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Contents
  • 1 The pinnacle, implosion and retribution
  • 2 Royal Mail's 1928 Debenture Stock Prospectus
  • 3 The Vestris Disaster
  • 4 The apogee of the Royal Mail Group
  • 5 Financial Collapse
  • 6 Complications
  • 7 Retribution
  • 8 An Historical Appraisal of Kylsant
  • 9 The Consequential Effects on the Royal Mail Group
  • 10 Bibliography
  • 11 Photographs
The pinnacle, implosion and retribution[edit]

Owen Cosby Philipps was appointed chairman of the moribund Royal Mail Steam Packet Co in 1903.

Part 1 covers the rescue and renaissance of RMSP. Most of its expansion was undertaken in collaboration with his friend and close business associate, William James Pirrie of the Belfast shipbuilder, Harland & Wolff (H&W).

Part 2 takes the narrative through World War One, during which RMSP fatally takes control of H&W

Part 3 relates Pirrie's disastrous post-war over-expansion of Harland & Wolff using RMSP funds during a period when he was elevated to Viscount Pirrie and Philipps became Baron Kylsant

Part 4 is devoted to Kylsant's reaction to the H&W financial nightmare that he discovered after Pirrie's death

Part 5 deals with the futile attempt to preserve H&W's order-book by the purchase of Oceanic Steam Navigation (White Star) after its owners IMMC threatened to take its business away from H&W

By 1928 the Group was having great difficulty in servicing its massive debts and obtained Government agreement to defer the repayment due on White Star Trade Facilities Act (TFA) loans by a year. To resolve the Group's cash shortage Kylsant decided to incur yet more debt, to cover some of the immediate repayments. He arranged for Royal Mail Steam Packet to raise £2 million from the public through the sale of debenture loan stock.

Royal Mail's 1928 Debenture Stock Prospectus[edit]

The prospectus issued in July 1928 to float the loan stock was another of Kylsant's works of creative accounting wherein it was stated that: -

  • The loan stock was being issued to finance the construction of new ships and "for the general purposes of the company" - no mention was made that the RMSP bankers were pressing for the repayment of a £500,000 overdraft.

  • "Although this Company in common with other shipping companies has suffered from the depression in the shipping industry, the audited accounts of the Company show that during the past ten years the average balance available .... has been sufficient to pay the interest on the present issue more than five times over. After providing for all taxation .... the dividends on the ordinary stock during the last 17 years have been as follows:" a schedule showing dividends of 4% to 8% had been paid in every year except one - the statement failed to disclose that RMSP had operated at a loss for the past seven years. These losses were converted into profits by releasing about £4,200,000 from reserves (largely secret reserves) established during the boom period of the war and in the immediate post war years, plus about £1,600,000 non-recurring exceptional income. The exact adjustment figures were never established.

Although the debenture stock issue was successful, the inadequacies of the statements made in the prospectus were to seal the fate of Kylsant.

The Vestris Disaster[edit]

On 10 November 1928 the Lamport & Holt liner Vestris sailed from New York on her regular service to the east coast of South America, with 129 passengers and 196 crew on-board. It was subsequently reported that her cargo was very badly stowed, with her Plimsoll line 7.5 inches under water and that the hatches were not properly battened down. As a result of her very badly loaded condition, the stability of Vestris became precarious when she ran into a storm on 11 November and she developed a permanent list. It was reported that first the cargo, then the coal bunkers began to shift, progressively increasing the list, leading to leaks through the ash ejectors and the coal bunker ports, but no SOS was sent out until the following day. By this time water was pouring into the engine room and the pumps failed. Vestris was on her beam-ends before the order was given to abandon ship and very few lifeboats could be launched before she foundered at about 14:00 hours on 12 November with the loss of 112 lives.

RML6-01.jpg

Photo 1: Vestis - Lamport & Holt

RML6-02.jpg

Photo 2: Vestris sinking. Note that the angle of list became too great to launch many of the lifeboats

The American press, with considerable justification, were highly critical of the incompetence of the master, officers and crew of the ship and the management of Lamport & Holt. This led to a dramatic drop in loadings for the company's other liners and the South American service was discontinued at the end of 1929. The other ships employed on the service were brought back to UK and laid-up.

The British Vestris survivors were brought home on the White Star liner Celtic. As she approached Cobh on 10 December the ship stopped to pick up a pilot in gale force conditions and drifted onto Roches Point, at the entrance to the harbour. Full astern was ordered and Celtic came off but went aground again on Calf Rocks and became a total loss, thankfully without loss of life.

RML6-03.jpg

Photo 3: Celtic aground on Calf Rocks, Cobh

The apogee of the Royal Mail Group[edit]

At the end of 1928, the Royal Mail Group was at is maximum size and was the largest shipping and shipbuilding organisation in the world. The July 1928 Debenture Loan Stock Prospectus (See above) stated that the group fleet totalled 2,761,969 GRT.

The Kylsant empire was not organised like a modern group, with a parent company and a hierarchy of subsidiaries. Instead there was a network of cross-shareholdings between the companies, which became more complex with each year. Kylsant controlled the empire through his ownership of management shares and his personal shareholdings in the relatively small management companies. Only Kylsant understood the entire financial picture. For operational purposes however, the companies were arranged in a series of groups: -

  • Royal Mail Steam Packet group
    • Royal Mail Steam Packet Co Ltd
    • RMSP Meat Transports Ltd
    • Pacific Steam Navigation Co Ltd
    • H & W Nelson Ltd
    • Nelson Steam Navigation Co
    • MacAndrews & Co Ltd
    • David MacIver & Co Ltd

  • African Steamship group
    • African Steamship Co
    • Elder Line Ltd
    • Interinsular Mail Steamship Co

  • Elder Dempster group
    • Elder Dempster & Co Ltd
    • British & African Steam Navigation Co Ltd
    • Imperial Direct Line Ltd
    • Atlantic Coaling Co Ltd
    • Elders Insurance Co Ltd
    • West African Lighterage & Transport Co Ltd

  • Argentine Navigation group
    • Argentine Navigation Co (Nicholas Mihanovich) Ltd
    • Sud Atlantia Navigation Co
    • Uruguayan Navigation Co Ltd

  • Coast Lines group
    • Ardrossan Harbour Co
    • Belfast Steamship Co
    • British & Irish Steam Packet Co Ltd
    • Burns & Laird Lines Ltd
    • City of Cork Steam Packet Co Ltd
    • Coast Lines Ltd
    • Dublin General Steam Shipping Co Ltd
    • Dundalk & Newry Steam Packet Co Ltd
    • Michael Murphy Ltd
    • Tedcastle McCormick & Co Ltd
    • John Westcott Ltd

  • Glen Line group
    • Glen Line Ltd
    • Arthur Holland & Co
    • McGregor Gow & Holland Ltd

  • Lamport & Holt group
    • Lamport & Holt Ltd
    • Liverpool Brazil & River Plate Steam Navigation Co Ltd
    • United States & South American Steamship Co Ltd
    • Ardrossan Dockyard & Shipbuilding Co Ltd
    • Archibald MacMillan & Son Ltd (managed by H&W)

  • Moss group
    • J & P Hutchinson Ltd
    • James Moss & Co Ltd
    • Moss Steamship Co Ltd

  • Union-Castle group
    • Union-Castle Mail Steamship Co Ltd
    • Bullard King & Co Ltd

  • White Star group
    • Oceanic Steam Navigation Co Ltd
    • White Star Line Ltd
    • Shaw Savill & Albion Co Ltd
    • George Thompson & Co Ltd (Aberdeen & Commonwealth Line)

  • Non-shipping group
    • Harland & Wolff Ltd
    • David Colville & Sons Ltd
    • Burmeister & Wain (Diesel System)Oil Engineering Co Ltd
    • Caird & Co Ltd
    • D & W Henderson & Co Ltd
    • A & J Inglis Ltd

In 1929 the services operated by the groups were: -

Royal Mail Steam Packet group

With the exception of PSNC and MacAndrews the RMSP group was devoted to the operation of services from UK to the east coast of South America, plus a cargo only service to Central America and the west coast of North America. RMSP also converted its 1913 liner Andes into the cruise ship Atlantis during 1929.

RML6-04.jpg

Photo 4: Atlantis - RMSP

PSNC operated to the west coast of South America from Liverpool and was winding down its service from New York, which closed in 1930. MacAndrews was engaged in the Spain-UK fruit trade.

RML6-05.jpg

Photo 5: Pinto - MacAndrews

African Steamship group

Part 1 relates how Pirrie arranged for Royal Mail to take control of the extensive shipping interests of Sir Alfred Jones after his death in 1909. Two management groups were established - Africa Steamship and Elder Dempster - largely because of the existence of different minority shareholders. Interinsular Mail Steamship Co provided a network of services between the Canary Islands. The other companies owned ships that were managed by Elder Dempster.

RML6-06.jpg

Photo 6: La Palma - Interinsular Mail Steamship Co

Elder Dempster group

The Elder Dempster group concentrated entirely on services from UK and Europe to West Africa, plus a minor service from South and West Africa to North America.

RML6-07.jpg

Photo 7: Apapa - British & African Steam Navigation Co

Argentine Navigation group

The three companies in the Argentine group provided passenger services on the River Plate, its tributaries and along the coast of Patagonia.

RML6-08.jpg

Photo 8: Ciudad de Buenos Aires - Argentine Navigation Co (Nicholas Mihanovich) Ltd

Coast Lines group

The large number of companies in the Coast Lines group operated in the seas around the UK and especially in the Irish Sea. There were frequent transfers of ships between companies in this group.

RML6-09.jpg

Photo 9: Ulster Prince - Belfast Steam Ship Co

Glen Line group

The Glen Line group was solely engaged on services from UK and Continental Ports to the Far East.

RML6-10.jpg

Photo 10: Glenapp - Glen Line

Lamport & Holt group

As a result of the American reaction to the Vestris tragedy, the Lamport & Holt group decided to "temporarily" suspend their New York - east coast of South America passenger service at the end of 1929. It was never restarted. This left cruise operations, a Pan-American cargo service and a Liverpool - east coast of South America cargo service. The group's two shipyards were managed by H&W.

RML6-11.jpg

Photo 11: Voltaire - Lamport & Holt

Moss group

The Moss group operated cargo services from UK to the Mediterranean, Black Sea and the Levant.

RML6-12.jpg

Photo 12: Kana - J Moss & Co

Union-Castle group

Union-Castle were the most financially sound group in the Kylsant empire, operating heavily subsidised mail services from the UK to South and East Africa against very little competition. The group's major problem was financing the new tonnage required for the mail services after Kylsant had removed its cash surplus to buy and support other companies.

RML6-13.jpg

Photo 13: Windsor Castle - Union-Castle

White Star group

The group operated transatlantic passenger services from UK to the USA and Canada, as well as emigrant and cargo services to Australia with George Thompson. Shaw Savill provided passenger and cargo services to New Zealand.

Despite a mail subsidy, the collapse of the Europe - USA emigrant trade resulted in major losses for White Star. In the decade before the war over 800,000 emigrants a year were carried by transatlantic passenger ships, with an all time record of 1,207,619 in 1907. White Star was a significant player in this emigrant traffic. The United States Immigration Act of June 1921 reduced the total number of European immigrants to 160,000 in 1924.

RML6-14.jpg

Photo 14: Laurentic - Oceanic Steam Navigation

Non-shipping group

H&W owned two major shipyards in Belfast (Queens Island and East Yard) and a further major shipyard on the Clyde, in Govan. In addition it operated on the Clyde, Caird & Co's shipyard in Greenock, the Meadowside shipyard of D & W Henderson and the A & J Inglis Pointhouse shipyard. H&W also managed the Scottish shipyards owned by Lamport & Holt - Ardrossan Dockyard & Shipbuilding Co and Archibald MacMillan & Son at Dumbarton.

A number of the shipyards had dry dock facilities, while H&W had dedicated shiprepair establishments in Southampton, Liverpool and London. Major marine engine works were located in Belfast, plus Finnieston and Scotstoun on the Clyde. H&W operated a foundry in Belfast and the largest foundry in Britain in Govan.

David Colville & Sons had a large steelworks at Motherwell as well as the Clydebridge Steel Co, the Glengarnock steelworks and the coal owners and quarry masters Archibald Russell.

Financial Collapse[edit]

Kylsant's Royal Mail group reached the final stage of its monumental expansion just at the point where it entered into its rapid implosion and collapse.

As explained in Part 4 of this history, Kylsant normally restricted his direct involvement to grand strategy, together with absolute control over the capital structure and margins of the Royal Mail group. Having established strategic policies, he usually left the operation of his companies to his band of very competent lieutenants. Unfortunately the management of the newly acquired White Star operations did not have the same ability, while the H&W management was generally incompetent. In his later years, Pirrie had filled most of that Company's management positions with servile yes-men. The team had no knowledge of the finances of H&W; how estimates were prepared and contract details were a mystery to them. Over three decades of cost-plus Commission Club contracts (See Part 1) had produced a management with no interest in, or experience of, efficient cost control. Only John Craig of Colville's Steelworks had any overall management expertise. Craig was appointed deputy chairman and under Kylsant's direction he attempted, without success, to reform the management of H&W.

The clearly approaching collapse of the Royal Mail group increasingly diverted Kylsant's attention from the problems of H&W, while Craig was preoccupied with the survival of Colville's after the severe dislocation created by the 1926 miners' strike and a mounting crisis in the Scottish steelmaking industry. This permitted the shipyard managing directors to abandon all attempts to contain costs or to rationalise the vast overcapacity of the yards. Their behaviour mirrored the stanza in Thomas Gray's 1742 poem: -

"Alas, regardless of their doom,
The little victims play!
No sense have they of ills to come,
Nor care beyond today."

The £2 million that RMSP had raised from its debenture loan stock issue was completely inadequate to meet all of the group's 1929 cash requirements. Kylsant position was becoming increasingly desperate with payments due to: -

  • IMMC for instalments on the deferred payment for the White Star companies
  • The Australian Government on the deferred payment for Australian Commonwealth Line
  • Make instalments due on TFA loans taken by group companies to purchase new ships.
  • Make instalments due on TFA loans taken by H&W
  • Reduce the bills of exchange issued to fund new ships
  • Pay interest on debentures
  • Pay Public preference shareholders' dividends

Preference shares are a non-voting part of a company's share capital. They are entitled to receive a dividend of a fixed amount, before any payment is made to ordinary shareholders. All dividends can only be paid from profits or reserves after loan interest liabilities have been met. Kylsant paid scant regard to these requirements, because if a preference divided is not paid on a group of shares they become entitled to a vote. If this were to happen, Kylsant would lose voting control of the companies concerned.

In the spring of 1929 Kylsant began a campaign to have the British and Northern Irish Governments grant a five year moratorium on all TFA repayments. His audacious approach was based on his standing in the City, his position as a Tory grandee, the size of the Royal Mail group and the massive unemployment that would be created by the collapse of the business.

The Government was taken completely by surprise. They knew that the newly acquired White Star group had cash problems, but had assumed that these stemmed from historic pre-acquisition difficulties. At first they could not believe that the gigantic Royal Mail group was on the point of collapse and merely rejected Kylsant's moratorium request. The situation was complicated by the run-up to a General Election, which was held on 30 May 1929. This resulted in the Conservative Party losing office and being replaced by a minority Labour Government that depended upon the support of the Liberal Party. Kylsant was deeply disliked by many Liberals ever since he resigned from them in 1916 and joined the Conservatives. His estranged brother, Viscount St David (See Part 5) remained a staunch Liberal supporter and a virulent critic of Kylsant.

As each repayment became due, Kylsant completely ignored the situation. Eventually the Government issued demands for the payments, but these received no response. When an official did succeed in making contact, Kylsant merely repeated his request for a moratorium. In the meanwhile the quoted Group shares began falling in value, then in October 1929 Wall Street crashed. Despite these enormous repayment difficulties, Kylsant was still trying to borrow even more money to pay the end of year preference dividends. The Government resorted to the typical strategy in difficult cir***stances - it set up an Independent Enquiry in December 1929.

The initial appraisal was conducted by the brilliant accountant Sir William McLintock, who had considerable experience of the financial affairs of large corporate enterprises. He worked at breakneck speed throughout January and February 1930 in an atmosphere of growing crisis as Kylsant desperately tried to retain control of the Royal Mail group. In an effort to divert criticism of his management, Kylsant served notice on H&W in February to terminate the group's membership of the cost-plus Commission Club.

In March 1930, McLintock presented his preliminary report to a meeting that included the Governor of the Bank of England, the Permanent Secretary to the Treasury, the Permanent Secretary to the Ministry of Finance of Northern Ireland and the senior members of the TFA Committee. McLintock informed the horrified meeting that he estimated the total current liabilities of the Royal Mail group to be a staggering £30 million. The meeting agreed that Kylsant should be forced to take action to contain the situation, but as they had no confidence that he would comply, action was taken to start the search for a replacement chairman.

At the end of March the Treasury summoned a conference of all of the directors of the Royal Mail group, informed them of the seriousness of the situation and demanded that they take immediate steps to reconstruct the Group. Unfortunately most of the directors lacked the financial information or competence to carry out this

The only director in the non-shipping group with sufficient independence and initiative to build an escape route was John Craig of David Colville & Sons. After years of debate the Scottish steelmakers eventually decided at the end of 1929 to seriously consider amalgamation to save the industry in Scotland. With Kylsant's approval, Craig took a leading part in developing this plan and on 21 March 1930 began discussions with Sir James Lithgow, head of the family owned Clydeside shipyard that also owned the steelmakers James Dunlop & Co. These talks led to agreement in April to merge Dunlop's and Colville's and form a new company to be called Colvilles Ltd. The merger required Treasury approval however and this was delayed by the major Royal Mail group problems.

Kylsant still believed that the Government would accede to his request for an extension to the TFA loans and allow him to continue as before. The Treasury had other ideas, especially after mid April when McLintock completed a detail report on the Group. The distinguished Liberal MP and former President of the Board of Trade, Walter Runciman, was brought into the discussions with the intention of him controlling Kylsant or replacing him. Runciman drew up a list of conditions considered essential for Royal Mail group's possible survival and put these to Kylsant. These essentially reduced Kylsant's position to non-executive chairman with Runciman as the new chief executive. Kylsant still did not accept that the group was on the verge of collapse and left for a holiday on his Welsh estate without replying to Runciman. On his return in May Kylsant continued to prevaricate until the Treasury trapped him into a meeting with them, the TFA Committee and McLintock where they made him face up to the enormous difficulties facing the Group and forced him to summon a meeting of secured creditors at Royal Mail House on 19 May.

The attendance at the meeting emphasised the gravity of the crisis. The Permanent Secretary to the Treasury, the chairman of the TFA Committee, McLintock, the chief executives of five clearing banks, three other banks and three bill discounting houses were present. McLintock's findings were unanimously accepted and a committee of inquiry established that consisted of McLintock, Brigadier Arthur Maxwell (the managing partner of the bankers Glynn Mills & Co) and Frederick Hyde (the managing director of Midland Bank). Within a week the committee reported back that there appeared to be sufficient assets to meet all of the Group's obligations provided that repayment of the TFA loans and bills of exchange were subject to a moratorium until the end of December 1930. To safeguard the lenders position the finance and management of all the Group companies was vested in three voting trustees - Hyde, McLintock and Maxwell, with Runciman as chief executive of all of the companies. Kylsant had lost control of his entire empire. He was granted leave of absence, but he elected to resign.

Complications[edit]

McLintock's breakneck investigation into the affairs of the collapsing Royal Mail group had been concentrated on its financial viability. As a result the newly appointed trustees initially assumed that the group could be quickly dissected into manageable units that could then be re-organised. It was only when they began their work that they began to realise the extent of the bewildering cross shareholding structure. Some of the shares were not fully paid and the holders could be asked to pay up the outstanding amount. There were also cross guarantees and indemnities covering borrowings and bills of exchange. Any proposal for the treatment of one Group company had consequential effects on most of the other companies. The trustees obtained a one year extension on the debt moratorium.

Retribution[edit]

The Government's frustration at the trustees' inability to quickly dismantle the Group structure heightened its antagonism towards its architect, adding to the desire to exact retribution upon Kylsant. Even at the peak of his fame, many influential people disliked him. At 6ft 7in, Kylsant was remarkably tall, which he enhanced by always being very elegantly dressed. Kylsant was also somewhat reticent as he suffered from a speech impediment. The combination of these characteristics gave an impression of arrogance and aloofness and helped to produce a large number of enemies. His encouragement of the popular press's habit of calling him "The Napoleon of the Seas" and his lavish London lifestyle did not endear him to the Establishment, especially after McLintock uncovered that Kylsant was charging management fees to the Group companies on the basis of their gross revenue, not their net profit.

In January 1931, Kylsant and Harold Morland, his long suffering auditor, were arrested and charged under the Larceny Act with issuing misleading accounts and Kylsant with issuing a misleading prospectus. These were very controversial charges as all previous prosecutions under this Act had been based on false statements. There was no suggestion that any of Kylsant's statements had been false, but the prosecution sought to extend the scope of the Act to cover statements that are factually correct, but used in a way to mislead the public. As was expected, the misleading accounts charge failed, but to general surprise Kylsant was convicted on the second charge of making misleading statements in the 1928 Loan Stock Prospectus. (See above) He was sentenced to one year in prison.

Kylsant immediately launched an appeal, but in November at the conclusion of the appeal hearing, Mr. Justice Avory ruled that: -
"In the opinion of this Court there is ample evidence . . . that this prospectus was false in material, particularly if it conveyed a false impression.
"The falsity in this case consists in putting before intending investors, as material upon which they can exercise judgment as to the existing position of the company, figures which apparently disclose the existing position but in fact conceal it.
"The implication arises particularly from the statement that dividends had been paid regularly over a term of years, although times had been bad-a statement which was entirely misleading [since] the fact that they were not paid out of current earnings but out of earnings in the abnormal War period is omitted. . . .
"This appeal is therefore denied."

Kylsant was taken to Wormwood Scrubs Prison to serve his sentence. Kylsant was the first Peer ever to be convicted of fraud. (The only other Peer to suffer the same notoriety is the newspaper owner Lord Conrad Black who was recently convicted in America.) On Kylsant's release he withdrew to his Welsh estate and never again appeared in public life. He died in 1937, aged 74.

RML6-15.jpg

Photo 15: Lord Kylsant

An Historical Appraisal of Kylsant[edit]

To this day the Kylsant case remains a subject of debate in legal circles. His spectacular rise and fall is equally controversial. It is generally agreed however that: -

  • Without the intervention of Owen Cosby Philipps in 1903, RMSP Co would almost certainly have quickly ceased to exist as an independent company.
  • Philipps' rapid expansion of RMSP was dependent upon large scale borrowing. The absence of consolidated accounts disguised the Group's very high gearing. The intricate structure of cross investment meant that dividends from an initial trading profit were subsequently declared several times as they passed through the individual companies, giving an exaggerated picture of the net Group profitability. These arrangements worked in periods of economic growth, but were unsustainable in a depression.
  • From the Union-Castle takeover onwards, Philipps / Kylsant generally paid a very high price for companies.
  • From 1905 onwards, Royal Mail and its subsidiaries were members of the Harland & Wolff Commission Club, which covered the construction of ships for the Group on a cost-plus contractual basis. As H&W became increasingly uncompetitive, this arrangement meant that the Group paid an excessive price for its ships.
  • The exceptional profits made during the War provided Sir Owen Philipps (as he had now become) with the opportunity to stabilise the Group's finances, but he squandered this opportunity and fatally allowed Pirrie to persuade him to take a controlling interest in the overextended, heavily indebted and uncompetitive H&W shipbuilding group. Philipps then made the ultimate collapse of the Royal Mail Group almost inevitable, by leaving Pirrie in sole charge of H&W and providing considerable additional funds to allow Pirrie to further expand his bloated organisation.
  • Pirrie's enthusiasm for the wartime standard ships probably influenced Philipps to take over 77 of the 137 standard ships under construction in UK yards in January 1919. P&O took over the remainder. Out of the total of 137 ships, 36 vessels were building in H&W group shipyards. Higher specification, cheaper German war reparation ships were available.
  • The pre-war accounts of the companies in the Group were generally produced to a high standard. After the war, as the Group became more and more financially overstretched, the accounts became progressively more opaque and deliberately confusing. The wartime accounts made substantial provisions for the complex special wartime taxation charges. These provisions proved to be excessive, but the considerable surplus was not declared to the public and returned to the profit and loss account as a prior year adjustment. During the 1920s Lord Kylsant (as he now was) began making secret transfers from this hidden reserve to convert current trading losses into profits, declaring dividends from these false profits and borrowing money to cover the cash cost of the dividends.
  • The purchase of Oceanic S N Co (White Star) at the end of 1926 for £7 million on deferred terms was a severe error of judgement by Kylsant. Transatlantic emigrant travel was plummeting and the remaining passenger volume was insufficient to support the number of shipping companies in the trade. It is generally believed that Kylsant only bought Oceanic because they gave notice to withdraw from the H&W Commission Club.
  • Oceanic controlled the voting shares in Shaw, Savill & Albion, although Sir John Ellerman owned the majority of the remaining shares. As this arrangement gave Kylsant undisputed control of the company, no one has been able to explain why Kylsant spent £995,000 of Royal Mail's desperately scarce cash to acquire Ellerman's shares. Ellerman himself found Kylsant's actions inexplicable.
  • The final folly was Kylsant's purchase of the seriously loss making Australian Commonwealth Line from the Australian Government for £1.85 million payable over 10 years. This extra debt was to have an important effect upon the break-up of the Royal Mail group.

The Consequential Effects on the Royal Mail Group[edit]

The Government's decision to place the task of dismembering the Royal Mail Group in the hands of McLintock and his fellow trustees was a master-stroke. Their brilliant manoeuvres ensured that the great majority of the Group companies survived and that this huge part of the British maritime industry was available to the country in the forthcoming war. The ways in which the transformation was achieved is told in the final part of this Article.

Bibliography[edit]

A complete Bibliography for all Parts of this Article is given at the end of Part 7

Photographs[edit]

Many of the photographs used to illustrate this article are from the very large collection contained in the Allen Collection hosted by Benjidog at: -
http://www.benjidog.co.uk/allen
Most of the remaining photographs are from the Ships Nostalgia Galleries, which are available for use in the Directory. Special thanks are extended Linerrich for providing photographs from his private collection and who kindly provided photographs specifically to support this article. The individual photographs used in Part 6 have been provided as follows: -

  1. Ships Nostalgia - Linerrich
  2. Ships Nostalgia - Dick Sloan
  3. Ships Nostalgia - Linerrich
  4. Benjidog - Allen Collection
  5. Benjidog - Allen Collection
  6. Ships Nostalgia - trenor
  7. Benjidog - Allen Collection
  8. Linerrich
  9. Benjidog - Allen Collection
  10. Benjidog - Allen Collection
  11. Linerrich
  12. Benjidog - Allen Collection
  13. Ships Nostalgia - Jan H
  14. Ships Nostalgia - Linerrich
  15. Photo in the Public Domain on several internet sites

Article written and compiled by Fred Henderson

Royal Mail Steam Packet Company Kylsant Empire
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