Tuesday, January 26, 2016

Who was Ludvig Nobel?

Ludvig NobelLudvig Nobel - brother of Alfred Nobel and known as Russia's Rockefeller. Explore his life journey in becoming Baku's major oil baron.

Ludvig Nobel (July 27, 1831 - April 12, 1888) worked as the owner of Branobel, a major oil company in Baku, capital of modern-day Azerbaijan. He came from a family of businessmen, scientist, and engineers. He took the chance of great wealth when the oil boom in Baku began in the 1860's. His work as an oil baron earned him the respect of his workers, the nickname Rockefeller of Russia and the eye of owner of the biggest oil company during those days - John Rockefeller and his Standard Oil.

The Nobel Family

Born on July 27, 1831, Ludvig Nobel was the son of Immanuel and Adrietta Nobel. In 1837, the Nobels moved to Russia and started family business in arms manufacturing. Sadly, it failed after two decades of operation.

But Immanuel’s failure in business did not meant failure as a father. His sons, Alfred and Ludvig both became successful. Alfred succeeded as a chemist, especially with his invention of dynamite. Ludvig on the other succeeded as a businessman. He revived his family business and started receiving contracts from the government.

But the third of the brothers, Robert, seemed to lack his brothers’ successes. He attempted to start his own business and failed. After which he decided to work for his brother Ludvig. In 1873, Ludvig received a contract from the Russian army to manufacture rifles. He accepted it and sent Robert to Baku with 25,000 rubles to purchase walnut lumber for rifle butts. When Robert arrived in Baku, he saw the city on the verge of an oil boom.

The City of Baku

Baku in the 1870’s saw the rise of large scale oil exploitation. Even during the time of Marco Polo, Baku was well-known for its oil seeping out from its lands. In the early 1800’s numerous hand-dug oil pits operated. But in 1857, the first oil refinery opened in the city. And with the rise of kerosene, many searched and highly valued oil. In the 1860’s refineries and mechanically dug oil wells began to rise in numbers. Especially when the Tsars allowed foreign investments to enter the region. Baku began to rise in prominence immediately.

In 1873, when Robert went to Baku, word reached him about the growing oil industry in the city. The captain of the ship he boarded told stories of oil in Baku. The captain offered him a piece of land and his refinery to purchase. Curious and driven to succeed, he decided to use the 25,000 rubles supposedly allocated for walnuts to purchase the captain’s land and refinery. Eventually, Robert’s gamble paid off and started to make money.

Ludvig in Baku

After two years, in 1875, Ludvig arrived in Baku to join with his brother Robert to profit from the oil boom. The brothers founded the Nobel Brothers Association, later known as the Tovarishchestvo Nephtanavo Proisvodtsva Braitiev (Nobel Brothers Petroleum Production Compay) or known as the Branobel. Ludvig brought drillers using steam engines to drill in the lands of the Absheron Peninsula. With the use of modern drilling machines, Ludvig managed to increase production. By the following year, Branobel shipped their first kerosene to the Russian capital of St. Petersburg.

Ludvig proved to be a dynamic, innovative, calculative, and most importantly, efficient businessman. Under his guidance, Branobel became the first oil company to make the position of professional petroleum geologist, an important post to find new oil wells.

As an employer, Ludvig showed great care to his workers. Unlike other businessmen or capitalist of his time, Ludvig exemplary treated his employees. He prohibited child labor. He reduced working hours to 10 and a half hours. Although long, others toiled worse, working conditions for more than 12 to 14 hours. He provided medical care and technical training for his employees. He gave elementary education to the children of his workers. Other than that, he provided banking services to his workers. His workers, in turn, respected him and vowed their loyalty to Ludvig and Branobel. They proudly labelled themselves as Nobelites.


Besides better working conditions, Nobel showed his creative mind in improving Branobel and even the whole Baku oil industry. For example, back then, either in railroad or in barges, producers transported oil in barrels. But Ludvig found ways to improve and to increase the volume of transported oil. For railroads, Branobel began to use special railroad wagons called cistern cars or wagons outfitted with tanks to carry oil or kerosene. By sea, in 1877, he ordered the construction of the first oil tanker – the Zoroaster. It began its service in 1878 with a capacity to haul 750 tons of oil for Branobel.

Other than tanker and cistern cars, Ludvig also borrowed ideas from other countries’ oil industries – most especially from the Americans. News of the pipelines in Pennsylvania took the attention of Ludvig. He saw its benefits in reducing transportation expenses. At that time, oil producers in Baku transported oil via wagon carriers and trains. And so, during the mid-1870’s, he ordered the construction of the first pipelines in Baku. The construction of the pipelines, however, faced enormous challenges. Wagon drivers opposed the pipeline project for its implications to their livelihood. It threatened to knock them out of the oil business. Local officials also disagreed with the pipelines as they saw the grievances of the wagon drivers. Ludvig asked and convinced officials in St. Petersburg just to make the Baku officials agree to the planned pipelines. But ultimately, despite immense objections and challenges, the Branobel pipeline opened in 1878. Powered by steam engines, it had a measure of 12 km of pipes connecting oil wells and Branobel refineries. With Ludvig’s initiatives and creativity, he made Branobel a major oil company in the Russian oil industry and even in the world stage.

Sibling Split

Branobel’s success, however, caused a rift between Ludvig and Robert. Robert disagreed with his brother’s interference in a business that he saw he started. He felt astray from his brother’s very active participation. So much so, he felt disregarded and overshadowed by his dynamic brother. In 1879, they incorporated Branobel. Robert who felt enough was enough sold his shares to Ludvig and left Russia for Sweden. Ludvig then continued the business and aimed to compete globally.

Competition and Competitors

Off course, Branobel faced serious competition from other ambitious and aggressive businessmen. One such competitor threatened Branobel in Baku itself.

The Rothschild competed with the Nobels in dominating the Baku oil industry. In the 1883, Alphonse de Rothschild financed the Baku-Tblisi-Batumi railroad. A year later, Rothschild bought the bankrupt company that operated the railroad, prompting his entry to the Baku oil industry. It challenged the supremacy of the Nobels in Baku and also in the European market. But other than the Rothschild, another challenge Ludvig faced came from Russia’s rival in the oil industry – the United States. 

John Rockefeller’s Standard Oil monopolized the oil industry in the United States and supplied almost 90% of the America’s oil output. Hence, he had a huge share in the world’s oil output and Rockefeller had no intentions to share the domination of the world’s oil. When the Nobels and Rothschild threatened Standard’s control of the European market, Rockefeller attempted to profit from Ludvig and the Rothschild’s profits by acquiring shares in their respective companies. Rockefeller sent W.H. Libby to talk to Ludvig to allow Standard Oil to buy shares of Branobel. Ludvig, however, wanted to break Standard Oil’s supremacy over the world’s oil and declined the offer. As a result, Standard Oil began a war with Branobel. It set up offices in Europe and dropped their prices. Nobel fought back by lowering his own prices to compete with Standard Oil.

But the competition and work stress took a toll in Ludvig’s health. His health went to a serious declines. Three years later in April 12, 1888, Ludvig Nobel passed away, leaving Branobel to the capable hands of his son Emmanuel who led the company through turbulent times until in 1920, when the Soviet government nationalized Branobel.

Summing Up

Ludvig Nobel earned the admiration of many and earned him the nickname Rockefeller of Russia. He showed ingenuity, creativity, and energy which every great and successful businessmen should have in order to succeed.

Ludvig's Death and the Nobel Prize

With the death of Ludvig spread to Europe, many journalist thought that the dead Nobel was Alfred Nobel, the famous inventor of dynamite. With this mistaken identity of the deceased, numerous newspaper printed obituaries celebrating the death of the inventor and chemist whose dynamite killed countless of lives, including Tsar Alexander II. Saddened by the jubilation once his demise came, Alfred Nobel began to prepare wills that his money would be used to create prizes for individuals who greatly contributed to specific fields. With the death of Ludvig, it set to motion the events that led to the creation of the Nobel Prize.

Explore also:

Travin, Dmitry & Otar Marganiya. "Resource Curse: Rethinking the Soviet Experience" in Resource Curse and Post-Soviet Eurasia: Oil, Gas, and Modernization. Edited by Vladimir Gel'man & Otar Marganiya. Lanham, Maryland: Lexington Books, 2010.

Vassiliou, M.s (ed.). Historical Dictionary of the Petroleum Industry. Lanham, Maryland: Scarecrow Press, Inc., 2009.

Yergin, Daniel. The Prize: The Epic Quest for Oil, Money, and Power. New York, New York: Simon & Schuster, 1991.

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