History of the Baku Oil Industry. Part 10

 
After the discovery of the oil fields, Baku became a special place, where various economic and political interests of international coalitions, industrial clans and leaders were concentrated and clashed. VK begins publishing chapters from the book by Ismail Agakishiev "History of the Baku Oil Industry and the Second Oil Boom (second half of the 19th century - beginning of the 20thcentury.)". The book presents a historical analysis of the emergence and current state of the Azerbaijani oil industry.

In the second half of the nineteenth century, in the oil industry, along with large companies by Nobels, Mantashev, Kokorev, and Shibaev, a lot of small and medium-sized organizations also functioned.

Although their number slightly decreased in the natural course of competition, it was large enough. A famous researcher of the problems of capitalist development of in the oil industry in the late nineteenth - early twentieth century,  A. A.  Fursenko, explained the large number of firms in Baku's oil industry: "Despite the cancellation of the lease system, the system of distribution and acquisition of oil lands preserved even some even some feudal traits (the highest awards, etc.), whose existence was supported by the royal monarchy. Therefore, the oil industry in Russia ... left rather wide opportunities for small and medium-size entrepreneurs, in this sense distinct by their diversity and heterogeneity. In the opinion o the same author, the stable existence of small and medium-size enterprises of the oil industry in many ways was also possible "by virtue of the relations which existed between large companies." It should be noted that the coexistence of large, medium and small companies was also possible because of the dominance in this industry is national capital, to which Nobels' company can be attributed too. For local capitalists, in the specific conditions of the national margins, including Azerbaijan, it was easier to agree on the division of the business. Government policy also did not limit the possibilities of business according to a national basis.

Approved in 1887 by the Government, "Regulation on the Congresses of Oil Industrialists" determined the purpose of the organization, its rights and obligations. Permanent Representative of the Council lived in St. Petersburg. Congresses were held at least once a year. Congresses and the Council discussed simmering issues of the oil industry, published statistical and other materials on its development, and spoke with special initiatives. Undoubtedly, the main problem was coexistence of different levels of oil companies. According to EB Muradalieva, until 1888 there were no property restrictions, so the small and medium-sized manufacturers widely participated in discussing and deciding on issues. And only at the Fifth Congress new edition of "Regulations on the Congresses" set price restrictions which significantly narrowed the possibility for small and medium businesses to defend their interests before the large businesses. Yet for a long time it was possibleto balance the opportunities of entrepreneurs. Among the Russian oil businessmen of non-Russian origin, Armenian businessmen were particularly active. By the early twentieth century, 89of 154 oil companies in Baku  (57.7%) belonged to Armenians. Distinct among them were "Oil industry and trading company of A. Mantashev & Co., ","Partnership of Mirzoyev Brothers and Co.," and "Partnership of the Oil Production G. M. Lianozov and Sons." 55% of the refineries belonged to Armenian owners. In addition, the Armenians managed to take leadership positions in advisory bodies of the oil industry organizations in Baku. Thus, the Board of the Congress of the oil industrialists in Baku was headed by Pavel Gukasov. The chair of the Head of the Baku stock exchange Committee was held by Stepan Tagianosov, and the Head of the Baku Department of Imperial Russian Technical Society was Constantine Hatisov.

By the end of the nineteenth century. Azerbaijan's national capital was relatively poorly represented in the oil industry. In oil production, the proportion of Azerbaijani businessmen did not exceed 5%. The pioneer of the Azerbaijani business in the oil industry, Haji Zeynalabdin Tagiyev, sold its oil enterprises and transmitted his capital into other industries. The largest Azerbaijani industrialists were Shamsi Assadullaev, in whose fields 8.5 million tons of oil a year was mined, and Musa Nagiyev (11.2 million pounds). In the field of oil processing, Azerbaijani businessmen owned only 19 enterprises (20.8%). Of course, the difference in the ratio of the Armenian and Azerbaijani capital in the oil industry was both due to both objective reasons and by preferences, which the local provincial administration often gave the Armenian entrepreneurs when giving the oil areas and the right to create oil-processing enterprises. This was an effect of Christian solidarity.

One of the most important problems of the oil industry was transporting crude oil and petroleum products to the markets of Russia and many other countries. For a long time, the tempos of oil production were significantly ahead of the possibility of its timely delivery to the consumer. This is explained by the lack of adequate number of vehicles. Even the delivery of oil to the refineries located in Baku, was very expensive - for many years oil was delivered on carts, which was twice the cost of the oil itself. As for the delivery of oil to the markets of Russia, it was a possible only by sea - the Caspian Sea. The first oil tankers were built in the 1870s. For example, in 1878, by the commission of Nobel brothers in the world's first oil tanker "Zoroaster" with the lifting capacity of 34 pounds of kerosene was built in Sweden. Subsequently the number of ships for transporting oil and oil products significantly increased. But maritime navigation on the Caspian Sea through Astrakhan lasted only six months of the year. Transporting oil by the railway was impossible because of the lack of a track connecting Baku with the central provinces of Russia and other cities in the Caucasus. All this made it difficult to sell crude oil and petroleum products, and brought oil production to a halt at times. The first serious crisis occurred already appeared in 1882, and then it repeated four years later.

The absence of a sufficient number of vessels led to pouring into the sea or burning of more than 25 million tons of petroleum products. All this forced the search for effective solutions to the problems of transportation. The first artery connecting oilfields to processing enterprises became the so-called "oil area" 12 km long, whose construction was completed by 1880. It was installed at the expense of the "Partnership of the Nobel brothers." The success of the "oil area" prompted other oil industrialists to begin building similar pipelines. Connection oil extraction with the factories and the Baku harbor was the beginning of the solution of transportation problem. Needs of the country and the necessity to export crude oil and petroleum products required the development of major transportation programs. This was precisely the reason for constructing the Baku-Tiflis railway line with the perspective to continue it up to Batum. A group of Russian industrialists led by N.H. Bunge, received the the contract for the construction of railway from Baku to Tbilisi, and thence to Batum. Thereby was the beginning of construction of the Trans-Caucasian railway. With the opening of the Baku- Tiflis railway "the mass entering of Baku oil to the markets in Central Russia the world became possible." Expansion of highways became a decisive factor in the expansion of oil production. Together with the expansion of the export possibilities of oil and oil products, the flow of goods transported across the Caspian Sea, also increased. In the beginning of the 20th century, trade harbor of Baku won the first place in terms of turnover among all Russian ports. This led to the creation of special shipping companies, such as the "Caspian-Black SeaSociety", established the Nobels, the tanker fleet of the Azerbaijani businessman Tagiyev and others. The rapid increase of the role of transport in the development of oil industry changed the nature of the oil production. The needs of vehicles, as well as most factories and plants in Russia, of fuel, changed the nature of the industry of oil products. "Kerosene" production was gradually giving way to black oil. Production of black oil was the main focus of the refineries.