J.P. MORGAN'S GREATEST BLUNDER UNITED STATES LINES

Sea Classics, Oct 2008 by McLaren, Robert

America 's pre-eminent financier created dozens of memorable multi-million dollar mergers yet his heirs weren't able to save one of his pet creations from corporate oblivion

J.P. Morgan & Company was one of the most-powerful banking houses in America at the end of the 19th century and into the 20th century. J. Pierpont Morgan's success in reorganizing and leadership were well known. His fame might have been with his many railroads however, a few of his industrial corporations included investments in companies such as United States Steel, International Harvester, General Electric, and American Telephone & Telegraph. He reorganized a number of railroad systems in 1893, mainly the Southern, Erie, and the Philadelphia & Reading.

Morgan also liked his yachts. His first yacht was built in 1880 at the William Cramp and Son Yard in Philadelphia, Pennsylvania. The iron yacht was 185-ft long and powered by a compound two-cylinder steam engine. He sold the little boat for $70,000 to build a larger yacht in 1891. His second yacht, named Corsair, was built by Neafie & Levy in Philadelphia, Pennsylvania. The steel yacht was 241-ft long, with a clipper bow, two masts and weighed in at 786-tons. The auxiliary sails were just that, she was powered by a 2000-hp triple-expansion steam engine. The interior consisted of two staterooms forward with baths; a large oak paneled dining saloon and six more staterooms aft. Morgan's stateroom had its own bath and a working fireplace.

In 1898, the Spanish America War started and the US Navy requisitioned the Corsair. She was converted into a gunboat and renamed USS Gloucester. The new gunboat, along with three ships was ordered to blockade Adm. Cervera and his fleet in Santiago Harbor. Within threehours on 3 July, Cervera's fleet was destroyed. After the American flag was hoisted and the US Army took command, the USS Gloucester cruised the Eastern seacoast from New York to Provincetown in the fall of 1898.

From 1899 to 1902, the gunboat served as a school ship at the United States Naval Academy in Annapolis, Maryland. The ship was decommissioned in 1902 and served as a training ship for the New York and Massachusetts Naval Militias until 7 April 1917 when she was recommissioned to conduct patrols in New York harbor. She was struck from the Naval Register on 21 November 1919 and immediately sold.

A month after the Corsair was turned over to the US Navy, Morgan had a third yacht built by W.A. Fletcher Company of Hoboken, New Jersey. This 293-ft yacht had a displacement of 1963tons. She was more elegant than the last - there were polished maple panels in her engine room, and a room with library and a piano. The yacht carried enough coal for her boilers to cross the Atlantic Ocean. J.P. Morgan would dispatch the yacht to Europe ahead of him while he sailed on a White Star liner.

When J.P. Morgan died in 1913, his son, Jack, turned the Corsair II over to the Navy in 1917, to serve for a brief time during World War I. The Navy returned the luxury yacht to the Morgans who continued to steam her until 1931 when the Morgan pennant was lowered; she then served with the Coast and Geodetic Survey as the Oceanographer. The Navy acquired her in 1942 and briefly named her Natchez (PG-85). She was renamed back to Oceanographer (AGS-3). The ship was outfitted for survey duty at the Norfolk Shipbuilding and Dry Dock Company and commissioned on 15 August 1942. During her 16-months in the South Pacific she produced 15 charts, each requiring up to 3,000,000 soundings. Much of the data compiled was the first of any accuracy for many areas. This information contributed greatly to the success of many amphibious operations. The ship returned to Pearl Harbor for needed repairs on 3 June 1944. She arrived at San Pedro, California, on 27 June. After a complete inspection of the ship, and with agreement with J.P. Morgan Jr., the Oceanographer (AGS-3) was decommissioned, struck from the Naval Register on 14 October 1944 and scrapped.

J.P. Morgan was still at his best in 1900 when he agreed to broker a merger of two American steamship companies - the Atlantic Transport and the International Navigation Company. This purchase gave him about 40 ships, almost all freighters. He started to create a monopoly by buying a large number of transatlantic steamship lines. Next, he went to England and the syndicate paid $12,000,000 for 40 more ships from the Leyland Line. Ten months later Morgan purchased the White Star Line, which had eight passenger liners in its fleet. White Star claimed to have higher profit margin than Cunard. He then purchased Britain's Dominion Line and a few more ships.

In a little more than one year Morgan and Company were in control of nearly 100 ships and one-third of the Atlantic passenger service. The purchase of the City of Paris and City of New York from Inman line was lately financed by Americans. Both ships were built in Glasgow, Scotland, in the late 1880s; the ships were 560-ft in length with a beam of 63-ft. The ships had coal-fired boilers for their steam engine's, geared twin screws. They also had three masts for sailing as a back up. A special Act of Congress allowed the two ships to be transferred to the American flag with the understanding the American Line would build two ships in an American shipyard. The two new ships to be built were named Saint Louis and Saint Paul. When the two Inman Line ships came under the American flag, their names were changed to Pan's and New York and flew the Blue Eagle house flag from the foremast. Two German steamship companies - the HamburgAmerican and North German Lloyd - would not sell out. However, Morgan's group reached a ten-year agreement with the two German lines to avoid undue competition.