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THE “RUSSIAN GERMAN”: Wogau family business: from tea to banks and factories

 

A land of endless opportunities

 

The Russian market has always been a world of unlimited opportunities for foreign businessmen. In Europe, profits were constrained because of fierce competition, and foreigners arriving to Russia were amazed at the opportunities available there. In Europe, it took generations to build a sizeable fortune, but in Russia this could happen within a lifetime. An unbounded Russian market and a wealth of natural resources lured Europeans eastward. Starting with the reign of Peter I the Great and Catherine II the Great, Russian imperial authorities actively recruited people of

German origin to serve the Russian crown. We should not forget that Catherine the Great was herself an ethnic German, who so successfully integrated into the Russian society that she became the best female ruler in Russian history.

Germans arriving in Russia could settle in communities and with their families, they were accepted to military service at their existing rank, they could speak their language and practice their religion. The transplants repaid Russia in kind: they became the fresh blood of the Russian economy, agriculture and public life. Among those German immigrants was the Wogau family. A detailed history of the family and its business has already been explored in several Russian-language publications by the author. The Wogau family business in Russia started

with a trading company founded by Philipp Maximilian von Wogau (1807 – 1880). The family can trace its ancestry to the 16th century; in the 18th century, the family became landed gentry.

 

The Russian branch of the Wogau family

 

One branch of the family fell on hard times; Philipp Maximilian had no savings and upon his arrival in Russia took a job as a courier in a small brokerage firm. Because of his hard work and a profitable marriage (he married the daughter of a dye factory owner Franz Rabeneck), Philipp Maximilian managed to establish good connections and

build up enough capital to start his own business. Philipp Maximilian ran his trading business together with his brother, Friedrich von Wogau  (1818 – 1848), selling dyes and tea. Using profits from the tea trade, the Wogau

started buying and selling cotton. The Wogau actively intermarried with other “Russian German” families in Moscow, which led to the emergence of a huge Wogau-Mark-Banza-Schumacher-Ruperti clan (with the Wogau, Mark and Banza families as its core). In 1848 Philipp Maximilian became a subject of the Russian crown and joined the merchant guild. The Wogau & Co. Trading Company was founded by M.M. Wogau and a merchant from Revel

named V.D. Luther. By 1914 the Company was owned by a group of relatives: a son of one of the founders, honorary citizen R.V. Hermann, Moscow 1st-guild merchants M.F. Mark and G.M. Mark and E. Schumacher, a British subject. The headquarters of the Company was located in the building belonging to the Anchor Insurance Company (Moscow, 26 Varvarka st.), of which the Wogau family later became part owners. The Anchor Insurance

Company achieved great success: it was one of the leaders of the Russian Empire’s insurance market.

 

A new player in the tea market

 

Soon the Wogau family’s attention was attracted by a highly profitable business: tea trade. The rapid growth of the Wogau tea business was made possible by the lifting of the import ban on the Chinese “Cantonese” tea in 1862. This type of tea was carried from Chinese port cities to Europe by European ships. It was inferior in quality to another type of tea, called “Kyakhta” ((Translator’s note: ‘Kyakhta’ is the name of a town in the Russian Far East, on the border between Russia and China, known throughout the 1800s for active Russian-Chinese trade. Caravans carrying loads of tea originated there; hence the type of tea delivered to mainland Russia this way was called ‘Kyakhta tea’.)) tea, which was delivered to Russia and Europe by land; but because the “Cantonese” tea was cheaper, due to lower transportation costs,  there was sufficient demand for it. Starting in 1862, the Wogay & Co. Trading Company bought tea on foreign markets, using British companies as intermediaries, for subsequent resale in Moscow and Nizhni Novgorod. Some of the tea was purchased on the London Tea Exchange. The Wogau tea business thrived:

cheap tea was attractive to consumers, and, although the markup was low, the Company made good profits because of the high volume of sales. The name of the Company – ‘Caravan’ – also contributed to its success: the word reminded consumers of the “caravan” tea, the tea that was brought to the European part of Russia by caravans

via Mongolia and Siberia. This tea was of better quality than the “Cantonese” tea. The fact that consumers associated the name with an ancient method of transportation was also a factor in boosting the company’s sales.

 

The “Caravan” trade partnership

 

In 1893 the Wogau & Co. Trading Company set up a trade partnership in Russia; the partnership was named ‘Caravan’, and the business was wholesale trade of bulk tea. Caravan imported tea not only from China, but also from India; the Indian tea was sold as ‘Number 105’. Caravan’s company logo underwent many changes. Aming the symbols used were the initials ‘TK’ (from the Russian name ‘ТовариществоКараван’ = ‘Partnership Caravan’) and ‘TPK’ (from the Russian name ‘РусскоеТовариществоКараван’ = ‘Russian Partnership Caravan’), a lion with a shield (the symbol of the Wogau & Co. Trading Company) and a country cottage. The partnership enjoyed steady growth; its offices and warehouses appeared in Moscow, Odessa, Ufa, Samarkand.

The Company sold its tea in paper packages as well as in luxury containers made of wood, glass, tin, porcelain and crystal. The Worgau even used advanced technology of the time in their packaging. For example, one type of tin containers had a built-in device for viewing stereographs (pictures that produced a 3-D image when viewed through a special lens), extremely popular at the end of the 19th — beginning of the 20th century. The container bearing the firm’s logo continued to live its own life even after the tea was all gone; children who played with it learned the firm’s name from an early age, becoming future consumers. For customers who regularly bought sugar and tea, Caravan manufactured special tea ware with the company logo. Favorite clients got generous gifts: glasses and other tableware bearing Caravan’s advertising. A lot of tea was sold in teapots, sugar bowls, even kettles. The useful packaging from Worgau remained in the consumer’s home, while the packaging of other firms was simply discarded. In addition to tea containers, the Worgau ordered all kinds of other promotional materials that consumers could see in places they least expected. For example, some stores had faience money bins with Caravan’s advertisements. There were even ashtrays with the company’s logo. Caravan’s stores were located in all major cities. They welcomed shoppers with beautiful tin signs featuring mountain eagles, the company logo and other themes. The walls inside the stores were hung with paper advertisements, and city streets were decorated with attractive posters. Even in places where there were no Caravan stores, the company had business partners who delivered its products to the farthest corners of the Russian Empire.

 

Caravan’s position on the tea market

 

By the beginning of the 20th century, Caravan was one of the leaders of the tea trade, being one of the top five companies in several categories. During 12 years since the founding date, the Caravan partnership, according to its own data, weighed out 117,547,673 pounds of tea into 643,381,059 packages. The state excises alone amounted to more than 70,000,000 rubles, and the cost of transporting the tea from production sites to consumers exceeded 20 million rubles. The annual volume of tea and sugar sales of the Caravan partnership (including commissioned sales of brick teas) was at least 35,000,000 rubles.

 

From tea trade to banking

 

In the 1860s the Wogau & Co. Trading Company expanded its business and started selling fine English cotton yarn

and American cotton. Since the 1870s the company sold building materials, sugar (both loose and cubed), domestic and imported ferrous and nonferrous metals, pyrite and anthracite. Investments into these businesses were made possible, in part, by profits from the tea trade. In the 1890s — early 1900s Wogau & Co. was a large barley trader on exchanges in the Volga region (Samara and Saratov exchanges) and Saint-Petersburg (Petersburg and Kalashnikov exchanges). The company had exclusive rights to sell the output of two large Russian sodium companies: Lyubimov, Solvay & Co. (founded in 1887 with part of the founding capital coming from Wogau & Co.; mines and factories in Perm’, Ekaterinoslav and

Nominal share cost of various tea trading companies and the first year of share trading

 

Nominal share cost of various tea trading companies and the first year of share trading
Rank(bysharecost) Partnership First yearsharestraded

Nominalsharecost

(inrubles)

1 Gubkin, Kuznetsov& Co. 1891 10.000
2-3 S. Perlov 1912 5.000
2-3 The Popov brothers 1883 5.000
4 V. Perlov 1894 3.000
5-7 Peter Botkin 1893 1.000
5-7 Caravan 1893 1.000
5-7 Medvedev 1899 1.000
8 Wysotsky& Co. 1898 500

 

Principal capital of the largest tea trading companies in the Russian Empire

 

Principal capital of the largest tea trading companies in the Russian Empire
Rank (by the amount of capital) Firm Principal Capital (in rubles)
1-2 Gubkin, Kuznetsov& Co. 10.000.000
1-2 Wysotsky& Co. 10.000.000
3 S. Perlov 2.500.000
4 Peter Botkin 1.800.000
5-6 Caravan 1.500.000
5-6 The Popov brothers 1.500.000
7 V. Perlov 1.200.000
8 Medvedev 600.000
9 Klimushin 300.000

 

Ranking of the largest tea trading companies in the Russian Empire by return per share

 

Ranking of the largest tea trading companies in the Russian Empire by return per share
Rank(byreturnpershare) Firm PrincipalCapital(in rubles)
1 Peter Botkin 1,800,000
2 Wysotsky& Co. 10,000,000
3 Gubkin, Kuznetsov& Co. 10,000,000
4 Caravan 1,500,000
5 Klimushin 300.000
6 Medvedev 600.000
7 V. Perlov 1,200,000
8 S. Perlov 2,500,000
9 The Popov brothers 1,500,000

 

Tomsk regions) and the “South Russia Society for Processing and Sale of Sodium and Other Chemical Products” (founded in 1897, sodium and chemical plants in Slavyansk, Khar’kov region). Wogau & Co. was also the sole authorized vendor for the Copper Syndicate (founded in 1908). Tea trade was highly speculative. Profits depended to a large extent on the vagaries of the market, but industrial production allowed the company to preserve its tea fortunes and to earn stable returns. In 1914, the trading branch of Wogau & Co. had six departments (industrial and household chemical products, building materials, tea, sugar, metals, cotton) and over 650 employees. The total sales volume was about 120 mln. rubles. Up until the early 1900s Wogau & Co. ran a banking business and had a bank in Moscow; the company also was among the founders of the Moscow “Uchyotni” Bank (1869) and a partowner of the Russian Foreign Trade Bank and the Commerce Bank of Riga. Wogau & Co.’s entry into the banking business was not an accident: this allowed the company to issue credit to itself at low interest rates and on favorable terms. At the end of the 19th century, the tea trade required an enormous operating capital because of large-scale purchases of tea. It is commonly stated that the Wogau & Co. Trading Company existed from 1859 to 1917; but this is inaccurate. Recently found documents indicate that the company continued to exist (in some form or other) at least until March-April of 1918.

 

The Wogau clan: investing in real estate

 

Considerable profits from the tea trade allowed the family to invest its money into the most secure asset with a steady appreciation: real estate. Members of the Wogau-Mark- Banza-Schumacher clan owned many buildings and much land in Moscow and in the surrounding regions. Every family owned several buildings in Moscow and a number of estates in the surrounding country, where they usually spent their summers. The Wogau clan owned six adjacent buildings on the Vorontsovo Polye street in Moscow, with several other buildings on nearby streets. At some point, the Wogau warehouses were also located there. One of those six buildings was destroyed by a mob in 1915, during anti-German riots caused by the hostilities between Russia and Germany during World War I. Before the war, the whole street was jokingly named ‘Wogau highway’ by the locals. But there was another major road and two minor streets in Moscow that actually bore the name ‘Wogau’. One of the railroad stations on the way out of Moscow is to this day named ‘Mark’, in honor of the Mark family (automobile and tea business), members of the Wogau-Mark-Banza clan. Many country estates belonging to the families of the Wogau clan were known for their large scale and beautifully decorated grounds. Unfortunately, most of them were damaged or destroyed during anti-German riots in 1915.

 

Appoaching the end

 

By the beginning of the World War I, the Wogau family had built and controlled one of the most extensive trading and industrial conglomerates in the Russian Empire. When Germany declared war on Russia, it thereby threatened the positions of German-owned enterprises there. The longer the war dragged on, the harder life became for German businessmen in Russia. As part of the campaign against an “overrepresentation” of ethnic Germans among Russian business elites, in 1916 the Russian government seized control of the Wogau & Co. There was some talk about nationalization, but it never happened. In spite of the war with Germany, Russian authorities tried to protect the life and property of ethnic Germans in Russia. At the same time, however, large portions of the Russian society turned against German businesses, and this led to a series of anti-German riots. In addition to the anti-German backlash, the government’s takeover of the Wogau & Co. allowed its competitors to start pushing the company out of the Russian tea market. Under such circumstances, the Wogau and their relatives had no choice but to start winding down their operations, trying to save what they had, including their tea-trading fortunes. Although Wogau & Co. formally operated until March-April of 1918, most operations had been ceased by 1916. Many members of the Wogau clan managed to escape to Europe, taking some of their money with them. Others remained in what became Soviet Russia. One of the descendants of the Wogau family — a well-known Russian writer Boris Andreevich Wogau (known under the pseudonym ‘Pil’nyak’) – met a tragic end: he was executed in 1938 at the time of the infamous “purges”.

 

From the past to the future

 

The Wogau family has had a distinguished history in Russia. Arriving from Germany during the first half of the 19th century, the family started a trading business, selling paint, chemicals and metals; one of the branches of the family even went into agriculture. Eventually, the family business empire came to include industrial production, trade, insurance and banking businesses. In all, the Wogau family owned 24 enterprises with the total capital of 90 mln. rubles and sales volume of 120 mln. rubles. The Wogau were among the leaders of the tea market, earning enormous profits from tea trade. Some of us here in Russia still fondly remember the Wogau family and their Caravan partnership. Let us hope that the history of Wogau & Co., interrupted by the First World War and the Bolshevik revolution of 1917, will continue in the new Russia.

 

SokolovIvan,

Historian, PhD

Опубликовано в журнале «Coffee & Tea International», 2 (114) 2014

http://coffeetea.ru/coffee-tea-in-russia-test-view/

Перепечатка материала осуществлена с разрешения журнала.

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