In October, 1929 the Stock Market in New York crashed. The government under President Wood acted surprisingly quickly to reassure people that things were not that bad. However, economic reality soon proved those statements false. In the United States, unemployment soon spiked at 16%, while the prices of commodities such as grain, produce and dairy fell by 45% severely impacting farmers in America's heartland. Rapid, emergency investment by both the government and large businesses managed to keep several key industries afloat, but at levels far below those of mid 1929. Compared to the rest of the world however, the United States was positively idyllic.
In Europe, unemployment reached 30% in some countries (with unemployment in Russia reaching 38% by 1932), with the United Kingdom reaching 21% unemployment in 1931. This unexpectedly resulted in an increase in passengers for White Star and other lines, as more people decided to attempt to immigrate. Mainly to the United States, though Canada and Australia were also popular with Argentina popular with German immigrants. It was during the Great Depression that White Star's business plan of the 1920s bore fruit. By buying out there smaller competitors, they were able to remove their excess capacity from the market, thus keeping their own ships profitable.
Being in the midst of a fleet update, White Star was able to assist the economy of the UK more than usual. By both buying new ships from Harland and Wolff, albeit at a slower rate then previously planned, and retiring their older ships to provide work scrapping them. This work was mainly performed at Inverkeithing, Scotland and Jarrow, England.
By 1933, the Olympic-class ships were beginning to show their age. Though still marginally profitable, White Star began to see a gradual eroding of the number of passengers carried. This was particularly true in Third Class. Beginning that year, White Star began to refit them, dividing Third Class into Third Class and Tourist Third. Tourist Third offered a slightly larger cabin, more "creature comforts" (primarily in bedding and cabin furniture). While still offering good value. This resulted in a slight bump in average passenger lists despite the ships' total capacity being reduced. Tourist Third was soon introduced across the fleet as ships came due for annual refits and overhauls.
In 1929, Cunard announced plans to build a new Superliner to be named RMS Queen Mary. She was to be 1,019' long, have a beam of 118' and weigh over 80,000 tons. Following just 6 years after the loss of the Berengaria and considering the financial straits Cunard was in having lost several ships in the Great War, this order was surprising. Privately, White Star expressed doubts that the ship would ever be built. However, the mere announcement of such a ship cast serious doubt on the viability of White Star's pride and joy, the Olympic-class. While the refits they received in 1933 certainly helped their cause, the ships were still between 19 and 22 years old. President of White Star, J. Bruce Ismay and Harland and Wolff Chairman, William J. Pirrie, in a repeat of their meeting 26 years earlier, began to discuss a new class of ship to replace "The Reliables." The ship they designed would come to be called RMS Majestic. The order for two ships was placed in March, 1934.
The Majestic was to be 1,050' long with a beam of 126' and would weigh some 83,000 tons. In addition, she would have a power plant capable of driving the ship at 30 knots. In keeping with White Star tradition, she would be designed to be the most luxurious liner afloat. In a first for a transatlantic liner, every cabin on board was to have a private bathroom. An unheard of luxury outside of First Class. The two ships would also introduce air conditioning to the majority of their public spaces. In short, they would ensure White Star's continued dominance at sea for the foreseeable future. There were two things, however that they could not foresee.
The first, in hindsight, should have been obvious. In June, 1934, Cunard approached White Star with an offer to merge. The offer initially took White Star by surprise. Even more so since Cunard proposed that they be the dominant partner in the new company. To say that White Star, and the London Stock Exchange, nearly died of laughter would be an understatement. By July, 1934 with the keel of Majestic having been laid, White Star studied the idea behind a merger with Cunard. While White Star was no stranger to mergers and taking over weaker lines, they had never even considered the possibility of taking over their largest competitor, nor the logistics of what would be involved in doing so.
On the surface, the idea seemed laughable. White Star was sound financially. And was the dominant line on the North Atlantic, along with having a commanding presence on the Australia run. Cunard on the other hand, was struggling. The high costs of running the Mauritania had never really been overcome, the loss of Berengaria to a collision at sea had given them a massive black eye, Lusitania's torpedoing in 1915 severely weakened the company financially. Only Aquitania was a true bright spot for Cunard. In light of this, several members of the Board at White Star argued that it would be better to simply let Cunard go under and buy whatever assets they wanted at auction afterwards.
In the end, White Star came up with what some considered to be the ideal solution. They would offer to buy out Cunard. No merger, just a simple buy out where Cunard would operate as a subsidiary of White Star. Cunard's vessels would remain in service with only a few exceptions (the largest being the requirement that Mauritania be laid up within 6 months). Cunard would be allowed a fleet size of 8 ships (down from their current fleet of 14), primarily to serve secondary markets such as Liverpool and London to Philadelphia and Baltimore. Though Aquitania would be allowed to maintain their flagship Southampton to New York service (though she would be scheduled in concert with the Olympic-class ships of White Star). The ship Cunard had ordered in 1929, still only 17% complete in 1934 (mainly due to financial difficulties at Cunard and John Brown & Company, her builders) would be cancelled. The steel plate would instead be reused to build two smaller vessels broadly similar to White Star's Oceanic-class, though with Cunard styling cues and touches.
Though Cunard's initial reaction to this proposal was broadly similar to White Star's reaction to THEIR proposal, namely, laughter, financial reality soon took hold. Despite initial attempts at countering White Star's offer with a second merger proposal where White Star would be the dominant partner and both Queen Mary and Majestic would be completed, White Star quickly made it clear that the only acceptable offer was the one White Star had made. Anything else, and White Star would simply wait for Cunard's inevitable collapse. Cunard's Board of Directors, though bristling at being relegated to a second-class line, accepted White Star's offer on August 1st, 1934. By the end of the month, Cunard ceased to exist as an independent company. On September 1st, 1934 Cunard's ships hoisted the White Star burgee on their main masts along with Cunard's house flag for the first time.
The other major event was the utter collapse of the Russian Empire in February, 1935.
