HISTORY

Today P&O is a major, diversified, international company. While it remains one of the world's leading ship owners, with a fleet of cruise ships, ferries, container ships, bulk carriers, coastal tankers and offshore service vessels, its other interests include:

• Port ownership, management and stevedoring LI>Rhine barges
• Road haulage
• Warehousing, cold storage and distribution
• Construction, property development and house building
• Property management and investment
• Exhibition halls
• Shopping centres
• Contract catering and tool distribution
• Travel agencies, tourism and leisure.

Today approximately 48 per cent of P&O's turnover comes from shipping, 30% from property and construction, and 22 per cent from service industries. Across six continents and seven seas, and in more than 45 countries, more than 300 companies and some 60,000 people make up the world of P&O.

But it is with shipping that P&O is most usually connected. Throughout its 150 years P&O has been a premier British ship owner, and in its time the largest in the world. It has flown the same quartered flag, embodying the royal colours of Portugal and Spain, from its very beginnings.

And it all started with a handful of paddle-steamers and a contract to carry mails - the first application of the technology ushered in by the Industrial Revolution to bring frequency and regularity to international communication. Carrying mails remained P&O's preoccupation for its first hundred years, and thereby the company made a major contribution to a revolution in world politics and commerce.

FROM GUN-RUNNING TO GIRAFFE-CARRYING

P&O stems from a partnership formed in 1822 between Brodie McGhie Willcox, a London shipbroker, and a Shetland-born former Royal Navy clerk named Arthur Anderson who had worked in Willcox's office since 1815.

They built up a business linking Britain and the Iberian Peninsula, owning sailing ships and managing steamers. During the Portuguese and then the Spanish civil wars of the early 1830s, they ran guns, raised loans and chartered steamers as warships and troop carriers for the legitimate heirs to both thrones. Their peacetime cargoes included anything from machinery for minting money to giraffes.

In 1835 they joined with Captain Richard Bourne, a Dublin shipowner, and began a regular service between London, Spain and Portugal under the appropriate name "Peninsular Steam Navigation Company". On August 22, 1837, Bourne signed the first commercial contract for carrying mails by sea, between Falmouth - the established "packet" port - Vigo, Oporto, Lisbon, Cadiz and Gibraltar, and with this financial security laid the traditional foundations of P&O.

Such contracts were to be a major source of the company's revenues until the Second World War.

The ship making the first contract run, the 800-ton Don Juan, was wrecked on her return voyage. Fortunately Anderson, who was aboard, helped save the mails and Peninsular Steam weathered the loss.

Its reputation grew. It was consulted on the extension of similar mail services into the Mediterranean. In1840 it received a contract for a monthly run to Alexandria, and to raise the one million pounds needed became a limited liability company.

The Peninsular and Oriental Steam Navigation Company was incorporated by Royal Charter, and remains to this day one of few British companies not operating under the Companies Acts.

Larger ships were acquired for the Egyptian run, still larger ones - all of 2,000 tons - built to brave monsoon weather on the Calcutta/Suez line opened in 1843. By 1845 P&O services reached Singapore and Hong Kong and in 1852 extended to Sydney.

The company's three great Imperial mail routes - to India, the Far East and Australia - had been established in less than a decade.

Across Egypt ran the celebrated Overland Route, involving stuffy canal boats from Alexandria to the Nile, a small bug-infested river steamer up to Cairo and cramped horse-drawn coaches 84 miles across the desert to Suez.

Mails went more rapidly by camel, and early passengers delayed en route feared that connecting ships might sail without them because of priority given to mails - there were penalties for late delivery. For both mail and passengers, P&O had revolutionised travel to the British Empire east of Suez; the only cargoes were high-value items such as silk and indigo.

A railway built in the 1850's improved the crossing, but P&O still monopolised steamer services east of Suez. It did not believe the Suez Canal would succeed, and when the French completed it in 1869, P&O found itself with an unsuitable fleet and falling revenue. Not only was it faced by burgeoning competitors using the Canal for both passengers and cargo, it was also forced by the cautious Post Office to continue conveying the fastest mails across Egypt by land until the mid 1880's.

THE RIGHT COMPANY TO HANDLE CATASTROPHE

P&O achieved and maintained a justifiably high reputation for safety and service, and was much concerned with establishing lighthouses and other navigational aids, but it had its share of wrecks.

A Mrs Dulcimer wrote calmly in 1863:

"If you are ever shipwrecked, my dearest Laura - do contrive to get the catastrophe conducted by the Peninsular and Oriental Company. I believe other companies drown you sometimes; and drowning is a very prosaic arrangement fit only for seafaring people and second-class passengers. I have just been shipwrecked under the auspices of P&O and I assure you that it is the pleasantest thing imaginable. It has its little hardships to be sure, but so has a picnic, and the wreck was one of the most agreeable picnics you can imagine."

P&O survived the opening of the Suez Canal by extensive economising. Overheads were slashed. Free liquor at meals was abolished!

Thomas Sutherland, formerly manager in Hong Kong, became managing director in 1872 and chairman in 1881. He masterminded P&O's recovery, ordering progressively larger and faster ships. Its British terminus moved back to London from Southampton.

These were years of Kipling's "Exile's Line"; two-thirds of its passengers for India were civil servants, but there were also diplomats, soldiers, bankers, industrialists, missionaries, world travellers, and young ladies known as the "fishing fleet" ("returned empties" if they failed to get a catch!).

Captains were responsible only to God and the P&O directors, and complaints were considered "bad form".

P&O became an Imperial institution, the premier British shipping company. Apart from mail steamers, it chartered ships to the government as troop transports and hospital ships, and provided the brand-new liner Medina as Royal Yacht for the Delhi Durbar in 1911. It also expanded its horizons by building cargo liners, and began carrying emigrants to Australia in 1910.

Between 1914 and 1946 P&O acquired many other shipping companies, most notably the British India Steam Navigation Company, New Zealand Shipping Company, Federal Steam, Orient Line and General Steam. Under Lord Inchcape's chairmanship from 19l5 to l932, the combined fleet grew to a peak in the mid l920's of nearly 500 ships of many different kinds.

P&O itself continued to concentrate on large, fast passenger and mail steamers. Its best ships served as troopships and armed merchant cruisers in both World Wars. Several were sunk, but most losses suffered by the P&O Group - 85 in the First World War, 182 in the Second - were as part of its massive contribution to the struggle to keep Britain supplied with munitions, raw materials and foodstuffs.

Between the Wars, the Australian trade replaced the Indian as the most important for P&O. Australian passengers encouraged the provision of games decks. Oil fuel replaced coal and the "Strath" liners of the 1930's introduced new white livery.

Second Class gave way to "Tourist". After the great depression, when salaries were cut by 10% and no dividend was declared for four years, P&O's Centenary in 1937 was celebrated with enthusiasm.

It is said that P&O "invented" cruising. Certainly, Arthur Anderson wrote about the idea of cruising before P&O ever existed. The novelist Thackeray made a Mediterranean cruise: - a Grand Tour by sea - with P&O in 1844.

In 1904 the Company offered its first programme of modern-style cruises - First Class only with shore excursions arranged by Thomas Cook.

ALL CHANGE AS THE JET AGE TAKES OFF

Between the Wars cruising became more popular, and with no rigid mail contracts after 1945, it then became still more important. Canberra was delivered in 1961, but in little more than a decade jet airliners had killed off the company's traditional passenger services.

Forced to concentrate on the leisure side of sea travel, P&O abolished passenger classes, bought and later built purpose-designed cruise ships and became one of the largest cruise operators in the world.

Even so, this was by now only one aspect, though an important one, of the Company's widespread shipping interests.

Shipping changed rapidly after the Second World War, and for 30 years the greatest proportion of P&O's investment was in cargo ships - conventional cargo liners, bulk carriers, tankers, liquefied gas carriers and especially container ships.

As a co-founder and now owner of Overseas Containers Ltd (OCL), P&O has pioneered the biggest change in cargo shipping in its 150 years. Furthermore, while by the mid-1970's the group had involved itself in practically every kind of merchant shipping except icebreakers (an omission rectified to a degree in 1990), it was also developing other transport operations, especially door-to-door road haulage in Britain and Europe using articulated lorries and roll-on/roll-off ferries.

To offset fluctuations in shipping profits, significant investments were now made in completely different fields, most notably when P&O acquired the Bovis construction and house building group in 1974, and when it merged with Sterling Guarantee Trust, a leading industrial services and property group, in l985.

Formerly Town & City Properties, "SGT" had its origins in a rubber estate company which reinvested its assets in property in the mid-1950's and grew to become one of the largest concerns of its kind in the UK.

In the early 1970's, however, Town & City ran into financial difficulties. A "reverse takeover" was arranged in 1974 with property and industrial services company Sterling Guarantee Trust Ltd, whose management team led by Jeffrey Sterling and Bruce MacPhail restored Town & City to health and to mark the achievement renamed it Sterling Guarantee Trust plc.

In 1983 Jeffrey (later Sir Jeffrey, now Lord) Sterling became chairman of P&O, and the later merger with SGT brought to P&O the management and development arms of Town & City Properties, including substantial investment in the USA, and the Arndale group of shopping centres.

On the industrial services side SGT included Buck & Hickman, tools distributors and manufacturers; Butlers Warehousing, merged with P&O European Transport Services and since renamed P&O Distribution; Earls Court & Olympia's exhibition centres and their related service concerns; Sterling Guards, an industrial and commercial security company; and Sutcliffe Catering, providing contract catering services for companies and local authorities.

In the ten years since the merger with SG, P&O has developed in all its major areas of activity, both by organic growth and strategic acquisitions. In shipping, it has:

• Bought its partners in Overseas Containers
• Purchased ferry, property and harbour group European Ferries and the cruise line Sitmar
• Taken a 50 per cent interest in Indonesian-based Spice Island Cruises
• Acquired first a half-interest and then total ownership of short-sea tanker operator Rowbotham Tankships
• Bought most of the Ellerman group container shipping interests from Trafalgar House.

Fleet renewal programmes are under way, and the world's largest ever cruise ship, the 109,000-ton Grand Princess, was built for Princess Cruises. Orders have also been placed for two more ships - Ocean Princess, to arrive in 1999, and the 76,000-ton Aurora to join the P&O Cruises Fleet. Arcadia - formerly Star Princess - replaced Canberra which was retired in September, 1997.

On the service side it now owns the German haulage, barge and storage group Rhenania, but in 1993 sold its Sutcliffe Services, Sterling Security, Spring Grove Services and Buck & Hickman concerns.

P&O Asia was established in 1992 to co-ordinate developments in the Western Pacific Rim and in China, and interests have been acquired in Chinese container terminals.

Leading American construction companies Lehrer McGovern, McDervitt & Street and Schal Associates have joined the Bovis group, and P&O's property interests have been expanded with the absorption of Stock Conversion and the acquisition of half Laing Properties.

The company's historic flag has become a corporate symbol flown on ships, offices, depots and exhibitions centres, incorporated into signs and badges, painted on vehicles and used in every type of printing and stationery.

Willcox, Anderson and Bourne would surely be surprised at the scope of their company today, but they would undoubtedly be gratified that it continues under the same name and the same quatered flag that they knew.