The United States Shipbuilding Company was a short-lived

trust Trust often refers to: * Trust (social science), confidence in or dependence on a person or quality It may also refer to: Business and law * Trust (law), a legal relationship in which one person holds property for another's benefit * Trust (bu ...

made up of seven shipbuilding companies, a property owner and steel company. Its stocks and bonds were unattractive to investors, and several of its member shipyards were overvalued, conditions which brought down the company less than a year after it was formed in 1902. The company was replaced by the

Bethlehem Steel Corporation The Bethlehem Steel Corporation was an American steelmaking company headquartered in Bethlehem, Pennsylvania. Until its closure in 2003, it was one of the world's largest steel-producing and shipbuilding companies. At the height of its success ...

in 1904. At the turn of the 20th century,

John Willard Young John Willard Young (October 1, 1844 – February 12, 1924) was a leader in the Church of Jesus Christ of Latter-day Saints (LDS Church). He is one of the few individuals to have been an LDS Church apostle and member of the First Presidency wi ...

, a son of Mormon pioneer Brigham Young, Young’s Suit Reopens Shipbuilding Tangle
" New York Times, 1905-03-04.Henry Wysham Lanier,
One Trust and What Became of It
" The World's Work, Vol. VII, p. 4445 (Feb. 1904). promoted the idea that many leading American shipbuilding companies should form one gigantic combination.L. Walter Sammis,
The Relation of Trust Companies to Industrial Combinations, as Illustrated by the United States Shipbuilding Company
" Annals of the American Academy of Political and Social Science Vol. 24, p. 241 (1904). The United States Shipbuilding Company was the manifestation of that idea.

Robert Hessen Robert Hessen (September 1936 – April 15, 2024) was an American economic and business historian. He was a professor at the Graduate School of Business at Stanford University and a senior research fellow at Stanford's Hoover Institution. He ...

, " Steel Titan: The Life of Charles M. Schwab," 145-62 (1990) ("The U.S. Shipbuilding Company Scandal"), . Following this course, the enterprise's central designing office would apportion the shipbuilding work to the yard best suited to handle the project, therefore increasing competition with European shipyards."Ship-Yard Trust Launched To-Day," New York World, 1902-06-11, at 3. Although American shipbuilding was not considered a highly profitable venture,Arthur Stone Dewing,
Promotions and Reorganizations
" Vol 10 ch. XVII at p. 464 (Harvard Univ. 1914). the political environment seemed right for improvement. President

William McKinley William McKinley (January 29, 1843September 14, 1901) was the 25th president of the United States, serving from 1897 until Assassination of William McKinley, his assassination in 1901. A member of the Republican Party (United States), Repub ...

and his new Vice President,

Theodore Roosevelt Theodore Roosevelt Jr. (October 27, 1858 – January 6, 1919), also known as Teddy or T.R., was the 26th president of the United States, serving from 1901 to 1909. Roosevelt previously was involved in New York (state), New York politics, incl ...

, had endorsed federal subsidies for American shipbuilding industries, to compensate for the subsidies provided by European governments, but Congress had not yet approved such a measure. A renowned naval architect and public servant, Lewis Nixon, was chosen to lead the venture, and helped attract several major shipyards to participate. Unfortunately, however, "the one thing

he consolidated firms He or HE may refer to: Language * He (letter), the fifth letter of the Semitic abjads * He (pronoun), a pronoun in Modern English * He (kana), one of the Japanese kana (へ in hiragana and ヘ in katakana) * Ge (Cyrillic), a Cyrillic letter cal ...

lacked, individually and collectively, was a realistic prospect of earning sustained profits." Financially the corporation failed almost immediately. As one scholar would later write of this plan, "the theory was impossible; the condition was untenable; the trust, as it was manufactured, was impracticable; and the United States Shipbuilding Company was insolvent."

Groundwork

Young first obtained an option to purchase the

Newport News Shipbuilding and Drydock Company Newport News Shipbuilding (NNS), a division of Huntington Ingalls Industries, is the sole designer, builder, and refueler of aircraft carriers and one of two providers of submarines for the United States Navy. Founded as the Chesapeake Dry Dock ...

(of

Newport News, Virginia Newport News () is an Independent city (United States), independent city in southeastern Virginia, United States. At the 2020 United States census, 2020 census, the population was 186,247. Located in the Hampton Roads region, it is the List of c ...

), then approached Nixon, who was then the lessor of the

Crescent Shipyard Crescent Shipyard, located on Newark Bay in Elizabeth, New Jersey, built a number of ships for the United States Navy and allied nations as well during their production run, which lasted about ten years while under the Crescent name and banner. ...

Elizabethport, New Jersey Elizabeth is a City (New Jersey), city in and the county seat of Union County, New Jersey, Union County, in the U.S. state of New Jersey.prospectus was prepared for issue on May 7, 1901, but the actual issuance was withheld at the last moment because of what became known as the Northern Pacific "short squeeze" of 1901, a panic that occurred on that date. A news dispatch of that date described the proposed combination.May 7, 1901 dispatch, reprinted in "Ship Trust Sure: Capital of New Corporation $65,000,000 and Hydes on Board of Directors" Bath (ME) Independent, 1901-05-11 at 2. It described a combination that would include

Union Iron Works Union Iron Works, located in San Francisco, California, on the southeast waterfront, was a central business within the large industrial zone of Potrero Point, for four decades at the end of the nineteenth and beginning of the twentieth centuries. ...

(of

San Francisco San Francisco, officially the City and County of San Francisco, is a commercial, Financial District, San Francisco, financial, and Culture of San Francisco, cultural center of Northern California. With a population of 827,526 residents as of ...

Bath Iron Works Bath Iron Works (BIW) is a major United States shipyard located on the Kennebec River in Bath, Maine, founded in 1884 as Bath Iron Works, Limited. Since 1995, Bath Iron Works has been a subsidiary of General Dynamics, one of the world's largest ...

Bath, Maine Bath is a city in Sagadahoc County, Maine, United States. Bath is included in the Brunswick, Maine, Brunswick Micropolitan statistical area, micropolitan area. Bath has a 2024 population of 8,870. It is also the county seat of Sagadahoc County ...

, Hyde Windlass Co. (also of Bath), Crescent Shipyard, Samuel J. Moore & Sons Co. of Elizabethport, New Jersey, Canda Manufacturing Co. of

Carteret, New Jersey Carteret is a borough in northeastern Middlesex County, in the U.S. state of New Jersey. As of the 2020 United States census, the borough's population reached 25,326, its highest decennial count ever and an increase of 2,482 (+10.9%) from the ...

, and Newport News Shipbuilding and Drydock Co. All but Canda Manufacturing were shipyards, and Canda (which manufactured car wheels) reportedly owned a prime location near

Staten Island Staten Island ( ) is the southernmost of the boroughs of New York City, five boroughs of New York City, coextensive with Richmond County and situated at the southernmost point of New York (state), New York. The borough is separated from the ad ...

for construction of a new shipyard. Three months later, it was again announced (again prematurely) that the new corporation would be launched in a few days. This time, British arms manufacturer Vickers Sons & Maxim, which had acquired the

William Cramp & Sons William Cramp & Sons Shipbuilding Company (also known as William Cramp & Sons Ship & Engine Building Company) was an American shipbuilding company based in Philadelphia, Pennsylvania, founded in 1830 by William Cramp. During its heyday in late 19 ...

shipyard in

Philadelphia Philadelphia ( ), colloquially referred to as Philly, is the List of municipalities in Pennsylvania, most populous city in the U.S. state of Pennsylvania and the List of United States cities by population, sixth-most populous city in the Unit ...

, and the Bethlehem Ship & Armor Plate works were included on the published list of interests included in the corporation. Ultimately, Vickers stayed out of the venture. In September 1901, while the USSC was still just a concept, Roosevelt replaced the assassinated President McKinley. Roosevelt had crusaded against trusts, and his elevation created a hostile environment toward formation of combinations like USSC, marked by the Department of Justice's suit in February 1902 to prevent the formation of the

Northern Securities Company The Northern Securities Company was an American railroad trust formed in 1901 by E. H. Harriman, James J. Hill, J. P. Morgan and their associates. The company controlled the Northern Pacific Railway; Great Northern Railway; Chicago, Burlington ...

railroad trust. Meanwhile, federal shipyard subsidy legislation stalled in Congress.

The 1902 rollout

By the time that a prospectus for USSC was formally issued in June 1902, Newport News and Vickers Sons & Maxim were no longer listed as participating interests, but Harlan & Hollingsworth Co. of

Wilmington, Delaware Wilmington is the List of municipalities in Delaware, most populous city in the U.S. state of Delaware. The city was built on the site of Fort Christina, the first Swedish colonization of the Americas, Swedish settlement in North America. It lie ...

, and Eastern Shipbuilding Company of

New London, Connecticut New London is a seaport city and a port of entry on the northeast coast of the United States, located at the outlet of the Thames River (Connecticut), Thames River in New London County, Connecticut, which empties into Long Island Sound. The cit ...

were now included.The Shipyard Combine
" New York Times, 1902-06-11 at p. 1. The June 1902 prospectus stated, among other things, that the USSC had been organized under the laws of the

State of New Jersey New Jersey is a state located in both the Mid-Atlantic and Northeastern regions of the United States. Located at the geographic hub of the heavily urbanized Northeast megalopolis, it is bordered to the northwest, north, and northeast ...

and described as its directors Nixon, Henry T. Scott (president of Union Iron Works), Charles J. Canda (president of Canda Manufacturing Co.), John S. Hyde (president of Hyde Windlass Co.), E. W. Hyde (president of Bath Iron Works), and Irving M. Scott (Vice President and General Manager of Union Iron Works). In fact, incorporation had not yet occurred, and the board had not yet been constituted. Once the company was organized several months later, only four of those mentioned in the prospectus as directors ever served as directors. The prospectus also stated that the plants were earning $2.25 million for a year and had abundant facilities for additional work and increased earnings. Even with positive representations in the prospectus, however, the public purchased less than $500,000 of the $9 million in bonds offered for sale, and foreign underwriters offered no cash, only promises (that were ultimately never honored). Eager to make the USSC more attractive to investors but facing a huge shortfall in funds, the promoters turned to

Charles M. Schwab Charles Michael Schwab (February 18, 1862 – September 18, 1939) was an American steel magnate. Under his leadership, Bethlehem Steel became the second-largest steel maker in the United States, and one of the most important heavy manufacturer ...

, then president of

United States Steel The United States Steel Corporation is an American steel company based in Pittsburgh, Pennsylvania. It maintains production facilities at several additional locations in the U.S. and Central Europe. The company produces and sells steel products, ...

, to discuss USSC acquiring Bethlehem Steel Company (which at the time was more sound than the shipyards already in the combination). With little cash to offer for Bethlehem (then held by a

J.P. Morgan JP may refer to: Arts and media * ''JP'' (album), 2001, by American singer Jesse Powell * ''Jp'' (magazine), an American Jeep magazine * '' Jönköpings-Posten'', a Swedish newspaper * Judas Priest, an English heavy metal band * ''Jurassic Pa ...

syndicate), the promoters instead proposed to pay for the acquisition with $7.2 million in cash and $2.5 million in USSC stock issued against the plants themselves. The cash came from Schwab, who furnished it on conditions that were highly favorable to him. By bringing Bethlehem into the combination, however, USSC could send a message to potential investors that Morgan was now behind the overall venture, and claim to be the world's only company capable of building a battleship complete with armament, armor and all equipment. In August 1902 USSC purchased the Union, Bath, Hyde Windlass, Crescent, Moore, Eastern, Harlan & Hollingsworth shipyards, the Canda Manufacturing company, and the capital stock of Bethlehem Steel. The

par value In finance and accounting, par value means stated value or face value of a financial instrument. Expressions derived from this term include at par (at the par value), over par (over par value) and under par (under par value). Bonds A bond selli ...

of these transactions totaled $69.5 million – yet (with the exception of Bethlehem Steel) the total value of the companies was appraised at less than $12.5 million. It soon became clear that the Bath, Crescent, Moore, Eastern, and Harlan & Hollingsworth shipyards were deeply indebted, and that the new trust lacked the ability to meet charges arising from the bond issuance. The goal of organizing a huge trust had been accomplished, but the result was doomed to fail, because from the start it was "already a water-logged wreck." The promoters were immediately forced to personally borrow $1.5 million from New York banks, to make up for cash that never arrived from foreign subscribers. USSC's problems brought down the Trust Company of the Republic, which had placed its own future on the line when arranging USSC's financing, by purchasing the largest share of bonds. In September 1902, when Young was in France in a futile attempt to convince subscribers to invest, Ann Pulitzer, a former prostitute, was murdered in his New York apartment. His son William Hooper Young, who had been living there, eventually pleaded guilty to second-degree murder. Prosecutors accepted the plea and dropped first-degree murder charges because of evidence that Hooper Young was mentally ill.

The collapse

Schwab took control of USSC within a year of its incorporation, but USSC's mortgageholders soon forced it into

receivership In law, receivership is a situation in which an institution or enterprise is held by a receiver – a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights" – especia ...

. A federal court appointed former U.S. Senator

James Smith Jr. James Smith Jr. (June 12, 1851April 1, 1927) was a newspaper publisher and U.S. Senator from New Jersey. A leader of the Irish Catholic community, he was the Democratic party boss who sponsored Woodrow Wilson to the governorship in 1910. Biog ...

as the receiver. The company was replaced by the

, in 1904.

Aftermath

One of USSC's first actions was to close Nixon's Crescent Shipyard. By then, Nixon had re-entered the shipbuilding business by leasing a yard in

Perth Amboy, New Jersey Perth Amboy is a city (New Jersey), city in northeastern Middlesex County, New Jersey, Middlesex County, in the U.S. state of New Jersey, within the New York metropolitan area, New York Metro Area. As of the 2020 United States census, the city' ...

. In 1905 John S. Hyde, son of the founder of the Bath Iron Works, purchased the Iron Works and Hyde Windlass Co. from the surviving company, which had bought the companies out of the receivership. It flourished as a supplier of major ships to the U.S. Navy. Bethlehem Shipbuilding and Steel repurchased and kept for itself the Union Iron Works in San Francisco and the Harlan & Hollingsworth Co. shipyard in Delaware (and began purchasing other shipyards). The name of the Delaware operation changed from Harlan & Hollingsworth to the Harlan Plant of Bethlehem Steel. That shipyard closed in 1926, although it was reopened for a time during the

Second World War World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...

and part of the shipyard was used by the

Dravo Corporation Dravo Corporation was an American shipbuilding company with shipyards in Pittsburgh, Pennsylvania, Pittsburgh and Wilmington, Delaware. It was founded by Frank and Ralph Dravo in Pittsburgh in 1891. The corporation Initial public offering, went pub ...

until 1964. Litigation arising from USSC's collapse continued for many years, as various victims sought relief against alleged wrongdoers. Plaintiffs in such suits included former

New York Governor The governor of New York is the head of government of the U.S. state of New York. The governor is the head of the executive branch of New York's state government and the commander-in-chief of the state's military forces. The governor ha ...

Benjamin Barker Odell Jr., railroad president John Caldwell Calhoun (grandson of the former vice president of the same name), and John W. Young, originator of the idea. In 1915, Smith (whose own financial enterprises had collapsed) was suing Schwab for fees allegedly owed him from his USSC receivership. In 1918, New York's highest court ordered a retrial of claims by shareholders of the Trust Company of the Republic against railroad president George Gould, a member of its board of directors who failed to attend any of the meetings where key votes were cast. On remand, the court ruled against Gould, and entered a $723,583 judgment against him in September 1919.G.J. Gould Loses Big Suit
" New York Times, 1919-09-05.

References

{{Authority control Defunct shipbuilding companies of the United States Manufacturing companies established in 1902 Manufacturing companies disestablished in 1903 American companies established in 1902 1903 disestablishments in New Jersey American companies disestablished in 1903 Defunct manufacturing companies based in Virginia Defunct manufacturing companies based in New Jersey