Category Archives: Shipping

Magnate personality: John Ellerman

How did John Ellerman become the richest man in Britain?

Early life
John Reeves Ellerman (1862 – 1933) was born in Hull, a large port town on the Yorkshire coast. He was the son of Johann Herman Ellerman (1819 – 1871), a shipbroker and corn merchant who had emigrated from Hamburg in the 1840s.

John Reeves Ellerman (1862 – 1933)

His father died in 1871, and left a relatively modest estate of £600. Ellerman spent much of his childhood in Caen in Normandy, before being educated at the King Edward VI School in Birmingham. Ellerman reportedly commented, “if I had gone to a public [fee-paying] school I should never have got so far in business”.

Ellerman inherited around £14,000 from his maternal grandfather in 1879, and used the money to train as a chartered accountant under William Smedley of Newhall Street, Birmingham. Smedley, a “Victorian eccentric”, was a successful speculative investor, and almost certainly inspired the young Ellerman.*

Ellerman subsequently became an accountant at Quilter Ball & Co, headed by Sir Cuthbert Quilter (1841 – 1911), one of the great accountants of the era. Quilter regarded Ellerman as one of the most promising accountants he had ever employed. Ellerman was offered a position as partner, but declined in order to establish himself independently.

J R Ellerman & Co, accountants of Moorgate Street in the City of London, was established in 1887. Ellerman soon enjoyed an annual income worth thousands of pounds.

Shipping interests
Frederick Richards Leyland (1832 – 1892), owner of the Leyland shipping line, died suddenly in 1892. Ellerman capitalised on the opportunity, and with a group of investors including Christopher Furness (1852 – 1912), acquired the line for £770,000. This was a shrewd acquisition, as company profits during the previous four years had averaged £121,159.

The new company had a share capital of £450,000. The assets acquired were excellent, and the modern fleet boasted a gross tonnage of 60,511. Existing management was continued.

Hard work, shrewdness and good luck would see Ellerman amass great wealth. He divested his accountancy business in order to focus on capital investment from 1896. Ellerman was the first prominent investor to have received formal accountancy training, and this was to afford him a significant advantage with regards to financial and legal knowledge.

The Leyland shipping line was sold to J P Morgan (1837 – 1913) in 1901. Ellerman gained £1.2 million in cash for his stake, a sale that represented a 33 percent premium over market prices.**

Ellerman established the London, Liverpool and Ocean Shipping Company with a share capital of £1.3 million. He invested a capital of £500,000.

Ellerman acquired the Leyland Mediterranean fleet of eleven vessels. He also acquired the Papayanni Steamship Co of Liverpool. Both assets were significantly undervalued. These businesses formed the basis of the Ellerman shipping line.

Ellerman then acquired the City line, which ran between Glasgow and the West Indies, and controlled 400,000 tons of shipping, for an estimated £1 million.

Later in 1901 Ellerman acquired the Hall line and the Westcott and Lawrence line (with nine steamers and a gross tonnage of 15,000 tons).

Ellerman extends his interests to include brewing and the media
Ellerman was a quiet, unassuming figure. He spent just five percent of his income, and reinvested the remainder. TIME magazine described his lifestyle as one of “almost miserly simplicity”. According to his daughter, Ellerman was not materialistic, “he was a mathematician, and his interests were in abstractions”.

Ellerman paid great attention to the smaller details of business. He was remarkable for his kindness in offering advice towards those who sought it. He retained the most highly-skilled managers from the businesses he acquired, and respected the decisions that they made when he was absent.

Ellerman identified the brewing industry, with the exception of the global brands of Bass and Guinness, as stagnant. Perceiving the industry as undervalued, he began to invest in breweries from 1897.

Ellerman became the largest shareholder in the Financial Times and one of the largest shareholders in the Daily Mail in 1904.

Ellerman was created a baronet in 1905.

Ellerman acquired the Bucknall line, which had 28 vessels and a large freight trade with South and East Africa, in 1908. Following the purchase Ellerman controlled 108 vessels with a combined tonnage of over 420,000.

Ellerman became the third largest shareholder in The Times in 1912. He also acquired the Sphere and Tatler. Ellerman acquired over a third share of the Illustrated London News and Sketch in 1913.

Ellerman rendered valuable assistance to the Ministry of Shipping during the First World War. He also equipped and maintained the Ellerman Hospital at St John’s Lodge, Regent’s Park, London.

Ellerman was the richest man in Britain by 1916, worth, at his own estimate, £20 million. His income that year was estimated at £3 million.

Ellerman made his most significant purchase with the acquisition of Thomas Wilson & Co of Hull for £4.1 million in 1916. Thomas Wilson & Co was the largest privately-owned shipping line in the world, with a fleet of 70 ships.

Ellerman controlled 204 vessels following the Wilson & Co acquisition, representing one eighth of British mercantile shipping. Unfortunately, the Wilson purchase was to prove a rare misstep for Ellerman, due to a slump in global shipping following the First World War.

Ellerman was extremely shy of publicity. He sold his house in Eastbourne in the early 1920s after double-decker buses were introduced which would have allowed passengers to glimpse a view of his home.

Ellerman sold his controlling interest in the St Clement’s Press, owner of the Financial Times, to the Berry brothers in 1919. He sold his holding in The Times to John Walter and John Jacob Astor (1886 – 1971) in 1922.

Ellerman divested his illustrated newspapers, which included the Sphere, Tatler and Eve to the Inveresk Paper Company for around £3 million in 1926.

Ellerman controlled over two million tons of shipping and was the third largest owner of shipping in the world in 1927.

The Inland Revenue privately assessed Ellerman as easily the richest man in Britain in 1929, with a fortune valued at more than twice that of the next wealthiest individual.

Ellerman died in 1933 with a British estate valued at £36,684,994, equivalent to around £20 billion in 2022 prices. Death duties amounted to around £18 million. It was estimated that Ellerman paid between £17 million and £20 million in wealth taxes during his lifetime.

Notes

  1. The Heart To Artemis, Bryher (1963).
  2. ‘J P Morgan in London and New York before 1914’ by Leslie Hannah (2011).

Ship’s set sail: Irvine’s Shipbuilding Co

Irvine & Co, along with William Gray & Co, helped make West Hartlepool a major centre for British shipbuilding.

Irvine Currie & Co, shipbuilders, was founded at Hartlepool by Robert Irvine (1824 – 1903) and Alexander Currie in 1863. The first vessel, an iron screw steamer, was launched in 1864. Robert Irvine took full control of the company from 1866.

Robert Irvine was succeeded in management by his son, Robert Irvine Jr (1845-1901), from 1880. By this time the firm was better known for ship-repairing than shipbuilding. An average of 300 workmen were employed.

The firm was acquired by Christopher Furness (1852 – 1912) in 1887, and renamed the Irvine Ship Building and Dry Docks Company Ltd.

Christopher Furness (1852 – 1912) in 1902

Irvine’s yard was struck by fire in 1891, with damage estimated at £20,000.

The yard was considerably extended in 1897 to enable it to construct steamers of 10,000 tons deadweight. There were three large berths, and the yard employed around 1,000 men.

Robert Irvine died in 1903 and his estate was valued at £104,238.

Irvine & Co had the capacity to construct 24 steamers per annum in 1908. The Furness Withy shipyard at Middleton, Hartlepool, was acquired in 1909.

In 1911 Irvine & Co was the eighth largest shipbuilder in Britain, as measured by gross tonnage. Irvine & Co built twelve ships a year during the First World War.

The company was acquired by the Commercial Bank of London, led by Clarence C Hatry (1888 – 1965), in 1917. The company prospered during the First World War, but had to reduce its capital in 1920 following a depression in the shipbuilding industry.

The company employed 3,000 employees by 1922. The yard covered eleven acres.

The last Irvine-built vessel to use the dry dock was in 1924. The shipbuilding yard was closed in 1925-6. The company entered receivership in 1926.

Capital was further reduced from £740,000 to £157,000 in 1929. The company entered into liquidation in 1930 after accruing excessive debts.

Later that year the yard received a reprieve when it was acquired as a going-concern by a syndicate of West Hartlepool businessmen, led by Stephen Furness, with a capital of £20,000. The plan was to maintain the yard with repairing and breaking contracts until the shipbuilding industry revived.

Unfortunately Britain had an oversupply of shipyards, and in 1938 the yard was nationalised by the government and mothballed.

Attempts to reopen the yard during the Second World War were unsuccessful due to a shortage of labour. It was found to be more efficient to simply increase production at existing shipyards.

A Wear we go: William Doxford

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