International Navigation Company - Postscript

Postscript

By the end of 1903, the value of the IMM preferred stock dropped from $85 to $18 and the bonds were not selling. Morgan was unable to sell much of the stock and bonds issued to finance IMM and was forced to remain active in IMM’s management. Instead of the $10 million profit he expected, he lost money on the transaction. The problem was that IMM paid too much for the companies it acquired and struggled under the debt payments. The hoped for subsidy from Congress did not materialize and the company was impacted by the economic depression that lasted through the middle of the decade. Further, the anticipated economies of scale from the merger did not materialize. In 1904, management was reorganized and IMM focused on White Star, the most profitable subsidiary. However, by 1915 the company was forced into bankruptcy court when IMM was unable to make debt service payments because the war disrupted cash flow from foreign subsidiaries. IMM survived and by 1917 profited from the demand for shipping during W.W.I.

During the 1920s and 30s, IMM sold its foreign flagged subsidiaries to focus on US operations. In 1930, the Roosevelt Steamship Company purchased 51% of IMM. The next year, Roosevelt IMM became the manager of the government owned United States Lines when the line’s purchaser defaulted on the payments. In 1934, Roosevelt IMM acquired a majority of the US Line stock for $1.1 million. All US Line, Roosevelt Line and IMM operations were merged in 1943 and the combined operation used the US Line name. The US Line emerged from the war as one of the largest international shippers and in the 1950s was the second largest transatlantic passenger carrier after Cunard. Passenger sailings were terminated in 1969 when the US government withdrew the operating subsidy for the United States. The US Lines failed in 1986 when it over expanded in the container cargo business and its operations were liquidated.