International Navigation Company
The principal American organizer and general agent of INC was the shipbroking firm of Peter Wright & Sons, one of the oldest, most respected, and most financially prosperous of the Philadelphia import-export houses.
Although the financial interests were headquartered in the United States, the backers did not believe that a transatlantic steamship line could be run successfully under an American flag.
The firm operated a large fleet of ships, with many transporting petroleum from the recently discovered fields of western Pennsylvania, carried in barrels and cases, to European markets.
Peter Wright & Sons also had established friendships and business ties with two prominent Belgian shipowners, Jules-Bernard von Der Becke and William Edouard Marsily.
[4] Clement Action Griscom, who rose rapidly from clerk to partner at Peter Wright & Sons, was a leader in the firm's shipping affairs and the chief force behind the creation of both INN and the chief negotiator with Belgian's King Leopold, von Der Becke, and Marsily to establish a subsidiary company in Antwerp beginning on September 19, 1872, under the title "Societe Anonyme de Navigation Belge-Americaine" (Red Star Line).
The agreement established the Red Star Line as the exclusive carrier of mail service out of Antwerp to Philadelphia and New York.
[5] The shipping line's home port was Antwerp and it sailed under the Belgian flag, thereby avoiding the obligation of employing far more expensive American personnel.
The former company, known as the American “Keystone” Line was unprofitable because of the substantially higher costs associated with operating American-flagged vessels.
Two years later, INC also acquired the assets of the financially troubled Inman Line, operator of a British flagged Liverpool-New York mail service.
In 1893, Inman was merged the American Line and the company built two additional express liners in the US to create a premium weekly service, now routed to Southampton.
[5] However, Griscom and Morgan paid too high a price for the companies they acquired and IMM struggled under the debt payments.
[5] In 1915, IMM was forced into bankruptcy when the war disrupted cash flow,[7] but later was able to profit from the wartime demand for shipping.
The new firm's affairs were turned over to a 30-year-old Peter Wright partner, Clement A. Griscom,[11] who was also a close associate of Edgar Thompson, President of PRR.
Griscom immediately left for Europe and met with Antwerp officials about the necessary improvements to modernize the old port into the terminus for a steamship line.
When he was told that Leopold II must also approve, Griscom left for Brussels where he received the King's strong support including a postal subsidy and port improvements.
[5] Red Star was in better position to survive the depression of 1873 than the US-flagged American “Keystone” Line because operating as a US carrier resulted in about 30% higher costs.
However, this amount was not sufficient to attract firms to acquire the liners required under the act, and Griscom's two new 20-knot Atlantic speedsters could not qualify, because they were built in the UK.
In July, International Navigation Limited was formed in the UK to hold title to the remaining British flagged vessels.
The company was also refinanced with a $6 million bond issue to enable Griscom to order the two new 20 knot express liners required under the US mail contract and additional new vessels for Red Star.
The major shipping companies including the American Line entered into an agreement to control sailing frequency and prices.
However, the agreement broke down in the fall of 1893 over a dispute between the German and British lines over Scandinavian business, resulting in a fare war.
[12] By 1896, economic conditions improved, and the major lines reached a new agreement, negotiated at International Navigation's headquarters in London.
[12] By 1902, International Navigation's fleet consisted of 26 ships totaling 181,000 tons and carried more passengers than either Cunard or White Star.
Congress was opposed to subsidizing rich financiers even though this meant that relatively fewer Americans were employed as merchant ship builders and sailors.
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.
[14] 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.
