Fiume Credit Bank

The Rijeka Hitelbank Rt. was founded in 1887 on the initiative of the local Steinacker & Partners Rt. with the support of the Hungarian General Credit Bank. In the predecessor company, the "partner" was Lajos Ossoinack, an important entrepreneur of Rijeka. During its existence until 1907, the Fiumei Hitelbank was also engaged in the usual financial services, but its industry-generating activities were notable, when it financed the establishment of companies important for the whole of Hungary with working capital investments and provided their management. Without wishing to be exhaustive, this included the First Hungarian Rice Husking and Starch Factory Ltd. of Rijeka (1881); the Petroleum Refinery Ltd. (1882); the Rijeka Dock Company Ltd. (1892); the Rijeka Cocoa and Chocolate Factory Ltd. (1896); the Rijeka Coffee Roasting Co. (1897); the Rijeka Steam Brick and Clay Factory (1898) and the Wood Production Co. (1899). The bank also engaged in the sale of the products of these factories on commission. Fiumei Hitelbank Rt. ceased to exist in 1907, when it was converted from an affiliated institution into a branch of the Hungarian General Credit Bank.

History

History of Fiumei Hitelbank Rt.

The predecessor of the Rijeka Hitelbank was the firm Steinacker & Partners, which was established in Rijeka in the early 1880s to promote the development of the financial and economic life of the city. Little is known about the life of Arthur Steinacker himself, but what is certain is that the family had German and Highland Cypriot roots. Arthur's father Steinacker Gusztáv was a Lutheran pastor in Gölnicbánya, where Arthur was born (1845), and in Trieste from 1846. The family settled in Weimar after the War of Independence, and the Steinacker sons (Edmund, Sándor, Arthur) were thus able to feel at home not only in their Hungarian roots but also in the developed world of the West. Arthur chose a career in finance and became a banker first in Stuttgart (1861) and then in London. From there he moved to Pest-Buda and then to Trieste, where he became a member of the local Masonic lodge on 23 July 1872. In the 1880s, Steinacker was already in Fiume, where he and his 'partner', Lajos Ossoinack, worked together to boost the town's economy. The 1880 annual report of the Hungarian General Credit Bank shows that the Budapest financial institution was already involved in the financing of Steinacker and Company as a foreign member.

Little is known about Steinacker's financial indicators and specific activities. It is very likely that through them or with their local knowledge, MÁH founded the rice milling and oil refining factories in Rijeka in 1881-1882. However, we know that MÁH's share in the profits of the Steinacker company was 35 250 Frt in 1884, 73 416 Frt in 1885 and 80 175 Frt in 1886, so it was on the increase. This was probably the reason why in 1887 the company was affiliated to the MÁH and the Banca di Credito Fiumana S.A. was founded (25 January 1887) with a share capital of Frt. 1 200 000, with its head office in Fiume, on the corner of Via albergo vecchio and Via Adamich.

János Ciotta, the Mayor of Rijeka, became the President of the company, Sándor Ribáry the Vice President, but the actual management was assumed by Arthur Steinacker, the CEO. The other directors were Félix Rosenberg, Miksa Engel, Emil Ehrlich, Lajos Cosulich, Antal Frank, Henrik Meynier, Zsigmond Mautner, Géza Radvánszky and Gyula Walthier, all local entrepreneurs from Fiume and members of the board of MÁH. However, in addition to the financial business typical of banking operations, the company was also engaged in merchandise business, as was typical of financial institutions of the time. Specifically, it was involved in the sale of products from the Rice Husking and Oil Refineries in Rijeka and was also involved in the flour and wood export business in Rijeka. However, before analysing the bank's activities, it is worth reviewing how the company made money during its existence between 1887 and 1907. As Antal Szász already wrote in his seminal work, the banks of the time, which were joint-stock companies, would have benefited from financing their activities through share capital, since this would have meant a long-term capital transfer between capitalists and industrialists. By contrast, as we shall see, the Rijeka Hitelbank financed its activities mainly through its creditors, i.e. it probably channelled money from other banks, including the parent company MÁH, through its own channels in the form of short-term loans. In the figure below, I will present the bank's operations in koruna terms, using the Rijeka Hitelbank's annual balance sheet total and its details, and I will also use the annual financial reports to explain this.

Analysis of certain financial balance sheet data of Fiumei Hitelbank Rt.

(Source: Compasses 1888-1906)

Meaningfully, the right-hand axis shows the annual balance sheet total of Rijeka Hitelbank Rt. in crowns, and the cumulative bar charts show the four sources (share capital, creditors, reserve fund, profit) of this annual total in percentages; these four have been repeatedly exposed in 100%, but sometimes this is not legitimate due to the inclusion of other sources not now shown. I have also included in the graph the stock of goods as a percentage of the balance sheet total from the appropriate balance sheet page to show the variation in this figure and its impact on the bank's overall performance.

At first sight, it should be striking that the bank's balance sheet total far exceeded the value of its share capital; on average, between 1887 and 1907, 261T3T of the balance sheet total was represented by share capital, while creditors accounted for 701T3T. The bank's initial 3-4 years were characterised by growth and a boom in business, which began to plummet in 1891. The reason for this, according to the annual reports, was the bank's timber business, which at that time had become a loss-making operation for the Rhenish people due to fluctuations in world demand. The report itself states: 'The credit bank of Rijeka, once rid of its dongak export business, will have in its other businesses the funds to ensure adequate profitability in the future'. In order to enable the bank to finance its losses, the shares were devalued and the company's share capital was reduced to 960 000 Koruna. As can also be seen from the development of the stock of goods in the diagram, in 1892 the bank got rid of its burdensome timber business and from then on a new boom began which lasted until 1902. During this period, the Rijeka Credit Bank founded the Rijeka Dock Company Ltd. in 1892 under the management of Zsigmond Copaitich, the Rijeka Cocoa and Chocolate Factory Ltd. under the management of Emil Gerbaud in 1896, the Rijeka Coffee Roasting Company Ltd. under the management of Anton Copaitich and Francesco Colazio in 1897, the Rijeka Steam Brick and Clay Factory Ltd. in 1898 and the Rijeka Wood Production Company Ltd. in 1899. Thus, we can see that not only the establishment of the Rijeka Credit Bank can be equated with a working capital investment, but the Rijeka institution itself was heavily involved in the establishment of industrial companies, whose headquarters and management often coincided with the building and management of the financial institution.

In 1901, the bank also switched to the new currency, the koruna, but this only increased the financial ratios in nominal terms, as there was no increase in real terms in the share capital, only a conversion (K 1 920 000). At the same time, for reasons unknown, the bank also closed its commodities business in this year. Financial reports cease to appear in Compass until 1908, and even then we are only tersely informed that Magyar Általános Hitelbank Rt. "converted the Fiume credit bank into a branch in 1908." For this reason, in 1907-1908 the Fiumei Hitelbank Rt ceased to exist and was replaced by the Fiumei branch of MÁH, whose detailed operation we cannot say anything about due to the lack of archival documents. It is certain that Arthur Steinacker was the branch manager until his death in Stuttgart on 20 February 1915.

The First Hungarian Rice Husk and Starch Factory Rt.

The Bank also participated in the establishment of the First Hungarian Rice Husking and Starch Factory of Fiume, also listed on the stock exchange, which is described in detail in in another article you can read.

The Rt.

The history of the founding of the Rijeka Petroleum Refinery has been an adventurous one. The industry came into being after the experiments of Ignác Łukasiewicz (1854), who was the first to produce lamp oil from petroleum. Subsequently, the search for black gold began in many parts of the world. In the years 1875-1885, the then obsolete sailing ships transported large quantities of oil from the United States to Europe, as the Rockefeller price war in America drove down the price of oil and the cheap commodity flooded the European market.

At the same time, the Rothschild and Nobel families also started to extract oil in the Russian regions of Batum and Baku, but they needed to build an oil refinery somewhere in Europe. Lajos Ossoinack finally persuaded the Rothschild-interested Hungarian General Credit Bank that, as Rijeka was located at the midpoint of the imaginary Gibraltar-Batum axis, a factory there would be the best bet. The plant was built north-west of the major port with a separate, lockable oil terminal for which the Hungarian State Railways built the rails, filling stations and loading bay connecting to the Fiume station at its own expense, at a cost of Frt 1 320 000 (K 2 640 000).

Kőolajfinomítógyár Rt., the refinery operator, was established on 13 October 1882 with its seat in Budapest. The company was founded in 1882 in 1882. Milutin Barač was appointed technical director of the Fiume site. The share capital of the company was HUF 1 500 000, which was increased to K 4 400 000 in 1895, K 6 600 000 in 1908 and K 8 800 000 in 1912.

When it was founded, the 40 000 m² refinery was capable of producing more than 500 000 m³ of finished product per year, which was 30% of the annual demand of Austria-Hungary at the time. In addition, the refinery was able to transport 5 000 q of oil per day in barrels, tankers or its own cans. To meet the latter demand, the company also maintained its own can factory with an annual production capacity of 300 000 cans. In addition to the production of petroleum, the plant was equipped to produce lubricating oil, petrol, gas oil and paraffin, and a fertiliser plant with a production capacity of 500 tonnes of by-products per year was also operated. The refinery became such a world-famous success that, following a visit by Joseph Ferenc Joseph on 23 June 1891, several Habsburg Archdukes (Franz Ferdinand, Franz Salvator) and even the Prince of Siam, later King Rama V, visited the site until 1913. In 1893, the joint-stock company founded oil refineries in Oderberg and Brasov in order to increase production.

The Fiume plant employed an average of 300 people, supported by an average of 400 horsepower of machinery. The refinery operated continuously, except on Sundays and public holidays. In the 1900s, workers' movement demonstrations were a regular feature in Rijeka, and thus also at the refinery. The most violent strike was in 1910. On 16 September, 120 workers refused to work, demanding an increase of 25% on the daily wage of 2.5 crowns, a reduction of the 12-hour working day to two half-hour breaks and a public holiday on 1 May. The strike was soon joined by all the workers (350), and in solidarity the workers in the torpedo yards and shipyards refused to work. The documents do not say whether the company(ies) met the demands of their workers, but they do say that after the police were unable to deal with the situation, the army was called in to 'settle' (sic!) the situation.

The company produced an average of 500 429 q between 1886-1895, 257 848 q between 1896-1905 and 352 000 q between 1906-1911, with an average annual value of K9 261 023 between 1895-1910. According to the unanimous opinion of the sources, oil refining was so successful in the early years that the joint stock company paid dividends of 60-80% on the Rijeka division from 1886 to 1900. This picture is nuanced by the fact that the Compasses report the results of the entire Petroleum Refinery Plc, i.e. the Rijeka, Brasov and presumably the Oelberg refineries aggregated. Based on these figures, profitability was not so overwhelming, but the company still paid an average dividend of 18% in the early years, and from 1892 up to 40% (although from 1905 onwards there were years when it paid nothing at all). The Petroleum Refinery Ltd. can therefore be considered one of the outstanding large companies of the dualist Rijeka, not only in terms of the number of workers, but also in terms of its production and business results.

Smaller business start-ups

The first serious attempt to build steamships in Rijeka was made by Zsigmond Copaitich. In 1892, Copaitich, together with several entrepreneurs interested in shipping, founded the Fiumei Dokktársulat Rt. a ship repair workshop in the Bergudi district of Fiume with a capital of 300 000 Frt. The shareholders of the company were: Fiumei Hitelbank Rt. (33%); Howaldt György Shipyard in Kiel (33%); Zsigmond Copaitich (4%); Gilbert Corrosacz (5.3%); József Gorup (9%); Máté Polich (3%); Antal Poschich (7.5%); Dr. Randich János (4,3%) Sverljuga Máté (1%) The company also received a state subsidy of K 80 000 per year for ten years for the construction and operation of a floating dock. In accordance with its statutes, the company was engaged in the repair of small steamers and sailing boats that arrived in Rijeka until 1893, when it was bought by the Howaldt shipyard in Germany and the Hungarian Settlement and Exchange Bank.

A Rijeka Cacao and Chocolate Factory Shareholderg was founded in 1896 with the support of the Fiumei Hitelbank and under the leadership of Emil Gerbaud, with a capital of 200 000 Frt. The company produced an average of 155 tonnes of chocolate, 1 750 tonnes of cocoa powder, 120 tonnes of cocoa paste, 150 tonnes of jam and 300 tonnes of bonbon per year. The company's growth in production is shown by the fact that in 1913 it also built a cocoa warehouse in Fiume. Its revenue was 100 000 Frt in 1897, 595 303 Krt in 1901 and from 1906 this figure rose to over 1 100 000 Krt.

A Fiumei Kávépörkölde RtThe factory was able to produce roasted coffee in steadily decreasing quantities: 2 750 tonnes in 1900, 2 045 tonnes in 1902, 1 700 tonnes in 1906 and 350 tonnes in 1910, with an average annual value of KD 600 000.

Sources

• Compass (1882-1932)
• Budapesti Hírlap.
• Državni Arhiv u Rijeci - Rijeka (Rijeka) State Archives.
• DAR-179. PO-1: Camera di Commercio e d'Industria Fiume (1851-1923) - Documents of the Chamber of Commerce and Industry of Fiume (1851-1923).
• DAR. JU-5.: DAR-7. Kraljevski gubernij za Rijeku i Ugarsko-hrvatsko primorje 1870-1918. - Papers of the Royal Governor of Rijeka and the Hungarian-Croatian coast 1870-1918.
• DAR. TH.: DAR-46. Pomorska oblast za Ugarsko-hrvatsko primorje u Rijeci (1870-1918.) - Documents of the Royal Hungarian Maritime Authority (1870-1918).
• Fest Aladár - Holek Sámuel (1896a). In Borovszky Samu - Sziklay János (eds.): Vármegyei és Városai Magyarország Vármegyei és Városai. Fiume and the Hungarian-Croatian Coast. The Hungarian and Hungarian-Hungarian-Hungarian-Hungarian-Hungarian Islands. Apollo Literary and Printing Company. 218-261.
• Fest Aladár - Holek Sámuel (1896b). In Borovszky Samu - Sziklay János (eds.): Vármegyei és Városai Magyarország Vármegyei és Várossai. Fiume and the Hungarian-Croatian Coast. Ferenc Fiume and Hungarian-Hungarian-Hungarian-Hungarian-Hungarian-Hungarian-Hungarian Islands. Apollo Literary and Printing Company. pp. 261-275.
• Zoltán Gál (2018) Modernisation of the Hungarian banking system and the establishment of a unified national economy at the turn of the century. In Norbert Csibi - Ádám Schwarczwölder (eds.): Modernizáció és nemzetstaatépítés: Haza and/or haladás dilemmája a dualizmus kori Magyarországon. Pécs, Kronosz Publishers. 181-211. o.
• Péter Gerhard (2008) Assimilation and dissimilation in autobiography. The case of Imre Fest and Edmund Steinacker. AETAS Vol. 23, 2008, No. 3, pp. 25-45.
• Karaman, Igor (1974) The economic development of the town of Rijeka in the dualist period. Századok 1974/1. pp. 193-211.
• György Kövér (1896) The development of the banking system of the Austro-Hungarian Monarchy. Economic Review, Vol. XXXIII, No. 3, pp. 312-324.
• György Kövér (2005) Bankers and bureaucrats. AETAS Vol. 20, 2005, No. 1-2. 93-114. o.
• Hungarian National Archives. National Archives. P-1083. Archives of Masonic organisations.
• Hungarian National Archives. National Archives. P-1134. Sirius Lodge 1901-1915.
• Oil Refinery: https://www.rothschildarchive.org/materials/ar2005rijeka.pdf
• Ágnes Pogány (2007) The first century of the Hungarian petroleum industry: 1882-1989.HISTORY: THE JOURNAL OF THE HUNGARIAN HISTORICAL ASSOCIATION.
• Márton Pelles (2018a) La storia delle societá industriali di Luigi Ossoinack (1875-1913) FIUME - RIVISTA DI STUDI ADRIATICI. 37.
• Márton Pelles - Gábor Zsigmond (2018): The Hungarian maritime trade history of Fiume (1868-1918), Pécs, Pro Pannonia Publishing Foundation.
• Antal Szász (1947). Budapest, TÉBE Publishers M. Sz. Sz.
• Géza Szurovy (1993). Budapest. Hírlapkiadó Vállalat.
• Gusztáv Thirring (1912). Budapest. Statistical Yearbook of Hungarian Statistics of Statistics of the City of Budapest.

Date of foundation: 25.01.1887.

Date of cessation: 1907

Founders: Steinacker & Társa Rt., Magyar Általános Hitelbank Rt.

Securities issued:

Fiume Credit Bank

Decisive leaders:

1887	János Ciotta
1896	Sándor Ribáry
1898	Henrik Meynier

Principal activities: banking, commodity trading, establishment, financing and participation in the operation of industrial and commercial companies

Main products are not set

Seats:

1887

Rijeka

Locations are not set

Main milestones are not set

Author: by Dr. Márton Pelles