Hungarian Levant Sea Navigation Company

The regulation of the Al Danube made it possible for Austria-Hungary's goods to reach the Black Sea by river transport. However, the existence of the Black Sea as a transit route for goods from Austria to Hungary had already gained in importance with the opening of the Suez Canal (17 November 1869), since neither the port of Fiume nor the Fiume railway had been built at that time, and the Black Sea was therefore seen as a natural gateway to the world market, especially for the eastern part of Hungary, due to its geographical distance.

Article XXVI of the Law of 1872 concluded a contract between the former Austrian (now Austrian-Hungarian) Lloyd company and the Hungarian state for the shipping company to provide regular services between the ports of the Lower Danube and Constantinople, and thus in fact between Hungary and the Middle East. The agreement was important for Hungary, which at the time was less capital-rich, but as the country's economic development allowed, the Hungarian side sought to nationalise this traffic. In this spirit, when in 1891 the Hungarian state - essentially with the needs of the burgeoning Rhenish shipping industry in mind - terminated its contracts with Lloyd, it entrusted the Black Sea traffic to Adria Magyar Királyi Tenger Shipping Ltd, founded in 1882. In particular, four of the new steamships to be built by Adria Rt. were to operate on the Sulina-Constantinople route in a manner suitable for passenger transport.

This situation was settled by the creation of the Hungarian Oriental Ltd. Although the company, after its foundation on 30 August 1897, initially only provided free navigation on the Marseille-Odessa line, this soon changed. The statutory contract with the State provided for 36 return services a year - during the period of navigation of the Danube - on the Galac-Sulina-Constanta-Constantinople and Varna-Burgas-Constantinople sections; return services were to operate on the Constantinople-Burgas-Varna-Constanta-Galac line. The company was obliged to operate from Galac, at the specific request of the Minister of Commerce, 12 to 12 services a year, on its own account, to Alexandria via the ports of Asia Minor and Syria, and to Patras, which was then a centre of Mediterranean trade, via the Turkish and Greek ports.

At the same time as the agreement between the company and the Hungarian state, a contract was concluded between Lloyd of Austria and Keleti Rt., in which Lloyd continued to transport the goods brokered by Keleti Rt. on its own lines for K 60 000 per year. Paragraph 8 of the contract stipulated that Keleti Rt. could operate free navigation in addition to its state routes, but only in such a way as not to create competition for Lloyd and so that the diversions did not cause unauthorised delays in the supply of the state lines. This contract was originally formally concluded until the end of February 1908, but remained in force until 1914, when a new contract was signed. The company received a subsidy of K 180 000 per year for the compulsory services, of which it had to spend a third on the settlement with Lloyd and a second third on financing any fines for delays. The headquarters of Magyar Keleti Rt. was in Budapest and its ships were based in Fiume.

Within the limits set by the law, the company was able to start developing. Although this growth was by no means monotonous and increasing. According to a report by the management, as early as 1899, 'due to particularly strong sea storms', repairs had to be carried out on the steamers Nádor, Corvin Mátyás and Attila over a period of several months. In the meantime, hired steamships were used to carry the traffic. We can already learn from the records of the Rijeka Archives that these steamers were the British Regnant and the Greek steamers Eleni, Giorgios and Alexandros Michalinos. In 1901, in order to benefit from the international preferences granted by the Danube Commissions, the company arranged for the steamer Iron Gate to carry mail between the Al-Danube and Constantinople, via Burgas and Varna. The move was also motivated by the general market depression that had indeed characterised maritime freight transport here in the early 1900s. The Iron Gate steamship itself had already made a substantial loss in 1902, despite the discounts, and in 1903 its fate was sealed. According to board reports, 'The steamer Iron Gates was smuggled aboard by civilians with dynamite which exploded. The masters, two officers, several sailors and a central officer also died". To replace the steamship and to further develop the company, the Keleti and the Hieronymi were put into service in the same year, followed in 1904 by the József Ágost Főherczeg and the Gróf Tisza István.), the Corvin Mátyás ran aground and was wrecked near Gibraltar; interestingly, in October 1906, the steamer Kelet, under the command of Rudolf Kehrer, had the honour of bringing back from Rhodesia the ashes of Ferenc Rákóczi II and his fellow exiles. In 1907 the Turul and Orsova were built, partly to replace the Corvin Mátyás.

In 1910, the market, especially in the Black Sea region, began to recover from the general depression, as the grain harvest was very strong in that year. It is true that the Company lost the Nádor steamer in 1909, but in exchange, partly from insurance premiums, the Augusta Archduchess and the Transylvania were built by 1910. The year 1911 brought a change in the operation of the Eastern Shipping Company when, on the initiative of the Ministry of Commerce, the direct Rijeka-Australia line was launched under the care of the Company. Partly in order to serve this, the Carpathian, Tatra and Corvin were built in 1912.

In 1914, two new contracts were signed between the company and the State for K 1 590 000. This was due to the fact that in 1914, in addition to the existing Black Sea trade, the State added the Australian line to the subsidised lines in the form of 8-8 flights per year. The Hungarian Eastern Shipping Company was then at the height of its history. In the last months before the war, the company had offices in Adelaide, Antwerp, Galacz, Braila, Hamburg, Constantinople, London, Melbourne, Rotterdam, Sydney and Trieste. The supported route was between Rijeka and the ports of Tasmania, New Zealand and South Australia (Fremantle and Brisbane). When the contract was signed, Magyar Keleti Rt. undertook to attempt to start a Rijeka-Dutch-India-Australia line for K20 000 per year, but this was not realised due to the outbreak of the World War.

With the outbreak of the war, the company's ships either fell into foreign hands or into the hands of the Austro-Hungarian command. Of these, the Tatra sank in 1916, when it was flying the Italian flag.

An interesting chapter in the war was the 1917 ceasefire on the Eastern Front. In the light of the reports of the board of directors of Magyar Keleti Rt., it would be worth examining this in the future, as there is a reference to the fact that Magyar Keleti Rt. and other Central European shipping companies had set up a large shipping company under the name of Euxina Schiffahrtsgesellschaft m.b.H., which was to transport post-war goods in the event of a victory for the central powers.

In 1919, the company's ships in the Adriatic Sea were requisitioned and employed by the Allies after the armistice. Except for the Orsova, requisitioned by Italy, which was moored on the island of Sumatra and had to be repaired. The French authorities returned the Corvin to the company on the condition that it continued to fly the French flag. The company was exempted from complying with Acts XXIII and XXIV of 1914 because of the armistice signed by the Hungarian government. The Corvin and the Keleti sailed under the company's control between ports in Asia Minor and the Black Sea, but this was abandoned by the end of the year due to the political situation there. In 1921, the company handed over both the East and the Corvin steamship to the Italian government because the company could not employ them on its own. The ships that were in domestic and neutral waters at the time of the armistice continued to be employed by the Italian government with reimbursement of operating costs.

By 1922, a decision on the fate of the Company's ships was made by the Reparation Committee. Thus, the Archduchess Augusta and the Carpathian became the property of Yugoslavia, the Transylvania, the Kossuth, the Orsova, the Count István Tisza, the Corvin, the Keleti and the Attila became the property of the Kingdom of Italy, although the Hungarian government had reserved the right to take the property of the Kingdom of Italy in the XVI. In the same year, the Hungarian Keleti Rt. entered into negotiations with the Italian government to buy back the ships under the Italian company "Societá di Navigazione di Transmarina", which was to be established by the company.

Finally, in August 1922, an agreement was reached with the Italian Government to increase traffic in the port of Rijeka. The new company was called Levante Societá di Navigazione Fiumana. The new company opened an office in Rijeka, with employees of mixed Hungarian and Italian nationality. Levante was established as a subsidiary of the Hungarian Oriental Company with its headquarters in Rome and a share capital of 30 million lire.

We have news again from 1926 about this company, according to which the Levante, which operated the old ships of Keleti Rt., was extremely profitable thanks to coal transports between the USA and Europe.In 1927, however, the markets were already depressed, and the Hungarian company ordered a modern steamer of 7,500 tons capacity from Swan, Hunter & Wigham Richardson Ltd's Sunderland shipyard, which was launched on 4 May 1927 under the name Honvéd. It was the first new Hungarian naval vessel since the war. By 1928, Levante's old ships were considered very obsolete and the company was running at a loss, while Keleti Rt. made a profit with Honvéd.

In the years 1930-1935, the Great Depression completely grounded both Levant and Keleti Rt., so the Italian company went into liquidation and Keleti Rt. was forced to sell Honvédo to cover its losses. The Hungarian Keleti Rt. finally declared liquidation in 1938, which was started, but as the company still claimed compensation from the Hungarian government, which it had been demanding since 1922 and still had not received, liquidation proceeded very slowly. The minutes of the last surviving general meeting of the liquidation committee, dated 27 November 1948, which, like the minutes of the previous liquidation committees, state the same thing year after year: the company claims 31 257 635 forints from the Hungarian State Treasury, which the shareholders are unable to pay until it is received. The liquidation was so successfully delayed that on 12 January 1965, the Financial Institutions Centre wrote to the Budapest Municipal Court asking whether the company still existed or had been liquidated. This letter was accompanied by a document stating that the company had been wound up by the Commercial Court on 6 December 1954. Thus ended the story of the Hungarian Eastern Shipping Company, originally founded in good faith on 30 August 1897 for 90 years.

The stock market value of the Hungarian Eastern Shipping Company between 1919 and 1943

The Hungarian Eastern Shipping Company was listed on the stock exchange relatively late. The first listing was in 1919, and although liquidation started in 1938, trading continued on the stock exchange until 1943. As you can see, the change from the Crown to the Pengay was only a nominal change. The company's stock market value during the Koruna period was determined by inflation and obviously by the company's efforts to re-market its ships in a changed geopolitical system. At the same time, in line with the company's annual profit after tax, the company's stock market value had already fallen by 1928, and the Great Depression hit it even harder, causing its value to fall back to the value it had been quoted at in the hyperinflationary years (while it also lost its ships) between 1929 and 1938, a situation from which it could not recover, and the general meeting ordered the company's dissolution in 1938. Liquidation then lasted for over a decade, but trading in the company's shares continued throughout the war; understandably, as our annual shareholder records show, the former owners sought to dispose of their shares, which were formally held by the Hungarian General Credit Bank and members of the liquidation committee. This essentially ended the history of the Hungarian Eastern Shipping Company, founded in 1898, by 1938-1948.

Date of foundation: 1897

Date of cessation: 1948

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Main activity: maritime transport of goods

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Author: by Dr. Márton Pelles