Under Two Flags

Last week the world's only ship to fly the flag of Palestine was in Greek waters on her maiden trip from Haifa to Trieste when the Greek revolution enveloped her like a dark cloud. What chiefly worried the Jewish crew and captain of the 10,000-ton Tel Aviv ("Hill of Spring") was not the revolution, however, but the behavior of a tall, lean-faced man who paced nervously up & down the promenade deck, wandered disconsolately between the kosher kitchen and the ship's synagog. Tel Aviv's owner, President Arnold Bernstein of Palestine Navigation Co., was impatient to get ashore, hurry to Paris for the annual spring meeting of the North Atlantic Passenger Conference (of which he was not a member) to discuss steamship rates.

Eager as he was to be in Paris, Arnold Bernstein was not half so anxious as the Conference was to have him there. Meeting behind closed doors in their swank offices, the grave-faced members had good cause for anxiety. In three short years this handsome, affable German Jew had grown from a minor competitor to a major menace. As the principal owner of Arnold Bernstein Line, biggest of the transatlantic independents, he had more than held his own against an international shipping combine by the simple method of selling transportation cheaper than anyone else. Hugely successful at 45, he had bought Red Star Line lock, stock & barrel from International Mercantile Marine for $1,000,000 last month after practically running that 61-year-old concern off the sea with his cut rates (TIME, Feb. 18). Now that he had added the Pennland and Westernland to his fleet, he might do the same to other old-established lines.

Conference members fumed at his absence, threatened to bolt all agreements, start a rate war to the finish unless Bernstein was brought into line. But how could he be brought into line when he was not even present? Frantic messages were sent to Bernstein's Hamburg headquarters, demanding his whereabouts. Hamburg reported Tycoon Bernstein "missing." Hopping mad, the Conference voted to postpone further meetings until Herr Bernstein arrived in Paris.

The strangest thing about Arnold Bernstein is that he operates equally well on either side of the Nazi v. Jew fence. While his Tel Aviv flies the red shield of Palestine on its Union Jack, his Red Star and Bernstein Line ships fly the black swastika of Germany. Only important Jewish shipping man left in Hitler's Reich, he enjoys government protection chiefly because of his distinguished War record, which included an important artillery command on the Western Front and the Iron Cross, first class. Soon after the War this Saxon-born son of a well-to-do shipping broker decided to go into business for himself. Backed by friends' money, he bought a dozen British freighters grown rusty in the Australia trade, reconditioned them as automobile transports. He installed high-speed elevators in his ships, similarly equipped his docks at Antwerp and Weehawken, N. J., carried nothing but uncrated automobiles, saved exporters up to $300 per car. As automobile exports from the U. S. mounted, Arnold Bernstein Line prospered mightily until he had a 65% monopoly in that branch of foreign trade.

Tycoon Bernstein lives in Hamburg with his wife and two children, plays golf often and well, visits the U. S. every spring and autumn for a month. Transatlantic competitors watched his maritime growth with envy, did not really begin to worry until three years ago when he decided to go into the passenger business. From his 14 ships, all named after Saxon castles, he chose three of the biggest and best, had them rebuilt as combined passenger & automobile transports in the New York-Antwerp trade, with stops at Southampton and Havre. The 16,000-ton Koenigstein was equipped to carry 300 passengers, the 14,000-ton Ilsenstein and Gerolstein 180 each. All three could still carry 450 cars apiece as against the 600 they carried as freighters. When tourists found they could go to Europe and back for a flat rate of $150, take their cars along for $120, they pack-jammed the Bernstein ships.

Tycoon Bernstein splashed full-page advertisements in the travel sections of newspapers, took additional pages in the Sunday magazine sections, book review sections, shiny-paper magazines. His ships boasted neither luxury nor speed--all are ten-day boats--but they did offer cheap, clean, comfortable accommodations, efficient service, friendly informality. Food was simple but wholesome and abundant, with German dishes a specialty. All cabins were amidships, all had hot & cold running water, nearly all were outside, none had more than two beds. Just as on big ships, passengers could dance, play deck games, swim in a canvas pool, lounge in the smoking-room, bar, library, veranda cafe.

Last week Arnold Bernstein finally got ashore from the Tel Aviv, hopped a Paris express, turned up at the North Atlantic Passenger Conference. There the No. 1 independent was welcomed with open arms into the tight little autocracy which rules the North Atlantic. After the doors of the conference opened, it was announced that Member-elect Bernstein had agreed to up his rates $2.50 one-way, $5 round-trip for the Koenigstein, Ilsenstein and Gerolstein, charge a minimum of $115 one-way, $207 round-trip for his 16.000-ton German Red Star Liners Pennland and Westernland.*

But Owner Bernstein was soon to receive a rude jolt. The North Atlantic Freight Conference, meeting in Manhattan, refused him membership on the ground that he had violated an agreement by buying Red Star Line and thus entering the general cargo field. With threats of a freight rate war on the horizon, bewildered Arnold Bernstein cabled a protest to the U. S. Shipping Board Bureau, felt sure the new "misunderstanding" would be straightened out, planned to travel to the U. S. next month.

*Making her first trip from Antwerp under Bernstein ownership last week, the Pennland arrived at Hoboken without a single passenger aboard. Pending an agreement with the Conference, the line had refused to sell reservations, took a loss rather than start a rate war.

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