CHICAGO, April 20 (Reuters) – By now you’re probably seasick
of hearing about the 100th anniversary of the Titanic tragedy
and the myriad analyses of why it sunk and what it means. Yet
for some of us who felt compelled to see the James Cameron movie
again – and got suckered into paying for a disappointing 3D -
we’re still looking for metaphors and analogies.
Few Titanic buffs look at how J.P. Morgan, the principal
investor in the Titanic, fared after the disaster in 1912.
Morgan was a financial emperor at the time, controlling the
Titanic’s parent company, White Star Line, as part of an attempt
to monopolize North Atlantic shipping through a trust of other
shippers he owned.
Morgan set up the White Star Line as a British-crewed
company to side-step U.S. antitrust laws. The banker, who had
canceled his trip aboard the Titanic, died in 1913. (It was said
that the ship was doomed by the ghosts of the eight Irish men
who died building it, according to my wife, who grew up a few
blocks away from where the ship was built in Belfast).
What later submerged Morgan’s shipping trust was that it was
over leveraged as it tried to control an already volatile
business that took a huge hit when World War One started in
1914. Ultimately, Morgan’s monopoly attempt failed, and his
International Mercantile Marine Co went into receivership a few
years after the Titanic sank. Like most other attempts to corner
a commodity or industry, it was an “all in” bet that
over-concentrated risk. It was the equivalent of borrowing money
to invest your entire portfolio in dot-com stocks in 1999.
Managers of the reorganized International Mercantile, which
became United States Lines during World War Two, though,
apparently hadn’t learned the lesson of spending big on mammoth
ships or outdated technologies. The company built and launched
the SS United States in 1952, the largest passenger ship built
in the United States at the time, just before the airline
industry was starting its long run to dominate long-distance