Saved by RFC

By a lifeline's breadth, the best-known U.S. shipping company last week was pulled out of a bad financial mess. In its 39-year history, International Mercantile Marine Co. has carried more passengers than any other U.S. line, operated crack ocean greyhounds like the Leviathan, Washington, Manhattan, America. But last week, with a $11,469,000 bond issue due Oct. 1, I.M.M. did not have nearly enough cash to meet it. Suddenly RFC jumped in, lent I.M.M. enough to pay off the entire issue.

RFC drove a hard bargain. The agency had already said I.M.M. must : 1) recapitalize; 2) dissolve two big subsidiaries; 3) allow RFC to keep tabs on the compensation of all officers, directors and employes; 4) make no dividend payments until the loan is repaid; 5)put up all the stock of United States Lines (I.M.M.'s fattest subsidiary) as collateral.

RFC had reason to be severe. I.M.M. management has been under fire for years. Last June a stockholders' suit brought by Paul Wadsworth Chapman (one of the founders of U.S. Lines) was settled for $750,000. Chapman charged, among other things, that I.M.M. had given Tide Water Associated Oil an over-juicy contract to supply its oil. In the settlement, Tide Water agreed to forego $375,000 in accrued dividends. He further charged that in the early '30s, U.S. Lines contracted away its operating division to a concern headed by Kermit Roosevelt, son of T. R. Kermit's company was paid $910,608 in fees in three years, but I.M.M. did the work.

I.M.M. spent the whole 1931-40 decade in the red, rolled up a balance sheet deficit of $27,000,000. Now the deficits are probably over. Although it lost seven ships (owned by a Belgian affiliate) to Nazi torpedoes, four crack liners to the Army and Navy, it will have at least 23 new money-making freighters to more than fill the hole. In the first half of this year, I.M.M.'s U.S. Lines cleared over $2,000,000, against only $371,000 last year.

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