At the close of the 19th Century the Cunard Steamship Company found itself in a difficult position. An earlier decision to generate more profit by utilising smaller, slower, more efficient vessels on the North Atlantic had led to the very successful ‘Intermediate’ class of vessel. Ships like the ‘Saxonia’ crossed the Atlantic at an average speed of 15 knots with very low fuel consumption but the company found that it was losing passengers to competitors who had concentrated on speed and luxury. Cunard’s latest ships, ‘Campania’ and ‘Lucania’, despite being built for speed, were outclassed by German ships whose owners (with government help) had continued development of fast transatlantic liners.
The Blue Riband for the fastest Atlantic crossing, eastbound or westbound, had been held by a succession of German ships since 1897. In May 1901 the Cunard board began discussing the building of two new fast steamers and their technical department developed an outline proposal for a vessel of approximately 700 feet long with a service speed of 23 knots carrying 2000 passengers. In February the following year outline specifications were sent out to four shipbuilding yards for costing, development and discussion.
At this stage the British Government entered the arena, concerned at the possible foreign domination of the North Atlantic route, highlighted by the takeover of the White Star Line by the aggressive American company International Mercantile Marine. With the proviso that in the event of war the vessels would be requisitioned by the Admiralty as Armed Merchant Cruisers, the government began negotiations with Cunard in March 1902 and announced the granting of a loan in September of that year. When it was finalised in July 1903 the loan was for £2.6M at 2.3/4% over 20 years coupled with an annual subsidy of £150K towards the cost of running the vessels. One of the conditions of the loan was that Cunard had to remain a British company. The Admiralty in the meantime carried out model tests in the tank at Haslar and in February 1903 recommended an increase in the length and breadth of the ships to achieve the design speed of 25 knots with lower horsepower.