United States Shipbuilding Company

The United States Shipbuilding Company was a short-lived trust 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’s failure enabled Bethlehem Steel to become Bethlehem Shipbuilding & Steel Company.

At the turn of the 20th century, John Willard Young, a son of Mormon pioneer Brigham Young, promoted the idea that many leading American shipbuilding companies should form one gigantic combination. The United States Shipbuilding Company was the manifestation of that idea.

Under that idea, the enterprise's central designing office would apportion the shipbuilding work to the yards best able to take it, to better compete with European shipyards. Although American shipbuilding was not considered a highly profitable venture, the political environment seemed right for improvement. President William McKinley and his new Vice President, Theodore Roosevelt, 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 to attract several major shipyards to participate.

Unfortunately, however, "the one thing [the consolidated firms] 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.”

Young first obtained an option to purchase the Newport News Shipbuilding and Drydock Company (of Newport News, Virginia), then approached Nixon, who was then the lessor of the Crescent Shipyard in Elizabethport, New Jersey. Nixon agreed to work with Young in forming the proposed combination, and granted him an option on his own plant. They then obtained options to purchase other shipbuilding companies. Working with a cotton industry bank known as the Trust Company of the Republic, they sought out underwriters, and planned to issue stock and sell bonds, in order to provide the funds to buy the plants and then operate them at a profit.

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