Titanic disaster affect on JP Morgan - Essay Example

Introduction JP Morgan of 1837-1913 was a financier, banker, philanthropists who was quite a common figure in the field of corporate finance and the industrial consolidation (Levinson 1912 pg 27-9). During his time, he effected several mergers among which, he facilitated the merger of Edison general electric and Thomson electric company to form the famous General Electric in the year 1892. After participating in this major merger, he thereafter created the federal steel company by merging several steel corporations together in the year 1901. He further undertook some consolidations consolidating steel and wire companies to form the United States Steel Corporation. At the height of Morgan’s career, he and his partners had vast investments in both the financial and the corporate fields and were accused of their critics of controlling the nation’s high finance a criticism that he dispelled through a banking coalition in 1907. Despite such dispelled rumors, facts have it that Morgan was the lead financier of the Progressive era and his dedication and efficiency contributed in injecting transformations in the American businesses "J.P. Morgan, FDIC tangle over who will pay off WaMu liabilities."(2010). This is the man behind the Construction of the American owned vessel, the Titanic through financing the International Mercantile Marine Company (IMMC) and as the owner of the company. This company controlled trust and retaining ownership of the White Star Line, Red Star Line, Dominion Line, American Transport Line, and the Leyland Line. During the construction of the Titanic, the vessel was American owned as mentioned but Morgan kept the ships of his trust under the British registry with the British crew. He did this to escape accuses of violating the American Sherman Anti-Trust Act of 1890 most so after the act had taken down J.D. Rockefeller's Standard Oil Company. It is worth noting that Most of the vessels flew both American and British flags with the White Star Line burgee (Levinson 1912 pg 36-9). In addition to this massive investment, Morgan also owned US Steel, General Electric and numerous banks and other financial institutions. JP Morgan and company continue to thrive today as JP Morgan Chase. Did the sinking of titanic affect the JP Morgan Corporation According to Merchants and masterpieces (1995), if JP Morgan’s company IMM was not actually down then we can say that it was seriously wounded after the Titanic fiasco. The war at the time caused a lot of havoc to the company and the company crumbled during the war years. Most of the businesspersons in America at that time expressed interest of discounting all the dreams of Morgan without expressing any signs that they might one day try and pick up the pieces to recapture the visions that Morgan had in the near future. JP Morgan and his partners like Harriman, Hill and Hanna collective dream of the transportation industry failed but the legacy they left behind still lives with us up to date. The name Morgan is still around with us today most so his great contribution in the banking industry though JP Morgan & Chase "J.P. Morgan, FDIC tangle over who will pay off WaMu liabilities."(2010) Their legacy in the transportation industry though a company like Citibank lives with us to date though the pieces of the transportation network they constructed fell away gradually. The white star line continued to date although it is quite hard for it to recover completely from the destructions caused by the Titanic and the same destruction took place with the IMM (Morris 2005 pg 126). The IMM and the white star line suffered another major loss most so after the loss caused by the Titanic and the onset of the war. This loss had an impact on the massive commercial travels across the Atlantic routes in the year 1916. During this time, the Britannica had served as the hospital ship from the time it was launched in 1914, within the same period specifically in November 21st the ship got a hard hit on a mine and sank off the island of kea into the sea. (Reading Company J.P. Morgan & Co., reorganization managers, with the voting trustees: agreement, February 1st, 1897). From this occurrence, twenty-one people died instantly while other twenty-eight were injured among the passenger who were aboard and alongside the crewmembers and the members of staff. The loss for the IMM was not just a loss on its own but also a further loss through the depletion of their vital fleet. This was a real loss as nothing could be done to avert it given that the IMM owned ships were now at the mercies of the British admiralty since the timing was out of bounds. The ship landed in the hands of the admiralty from Britain from the effect of the agreement made between the British government and the IMM. This was that when the trust formation took effect in 1902, all the ship that belonged to the subsidiaries of the White Star, Red Star, Dominion, Fredrick Leyland and Atlantic Transport line were all to be moved to Britain for government use and chartered to the Ministry of War Transportation. This came at a time when the IMM could not transfer some ship over to the United States registry for the sake of avoiding the service requirements with the Britain even though the Ships belonging to the American line were not subject to this change. The US senate on the other hand refused to transfer through an approval of 14 of the largest liners that belonged to the IMM arguing that the transfers could go against the Charter amendment that the company agreed to in the year 1903 (Morris 2005 pg 186). The red star line ships on the other hand sailed on the Belgian flag until the Antwerp collapsed to the Germans during war from which point, the IMM made a transfer of the ships flags from that of the Belgians to the Red Ensign. There were though some four exceptions to this among which the Red Star Line fleet, which included: - Gothland, samland, Kroonland and Finland. While the first two remained under the Belgian flag and got engaged through special arrangements to operate between Rotterdam and New York engaging in the business of transporting food and clothes, the other two liners were transferred to the registry of the Americans and switched to run under the American flag (www.jpmorgan.com/pages/jpmorgan/am). The IMM was facing bankruptcy even before the Britannica was destroyed in the year 1915. "A TITANIC LEGACY; AS METAPHOR, 1912 DISASTER CONTINUES TO CAPTURE IMAGINATION. (Opinion)(Letter to the editor)." Indicated that; without Morgan’s leadership, the company was beginning to feel the negative effects of having overpaid for the majority of its acquisitions and shares in the other shipping companies. IMM underestimated the competition it was likely to face in Europe and the hostility of the British companies. In addition, the company was also not getting enough efforts from the government of America through subsidies, which would aid its construction of more ships. The IMM did not have any break whatsoever since the government did not even support its carriage of the mails hence facing very tough times. With some lines as subsidiaries and after operating in the hostile conditions for quite some time, it was much evident that the operations of the IMM in the Atlantic was first dwindling as it would no longer secure a percentage of up to 60% of the business on the transatlantic route. Furthermore, none of its constituent companies was neither profitable nor doing good business (Morris 2005 pg 226-29). The movie Secrets of the Titanic (2012), the IMM was becoming crippled as it could no longer control even business in the North Atlantic and therefore, Cunard, representing the Great Britain on the high seas was quite free to through pillage at the Morgan’s empire given the massive calamities. The individual could not even at par defend the company from the rate at which the war was damaging its operations. When their term as partners expired, the German parked and they had to go their separate ways though it just a matter of a short while before war drifted them apart. The remaining lines without recourse suffered a lot of imprisonment and in the end, the uncertainties of lingering war placed a further damper on the traffic going into the ocean causing IMM to face a technical bankruptcy, the voting was dissolved and a receiver appointed to steer the company during this tough period. Another article gives us an explanation on J.P Morgan’s unsuccessful investment in the sea, which is in the shipping industry. The company financed the formation of the IMMC; this was the Atlantic shipping combine, which brought together major American and British shipping line. IMMC was a holding company that had control of all the subsidiaries with the operations of the subsidiaries remaining independent. With such a strategy, Morgan hoped he would have control over the whole of the transatlantic shipping industry through interlocking all the directorates and contractual arrangement with the railroads (www.jpmorgan.com/pages/jpmorgan/am). Such arrangement though received a setback, as there was the unscheduled nature of the sea transport, the American trust legislation and the series of agreement with the British government. It is wise to note that one of the IMMC subsidiaries was the White Star Line that owned the RMS Titanic. The ship’s famous sinking in the 1912 caused a financial distress for the IMMC and forced the company to apply for a bankruptcy protection in the year 1915. The financial records of the company at the time indicated the firm was overleveraged hence suffering from inadequate cash flows. This made the company to default in the payments of its bond interest payments "Milestones in J.P. Morgan History." The company owned by JP Morgan did not completely collapse as it reemerged as the United States Lines due to the First World War, it again went bankrupt in the year 1986 making Morgan to lose heavily on the deal. The sinking of the titanic might have been an arrangement by the fierce competitive partners since as the JP Morgan experienced losses due to bankruptcy, there emerged a tale of bank mergers and acquisitions and the advent of healthcare insurance as well as compensation for workers (http://www.the-titanic.com). On the contrary, the sinking of the Titanic went with the investment of all the vulnerable center city financial institutions. At this time, the Fidelity Trust Company had undertaken an underwriting of the White Star Line a disaster, which caused the bank to lay off so many employees. Alongside this, the bank president established a fund for the wives and the children of the employees of the bank who died for a value worth $100,000. This arrangement helped the impacted for the start but later it extended into benefiting those who worked for the bank anywhere in the region "100th Titanic Disaster Observance Underscores Need for Better Cruise Ship Training.”(2012). The other argument is that the sinking ship was not actually the real Titanic but a plan by the capitalist business people to wreck the huge insurance money formed by the agreements. This they affected by a plan to dispose another ship called the Olympic and the collect the insurance money, a plan that was formulated as follows according to the theorists. That the Titanic would steam out into the Atlantic where the sea cocks would be opened to slowly allow water into the ship. After this, numerous ships were to be stationed around to try to take off the passengers on board. The shortage of the life boats did not matter as the sinking of the ship was anticipated to be quite slow hence; the boats could make several trips between the sinking ships and the rescuers, which was good business for the capitalists. Achieving this was not quite hard given that the White Star Line was part of the enormous IMMC group majorly owned by JP Morgan and other groups, which integrated the Leyland Line Battles, James B. "Disaster prevention: lessons learned from the Titanic. (Report)."(2001). Other writers still found the sinking of the unsinkable Titanic a deal of mystery since the elements that lead to the sinking have been questioned and analyzed over years (Hopkinson 2012 pg 13). Three beliefs have been developed ranging from a belief that it was fate, others believing that there were reckless tactics behind the sinking with others believing that it was caused by events that are more sinister. The major conspiracy going around is that it was planned, well executed and orchestrated to shape the world. That is, as we know it today, to create the Federal Reserve (Battles 2001 pg 314-19). The force argues that there was a force behind the sinking of the ship to usher in the formation of the federal reserve through a group of Illuminati, a group who were enlightened about the new world order and deemed it necessary to form the Federal Reserve. The theorists believe that the Illuminati establishment so that they would loan money, shape the world landscape and become one of the most powerful organizations. Here is how the Federal Reserve and the Titanic are connected. In 1910, seven men met on Jekyll Island just off the coast of Georgia to plan the Federal Reserve Bank. Nelson Aldrich and Frank Vanderclip represented the Rockefeller (Illuminati) financial empire. Henry Davidson, Charles Norton and Benjamin Strong represented J.P. Morgan (Illuminati). Paul Warburg (Illuminati) represented the Rothschilds (Illuminati) Banking dynasty of Europe. The writers go further to prove that the sinking of the Titanic was well orchestrated and among the orchestrators were JP Morgan proving his company was not affected financially "Focus: A drop in the ocean of global finance.(J.P. Morgan Fleming Asset Management Ltd.)(Company Profile)." (2005). It was necessary for the plans that the formation of the Federal Reserve did actually have some opposition; these are those individuals who saw what the future would become if banking was taken off the government’s controls. This would propagate unnecessary exploitation of the citizens as the private businesspersons and capitalists like Fed would consider it "J.P. Morgan, FDIC tangle over who will pay off WaMu liabilities."(2010). All the wealthy and powerful men who were against the formation of the Federal Reserve were brought aboard the cruise so that they could be gotten rid of. This group included three of the richest and most important men in the land at this time. They were Benjamin Guggenheim, Isador Strauss, who headed the Macy’s Department Stores, and John Jacob Astor, probably the wealthiest man in the world at the time (Jones 1998 pg 117-125). Using the dollar values at their time, their wealth accumulated would total to over 500 million US dollars and the value today of such wealth can be translated to over eleven billion dollars. The three men were coaxed, encouraged, and even made to see the need to board the floating palace. They had to be destroyed because the Orchestrators knew they would use their wealth and influence to oppose a Federal Reserve Bank formation as well as the various wars that were being planned like the World War I. It can also be mentioned that J.P. Morgan, the individual contracted to build the Titanic was scheduled to be on the maiden voyage, but canceled (Kuntz and William 1998 pg 214-18). This is enough proof that his company could not suffer losses as no businessperson can ever engage in deals geared towards bringing them down. On the other hand, supporters of the idea that the Titanic shipwreck well orchestrated, a Jesuit tempore co-adjustor was picked to captain the ship, a man that would do anything for the order and God’s will; Captain Edward Smith. He was a Jesuit and worked for J.P. Morgan in his White Star Line company a partner at the time with IMMC. As National Geographic stated in their 1986 documentary entitled ‘The Secrets of the Titanic,’ “Anyone could be a Jesuit and their identity not be known.” Conclusion Therefore, the Titanic sinking has two side of the coin when it comes to how it affected J.P. Morgan. Some theorist argue that the sinking was genuine and had negative impacts to financially on J.P. Morgan and his company while others say the sinking was planned and Morgan being one of the orchestrators experienced no loss whatsoever. 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