The International Navigation Company (INC) was a Philadelphia-based holding company owning 26 ships totaling 181,000 tons and carried more passengers than either Cunard or White Star, when the company was reorganized as International Mercantile Marine in 1902. The General Assembly of the Commonwealth of Pennsylvania approved a charter for the INC on May 5, 1871. The company was commonly known as the Red Star Line due to the red star on its white house flag. 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. .Flayhart III, William Henry (2000). The American Line 1871 -1902. W.W. Norton & Company. Principal financial backing was provided by the Pennsylvania Railroad Company. 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. Ships were to be built in foreign yards, operated under foreign flags, and crewed with foreign sailors.Flayhart III, William Henry (2000). The American Line 1871 -1902. W.W. Norton & Company.
Peter Wright & Sons provided invaluable commercial expertise and foreign contacts. 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. During the 1860s, the von Der Becke firm became an important importer of petroleum products from Pennsylvania to Antwerp in American and Belgian ships.Flayhart III, William Henry (2000). The American Line 1871 -1902. W.W. Norton & Company. 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. This subsidiary would provide most of the company's profits for the next 30 years. 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.Caestecker, Frank et al.(2008). Red Star Line: People on the Move. BAI, Schoten.
In January, 1874, the board of directors of the American Line, a Philadelphia-based passenger and cargo service to Liverpool that was also backed by the Pennsylvania Railroad and was facing possible bankruptcy, passed management of the steamship line to Peter Wright & Sons. Clement Griscom was charged by the firm to manage the American Line as well as the Red Star Line. The former company, known as the American “Keystone” Line was unprofitable because of the substantially higher costs associated with operating American-flagged vessels. In 1884, the assets of the American Line were acquired by International Navigation. Two years later, INC also acquired the assets of the financially troubled Inman Line, operator of a British flagged Liverpool-New York mail service. With PRR's backing, Griscom ordered two record breakers to restore Inman's fortunes. However, the British Government objected to Inman's ownership change and revoked Imman's mail contract. Griscom successfully lobbied Congress to reflag the two new express liners and qualify for an American mail subsidy. 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.
Griscom believed that the major lines should be merged to control capacity and avoid rate wars. In 1899, he became acquainted with J. P. Morgan, an investment banker who was responsible for many of the large mergers during the period. With financing from Morgan's syndicate, in 1902 Griscom and Morgan expanded International Navigation by acquiring the Atlantic Transport Line, the Leyland Line, the White Star Line, the Dominion Line and half of Holland America. International Navigation was renamed International Mercantile Marine (IMM).
However, Griscom and Morgan paid too high a price for the companies they acquired and IMM struggled under the debt payments. Management was reorganized to focus on White Star, the most profitable subsidiary. In 1915, IMM was forced into bankruptcy when the war disrupted cash flow, but later was able to profit from the wartime demand for shipping. In the 1920s and 1930s, IMM gradually sold off its foreign subsidiaries. In 1931, it acquired the United States Lines, and merged all operations under that name in 1943. The company failed in 1986 and was liquidated when it over expanded in the cargo container business.
1871–84
In 1858, the Inman Line abandoned Philadelphia as its American terminus and switched its operations to New York. Various interests in Philadelphia, including the Pennsylvania Railroad, recognized the need to reestablish steamship service directly to Europe. In 1870, PRR backed the creation of two shipping companies, the US-flagged American Steamship Company and the foreign flagged International Navigation Company. Chartered on May 5, 1871, International Navigation was created by the Philadelphia ship brokerage of Peter Wright & Sons. A $1 million bond issue was guaranteed by PRR and the initial $1.5 million stock offering was largely purchased by a small group of Peter Wright partners and PRR executives. The new firm's affairs were turned over to a 30-year-old Peter Wright partner, Clement A. Griscom, who was also a close associate of Edgar Thompson, President of PRR.
International Navigation's original plan was to operate UK flagged steamers on the Liverpool–Philadelphia route and to coordinate sailings with the American Steamship Company, operating as the American “Keystone” Line. Since Peter Wright & Sons was also involved in the early transport of oil from the Pennsylvania petroleum fields, Griscom had the support of the Standard Oil Company for his new steamship line. INC ordered its first steamer as a combined passenger ship/tanker, but she probably only carried oil on one voyage after it was realized that the fire hazard with tankers was too great to also carry passengers on the same ship.
In 1872, Griscom and Thompson concluded that International Navigation should seek a terminus on the continent. According to his son, Griscom marked all of the principal manufacturing towns in England, Belgium, France and Germany and determined that the center was Antwerp Belgium. 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. On September 27, 1872, the Red Star Line was chartered in Belgium as the “Societe Anonyme de Navigation Belge-Americaine”. In addition to Griscom, the board included Thomas Scott, who in two years would become President of the Pennsylvania Railroad.
Red Star's Antwerp–Philadelphia Service started in January 1873. Red Star took delivery of three new steamers built in England and supplemented its fleet with chartered tonnage. 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. At the end of 1873, Griscom took over management of the American Keystone Line. In 1874, Red Star also started an Antwerp-New York service under a mail contract from the Belgian Government.
Red Star thrived and by 1881 carried over 40,000 passengers. At the same time, the American Keystone Line was not profitable because of its higher cost structure. When the hoped for subsidy never came from Congress, PRR decided to reorganize American Steamship. In 1884, PRR offered to purchase 14,500 new shares in International Navigation for $725,000 to finance INC's purchase of American Steamship's four vessels as well as its name and good will. The money never actually left PRR's account because it was used to repay the railroad for the American Steamship bonds it guaranteed. When the transaction was completed, the American Keystone Line became INC's second operating subsidiary.
1884–93
International Navigation's Liverpool agent was Richardson and Spence, who was also the agent for the Inman Line, one of the big three British flagged companies on the Liverpool–New York route. INC became a major creditor of Inman when that company suffered financial difficulties in the early 1880s. In 1886, with the backing of the Pennsylvania Railroad, Griscom offered £205,000 for Inman's five liners and name. Under the deal, Griscom was able to deduct the debt owed INC from the purchase price. With no real alternative, Inman's directors accepted the offer.
Griscom realized that the renamed Inman and International Line required a new express steamer to compete against its rivals, the Cunard Line and White Star. He sailed for Europe with a commitment of $2 million from the Pennsylvania Railroad to finance the new ship. Scottish shipbuilders were suffering a depression at the time and offered to build two liners at the bargain price of $1,850,000 apiece. The PRR agreed and Griscom ordered what were to become the two largest and fastest ships on the Atlantic, the 20 knot City of New York and City of Paris. He also ordered a large new liner for Red Star, the Friesland.
The intent was to continue Inman as a British-flagged company. However, considerable opposition developed over Inman's change in ownership, and the British Government transferred Inman's mail contract to the Guion Line. Under the Ocean Mail Act of 1891, the US Government offered to pay $12,500 per round-trip voyage to any American-flagged carrier offering 20-knot steamship service to the UK. 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. Therefore, Griscom and the Pennsylvania Railroad lobbied Congress to allow the reflagging of Inman's two record-breakers. Griscom also offered to build a second pair of 20-knot liners in a US yard so that Inman would have the four ships required for a weekly service. In May 1892, Congress enacted the necessary legislation. Five months later, the post office department agreed to contract with INC for a weekly New York–Southampton mail service. On February 22, 1893, President Benjamin Harrison personally raised the American flag on the newly renamed New York, and the Inman and International Line was officially merged into the American Line.
1893–1902