6 - The Effects of the Conference System

Summary

Sir Alfred Jones

Alfred Jones’ success in promoting Elder Dempster's interests led almost inevitably to an enhancement of his own personal situation, and ultimately to a knighthood. When he gained control of Elder Dempster in 1884 the Company managed the British and African Steam Navigation Company, but had only a working arrangement with its principal competitor, the African Steam Ship Company. By 1890 Jones had secured the management of the latter firm and from that time onward the two British shipping firms worked as a single integrated unit under his leadership. This achievement, however, was not sufficient to satisfy his ambitions. It was possible, though highly unlikely, that at some future date one or other of these companies might wish to change its manager. To guard against this eventuality, and also to share in the prosperity he was striving to ensure, Jones decided to seek power within the two lines. By 1900 his efforts had begun to bear fruit.

In the case of the African Steam Ship Company Jones pursued a policy of systematically buying its shares when they came on to the market. At the turn of the century he owned sufficient stock to preclude the possibility of any change being made and by the time of his death in 1909 he owned 26,328 of the Company's £20 ordinary shares. (i.e., seventy-five percent of the issued capital).

Jones handled the British and African Steam Navigation Company in a different way. He made no attempt to buy their shares and from 1884 to 1900 his holdings in the Company were purely nominal. Then in 1900 he bought the firm, complete with its fleet, for £800,000. Jones did not possess anything like this amount of cash, but Elder Dempster did own many ships, and he used these to give him the capital he required. His method of operation is very interesting, and well worth revealing. Acting through Elder Dempster he made an agreement to buy the British and African Steam Navigation Company Limited. He then set up a new concern, calling it the British and African Steam Navigation Company (1900) Limited and the new firm offered 4½ percent debentures to the public to the value of £800,000.