The economic impact of the Titanic’s sinking….

If you think the movie Titanic was merely a work of fiction, then you better get ready for a rethink. That movie was a figment of reality. The largest ship of their time sunk, carrying with it humans, property, and years of blood and sweat worth hundreds of millions of dollars.

Image ref: History Channel

It was 1912, when the world stood in awe of the biggest ship yet, built at an estimated cost of $7.5 million in 1912, which today would cost roughly $400 million to construct.

Building a ship like the Titanic was not something that happened overnight. It took two years and two months to complete. Inside the ship was “turn-of-the-century” designs and high-end technology. All of these fancy things cost a lot of money to have on board. It was planned that in the long run, the ship would make plenty of money. The White Star Line, owners of this massive sea monster knew they would make a huge profit on the many voyages of the Titanic. A first-class ticket would cost about $80,000 today, second-class $1,375, and third-class, $350-$900. The passengers would basically pay for how they wanted to be treated.

Described succinctly as “Even God himself could not sink the ship”, many of the wealthy people of Titanic’s time were on board this ship, on their way to New York and because these wealthy people were onboard, they brought with them their valuables unknown to them that the night between the 14th and the 15th of April 1912 was the date it would sink due to a collision with an iceberg in the Atlantic Ocean. Titanic received sporadic reports of ice from other ships, but she was sailing on calm seas under a moonless, clear sky. However, at about 11:30 p.m., a lookout saw an iceberg coming out of a slight haze dead ahead, then rang the warning bell and telephoned the bridge. The engines were quickly reversed and the ship was turned sharply—instead of making direct impact, Titanic seemed to graze along the side of the berg, sprinkling ice fragments on the forward deck.

This tragedy took the lives of 1517 people but historians said it could have been fewer.

Image ref: Ralph Howe

Sensing no collision, the lookouts were relieved. They had no idea that the iceberg had a jagged underwater spur, which slashed a 300-foot gash in the hull below the ship’s waterline.

By the time the captain toured the damaged area with Harland and Wolff’s Thomas Andrews, five compartments were already filling with seawater, and the bow of the doomed ship was alarmingly pitched downward, allowing seawater to pour from one bulkhead into the neighbouring compartment.

Andrews did a quick calculation and estimated that the Titanic might remain afloat for an hour and a half, perhaps slightly more. At that point, the captain, who had already instructed his wireless operator to call for help, ordered the lifeboats to be loaded.

Here comes the twist:

Image ref: History Channel

A little more than an hour after contact with the iceberg, a largely disorganized and haphazard evacuation began with the lowering of the first lifeboat – designed to hold 65 people; it left with only 28 aboard.

During the confusion and chaos during the precious hours before Titanic plunged into the sea, nearly every lifeboat would be launched woefully under-filled, some with only a handful of passengers. In compliance with the law of the sea, women and children boarded the boats first; only when there were no women or children nearby were men permitted to board. Yet many of the victims were in fact women and children, the result of disorderly procedures that failed to get them to the boats in the first place.

Titanic stubbornly stayed afloat for close to three hours witnessing hundreds of human dramas unfold between the order to load the lifeboats and the ship’s final plunge: Men saw off wives and children, families were separated in the confusion and selfless individuals gave up their spots to remain with loved ones or allow a more vulnerable passenger to escape. In the end, 706 people survived the sinking of the Titanic.

At what cost?

What many may not know, is the ship also took with it millions of dollars in mail, packages and cargo, valued at approximately $9.5 million today. Destinations for the goods included high-end stores such as B. Altman & Co., Tiffany & Co. and sporting and leather goods retailer, A.G Spalding & Bro. Among the cargo were 3,500 bags of mail and 750 packages bound for the United States.

Also headed to America was a vast array of goods, including five grand pianos, 1,500 bottles of wine, 800 cigars and 50 cases of toothpaste. From diamond necklaces to marmalade machines and party dresses, every item had value to shippers and recipients.

The White Star Line insured the Titanic for the equivalent of $133 million in today’s currency. After the accident, cargo insurance policies covered almost all of the property claims totalling $9.42 million. Much like today, insurance companies were able to step in and absorb the losses.

Before there was auto insurance, there was cargo insurance. First-class passenger William Carter and his family survived the Titanic disaster, but his automobile, a Renault Type CB Coupe de Ville went down with the ship. Today, car owners are required to carry automobile insurance to cover loss and damage, but no such product existed in 1912. Carter filed what was probably the first-ever automobile claim for $5,000 against the White Star Line. A reproduction of the vehicle sold at auction in 2003, for $269,500.

Survivors filed insurance claims on everything from the most expensive cargo to everyday belongings. Some of the most famous objects lost at sea included a hand-bound book of poetry inlaid with 1,500 precious gemstones, which took two years to make. It was being shipped by Sotheby’s auction house to an American buyer. The owners of the masterpiece, by the artist Blondel, filed a claim against the White Star Line for $100,000.

The Titanic disaster was a perfect storm of unfortunate circumstances that culminated in tragedy. One that leaves us fascinated even now. Despite many people believing the ship was infallible, the disaster illustrates that even a state-of-the-art ship can meet with unexpected catastrophes. Fortunately, as a result of the incident, maritime regulations and shipbuilding practices became stricter. The round-the-clock wireless operation went into effect on all ships and GPS and tracking systems became more sophisticated.

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