Ships Nostalgia banner

1 - 1 of 1 Posts

3,931 Posts
Discussion Starter #1 (Edited by Moderator)
  • 1 The aftermath of the collapse of the group and the rescue operation
  • 2 Colville's
  • 3 Starting the task of rationalising Harland & Wolff (H&W)
  • 4 The Royal Mail Scheme
  • 5 Royal Mail Steam Packet group:
  • 6 African Steamship group and Elder Dempster group
  • 7 Argentine Navigation group
  • 8 Coast Lines group
  • 9 Glen Line group
  • 10 Lamport & Holt group
  • 11 Moss group
  • 12 Union-Castle group
  • 13 White Star group
  • 14 Non-shipping group: H&W; Caird & Co; A&J Inglis; D&W Henderson
  • 15 Bibliography
  • 16 Photographs
The aftermath of the collapse of the group and the rescue operation[edit]

The remarkable story of the way Owen Cosby Philipps took control of the dying Royal Mail Steam Packet Company in 1903 and built it into the largest shipping and shipbuilding organisation in Britain is told in the earlier parts of this Article. In the process Philipps received a knighthood, then was made Lord Kylsant, before his empire collapsed in 1931 and he ended his life in disgrace. This final part of the Article relates how the brilliant accountant Sir William McLintock and his fellow trustees in bankruptcy succeeded in rescuing and re-establishing most of the constituent companies in the Royal Mail Group.

This task was made very difficult by the bewildering cross shareholding structure of the Kylsant empire. Some of the companies' 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 first company to leave the Royal Mail Group was David Colville & Sons Ltd the Scottish steelmakers. In July 1930 the Trustees consented to the merger with the Lithgow's owned James Dunlop & Co, which John Craig had negotiated the previous year. McLintock wanted to encourage friendly relations with Sir James Lithgow who was chairman of the newly formed National Shipbuilders Security Ltd (NSS), which was established to finance the closure of uneconomic shipyards.


Photo 1: John Craig, chairman of Colville's

Starting the task of rationalising Harland & Wolff (H&W)[edit]

The Trustees decided that H&W needed to have a different chairman from Sir Walter Runciman who was appointed to control the shipowning companies, but they had great difficulty in finding a suitable candidate for the H&W post. They eventually decided to promote the Belfast engineering works managing director, Frederick F Rebbeck, in the hope that they could teach him how to control the entire H&W business. It was clear that a number of the H&W facilities should be closed, while at the same time Workman Clark - the other Belfast shipbuilder - began overtures about a possible merger. The trustees were not confident that Rebbeck could carry through the drastic reformation needed in H&W without support. They appointed Ulsterman Sir Ernest Clark to the board. He was a former Permanent Secretary in the Ministry of Finance of Northern Ireland. The Trustees fears were rapidly justified, as Rebbeck and his fellow directors were completely disinterested in discussions with Workman Clark, they continued to ignore the excessive H&W costs and remained unconcerned by their inability to improve their estimating procedures.

The Royal Mail Scheme[edit]

Throughout 1930 and 1931 the Trustees were engaged in untangling the Kylsant web of share ownership and calming the irate public shareholders and debenture holders after the appalling state of the Group's finances became known. The Banks were persuaded to support the trading companies to enable them to remain in business. Sir Walter Runciman was appointed as President of the Board of Trade in 1931 and he resigned from all of the Group companies. This was a great relief to H&W as Runciman was fundamentally opposed to shipbuilders being owned by shipping companies. This was a very sound theoretical position, but his attempts to prevent any work being placed with H&W were extremely unhelpful in the Group's situation and led to constant conflict with McLintock. Runciman was replaced by Sir Richard Durning Holt, the senior partner of Alfred Holt & Co - the managers of the Blue Funnel Line.

The Trustees decided that the only way forward was to segregate the moratorium companies from their shipping assets in a legally binding scheme of arrangement. The trustees obtained a court order approving the Royal Mail Scheme, which granted them full powers to dispose of all of the Group assets and authorised the Group's secured debts to be replaced by deferred creditor's certificates. The trustees' subsequent actions are detailed below; group by group.

Royal Mail Steam Packet group:[edit]

As the Royal Mail Steam Packet Co Ltd was the original Kylsant liner company, it had financial interests in most of the other companies. To simplify matters, the trustees removed two companies from this group: -

  • Pacific Steam Navigation Co Ltd was a company established by Royal Charter, so it required a special Act of Parliament for it to continue to trade under the control of its creditors, including its bankers. The links with RMSP were severed and a number of creditors' representatives were elected to the Board. The number of ships in the company's fleet was considerably greater than the number of vessels needed to meet the 1930s trade on its routes to the west coast of South America. Many of its ships were sold or laid-up, but by 1938 financial stability was restored and PSNC was again taken over by Royal Mail.


Photo 2: Orduna - PSNC

  • MacAndrews & Co Ltd had very little connection with the other activities of RMSP. It was operated by the trustees until the end of 1935, when it was bought by Andrew Weir & Co Ltd, as a subsidiary for their United Baltic Corporation. In total, 21 ships were transferred.


Photo 3: Palacio - MacAndrews

Royal Mail Lines Ltd was formed in 1932 to take over the ships and trading assets of Royal Mail Steam Packet Co Ltd, RMSP Meat Transports Ltd, H & W Nelson Ltd, Nelson Steam Navigation Co and David MacIver & Co Ltd. This created a fleet of 10 passenger ships and 27 cargo ships.


Photo 4: Highland Monarch after she was acquired by Royal Mail Line

The old companies obtained shares in Royal Mail Lines in exchange for these assets. Other shares were then sold to the public to obtain working capital and most significantly, Lord Essendon - the chairman of Furness, Withy - became chairman of Royal Mail Lines. To improve the company's competitive position on its main South American service their newest mail liners, the unsatisfactory Asturias and Alcantara, were returned to H&W in 1934 and completely refurbished, including replacing their diesel engines with steam turbines.


Photo 5: Asturias after rebuilding and conversion to steam-turbine propulsion

In 1936 the shares in Royal Mail Lines owned by RMSP and the other companies were sold to realisation companies (See below) and the old companies were formally liquidated, with a deficit of over £20 million. In 1937 Furness, Withy bought all of the shares held by the realisation companies. In September 1939 a new flagship, Andes, was delivered by H&W, with the intention that she would sail from Southampton to South America on 26 September to mark the 100th anniversary of the founding of Royal Mail Steam Packet Co. Instead she proceeded to Liverpool for conversion onto a troopship carrying 4,096 men.


Photo 6: Andes serving as a troopship

African Steamship group and Elder Dempster group[edit]

These two groups were dealt with as a single entity and their transformation is described in detail, as it is representative of the procedures followed by many of the Royal Mail Group companies.

In August 1932 a new company named Elder Dempster Lines Ltd was formed with a share capital of £2,500,000. These shares were issued to purchase the ships owned by the various companies in the two groups. The exception was Interinsular Mail Steamship Co, which was sold to Cia de Trasmediterranea, Barcelona. The other existing companies remained in being as shareholders in the new organisation, although Elder Dempster & Co Ltd was left with the residual group deficit of £8,400,000. The 8 ships of the Explorer class were repossessed by the banks, but leased to Elder Dempster Lines until they were bought back in 1935.


Photo 7: David Livingstone - One of the Explorer Class

Also in 1935 E D Realisation Co Ltd was formed to take over the Elder Dempster Lines shares held by Elder Dempster & Co Ltd plus that company's liability to pay off its debenture stockholders, a task that would take 11 years to complete. By 1936 the financial health of Elder Dempster Lines had increased sufficiently to float a new company, Elder Dempster Lines Holdings Ltd on the Stock Exchange. The market was encouraged by the appointment of Alfred Holt & Co as managers of the business and by the fact that their company, Ocean Steam Ship Co Ltd, bought a substantial part of the public share issue. The share floatation was a success and further Holding Company shares were issued in exchange for all of the shares held by the old companies in Elder Dempster Lines Ltd. Over a period of time the old companies sold their newly acquired Holding Company shares on the Stock Exchange and used the proceeds to pay off their senior debt, before each of the old companies was wound-up. In 1937 the management agreement was formalised for a period of seven years and Alfred Holt underwrote any legal liabilities left over from Elder Dempster's membership of the Royal Mail Group. The relationship with Alfred Holt deepened and Elder Dempster eventually became part of the Holt Blue Funnel group.


Photo 8: Abosso (1935) - Elder Dempster Lines. Most significantly this ship was built by Cammell Laird. After gaining its independence Elder Dempster never returned to Harland & Wolff for a passenger ship

Argentine Navigation group[edit]

This group of companies was sold to South American investors led by Alberto Dodero.


Photo 9: Ciudad Buenos Aires - One of a pair of Cammell Laird built steam turbine powered ships employed on the overnight Buenos Aires - Montevideo service

Coast Lines group[edit]

This group of companies was not quite as enmeshed in the Royal Mail web of cross-shareholdings as many of the other groups. Moreover it was consistently profitable. In 1935 it became independent under the chairmanship of Sir Alfred Read, who had previously been a director.


Photo 10: Ocean Coast - One of the unusual class of 1930s Coast Lines coastal vessels that had limited passenger accommodation

Glen Line group[edit]

This group's well established cargo services to the Far East were of considerable interest to the Chairman of the Board of Trustees, Sir Richard Durning Holt as they perfectly complemented his Blue Funnel Line operations. The Glen Line group was re-capitalising at market value in the same way as described in the Elder Dempster group entry above except that Holt's purchased all of the shares of the group companies in 1935 at an agreed price and the proceeds were used to pay off the preference share and debenture holders. Royal Mail, as Ordinary shareholders, received nothing. The group's secured loans and trading debts were also underwritten by Holt's enabling the Government to be satisfied that the group had been successfully extricated from the Kylsant debacle. The new company then needed to address the problem that they had a very elderly fleet, with the newest ship being over 12 years old. This was resolved by assigning nine of the ships in the Blue Funnel building programme to the Glen and Shire Lines.


Photo 11: Denbighshire; built in Holland in 1938. These ships had even larger funnels than their Blue Funnel cousins!

Lamport & Holt group[edit]

The resolution of this group's affairs was complicated by the law cases arising from the loss of the Vestris (see Part 6) and the group's ownership of two Scottish shipyards. At one stage it seemed that the Vestris case would drive the group into total bankruptcy with all the available assets swallowed by lawyers' fees, but McLintock succeeded in settling the group action out of court for £100,000. The two yards were closed and sold through the NSS mechanism.

The Vestris case led to the closure of the group's passenger service from New York to South America. Vauban (the sister of Vestris) was scrapped; the newer Vandyke and Voltaire were converted into cruise ships.

In 1934 Lamport & Holt Line Ltd was formed by a group of shipping investors to take over the assets and business of the group. The new company's first chairman was Sir Philip Haldin of Court Line.


Photo 12: Vandyck after conversion into a cruise ship

Moss group[edit]

The companies in the Moss group were recapitalised as Moss Hutchinson Line Ltd, which was then purchased by the P&O subsidiary, General Steam Navigation Co in 1934.

Union-Castle group[edit]

This company's heavily subsidised services were vital to British interests in South and East Africa. As a result the Government had a much greater direct involvement in the restructuring of Union-Castle than it did in the other Group companies. The Government took over the repayment of Union-Castle borrowings and provided the company with funds to meet its obligation to purchase White Star shares. Nevertheless it was only after realisation companies were appointed to clear up RMSP Co and Elder Dempster that that the way was opened to release Union-Castle from the tangled Kylsant empire. In 1936 the Union-Castle shares that were owned by the realisation companies were successfully sold on the London Stock Exchange and Union-Castle was free.

Also in 1936 the Athlone Castle and Stirling Castle, two new, faster, Mail Ships were delivered. The following year a new 10 year mail contract was signed with the passage time reduced to 14 days. The company's problem was that only its two latest ships were capable of meeting this timetable. The rest of the fleet needed to be rebuilt to comply with the contractual requirements. The new ships were far more handsome than any of the previous post-war H&W designs and they set the standard for the appearance of the rebuilt vessels.


Photo 13: Stirling Castle - 25,550 GRT; twin screw, two 10 cylinder two stroke double acting B&W diesel engines, 24,000 bhp = 20 knots service speed; 297 First, 492 Cabin Class Passengers


Photo 14: Rebuilt Windsor Castle - 19,141 GRT; twin screw, new Parsons steam turbines and oil-fired boilers = 20 knots service speed; 219 First, 191 Second, 194 Tourist Class Passengers


Photo 15: Rebuilt Carnarvon Castle - 20,123 GRT; twin screw, two new 10 cylinder two stroke double acting B&W diesel engines, 26,000 bhp = 20 knots service speed; 226 First, 245 Second, 188 Tourist Class Passengers


Photo 16: Rebuilt Winchester Castle - 20,012 GRT; twin screw, two new 10 cylinder two stroke double acting B&W diesel engines, 26,000 bhp = 20 knots service speed; 262 First, 228 Second, 209 Tourist Class Passengers

In 1938 Union-Castle took delivery of its new flagship, Capetown Castle, which was to be their last diesel-powered mail-ship.


Photo 17: Capetown Castle - 27,002 GRT; twin screw, two 10 cylinder two stroke double acting B&W diesel engines, 28,000 bhp = 20 knots service speed; 292 First, 499 Cabin Class Passengers

White Star group[edit]

This group was divided into segments. The Bay ships were modified in 1931, removing their small First Class and converting their Third Class accommodation to carry a greatly reduced number of Tourist Class passengers. These ships and the other Australian Commonwealth Line assets were sold for £550,000 in 1933 to Aberdeen & Commonwealth Line Ltd, a new company formed by a consortium of Furness Withy; Shaw, Savill & Albion and P&O. Kylsant had bought the Australian business for £1.85 million in 1928.


Photo 18: Refitted Moreton Bay - 14,145 GRT; twin screw, four Parsons double reduction geared steam turbines, 9,000 SHP = 15 knots service speed, oil burning; 542 Tourist Class Passengers

In 1932 the other George Thompson & Co Ltd fleet and assets were sold to Shaw, Savill & Albion for £350,000, with the sale being financed by a debenture loan from Midland Bank. In 1933 sufficient additional Shaw Savill shares were bought by the Furness Withy group to give them control of the company and it left the group.

The British Commonwealth Preference trading scheme was very beneficial to Shaw, Savill and the company embarked upon a major new-building programme. The most important new ship was the liner Dominion Monarch, which was the largest ship ever owned by the company. Significantly she was not built by H&W, but by Swan Hunter and she was powered by Doxford, not B&W diesel engines.


Photo 19: Dominion Monarch - 27,155 GRT; quadruple screw, four opposed piston Doxford diesel engines 32,000 bhp = 19.5 knots service speed; 517 First Class Passengers

Ever since Kylsant formed White Star Line Ltd on 1 January 1927 to acquire the Oceanic Steam Navigation Co Ltd, the appalling transatlantic trading conditions had resulted in a steady reduction in the size of the White Star fleet. By the end of 1933 the remaining White Star group companies were clearly bankrupt and the Treasury was obliged to step in.

To solve the White Star problem and the difficulties that Cunard were experiencing in financing the construction of the superliners Queen Mary and Queen Elizabeth, the Government offered to provide assistance provided the two organisations merged their transatlantic operations. The North Atlantic Shipping Act was passed in 1934 and Cunard-White Star Ltd was formed. At the same time Oceanic Steam Realisation Co Ltd was formed to hold 38% of the shares in Cunard-White Star. Every White Star Group asset that was not required for the combined service was sold, including the remaining Australian assets.


Photo 20: Queen Mary under construction at John Brown's in 1934

In 1935 White Star Line Ltd was wound up in 1935 with a deficit of £11.28 million. Oceanic Steam Navigation Co Ltd was dissolved in 1939. By then Britannic and Georgic were the only remaining operational Oceanic vessels. In 1947 Cunard bought the Oceanic Steam Realisation Co 38% shareholding in Cunard-White Star Ltd and the realisation company was wound up the following year. The Cunard-White Star name was dropped in 1949 when Cunard Steam-Ship Co Ltd took over all of the activities of Cunard-White Star.


Photo 21: Georgic in the Mersey with the Canadian Pacific liner Duchess of York and Moss Hutchinson's Amara

Non-shipping group: H&W; Caird & Co; A&J Inglis; D&W Henderson[edit]

Following the disposal of David Colville & Sons Ltd in July 1930, this group was reduced to the Harland & Wolff shipbuilding organisation under the new chairmanship of Frederick F Rebbeck. Although at that date most of the H&W facilities were busy, the directors totally failed to recognise that the company was insolvent. In October 1930 H&W had extreme difficulty in finding sufficient cash to pay the wage bill, but no management effort was made to control the company's bloated operating costs. The directors even contemplated extending credit to shipowners to secure new orders! They clearly thought that finance was not their concern and that McLintock would provide all of the cash needed in same way as Kylsant and Pirrie had throughout their working life.

This assumption was not entirely incorrect, because the trustees were acutely aware that the support of the Northern Ireland Government was essential to the entire Royal Mail rescue effort and that support was dependent upon H&W maintaining Belfast employment at its highest possible level. As a result the trustees' small secretariat was obliged to take on the task of calculating weekly cash flow forecasts to ensure that H&W did not collapse. The trustees demanded that a Committee of Economies be established under the control of the Treasury appointed director, Sir Ernest Clark, to reduce cash outflow.

The 1931 Old Bailey trial of Kylsant created a further hazard to the rescue scheme. McLintock adopted the strategy of trying to ensure that the general public only associated Kylsant with the Royal Mail Steam Packet Company so that the H&W trustees could gain acceptance of an Elder Dempster type of scheme described in detail above. Even though the insatiable needs of H&W had been the main reason for Kylsant's predicament, no mention of the company surfaced during his trial and appeal proceedings. A public examination of H&W's finances in 1931 would have been disastrous, as it is highly unlikely that any outside shipowner would place new orders with a shipyard of such questionable solvency.

The Royal Mail scheme enabled H&W to defer payment on secured debts totalling £7,687,577. Unfortunately it also deferred payments due to H&W from other Group companies, so that the company continued to suffer from a precarious cash flow situation.

As 1931 progressed the H&W Board were obliged to recognise that the company's shipbuilding facilities were far too extensive and they entered into discussions with National Shipbuilders Security Ltd (NSS), which had been established to finance the closure of uneconomic shipyards. These talks eventually led to the closure and sterilisation of the building berths at Caird's yard at Greenock and the Henderson yard at Meadowside, although in the latter case the fitting-out facilities and dry-dock were retained to service the Govan shipyard. The A & J Inglis yard was scheduled for closure several times, but managed to survive. In 1932 the Belfast shipyards completed their entire order book and were placed on a care and maintenance basis with only foremen and apprentices retained in the yards. The office staff was placed on part-time employment on reduced salaries. Every effort was made to sell unnecessary assets. It was the end of 1933 before the shipyards slowly began to resume production. The number of employees in the H&W shipyards during this period was: -

1930 15,082
1931 7,373
1932 2,824
1933 4,270
1934 13,894
1935 17,642

The resumption of shipbuilding also led to a resumption of contract losses. It soon became clear to the trustees and the Midland Bank that H&W had still failed to produce reliable estimates and to control costs. These continuing management failures resulted in Rebbeck coming under repeated attack especially for financial disasters like the Sir Hastings Anderson built in 1934 for the War Office at a loss of £80,000 on a contract price of £30,000. Rebbeck's defence was that other shipyards were tendering at the same prices as H&W. He appeared to be unable to comprehend that costs at other British shipyards were far lower than those of H&W. This argument continued until the arrival of cost-plus wartime contracts.

H&W was delighted to be awarded the 1934 contract to build the cruiser HMS Penelope. As the shipyards seemed to be slowly returning to an acceptable level of production, McLintock decided to try to arrange a financial reconstruction along the similar lines to the scheme used by Elder Dempster (see above) but with the possibility of selling the business to Vickers. Unfortunately sectarian riots broke out again in Belfast during July 1935 and the plan was abandoned.


Photo 22: The formal keel-laying of HMS Penelope on 30 May 1934 in the presence of the Duke and Duchess of Kent

In 1935 NSS bought Workman Clarke and sold the firm's Victoria Shipyard and Engine Works to H&W in exchange for its shareholding in D & W Henderson. This move gave H&W control of most of Queens Island and enabled it to re-organise its Belfast operations. These changes were also largely responsible for the 1935 increase in the shipbuilding workforce listed above.

During 1935 the first steps were taken to enable H&W to resume aircraft building. This development proceeded at a slow pace, because of the scarcity of work for the established aircraft builders. Strategically however, Belfast was seen as a secure site, because its distance from Germany. In 1936 agreement was reached with Short Brothers of Rochester to form Short & Harland Ltd and aircraft production began in 1937. The facility went on to become the main production centre for the Stirling heavy bomber.

In 1936 Colvilles Ltd was successfully sold to the public netting £1,715,000 for H&W and temporarily easing the shipbuilder's cash flow problems. McLintock attempted to reactivate the sale of H&W, based upon the company's £250,000 profit earned in the first half of the year. As work on the sale progressed it was discovered that H&W had fallen back into losses in the second half of 1936, almost eliminating the earlier gain. The sale plan was again abandoned.

At beginning of 1937 the patience of the major creditors snapped and McLintock and Midland Bank drew up a major capital and management control scheme, largely ignoring Rebbeck. The main elements of the scheme were: -

  • The paid-up ordinary and preference capital of H&W was reduced from £10,340,394 to £36,476 by savagely writing-off the value of the shares.
  • The dividend arrears of the various ***ulative preference shares were written off.
  • The publicly held preference shares were converted into non-voting B ordinary shares and consolidated into £1 units.
  • £5,200,000 voting A ordinary shares were pooled and held by trustees for those creditors with first call on the H&W assets - Midland Bank; the Treasury; the Northern Ireland Government and the Bank of Ireland.
  • The trustees also took over the Royal Mail Group deferred creditor certificates held by H&W with a view to disposing them on behalf of the H&W creditors.
  • The trustees had wide powers to sell surplus H&W assets and investigate its affairs.
  • The trustees were McLintock, Lord Kennet - a distinguished public servant representing the Treasury and representatives of Midland Bank; the Northern Ireland Government and the Bank of Ireland.

In a move worthy of a modern British Government, the scheme was announced on Coronation Day, 10 May 1937 and escaped media comment. It was fully approved by 3 June.

The new trustees introduced a system of comparing final actual costs against the detail estimate. Amazingly this had not been done previously. The first comparative statement was for Bank Line's Ernebank, built at Queen's Island at a loss of £26,472. The loss appeared to be largely due to excessive overheads, particularly in the engine works. Twelve of the nineteen vessels delivered during 1937 lost money. The trustees suspected that in every case the engine works was the main source of the losses and blamed this on Rebbeck's search for engineering perfection regardless of cost.


Photo 23: Ernebank

In 1938 Lord Kennet was instructed to carry out an in-depth investigation into H&W's operational efficiency. The ship repairing facilities in England were consistently profitable but their revenue was being swallowed by the rest of the business. As suspected, Kennet found the Queen's Island engine works was the biggest drain on the company's resources. He reported that the new-generation airless-injection diesel engines had required extensive modification under guarantee after delivery and in one case the company had been unable to meet the contract specification performance. He was given detail access to Swan Hunter and Cammell Laird's 1937 accounts and found that they were shockingly better than H&W. Further investigation disclosed that the Admiralty was unhappy with the late delivery of HMS Penelope. The high costs and poor operational performance at H&W were sadly a continuation of the difficulties identified by Kylsant over a decade earlier. These all stemmed from the company management's failure to control the business.

During 1938 the trustees actively considered replacing Rebbeck, but were unable to find a suitable candidate. Rebbeck had a very forceful personality and completed dominated the H&W management. The problem was that his only practical management experience was in engine building. Although some of the other shipbuilding leaders detested Rebbeck, none of them wanted his job as chairman of H&W, which they regarded as a poisoned chalice. The trustees felt that the only possible solution was to try once more to impose financial discipline on the company. The salvation of H&W was the growing likelihood of war.


Photo 24: Frederick Rebbeck (right) with Henry Harland the grandson of Sir Edward Harland

Rebbeck felt that the H&W shipyards could only pay their way if they were fully occupied. In February 1939, 13 building berths in Belfast and 7 at Govan were unoccupied. Unknown to the trustees he was secretly trying to bring more work to Belfast, playing on the advantage of its geographical remoteness, in a war that would undoubtedly involve bombing raids on military production centres. Rebbeck obtained finance from the Government of Northern Ireland, the Belfast Harbour Commissioners and the Admiralty to obtain a giant crane and adapt the fitting out berths to build battleships - unfortunately the one class of warship that was to have the lowest priority in the reality of war. The War Office was persuaded to build an armament factory in the Abercorn Works and the Air Ministry to build a "shadow factory" in the Musgrave Shipyard to be managed by Short & Harland Ltd to build Short Stirling heavy bombers. Even the Scotstoun works was re-opened to produce gun mountings. The 1938 profits from non-shipbuilding activities had grown to such an extent that they were able to offset the continuing shipbuilding losses and for the first time since the collapse of the Royal Mail Group, H&W was able to make provision for depreciation.


Photo 25: A Short Sterling heavy bomber

During the summer of 1939, as war in Europe looked increasingly probable, H&W received a growing volume of work. The company's bulging order book was progressively undermining the trustee's efforts to improve the quality of management. They decided to reconstruct H&W's capital and again try to sell the company. The trustees appeared to be trying to get out while they could, but the declaration of war in September prevented their escape. The government's determination to prevent a repetition of the excess profits earned by companies in the WW1 was a boon to H&W. Placing contracts at cost plus 3% was a disappointment to other shipbuilders, but it dramatically improved H&W's profitability. At the same time however, the company's old problem of financing work-in-progress rapidly became acute. The government, banks and other institutions were most reluctant to provide additional facilities as they were still owed £7 million from the Kylsant era. Eventually in May 1940, Midland Bank agreed to add £750,000 to H&W's overdraft facility.

The German occupation of France shattered the theory that the geographical remoteness of Belfast would provide immunity from air raids. Unfortunately as a consequence of that belief, of all of the British cities, Belfast was the least prepared for attack. When the city was attacked in April and May 1941 heavy casualties and severe damage was inflicted on Belfast and H&W. Rebbeck took the opportunity to rebuild using much more solid structures and claimed £2,942,740 in restitution costs - the largest single claim in the entire war. This led to a lengthy dispute with the Government and Midland Bank about the enhancement element of the cost. Unfortunately the same attitude prevented the installation of higher capacity cranes, which would have greatly improved the productivity of the facility.

In September 1941 the trustees again prepared for a public reconstruction of the H&W share structure. Again the plans were frustrated; this time by the outbreak of war with Japan. Bringing H&W back into full production was an expensive and time consuming task. The H&W overdraft was gradually increased by the reluctant banks. The management of Short & Harland failed completely and operation of the business was taken over by the Government. Rebbeck was greatly concerned that the same fate could befall H&W, especially as he had made a bitter enemy of Sir James Lithgow, who was now Controller of Merchant Shipbuilding & Repair. Eventually agreement was reached to increase the H&W overdraft to £4 million contingent upon Rebbeck concentrating all his efforts on the management of the Belfast facilities and stepping down from the position of Chairman of H&W. This was a considerable blow to Rebbeck, even though he had the consolation of being awarded a knighthood. The new chairman was Charles Palmour, an accountant from the auditors of Midland Bank.

H&W produced a greater wartime tonnage than any other shipbuilder in Britain, including aircraft carriers, corvettes, frigates, landing craft and a considerable number of tankers and other merchant ships. The company's output was essential to the British war effort, but its production costs for identical ships remained considerably higher than those of any other shipyard. H&W even succeeded in losing money building the Aircraft Maintenance Ship, HMS Unicorn.


Photo 26: Fleet Aircraft Carrier HMS Formidable: 23,000 tons (standard); completed 1940


Photo 27: Flower Class Corvette HMS Alisma: 925 tons (standard); completed 1941


Photo 28: Aircraft Maintenance Ship HMS Unicorn: 14,750 tons (standard); completed 1943

As the war began to progress in the Allies favour, the trustees revived the idea of recouping their debt and escaping from H&W. This time they were at last successful in restructuring the company's capital and selling the shares on the London Stock Exchange in 1944. Sir Frederick Rebbeck was reinstated as chairman, with a group of directors that were entirely dominated by him.

Against great odds Sir William McLintock had succeeded in preserving H&W. Like Kylsant before him however, he failed to change the management ethos that disregarded any thought of controlling operational costs. Sir James Lithgow was not alone in regarding H&W as the least cost efficient shipbuilder in Britain. The company only prospered during periods of intense demand for ships. Rebbeck's arrogance and obstinacy grew as he realised that no leading shipbuilder wanted to tackle the ingrained H&W problems. He was now released from McLintock's efforts to impose financial responsibility and was confident that when the shipbuilding boom was over, the political importance of H&W to the government of Northern Ireland would ensure its continued existence for many years regardless of its inefficiency.


No book about the Royal Mail Group during the Philipps/Kylsant era appears to be in print, although several websites briefly cover the story - often in a contradictory manner. The best are: -

Various Wikipedia pages are helpful, as are a number of South American historical websites, the historical web pages from Time Magazine, The Harvard Law Journal and US Senate Immigration Reports. Also the fleet histories in the Allen Collection hosted by Benjidog at: -

Books consulted include: -

  • Arnold Kludas - Great Passenger Ships of the World
  • N R P Bonsor - North Atlantic Seaway
  • Duncan Hawes Merchant Fleets series: -
  • Volume 1 P&O, Orient and Blue Anchor Lines
  • Volume 5 Royal Mail & Nelson Lines
  • Volume 8 Pacific Steam Navigation Company
  • Volume 10 Shaw, Savill & Albion
  • Volume 17 Aberdeen and Aberdeen & Commonwealth lines
  • Volume 18 Union, Castle and Union-Castle Lines
  • Volume 19 White Star Line
  • Volume 20 Elder Dempster Lines
  • Volume 22 Glen and Shire Lines
  • Volume 34 Lamport & Holt and Booth
  • Volume 41 Andrew Weir Shipping
  • James E Cowen and John O C Duffy - The Elder Dempster Fleet History 1852-1985
  • W H Mitchell and L A Sawyer - The Cape Run
  • Michael Moss and John R Hume - Shipbuilders to the World


Many of the photographs used to illustrate this article are from the very large collection contained in the Allen Collection hosted by Benjidog at: -

Most of the remaining photographs are from the Ships Nostalgia Galleries, which are available for use in the Directory. Special thanks are extended to Marconi Sahib for his SN postings from the Dickinson collection and Linerrich for providing photographs from his private collection. Both SN Members kindly provided photographs specifically to support this article. The individual photographs used in Part 7 have been provided as follows: -

  1. Colville's
  2. Benjidog - Allen Collection
  3. Benjidog - Allen Collection
  4. Benjidog - Allen Collection
  5. Ships Nostalgia - Ruud
  6. Ships Nostalgia - Ngaio 62
  7. Benjidog - Allen Collection
  8. Benjidog - Allen Collection
  10. Benjidog - Allen Collection
  11. Benjidog - Allen Collection
  12. Linerrich
  13. Benjidog - Allen Collection
  14. Ships Nostalgia - shipmate17
  15. Benjidog - Allen Collection
  16. Benjidog - Allen Collection
  17. Benjidog - Allen Collection
  18. Benjidog - Allen Collection
  19. Benjidog - Allen Collection
  20. Ships Nostalgia - WDM
  21. Ships Nostalgia - Marconi Sahib
  22. Ships Nostalgia - Tmac1720
  23. Ships Nostalgia - Stuart Smith
  24. Harland & Wolff
  25. Wikipedia
  26. - Mike Pocock
  27. - Mike Pocock
  28. Ships Nostalgia - Lancastrian

Article written and compiled by Fred Henderson

Royal Mail Steam Packet Company Kylsant Empire
Intro Part 1 Part 2 Part 3 Part 4 Part 5 Part 6 Part 7
1 - 1 of 1 Posts