North-Eastern railway

The raw materials of north-eastern Hungary, mainly salt and timber, but also the transport of agricultural products to Western Europe, were seen as an opportunity by many entrepreneurs early on. The Tiszavidéki railway applied for a licence for a line here in 1859, but gave it back in 1862, preferring to expand into Transylvania. However, the city of Debrecen, together with Counts Antal Forgách and Lajos Kovách, revived the enterprise in 1864 with slightly altered plans, and in 1867, at the behest of the Hungarian government, this initiative was merged with the company planned for the eastern part of Upper Hungary, founded by Counts János Waldstein and Ervin Schönborn-Buchheim, to form the Hungarian Northeastern Railway.

So the business plan was based on the transport of raw materials and crops, such as tobacco, but there was also a great potential in the transport of goods from Gacia, the then part of the empire of Eastern Ukraine, because together with the planned railway on the other side of the border, a Lviv-Budapest-Fiume axis could have been created.

The Hungarian Northeastern Railway Company was founded in 1867, and the licence to build the railway was granted by Act XIII of 1868, namely for the line from Debrecen via Szatmárnémet and Tekeháza to Máramarossziget; and from Tekeháza via Csap to Kass, and from the latter to the Sátoraljaújhely-Zombor; and the Bátyu-Munkács branches. The construction of the latter line was also advocated by the large landowners of Gacia, who wanted to use it to join the Hungarian network. The state also provided interest rate insurance, i.e. the Hungarian government guaranteed the company a subsidy of HUF 37 100 per mile, and the capital was set at HUF 47 214 million.

The railway lines were to be built - for the construction capital to be issued on the basis of an interest security, which was set at 732,000 Austrian forints per mile - by the Berlin-based Dr. Henrik Stroussberg of Berlin undertook to build it with all the equipment, but due to economic difficulties, such as the outbreak of the Franco-Prussian War (as many German workers were employed and had to return home because of the war), economic planning and management problems, the project was handed over to the Union Bank of Vienna in 1871. The bank demanded an additional 22 million forints from the company after the construction was completed, as the line had become more expensive due to delays during construction, the high water level of the Tisza, the raising of the already finished substructures and the construction of a 420-metre-long wooden bridge at Tekeháza. The delays were also raised in Parliament, and János Vállyi spoke out on 6 March 1871, calling on the Ministry to force the company to meet the deadline. In the meantime, in 1870, the railway company had also obtained a licence for the Nyíregyháza-Ungvár line (the interest insurance was only 20 000 forints), which they had undertaken to build because there were two other applicants and if they had succeeded, it would have had a negative impact on MÉKV's turnover. After long delays, the lines of the Northeastern Railway only opened steadily after 1870, the last section being completed by October 1873, with a total length of 559 km.

The railway asked the government to intervene to settle the additional costs of the contractor, and finally an agreement was reached, and to cover the additional works, the government issued a HUF 5.5 million senior bond with a face value of HUF 5%.

The nominal capital of the company at the end of 1877 was 57 390 000 forints, of which only 20 356 000 forints was the proceeds from the shares in circulation, the rest being from bonds. In addition, there were 7 394 830 loans. At the end of 1884 the company's capital amounted to HUF 60 487 078.

During the period, investors in joint stock companies received a fixed annual interest on their shares, which the companies paid out annually by redeeming the coupons attached to the shares, i.e. even if the company was profitable in principle, i.e. its income exceeded its operating expenses, the amounts payable on the shares had to be paid out each year regardless.

Although the plant operated at a profit, the government's assessment in 1890 was that revenues never reached a level sufficient to cover the interest and amortization annuities on the company's senior loans. The reason for this was probably that the agricultural and commercial depression of the 1880s meant that revenues were below expectations, i.e. the line was unable to generate the amount needed to pay the interest on loans, bonds and fixed coupons on shares. In 1885, the railway took over the Mukachevo-Beskydy line, as well as the local interest lines in its area. Between 1884 and 1886, four tunnels and six viaducts were built on this section of the line, and the Beskid tunnel under the main Carpathian ridge was completed by April 1886. The single-track tunnel was used until 2018.

In the framework of Gábor Baross's nationalisation programme, negotiations started with this railway, whose importance increased significantly with the opening of the Munkács-Beskid line. The reasons given by Baross for the redemption were, on the one hand, that the railway was of low profitability, i.e. it could be redeemed under Act XXIV of 1883, and, on the other hand, that the network of the Hungarian Northeastern Railway fitted well into the MÁV network, which was thus more unified. Another reason for redemption was military, as the line led to Gacia, the Polish part of the empire bordering Russia.

The Government was authorised to redeem the property by Act XXXI of 1890. On 16 May 1890, the State redeemed the line, for which it paid 178 514 crowns per kilometre.

Points of interest

The Tisza Bridge, which is a railway bridge at Tekeháza, was originally built of wood. The 420-metre-long structure did not serve traffic for long, because the Hungarian Northeastern Railway rebuilt it in 1888, and the new iron bridge was completed with 7 openings, each 60 metres long, making it 420 metres long. (The original wooden railway bridge is often identified with the wooden road bridge built in the 1880s, also in Tekehaza, but that was a different structure).

Sources

• Papers of the Chamber of Deputies, 1887, Volume XXII - No.754-868.Papers1887-814. Bill on the redemption of the railway lines of the "Hungarian Northeastern Railway" joint-stock company
• László Vörös (editor): the Hungarian Railway Yearbook 1 year 1878 (Budapest, 1878)
• László Vörös (ed.): Hungarian Railway Yearbook Vol. 5 / 1882 (Budapest, 1883)
• Bill on the redemption of the railway lines of the "Hungarian Northeastern Railway" joint-stock company.
• The railway between Kisvárda and Záhony has been running for 150 years, Vasutas Magazin, 2023.04.03. www.vasutasmagazin.hu
• The nationalisation of the railways in the Hungarian Northeast. Nemzet, 30 May 1890

Date of foundation: 1867

Date of cessation: 1890

Founders: the City of Debrecen, Count Antal Forgách, Lajos Kovách

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Main activity: railway operation, railway construction

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Author: by Domonkos Csaba