail Group (which was overleveraged and undercapitalized), collapsed in the early 1930s. In the late 1920s, Franklin and IMM received government grants to American ships (either those built in the United States or flying the U.S. flag). With the Great Depression once again impacting passenger and cargo volumes, Franklin sought to downsize the company. In 1930, IMM owned 30 vessels. By 1933 there were 19 and only 11 by 1935.

However, IMM was still in financial trouble. It merged with the Roosevelt Steamship Company, parent company of the Roosevelt Line, in 1931 and formed Roosevelt International Mercantile Marine Company (RIMM). Later that same year, RIMM acquired the financially troubled United States Lines; it began consolidating the operations of the three companies under the United States Lines brand. 

The Atlantic Transport Line was dissolved in late 1931 and its ships were parceled out to RIMM’s remaining divisions. In 1932 the American Line was merged into United States Lines; the Red Star Line was sold to Arnold Bernstein in 1934; the Baltimore Mail Line was merged into United States Lines in 1937; the Panama Pacific Line was dissolved in 1938 and its ships were sold; and that same year American Merchant Line was merged into United States Lines.

The last act of RIMM was the merging of the Roosevelt Line into United States Lines in 1940. Therefore United States Lines was RIMM’s only remaining business. That was followed in 1943 by RIMM changing its corporate name to United States Lines Inc. In 1986 United States Lines declared bankruptcy.

The S.S. United States. (Image:
The S.S. United States. (Image:

The IMM legacy

J.P. Morgan was unable to use IMM to monopolize trans-Atlantic shipping of cargo and passengers (although IMM controlled a large percentage of that shipping). The sinking of the Titanic, Senator Smith’s public attacks on IMM and Morgan and Morgan’s death took their toll. Although IMM survived several more years, it was never able to fulfill Morgan’s plan.

Ironically, several large companies dominate a large portion of the maritime shipping world today.

Scott Mall

Scott Mall serves as Managing Editor of FreightWaves Classics. He writes articles for the website, edits the SONAR Daily Watch series, marketing material for FreightWaves and a variety of FreightWaves special projects. Mall’s career spans 45 years in public relations, marketing and communications for Fortune 500 corporations, international non-profits, public relations agencies and government agencies.