By James Heinz
(Steinbrenner Story – Chapter Twelve)
Some of the information in this section comes from the book “Freshwater Whales: A History of the American Shipbuilding Company” by Richard C. Wright.
George III also had new ships built for Kinsman, including the PAUL THAYER and the WILLIAM R. ROESCH, which were built for a contract with Jones and Laughlin Steel. And where did George build these ships? In the same shipyard that his great grandfather Nutty Philip Jacob Minch I had founded and passed to his son Peter Minch.
As noted above, Nutty Phil had been one of the founders of the Cleveland Shipbuilding Company. As Wikipedia tells us: “It started as Cleveland Shipbuilding in Cleveland, Ohio, in 1888 and opened the yard in Lorain, Ohio, in 1898. It changed its name to the American Ship Building Company in 1900, when it acquired Superior Shipbuilding, in Superior, Wis.; Toledo Shipbuilding, in Toledo, Ohio, and West Bay Shipbuilding, in West Bay City, Mich. With the coming of World War I, the company also acquired Buffalo Dry Dock, in Buffalo, New York; Chicago Shipbuilding, in Chicago, Ill; and Detroit Shipbuilding, in Wyandotte, Mich.”
A list online at: http://shipbuildinghistory.com/shipyards/large/amshiplorain.htm lists 909 ships built by Cleveland Shipbuilding/American Shipbuilding at either Cleveland or Lorain.
Some of these ships became the most famous in the history of the Great Lakes. In addition to the WESTERN RESERVE and the GILCHER, the yard built the ARTHUR M. ANDERSON, CARL D. BRADLEY, the car ferry MILWAUKEE, the MILWAUKEE CLIPPER, the icebreaker MACKINAW, and all 6 of the American freighters lost in the Great Storm of 1913.
How the Minch/Steinbrenner family became disassociated from the company is not clear. But by 1967 no one in the family apparently had any involvement with AmShip.
In 1967 a group of New York investors who owned a considerable share of stock in AmShip approached a Cleveland broker named Thomas Roulston. The New Yorkers were concerned that AmShip wasn’t doing well and asked Roulston if he knew anyone who would make a good CEO and turn Amship around.
Roulston had already loaned George III the $10,000 he needed to buy control of Kinsman Transit from his father. Roulston was impressed by George III’s performance in turning around Kinsman and recommended him for the position. George III insisted that AmShip acquire Kinsman, which was rejected.
Roulston assembled a group of investors who enabled George III to buy 470,000 of the 1,197,250 outstanding shares of AmShip. This enabled him to take control of the company. George III became CEO of AmShip on October 11, 1968. In February 1968, AmShip bought the four ship Buckeye Steamship Company. On June 11, 1968, AmShip bought Kinsman, which at that time owned 8 ships. Kinsman then became the operating subsidiary for ships owned by AmShjp. In 1976 Kinsman was renamed the Pringle Transit Company.
Golenbrock says that George III brought in his father to run the shipyard, and sold Kinsman to two associates, but later somehow brought it back into Steinbrenner family ownership.
Just as he had done with Kinsman, George III revitalized the company. Fifteen days after being named CEO, AmShip announced a $20 million contract with US Steel to build a revolutionary self-unloading bulk carrier called the ROGER BLOUGH, whose keel was laid September 3, 1968.
George III anticipated 5 to 7 orders for similar new ships in the coming years. He was quoted as saying, “the shipyard that gets the first order for a new class of ships has a huge start in the competition to land more orders, and now we are off and running.”
Fortune magazine agreed. In 1968 the magazine named George III one of America’s young “Movers and Shakers” as a result of his success.
And that is why George Steinbrenner III was at the American Shipbuilding Yard in Lorain in 1971 when the ROGER BLOUGH caught fire. He owned the shipyard.
In five years, George III increased AmShip’s revenues from $46.9 million in 1967 to $73.7 million in 1972. In 1972, American Ship Building became the largest grain carrier on the Great Lakes when it bought out its major competitor, Wilson Marine Transit Co. In the early ’80s, the Associated Press valued American Ship Building at $200 million.
In 1973, AmShip launched the PAUL THAYER. She was a steel self-unloader of 13,503 tons and is 612 feet long and 68 feet wide. In 1975, she was sub chartered from Kinsman to the Pringle Transit Company, a division of Oglebay Norton.
Just in time for Kinsman Transit to go out of business.
In 1975, all 12 ships of the Kinsman Transit Company were sold to S & E Shipping, which did business as Kinsman Lines. In 1975, the THAYER was renamed EARL W. OGLEBAY and was sold to Oglebay Norton in 1999. She was renamed EARL W in 1995. In 2006 she was sold to the Wisconsin & Michigan Steamship Line. In 2008 she was sold to Lower Lakes Towing Company and renamed MANITOWOC.
The WILLIAM R. ROESCH is a sister ship of the THAYER, being launched the same year and passing through the same owners. In 1995 she was renamed DAVID Z. NORTON. Her life has been uneventful except in 1999 when the Coast Guard seized three slot machines and two video poker machines from a storage room on the NORTON.
A crew-member had brought them on board for the crew’s amusement with the captain’s knowledge. The company said no one would be fired since it was unclear if any law had been broken.
One reason for the sale of these ships is that George III had been too successful in building up Kinsman Marine Transit into the largest independent shipping company on the Lakes. In 1973 the U.S. Justice Department issued an order limiting the size of the Kinsman fleet to 20 ships on the basis of anti-trust legislation.
The order, later confirmed by a U.S. District court, allowed George III to purchase the entire Wilson fleet as long as he sold three of their ten ships to someone who did not operate ships on the Great Lakes. The order stated: “For six years the size of the Kinsman fleet will be strictly regulated and for five years the fleet will not be permitted to increase the number of vessels operated.” This necessitated the sale of many Kinsman vessels.
There was one other thing that George III did that helped turn around his companies, although it would ruin him personally.
Golenbock explains: “In 1936 a bill was passed benefitting shipowners on the East and West coasts. The subsidy law guaranteed Title XI mortgages and put them in a capital construction fund. Tax was deferred, and the money saved was used to build new ships. The owners could also depreciate the vessels.”
“Were the Great Lakes shipbuilders able to gain an equal recognition, the business interests, including the union, could obtain tax advantages that were being enjoyed by shipbuilders on the East and West coasts. The purpose of the bill was to encourage shipbuilding on the Great Lakes.”
George III desperately wanted to see Congress pass the Merchant Marine Act of 1970 to recognize the Great Lakes as a seacoast and extend these advantages to Great Lakes shipbuilders. In order to do that George had to go into politics.
It did not go well.
Although a lifelong Republican, George III proved able to work on both sides of the aisle as he lobbied Ted Kennedy and Richard Nixon for passage of the bill. But George III knew that politicians needed more than just talk to motivate them to pass a bill.
They needed money.
And George III decided to give it to them. Being George III, he couldn’t just do things the legal way. He was already in trouble for anti-trust violations for buying Great Lakes Towing and possibly for buying the companies that supplied his stevedores as well as being too successful in driving out the competition.
George III gave eight of his senior executives unexpectedly large “bonuses” of $5,000 each from the AmShip checking account. The executives in turn paid the taxes on these bonuses, and then contributed $3,000 to one of the political parties, in 1972 to the Democrats and in 1974 to the Republicans. This was illegal at the time, since it was a thinly disguised way to get around campaign finance law that forbade corporations from contributing to political campaigns.
Why he did this remains a mystery. George III contributed $75,000 of his own money and also gave $100,000 to Nixon’s Committee to Re-Elect the President, or CREEP. He could have easily donated in his own name the money he gave to his executives.
When the eight AmShip employees were caught, George III told them to “stonewall.” Unfortunately, in 1974 Richard Nixon had to resign the presidency because of his own stonewalling in the Watergate scandal, and stonewalling was no longer in vogue. When George II himself was caught, at first he stonewalled, then he blamed his lawyer, and then Richard Nixon.
Instead of pleading guilty and accepting a misdemeanor conviction, George III decided to fight it out in court but then ended up pleading guilty to a felony anyway. He literally could not have handled it worse and he never got over the stigma of being a convicted felon.
In 1973 George III and a group of investors bought the New York Yankees baseball team. More on that later.
In the words of the New York Times: “In November 1974, (Baseball) Commissioner Bowie Kuhn suspended him for two years — a term later reduced to 15 months — after he pleaded guilty to two charges, one a felony and the other a misdemeanor: conspiring to make illegal corporate contributions to President Richard M. Nixon’s 1972 re-election campaign, and trying to “influence and intimidate employees” of his shipbuilding company to lie to a grand jury about the matter. He was fined $15,000 in the criminal case but given no jail time.”
Photo at the top: WILLIAM R. ROESCH in the St. Marys River, July 1983, photo by Robert Campbell
NEXT: THE DEATH OF AMERICAN SHIPBUILDING
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James Heinz is the Wisconsin Marine Historical Society’s acquisitions director. He became interested in maritime history as a kid watching Jacques Cousteau’s adventures on TV. He was a Great Lakes wreck diver until three episodes of the bends forced him to retire from diving. He was a University of Wisconsin – Milwaukee police officer for thirty years. He regularly flies either a Cessna 152 or 172.
GEORGE STEINBRENNER, GREAT LAKES SHIP OWNER – Chapter One
THE WRECK OF THE WESTERN RESERVE – Chapter Two
NUTTY PHIL AND THE WRECK OF THE ONOKO – Chapter Three
SOPHIA MINCH AND THE WRECK OF THE SOPHIA MINCH – Chapter Four
HENRY STEINBRENNER I, GORDON LIGHTFOOT, AND THE WRECK OF THE HENRY STEINBRENNER I – Chapter Five
THE WRECK OF THE ANNA C. MINCH – Chapter Six
HENRY STEINBRENNER II AND THE SHIPWRECK THAT BECAME A SHIP AGAIN – Chapter Seven
AN OLDIE BUT A GOLDIE: HENRY STEINBRENNER II AND THE J. B. FORD – Chapter Eight
HENRY III AND GEORGE STEINBRENNER III: LIKE FATHER LIKE SON – Chapter Nine
KINSMAN TRANSIT IS IN TROUBLE – Chapter Ten
GEORGE III SAVES KINSMAN TRANSIT – Chapter Eleven
GEORGE III SAVES AMERICAN SHIPBUILDING – Chapter Twelve
