How the Nobel family helped establish the Russian oil industry

This enterprising family rose from the bottom to incredible heights during their years in Russia.

The Nobel Prize was established in 1901. Since then, it has been awarded 615 times to 989 individuals and organizations, mostly from the United States, Great Britain, Germany, France, Sweden and Russia.

What few people remember today is that the prize appearance was made possible, thanks to the Nobel family's lucrative oil business in the Russian Empire.

Bankruptcy

The Nobel family came to Russia from Sweden in 1838. The inventor Immanuel Nobel - the head of the family and father of the Nobel Prize founder - moved his wife and three sons to St. Petersburg, hoping to market inventions he had worked on in Sweden.

Swedish industrialist Emmanuel Nobel (1859-1932).

Swedish industrialist Emmanuel Nobel (1859-1932).

Sputnik

The risk of relocation eventually brought rich profits for the family. The innovative Swede managed to arouse the personal interest of Czar Nicholas I of Russia, when he introduced an improved version of an exploding underwater mine.

During the time of the Crimean War - which lasted from 1853 to 1856 - invention, innovation and mass production of weapons and military equipment were of paramount importance to the Russian government.

Taking advantage of his early success, Immanuel Nobel established a munitions factory which proved to be a very lucrative business at the time.

However, he went very quickly with no luck when the new Tsar Alexander II introduced severe cuts to the country's military budget soon after the Crimean War had ended.

The family business in Russia went bankrupt and was sold by creditors.

An impulsive purchase

When he returned to his native Sweden, Immanuel entrusted the remains of the family fortune to his eldest son Ludvig, who remained in Russia with his siblings.

Ludvig Nobel used the savings to found a new factory specializing in the manufacture of gun carriages. Under Ludvig's leadership, the business began to grow and the Machine Building Factory 'Ludvig Nobel' became one of the largest manufacturers of artillery parts and rifles in Russia.

Ludwig Immanuel Nobel (1831-1888)

Ludwig Immanuel Nobel (1831-1888)

Public domain

In 1873, Louis entrusted his brother Robert with 25,000 rubles and instructed him to go to the Caucasus to obtain walnut wood that he hoped to use in the manufacture of gun stocks.

But when Robert arrived in Baku, he could not resist the temptation to make a purchase that would prove life-changing for the Nobel family. Using the 25,000 rubles in his possession, Robert bought a small oil refinery in the city that would soon turn into a world capital of oil production.

Branobel, Ltd.

In three years, the small oil refinery in Baku was transformed into the limited company 'Branobel' with headquarters in St. Petersburg with a share capital of three million rubles. The Nobel brothers jointly owned 60.8 percent of the company's shares and the rest went to other investors.

Nobel Nafta Brothers Production Corporation in Baku, Azerbaijan. 1875-1920. The Technical Museum (SS PO 2.0)

In the years that followed, the company began to buy oil fields throughout the Russian Caucasus, mainly in the territory of modern Azerbaijan and also some fields in the Asian part of the Russian Empire.

Nobel Nafta Brothers Production Corporation in Baku, Azerbaijan. 1875-1920. The Technical Museum (SS PO 2.0)

The Nobel brothers used technology to grow their oil business and pioneered the development of early oil tankers. The world's first tanker named 'Zoroastr' belonged to their company.

Zoroaster

Zoroaster

Public domain

Establishing research laboratories in Baku and employing dozens of scientists, the Nobel brothers relied heavily on science and technology to influence their business operations.

The company's management was also known for friendly treatment of workers, atypical of the time before the Russian Revolution. The Nobel brothers introduced the profit sharing system to their workers, invested in improving their living conditions and donated to schools and hospitals in areas where it operated.

Nobel Nafta Brothers Production Corporation in Baku, Azerbaijan. 1875-1920. The Technical Museum (SS PO 2.0)

At the turn of the century, Branobel grew exponentially and became the largest oil company in the Russian Empire. It operated over 500 oil wells and a staff of about 12,000 workers. Then the Russian Revolution undid the company's impressive rise.

Nobel Nafta Brothers Production Corporation in Baku, Azerbaijan. 1875-1920. The Technical Museum (SS PO 2.0)

The Red Army took power in Baku in late April 1920. The Bolsheviks nationalized the Branobel company's assets, leaving the founders without de facto control over the business they had founded.

Nobel Nafta Brothers Production Corporation in Baku, Azerbaijan. 1875-1920. The Technical Museum (SS PO 2.0)

However, the resourceful brothers took advantage of the uncertainty of whether the Bolsheviks would win the Russian Civil War and sold their shares in the company, which had already been nationalized by the Bolsheviks, to the American Standard Oil Company, Inc.

Nobel Nafta Brothers Production Corporation in Baku, Azerbaijan. 1875-1920. The Technical Museum (SS PO 2.0)

Part of the profit from the deal was to be used by Alfred Nobel to establish the Nobel Prize in 1901.

Today, the Nobel brothers are widely recognized for founding the Russian oil industry, which has grown to become one of the largest in the world.

Click here to find out what happened to the richest people in the Russian Empire after the 1917 revolution.

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