29 January 2010

The Company's Revelations

From the Sydney Morning Herald on this day in 1932:

Could be Made to Pay.
LONDON, Jan. 29
An extraordinary revelation of the financial affairs of the Cunard Company has been made in a special circular issued to shareholders regarding the suspension of the work on the new mammoth liner, the construction of which, it is stated, could be completed if the Government would grant reasonable help by way of a loan.

It is recalled that in past enterprises, the company received special treatment in the matter of finance, notably in the building of the Lusitania and the Mauretania, for which the Government granted a loan repayable in instalments [sic].

The company is convinced that, once the new liner has been built, she can be made to pay her way, despite what the Prime Minister (Mr. Ramsay MacDonald) recently stated to the contrary.

On this point the directors are explicit, as is indicated by the following quotations from the circular: -

"Your directors are firmly convinced that she is the right ship to build as well in the interests of the company as of the nation. They have never lost faith in the company's ability to operate her, either with the existing ships or later with a future sister ship. In such a manner as will enable her to pay her way; and, if opportunity is afforded, they will lay before the Government the facts upon which the company's schemes are based. Once such ships as this become possible they become inevitable, and as a matter of history in the North Atlantic it has been proved over and over again that it is the finest ship in the trade that gets the traffic, not only for its company but for its country. In other words, the fundamental basis of No. 534 - the present official name of the new liner - is purely economic.

The circular adds that the first of the new ships should be in service by 1934, unless the company makes a definite surrender of its paramount position and risks the transfer of English mails to foreign and faster ships. For some time after 1934 it would be possible to maintain the trans-Atlantic mail service effectively by "No. 534" and the existing tonnage, but, when the next replacement was due, the second ship would have to be of the same type, thus making it possible for two vessels to do the work of the three existing Empress liners. The directors are emphatic that in no circumstances would they consider building any other class of vessel, for to do so would be to engage in a losing hazard.


Some idea of the immense financial obligations of the Cunard Company is given by the following interesting information, gleaned from the circular. During the post-war years, from 1919 to 1930, depreciation to the extent of 15,267,287 has been written off the company's own ships. In the case of subsidiary companies figuring in the Cunard balance-sheet, depreciation has been dealt with on similar lines. During the post-war years the ship depreciation written off by the subsidiary companies has amounted to 16,133,000. During the period specified, the Cunard Company and its subsidiaries had paid over 6,000,000 in income tax. No receipts from the return of excess profits duty have been brought into the profit and loss accounts of the Cunard Company or the subsidiaries.  The agreement under which the Lusitania and the Mauretania were bulit terminated in 1927, when the last instalment [sic] was repaid with interest on the due date.

If the Government would extend similar assistance in respect of the new liner, work could proceed at an earlier date than would otherwise be possible.


That construction is suspended at present is not attributable to factors inherent in the North Atlantic trade nor to factors domestic to the company, but to international causes which are hampering the ordinary financial machinery of commerce, the circular adds. The keel of the new giant liner was laid in December, 1930. In the following year more than 1,500,000 was spent on construction, and work was begun on the ninth of the 11 decks. In addition to 3000 workpeople [sic] directly employed, it is estimated than [sic] 10,000 were indirectly affected by the suspension of the construction work.

Archives, University of Glasgow

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