No. 2, 2009

Prof. Alexander Bessolitsyn ,
Dr. Sc., Head of the Department for the History of Russian Business at the Moscow Financial and Industrial Academy


On the 130th anniversary of the establishment in Russia of the Nobel Brothers' Oil Production Partnership

On the last day of May 1879, the well-known St. Petersburg industrialist Ludvig Nobel received the news that Emperor Alexander II had "by resolution of the Committee of Ministers, His Highness deigned to permit Ludvig Emmanuelovich Nobel in St. Petersburg, Robert Emmanuelovich Nobel in Baku, Alfred Emmanuelovich Nobel in Paris and Colonel of the Guards Pyotr Alexandrovich Bilderling to found a Share Partnership with the name "Nobel Brothers' Oil Production Partnership." That was the launch of the joint-stock company that soon became the leader of the Russian oil industry.

At the beginning was the deed...

In Russian history, there were examples of successful introduction of social programs by entrepreneurs at the turn of the 19th and 20th centuries, at the stage of the first wave of Russian economic modernization. The activities of the Oil Production Partnership of the Nobel Brothers, being one of the biggest joint-stock companies in Russia at the beginning of the 20th century, provide a clear example of this.

The Oil Production Partnership of the Nobel Brothers was established in Russia on May 30, 1879. The authorized equity capital of the partnership was originally three million rubles. The biggest stakeholder was Ludvig Nobel (1831-1888): he had shares worth 1,610,000 rubles. The second brother, Robert Nobel (1829-1896), held shares worth 100,000 rubles and the third brother, Alfred (1835-1896), shares worth 115,000 rubles, plus there were another two brothers, the Russian officers Pyotr and Alexander Bilderling, who had shares to the sum of 980,000 rubles.

At the turn of the 19th and 20th centuries, the industrial empire of the Nobel brothers in Russia reaped the fruits of the tremendous efforts of Ludvig Nobel, who managed to create an industry supplying 10% of the world's oil production from fields in Baku and other parts of the Caspian seashore. On the Balakhna field, an 800,000 ton oil reservoir was built, while the capacity of all the oil storage facilities amounted to two million tons. Of the 140 km of oil pipelines on the Apsheron Peninsula, the greater part belonged to the Nobel company. Almost 60% of the oil transported along the Volga was refined at Nobel refineries in Baku. The Partnership sold a variety of petroleum products: petrol, kerosene, lubricating oils, paraffin, asphalt, and so on.

At the beginning of the century, the Nobels' tanker fleet began to grow. By 1913, the Nobel Brothers' firm owned 89 vessels, including: 26 steam and motor ships, 44 iron barges and 19 wooden barges. Noteworthy, the freight capacity of just one iron barge exceeded 600,000 poods. Every year, the Partnership used its own fleet to move over 70 million poods of liquid cargo from Astrakhan along the Volga, 28% of this consisting of black and crude oil. In addition, the output of the Nobel Brothers' Partnership was also exported via Baku and Novorossiysk to Turkey, Italy, Austria, Tunisia, France and Britain. Across the Baltic it was transported to Germany, the Netherlands and the Scandinavian countries.

The fame of Nobel townships

In virtually all the towns of the Volga area, the Nobels' company established its own production units. Along the route taken by the Nobel tankers with oil and petroleum products from Baku via Astrakhan and further up the Volga, production units belonging to the company rose up, as well as townships for factory and office workers - so called "Nobel townships."

One of the first of these was the Villa Petrolea township, built at the beginning of the 1880s near Baku. In all, it consisted of about 10 buildings housing about 100 company staff. In addition to the housing, the area of the township (covering about 50 km2) included a theatre, club, economic and toilet facilities, a bowling alley, tennis courts, and so on.

As described by the engineer Gustav Ternud, the township became a show place, a true oasis among the tropical heat and barren desert surrounding Baku. Thanks to the black earth brought in from the fertile surroundings of Lenkoran and the fresh water delivered from the Volga, gardens flourished. The inhabitants were provided with drinking water by a desalination unit. At the end of spring, 800 tons of ice were delivered by sea to last throughout the summer season.

Gas was supplied to the houses from the works for cooking and heating purposes. The lighting both in the houses and at the works was electric; there was a telephone line and, almost unbelievable for the 1880s, an air-conditioning unit was built to maintain a comfortable temperature of 15 20 degrees during the summer period.

In 1880, an oil industry complex started up in Tsaritsyn, thereby laying the foundations here for a "Nobel township". Industry became the main factor in the town's formation, exerting an impact on its development and the social composition of its population. The biggest enterprise in Tsaritsyn was the Nobel Brothers' Partnership's mechanical and barrel-making plant, which employed over 300 people. In addition to this enterprise, the company constructed a refinery to produce lubricants from oil, as well as a major oil tank farm with reservoirs for storing oil and petroleum products. Alongside these works, an "oil township" was built, embodying the model of a new social settlement for workers. It was a township of an industrial type. The lower part, facing the Volga, consisted of a wharf connected to the shore by strong gangways. Nearby, there was a steam pump for pumping the kerosene from the ships. The lower part also accommodated storage facilities and a railway branch along which the kerosene was delivered in wagons to the Gryazi-Tsaritsyn railway station.

On the middle terrace, there was the two-storey stone office building of the Nobel plant, the upper floors of which accommodated apartments for managers and senior staff, as well as a library and billiards room.

On the third and upper terrace, single-storey cottages surrounded by vegetation were built to house employees. A total of about 4,000 decorative young trees were planted. The standard, 4-room, individual houses stood among apple and cherry trees. There was also a pharmacy, hospital for workers, kindergarten, a primary school for employees' children, a canteen and bathhouse.

The entire Nobel township was lit by electricity, which was a rarity at the time. It should be noted that in the 1890s, the streets of Tsaritsyn were illuminated by only 220 kerosene street lamps and even these were not always lit; electric street lamps appeared in the town only in 1908.

Someone at the time wrote about the Nobel township: "Anyone who, in the 1870s, saw the place where the Nobel plant is located cannot but marvel at the energy of this ‘Oil King'; the former impassable, scary gullies sheltering runaways and swindlers are now unrecognizable; along the slopes of the gullies, gentle declines faced with stone have been built; everywhere is bubbling with life, with signs of labor, energy and civilization. Previously, this area was far from the town, while today the buildings reach up to it."

The Nobel township in Tsaritsyn was no exception in the activities of the Nobels. The township idea was also implemented in Astrakhan, Saratov, Samara, Ufa, Rybinsk and other towns. Their construction meant, essentially, introduction of a new type of social settlement for working people. These townships included all three vital functions - labor, living and leisure. The idea of the Nobel townships combined the principle of an organized social structure ("fair capitalism") with planning of a regularly organized living environment. The Nobel township was always "new," standing out from the existing city districts. It was built from scratch and fulfilled a civilizing role in town planning, by Europeanizing what were quite undeveloped areas at the time.

To do good...

The charitable works of the Nobel industrial dynasty took a variety of forms in Russia: creation of a comfortable living environment for the workers of their enterprises, material support for scientists, and foundation of bonuses and stipends. For example, 400,000 rubles of Nobel gold were given to Academician Ivan Pavlov for his scientific research. Support was provided for Rudolph Diesel, not previously been recognized in Germany, who organized in Russia the world's first serial production of diesel engines. In 1889, at the request of the Partnership's shareholders, the Russian Technical Society established a "Nobel Prize" for the best works in the oil and metal industries. The Russian Technical Society was given 6,000 rubles, and the interest on this sum was used to award a prize and a gold medal once every three years. Nobel stipends were founded for students of the Mining Institute, the Technological Institute, the Baku real college and other educational institutions. Ludvig's daughter, Martha Nobel-Oleynikova, used her own money to build the eye clinic building at the St. Petersburg Medical Institute and, during World War I, opened an infirmary for wounded and a "colony" for children and orphans of frontline soldiers. In St. Petersburg, the Partnership financed construction of a National House and school for 200 workers' children, special capital was formed for supporting staff and for awarding stipends for their children's education. By the beginning of the 20th century, the balance sheet of the Nobel company included 159 of their own and 14 leased houses, hostels, hospitals, pharmacies, canteens, libraries and schools.

It may thus be concluded that the Russian oil industrialists of the Nobel family implemented in practice social programs that became an example for development of the charitable works of other Russian businessmen. Their social initiatives are also an example for modern Russian business.

All articles
Oil of Russia, No. 2, 2009
© 1998-2022, "OIL OF RUSSIA".
"OIL OF RUSSIA" magazine welcomes comments and ideas from its readers.
Letters should be sent by regular mail, fax or e-mail.
All right reserved, including right of reproduction in whole or in parts in any form.