Finance-Public & Private
The White Star " Deal" WHETHER the Royal Mail Steam Packet Company has or has not made a profitable investment by the purchase of the share capital of the White Star Line remains to be seen, but, whether the operation is viewed from the standpoint of the interests of the shareholders of the Royal Mail Company or from the national standpoint as reflecting the tegaining of the control of more than half a million of shipping tonnage, the operation is a most interesting and important one. Inasmuch, however, L s f‘e statement has been made in so many quarters tl t thi ; purchase by the Royal Mail Company of the WI itc Star means, as it were, the recapturing by the British g of those popular liners, the Majestic, Olympic, &c., it may be well to point out very definitely that these ships never hive passed entirely beyond British control and have, indeed, always sailed under the British flag.
' ' THE OPERATION EXPLAINED.
To appreciate exactly the character of i he great shipping deal which has just been consummated, e must go back some years to the time when the United States, in its anxiety to promote mercantile shipping umer American control or semi-control, formed a huge Trust known as the International Mercantile Marine Company of New Jersey. This company was really a huge holding co Leern and through its large holding of a company inco: por tted in Great Britain known as the International Nat igation Company, Limited, it possessed the ownership of tiry capital stock of the Oceanic Steam Navigation Coin' any, the Atlantic Transport Company, Limited, and Fredel ick Leyland and Co. The first-named of these companies, the Oceanic Steam Navigation Company, owned the whole of the capital stock of £5,000,000 of the company which is really the White Star Line. There are Deben- tures of the company, and these throughout have been held by the ordinary investor chiefly, probably, British, but the Ordinary stock, as already indicated, has indirectly been held by the International Mercantile Marine Company of New Jersey-an American concern.
COMPLETE BRITISH CONTROL.
It is this block of £5,000,000 of stock which has now been acquired-at the price, it is said, of £7,000,000-by the Royal Mail Steam Packet Company, and the ownership of the White Star vessels will now, therefore, have no kind of ambiguity. Not only the ships but the entire control of the Oceanic Steam Navigation Company will be in the hands of the Royal Mail Company, whose chairman, Lord Kylsant, it may be recalled, is also chairman of the famous shipbuilding concern of Harland and Wolff.
ARE OTHER DEALS IMPENDING ?
In view of the description I have just given of the rami- fications of the International Mercantile Marine Company of New Jersey, it is, of course, not surprising that there should now be rumours as to the possible future of the Leyland Line and the Atlantic Transport Line, but that is a story for another day-, but at present it is merely market talk.
FINANCIAL ASPECTS.
Dealing now, however, with this interesting shipping operation from the financial side, it is, perhaps, premature at the moment to determine whether the Royal Mail Company has or has not made a good bargain, and final judgment must be reserved until further details are available. So far as recent earnings by the Oceanic Steam Navigation Company (the company owning the White Star vessels) are concerned, the price paid would seem to be rather high. In 1921 and 1922-the yeari of high freights-profits were earned of about £800,000 and £580,000 respectively, but by 1925 these had dwindled to £820,000, and the dividend was only 5 per cent. That is a distribution which would scarcely be justified by the nominal capital of £5,000,000, whereas the Royal Mail is understood to have given £7,000,000. Neverthelessi
the fact remains that Royal Mail Steam Packet shares, which fell recently to 75 on the passing of the interim dividend, have since steadily recovered, and, following upon an announcement of the deal, rose to 821.
And am inclined to think that_ultimately this rise will be found to be justified, In examining a deal of this character it is necessary to, look ahead and not to follow too closely.- the mere figures" of recent' profits.. Rather more than half a million of tonnage of good shipping will come under the control of the Royal Mail Company, and, workinc, the, price of /7,000,000 out on a tonnage basis, the value does not seem unduly. high.. Moreover, if the White Star vessels themselves are comparatively young (and are deservedly popular), the United States, to which they ply from this country, are still in their infancy, and when more normal political and industrial conditions return there should be an enormous expansion in the Atlantic trade. Finally, it is only fair to recognize the great ability and shrewdness shown by Lord Kylsant in his building up of the Royal Mail Steam Packet Company, and I see no reason at all why this latest deal should not ultimately bring to the Royal Mail Company as full a measure of actual profits as it has certainly brought to it
an already enhanced prestige. •
ARTHUR W. KIDDY.
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