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THE TURMOIL OF WAR
Contents
- 1 Introduction
- 2 The turmoil of war
- 3 Financial Upheaval
- 3.1 Changing of the Guard at International Mercantile Marine
- 3.2 Harland & Wolf on the brink of financial collapse
- 4 World War 1
- 4.1 IMM Crisis
- 4.2 J. P. Morgan & Co
- 4.3 Red Star
- 4.4 Olympic
- 4.4.1 HMS Audacious
- 4.4.2 Military Service
- 4.5 The rest of the White Star fleet
- 5 Restoring post-war service
- 5.1 Refits
- 5.2 HAPAG's Imperator Class
- 5.3 The United States Shipping Board Merchant Fleet Corporation
- 5.4 Majestic
- 5.5 Cunard Competition
- 5.6 Homeric
- 5.7 Other war-loss replacements
- 6 Bibliography
- 7 Photographs
To the general public Titanic is possibly the most famous passenger liner ever built; largely because of the considerable loss of life that arose when she sank on her maiden voyage and the resultant media hype; then and ever since. If that tragedy had not happened, she would only have had fleeting fame and her name would be generally unknown today. Interestingly there have been other peacetime passenger ship disasters with greater loss of life that are unknown to the general public. The centenary of the tragedy has generated considerable interest in the Titanic story. Perhaps it is inevitable that there has also been a great deal of romance and fantasy surrounding the disaster. The aim of these Articles is to provide a factual account of why she was built; what she was; what happened on her maiden voyage, the aftermath of the tragedy and what happened to her two sister ships. This Part covers World War 1 and the return to peacetime operations. Part 8 continues the history through to the final collapse of White Star.
For practical and technical reasons, the Articles are presented in the following parts: -
- Part 1. The establishment of White Star and Harland & Wolff
- Part 2. International Mercantile Marine Company
- Part 3. Olympic
- Part 4. Titanic
- Part 5. The immediate aftermath of the Titanic disaster
- Part 6. Britannic
- Part 7: The turmoil of war
- Part 8. The lingering demise of White Star
Definitions
- In these Articles the term Gross Registered Tonnage - usually abbreviated to GRT, or merely tons - is used to define the size of a ship. This term had no connection with weight. It was a measurement based upon a survey of the total internal watertight volume of a vessel, with 1 gross registered ton being equal to 100 cubic feet. The calculation was complex and subject to manipulation, with increases sometimes being engineered for prestige reasons and (more frequently) decreases being made to reduce harbour dues, pilotage charges, etc.
- White Star: For the greater part of the existence of the Line, White Star was merely the trading name of Oceanic Steam Navigation Company. To avoid confusion White Star is used in all respects in this Article.
The turmoil of war[edit]
Financial Upheaval[edit]
Changing of the Guard at International Mercantile Marine[edit]
In the opening years of the 20th Century (as explained in Part 1) Clement Griscom persuaded the leading American financier, J Pierpont Morgan to back the attempted creation of a North Atlantic migrant shipping monopoly - International Mercantile Marine. William Pirrie of Harland & Wolff became the main negotiator, bringing in White Star and other smaller companies. It was always realised that the State owned French line would remain independent, but Griscom's concept was doomed by the spirited resistance of Cunard and the cautious response of the German champions, Hamburg America and North German Lloyd, obliged IMM to settle for a profit sharing agreement with the two German companies. H&W bought 51% of Holland America and subsequently sold half its shareholding to IMM and the balance to the two German lines.
IMM was one of the few failures of Morgan's spectacular financial career. The cost of establishing the conglomerate greatly exceeded Griscom's original estimates, but Morgan was unwilling to provide additional equity investment. IMM raised the necessary additional funds through a very large and very unsuccessful loan stock issue, with the bulk of the stock being left in the hands of the promoters, one of which was H&W.
Griscom was IMM's initial President, but was soon replaced by Bruce Ismay who struggled with the task of turning IMM into a profitable operation. Servicing IMM's loan commitments absorbed most of its free cash flow, with little left over for new ship construction and the group's fleet became progressively outclassed as new tonnage was introduced by rival shipowners. The Olympic class was essential to maintain White Star's pretensions as a leading transatlantic operator. To finance them Ismay was obliged to issue additional loan stock, adding to the IMM debt burden.
After Olympic had been successfully introduced into service and with Titanic approaching completion, Ismay confirmed the order for Britannic. In January 1912, thinking that the renaissance of White Star had been firmly established, Ismay announced his intention to retire in June 1913 and arranged that his close associate Harold Sanderson would succeed him at IMM and White Star.
The loss of Titanic on her maiden voyage was a financial disaster to cash-strapped White Star as well as a human disaster to those on board. Like many shipping companies, White Star only insured part of the value of its ships and carried the remainder of the risk itself.
Ismay offered to stay on and try to resolve IMM's new financial crises, but Morgan ruled that the change of leadership should continue as planned.

Photo 1: John Pierpont Morgan
On 31st March 1913, John Pierpont Morgan died while staying in the Grand Hotel, Rome. At the time of his death he had an estate worth $80 million (about $1.9 billion in 2012). Compared to his peers of the time, especially Rockefeller, it was not a very large estate. In fact, it was Rockefeller's comment at the time, "And to think he wasn't even a rich man." Yet, JP Morgan's power did not lie in the millions he had; it lay in the billions he controlled. In addition to his bank, he controlled over 20 railroads, American Telephone & Telegraph, Federal Steel Co, General Electric and International Harvester. One of his very few failures was International Mercantile Marine.

Photo 2: John Pierpont Morgan Jnr
Morgan's son John Pierpont Morgan took control of the bank and other Morgan interests. He had no emotional feelings towards IMM and immediately decreed that it was entirely responsible for its own survival. No financial support could be expected from Morgan's bank.
Harland & Wolf on the brink of financial collapse[edit]
As explained in Part 1, there was a contractual commitment that all White Star ships would be built by Harland & Wolff on cost plus fixed profit contracts. White Star was therefore directly concerned by H&W's affairs. The majority of H&W's construction material and equipment came from mainland Britain at additional transportation cost. H&W's Lord Pirrie successfully overcame this by persuading other shipowners to join his Commission Club and place similar cost-plus contracts with H&W.
Unfortunately cost-plus contracts do not provide any incentive for the shipyard management to save cost. Profitability is however, dependent upon uninterrupted production and H&W was usually successful in avoiding demarcation disputes between the members of the 20 trade unions representing its work force. The cost of this harmony was over manning and high labour costs in addition to the higher material costs facing H&W. As a result, by the early years of the 20th Century the company almost invariably lost money on fixed price contracts, obtained in open competition with other yards. Conversely White Star and the other Club members paid progressively more than the market price for their ships to be built by H&W.
Although the Sheffield forgemasters John Brown were brought in as 52% shareholders, Pirrie operated H&W as his personal fiefdom, surrounded by managers who would unquestioningly obey his orders. In 1907 the H&W administrative headquarters were transferred to London and the day-to-day management of the Company was devolved to a committee of managing directors whose technical skill and devotion Pirrie could rely upon. They were only given the barest minimum of financial and contractual information. The central financial records of the business were under Pirrie's personal control and the only other men allowed access to them were the chief accountant and the company secretary.
A most important new H&W customer was the rapidly expanding Royal Mail Group of Owen Cosby Philipps. The first H&W built Royal Mail ship was Amazon delivered in 1907. By 1910 Philipps and Pirrie had become very close business confidants.

Photo 3: Amazon - Royal Mail's first liner to be built by Harland & Wolff
The successful delivery of Olympic in 1909 enabled H&W to temporarily pay off its overdrafts and reduce its other borrowings. White Star were delighted with their new ship and placed an order with H&W for a third sister, Britannic, with work to commence after the delivery of Titanic.
Improved world trading conditions produced more Club orders than H&W could handle and an agreement was made with the Tyneside shipbuilder Hawthorn Leslie to take some of the excess. These developments alerted other shipbuilders to H&W's need for additional capacity at a time when the second generation owners of a number of medium sized shipyards were seeking to leave the industry. Both Caird & Co of Greenock and the London & Glasgow Engineering & Iron Shipbuilding Co at Govan offered their businesses to Pirrie, who decided to take over London & Glasgow, because of its larger capacity and its highly regarded Lancefield Engine Works across the river in Finnieston. Unfortunately H&W did not have sufficient funds to support its Belfast opperations, let alone additional Clydeside facilities.
A further expensive investment was the result of Pirrie's enthusiasm for the diesel engine. H & W entered into an exclusive UK partnership with Burmeister & Wain to develop and manufacture marine diesel engines. During the War, Pirrie bought-out B&W's share of enterprise.
These acquisitions were merely the start of Pirrie's insatiable desire to acquire shipbuilding and engineering assets, which is explained in detail in Royal Mail Steam Packet Company Kylsant Empire Part 3. Suffice to say that Pirrie added 5 more shipyards, an additional engineering works and the giant Colville steelmaking organisation, in addition to building the largest steel foundry in the UK, establishing a shiprepair facility in the London docks, an aircraft building factory in Belfast and creating an airfield at Aldergrove! Pirrie was also constantly expanding and upgrading his empire's production capabilities.
Huge capital resources were needed to finance this expansion and H&W's bankers became extremely nervous about the company's overtrading. To placate the banks, Pirrie again sought to raise additional equity capital and astonishingly persuaded Sir Owen Philipps to invest from his Royal Mail group thereby "cementing the building agreement". This investment had the advantage of wresting voting control from John Brown and passing it to Pirrie and Philipps. John Brown did not object on the understanding that this "would not interfere with their working relationship." Pirrie's coup in persuading Philipps to bring his Royal Mail group companies as shareholders provided H&W with a post-war lifeline.
Royal Mail group was financially weak during most of the years it was controlled by Philipps. By acquiring control of H&W, Philipps greatly increased the fragility of Royal Mail. Despite this, Philipps was content to allow Pirrie to continue to operate H&W as an independent entity, even though there were to be repeated requirements for Royal Mail to increase its investment in H&W to keep it solvent.
World War 1[edit]
IMM Crisis[edit]
In September of 1914 the directors of IMM announced that because of the disruptions and uncertainties caused by the outbreak of war they were deferring the October interest payment on its 4½% bonds. The bond indenture provided that a six month postponement did not constitute default. But by the spring of 1915, with $3.3 million in interest still owed, the Combine was declared to be in technical bankruptcy and in April Philip A S Franklin, vice president of the IMM in America and a director of the Atlantic Transport Co was appointed as administrator.

Photo 4: Philip Albright Small Franklin
At that time the market value of IMM shares had fallen to $26.5 million, whereas the nominal value was $172 million. Thanks to Franklin's efforts IMM's earnings began to recover because of wartime demands for shipping and a year later the market value of IMM had risen to $165 million. Franklin was appointed president of the IMM, in recognition of his achievements.
The return of IMM to near par value enabled H&W to liquidate its £1 million investment and bolster its own precarious cash position. In doing so however, it lost its leverage to secure future IMM shipbuilding orders.
J. P. Morgan & Co[edit]
Morgan Jnr. played a prominent part in financing the Allies during the war. From 1915 until sometime after the United States entered the war, his firm was the official purchasing agent for the British government, buying cotton, steel, chemicals and food, receiving a 1% commission on all purchases. Morgan organized a syndicate of banks and floated a loan of $500,000,000 for the Allies.
These activities incensed the anti-British William Randolph Hearst and created a storm of propaganda in his newspapers. As a result at the beginning of World War I the Wilson administration were very suspicious of J. P. Morgan & Co.'s enthusiastic role as British agent for purchasing and banking. When the United States entered the war however, this gave way to close collaboration.
Red Star[edit]
The rapid advance of the German Army through Belgium in August 1914 and the threat to Antwerp resulted in the immediate transfer of Red Star's activities to Liverpool. All bar two ships in the Red Star fleet were re-registered under the British Flag in the name of the International Navigation Co Ltd. Most were subsequently operated by White Star.

Photo 5: Red Star's Lapland
Olympic[edit]
Following the outbreak of World War I in August 1914, Olympic initially remained in commercial service under Captain Herbert James Haddock. As a wartime measure, she was painted in a grey colour scheme, portholes were blocked, and lights on deck were turned off to make the ship less visible. The schedule was altered to terminate at Liverpool rather than Southampton, and this was later altered again to Glasgow.
The first few westbound wartime voyages were packed with Americans trapped in Europe and keen to return home, but the eastbound journeys carried few passengers. By mid-October, bookings had fallen sharply as the threat from German U-boats became increasingly serious and White Star Line decided to withdraw Olympic from commercial service.
HMS Audacious[edit]
On 21 October 1914, Olympic left New York for Glasgow, on her last commercial voyage of the war, carrying only 153 passengers. On 27 October, near Lough Swilly off the north coast of Ireland, she received distress signals from the battleship HMS Audacious which had struck a mine off Tory Island and was taking on water.

Photo 6: HMS Audacious
Olympic took off 250 of the crew of Audacious crew by 14:00; then the destroyer HMS Fury managed to attach a tow cable between Audacious and Olympic and they headed west for Lough Swilly. The battleship was unmanageable however and when her quarterdeck was awash it was decided to evacuate the remaining crew members to Olympic and the cruiser HMS Liverpool. At 20:55 there was an explosion aboard the Audacious and she sank.

Photo 7: HMS Audacious crew evacuation
Admiral Sir John Jellicoe, Commander of the Home Fleet, was anxious to suppress the news of the sinking of Audacious, for fear of the demoralising effect it could have on the British public. Olympic was held in custody at Lough Swilly, no communications were permitted and passengers were not allowed to leave the ship. Finally, on 2 November, Olympic was given permission to go to Belfast, where the passengers disembarked.
Military Service[edit]
Olympic was laid up in Belfast until May 1815 when she was requisitioned as a troopship. She was stripped of her peacetime furniture and fittings, armed with 12-pounders and 4.7-inch guns, and converted to transport up to 6,000 troops. Olympic was used until early 1916 to transport troops to the Mediterranean for the Gallipoli campaign, before being chartered by the Canadian Government to transport troops from Halifax to Britain. At this time she was painted in dazzle camouflage scheme and 6-inch guns were added to her armament.

Photo 8: Olympic in WW1 dazzle camouflage
After the United States declared war on Germany in 1917, Olympic also transported thousands of U.S. troops to Britain and France. In the early hours of 12 May 1918, while en route for France with US troops, Olympic sighted a surfaced U-boat about 1,600 ft ahead. Her gunners opened fire and she turned to ram the submarine, which immediately dived and began to turn onto a parallel course. Almost immediately afterwards Olympic struck the submarine just aft of her conning tower and Olympic's port propeller sliced through U-103's pressure hull. The crew of U-103 blew her ballast tanks to surface, before scuttling and abandoned the submarine. This is the only known incident in World War I in which a merchant vessel sank an enemy warship. On arrival at Southampton Olympic was found to have several hull plates dented, but not holed and her prow was twisted to one side.

Photo 9: Olympic in New York while serving as a troopship
After the Armistice Olympic, was engaged to return American and Canadian troops to their homeland. During her war service, Olympic is reported to have carried over 200,000 troops and other personnel, burning 347,000 tons of coal and travelling about 184,000 miles.
The rest of the White Star fleet[edit]
At the outbreak of war, Teutonic, Oceanic, Cedric and Celtic were immediately requisitioned by the Admiralty as Armed merchant cruisers. Oceanic was wrecked on the Shetlands on 8 September 1914 when under the command of a Royal Naval officer. Teutonic was bought by the Admiralty in August 1915, while the other two liners were decommissioned as warships in December 1915.
The remaining White Star ships continued to operate a modified commercial service, although they were from time-to-time employed as troopships. Southampton became a military port and all White Star transatlantic operations were based in Liverpool. During the war White Star was allocated the ownership or management of a number of ships, some of which were well outside its normal fleet.
The British Government initially avoided wartime involvement in merchant shipping operations. Mercantile confidence was maintained predominately by the War Risk Insurance Scheme: whereby the general tax-payer met eighty per cent of the cost of any ship and cargo lost. It was only at the end of 1916, with the dynamic David Lloyd-George now Prime Minister, that a Ministry of Shipping was formed; with a prominent ship-owner, Sir Joseph Maclay, as Controller. Within five months it took executive command of the mercantile industry. From March 1917 the British Liner Requisition Scheme came into operation, taking over the direction of all liners still in private hands
Britannic was White Star's greatest wartime loss (See Part 6). Other fleet losses were as follows: -
WHITE STAR WAR LOSSES |
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