#100YearsofRomania: The companies that turned Romania into the “Japan of Europe” in the 1900s

Newsroom 18/10/2018 | 11:17

In 1918, Romania was focusing on modernizing and developing its industry through facilities given to small “handyman companies” who created jobs in the developing economic sectors of the time. The state offered subsidies for railway goods transport, discounted prices for land fields used to build plants and lower taxes for business. 

Encouraging the industry led to a huge economic progress of the country. At the beginning of the 20th century Romania was frequently called the “Belgium of the Orient” or the “Japan of Europe”. A century ago Romania was exporting more goods than it was importing: For every RON 98 per capita exports, the country was importing RON 80 worth of goods per capita. Almost 80 percent of goods and merchandise were transported by train, through the Romanian Railway Company, at the time the most valuable Romanian company.  Romanian industry had a RON 1,5 billion capital, 200,000 employees, most of whom worked in the manufacturing and extraction industry.

The first foreign banks came to Romania in 1897, and in 1915 the number increased to 215 with a total capital of RON 228 million. The five most important banks were Banca Romaneasca, Marmorosch Blank, Banca Comerciala Romania, Banca Chrissoveloni, Banca de Credit Roman and Banca Comertului from Craiova.

The next most important companies in terms of revenues and influence in the world were oil companies. Romania’s oil production in 1913 was of 1.849 million tonnes per year.

Just like today, oil companies had foreign ownership, mostly German – but the allies, the French and even the English, invoking the provisions of the San Remo Convention, were putting pressure on the Romanian state to break up these German oil companies.

After several rounds of negotiations led by the Averescu government with French and English diplomats, Romanian companies took over the majority stake, and the rest was equally divided between French and English capital.

The most important oil companies in Romania in the 19-20th centuries

The British-controlled Steaua Romana company, with the most modern refinery in Europe at the time it was built in 1895, and Romanian Astra Society, founded in 1910, were the biggest players on the Romanian market. 

Between 1910 and 1947, the Romanian Astra Refinery belonged to the Dutch Royal Dutch Shell Trust. Until the beginning of the First World War, the other major companies were: Romanian-American (founded in 1904 as a subsidiary of JD Rockefeller’s American Standard Oil Company), Vega (founded in 1905 with German capital), Petrolifer Credit (1905), the Franco-Romanian Oil Company (appeared in 1905 and is considered the largest infusion of French capital on the Romanian oil market), Franco-Romanian Company Unirea Aquila (1906).

Romania was the first country in the world with a 275-tonne oil production recorded in international statistics around 1850. It was followed by the US in 1859, Italy in 1860, Canada in 1862 and Russia in 1863.

The first commercial oil well was built in Romania. The first oil installations in the country were the oil pumps from Lucacesti (Bacau) and Bucharest was the first city in the world to be lit with lamp oil.

The engineers were also extremely important in this fresh industry, and important figures included Virgilio Tacit, the inventor of the first device to prevent eruptions, Andrei Dragulanescu, who developed and tested the single-column well tube casing, Ion Basgan, who used the principle of sonicity in 1934, both in Romania and in the USA, for a new drilling system, the method for improving the yield and perfecting the rotary drilling by percussion rotation and by damping hydrodynamic pressures.

The method proposed by the engineer Basgan has been widely used in the USA, and introduced in Romania after 1944. Finally, Lazar Eldeanu, who developed a new method of refining oil and then other petroleum products. It is a selective refining method that uses sulfur dioxide.

The story of Blazi Guban

Guban shoes are still well-known, and the brand still exists, owned by an Italian company. The Guban factory was founded in 1937 by Blazi Guban under the name of Guban Timisoara Chemical Plant and operated as a workshop of chemical products and boot cream (near the Gara Mica).

The most interesting thing is that Guban managed to become a director for life, following an agreement with the communist rulers, after he donated the factory to the state. It was the only plant in the country that retained its manager after the 1948 nationalization.

Guban shoes have been worn by famous people, from former US President Harry Truman to actress Sophia Loren.

The eternal battle between Nicolae Malaxa and Max Auschnitt

Nicolae Malaxa used the plant built between 1923 and 1927 with 82 machines purchased from Germany, making it the most sophisticated rolling stock in Europe at the time. Furthermore, Malaxa contracted 180 skilled German workers for a period of between six months and a year, to begin the construction of locomotives. German workers also had the role of instructing the Romanian workers to take their place.

In 1928, after less than a year, the factory became operational, and the first steam locomotive, bearing the name of its Romanian builder, emerged through the factory gates. At the same time, Romanian workers were trained to replace the Germans at the end of the contract term.

Since then, Romania did not import another locomotive.

Together with engineer Henry Holban, Malaxa set up an integrative strategy in the unified national space for automotive construction and exploitation. Between 1932 and 1934, scientist George Constantinescu used the principle of sonicity in his invention, the Sonic Couple Converter, successfully applied to the locomotives and motor cars produced at the Malaxa plants in Bucharest.

In parallel with the locomotive production, Nicolae Malaxa builds the seamless steel pipe factory (the current Republica plant), applying the American Stiefel laminating process for the first time.

In just 12 years (1928-1939), Malaxa’s plants evolved from a rolling stock repair shop to the size of a leading industrial player in Europe. In 1945, the first Romanian car named Malaxa was manufactured in Resita.

Malaxa initiated and implemented in Romania the following industries: rolling stock equipment (1939-1943); Diesel engines (1935); mechanical transmissions for motor vehicles, including control systems (1936-1937); seamless steel tubes (1937 after the Stiefel process); Diesel locomotives for CFR (1938); optical apparatus (1938).

Politically, Malaxa was a sympathizer of the legionary movement and a financier for almost all political parties, including Garda de Fier and the Romanian Communist Party. Malaxa enjoyed the friendship of philosopher Nae Ionescu, and through him succeeding to establish relations with the legionary environment and approach German political circles.

During the Second World War, in May 1941, Malaxa was accused of collaborating with the Legionnaires, and consequently his factories were seized.

He was competing with his eternal enemy Max Auschnitt, a Romanian businessman who managed the Iron Factories and Resita Domains (UDR) successfully, leading it to become the Romanian firm with the largest capital of RON 1 billion, the highest turnover and the most employees (16,669 in 1938, and 22,892 in 1948), for the favors of King Carol II, both being part of his camarilla.

Together with his brother Edgar, Auschnitt owned several steel and munitions businesses, including the Titan-Nadrag-Calan chain, which had over 4,900 employees in 1938. He was among the managers of various foreign companies in Vienna or Munich, as well as of Romania-based companies such as the Romanian Telephone Society and the Chrissoveloni Bank.

Malaxa won the battle for Carol II’s favors and Auschnitt was sent to jail for six years. He was freed by Antonescu after two years.

Both failed to make a deal with the communists and continue their fight in the USA.

The bankers who influenced Romania

Zenni Chrissoveloni came to the Romanian Principalities in 1848 and set up a bank and an exporting company in Galati, which later expanded into Braila and Bucharest. 

Businesses then flourished under the leadership of Nicolas Z. Chrissoveloni, Zenni’s son, a period in which family investment in real estate and agriculture developed.

In 1879 he bought the domains of Ghidigeni and Coraşti from Dimitrie Mavrocordat, where he built a school that still exists today, the village church, a villa and developed the cognac distillery there.

The bank lost its reputation during the crisis, but later regained it, and under the management of Nicky Chrissoveloni, the institution was so strong that on 3 June 1948 the profit reported for the previous year reached RON 2 billion, but the Communists nationalized the bank eight days later.

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