From Jerzy Czajewski. A very interesting read about the original Polish owners, capital investment and lost fortunes in the Ashiho Sugar Factory: POLISH INDUSTRIAL CAPITAL IN CHINA ASHIHO SUGAR FACTORY – 1908 -1927 At the beginning of 20th century, in the Russian Kingdom of Poland (where there were 49 sugar factories and refineries including 13 in the Lublin district alone), there was a sugar industry crisis caused by high export duties imposed by the Russian government. (Russia did not enter into the Brussels convention of 1901 which liberalized sugar export-import in Europe). It was a result of this crisis that the idea of construction of a factory outside of Russia emerged. A group of Lublin landowners decided to invest one million gold rubles into the venture in China. These investors were as follows: Baron Gustaw Grothus, landowner in Hrubieszow county. Stanislaw Kowerski, owner of a professionally managed agrarian-industrial farms in Dubie and Michalowek in Krasnystaw county, graduate of agrarian studies in the university of Halle (Germany). Bohdan Broniewski, initiator, organizer and director up to 1922 of the Ashiho factory. He was an enterprising man, a graduate of chemical studies in Vienna Politechnical Institute He began his professional career as an apprentice in sugar factories in Lublin and Volhynia (so called Polish Ukraine). Shortly afterwards he was nominated for the post of deputy-director and director. When the Ashiho started production he was also administrator of three Lublin area factories and one in Plock district. He was engaged in all the technological and practical aspects of sugar production in Poland. He was originally from a pauperized petty gentry family and only in 1909 bought the estate of Garbow, by Lublin, where he built a steam brickyard, distillery and sugar factory. These three men were getting information from Poles engaged in the building of the Chinese Eastern Railway in Northern China about favorable conditions for establishing a sugar factory there. They put up 20,000 rubles to prepare a study on conditions there. In 1907 they sent two specialists to Manchuria: a grower, and a specialist in sugar production. After a year in Manchuria they prepared a report that was in favor of investment. A joint-stock company was established with one million rubles capital. It issued 1000 stocks, each worth 1000 rubles. As of April 1909 there were 240 stockholders. By the end of Autumn 1909 there were more stockholders and more capital. Most of the shareholders were local Lublin landowners, but there were also those from Volhynia. Share prices were reasonable so there were many stockholders of small to medium size. Also among the stockholders were Polish aristocratic families such as countess Jadwiga Bninska, Counts Jan, Jadwiga and Witold Poletyllo, Count Wojciech Rostworowski, Prince Witold Borysiewicz, Prince Andrzej Lubomirski, Princess Franciszka Woroniecka. Broniewski himself put up only 2,300 rubles in the venture. With the funding raised the construction of factory could be started. The design was prepared with the help of Bohdan Broniewski based on his factory in Garbow, already being built. The construction in Manchuria was supervised by engineer Antoni Lacinski. The plan was to be finished by August 1909 and to begin production in September that year. The organizers forecast that the investment should bring a 100% return on investment within the first year. This was based on presumed low cost of labor and lower cost of sugar beets. Also taxes on sugar production in China was much lower than in Kingdom of Poland or in Russia. The first sugar production of 1909/1910 produced only 34,700 rubles in profit. This was only 3.5% instead of 100 % return. Such bad results were explained by the extremely low temperatures of -30° celsius, and the high cost of fuel. Also The Great Manchurian Plague of 1910-1911 had its impact as well. Workers died of the plague and factory had to be closed temporarily. The Polish press reported with exaggeration that: ”wires from Ashiho state that the situation is most tragic; the town, as a place of cholera outbreak is doomed for extinction, surrounded by the military firing into fugitives”. The next years were not better. The 1911/1912 production closed with losses of 133,000 rubles. The next year 1912/1913 made a profit of 50,000 rubles. Profits from 1917/18 through 1919/1920 were not easily comparable as they were calculated in deprecated Kerensky Rubles. The chaotic situation in the currency market is was evident by the fact that cash held in factory’s safe, in 1924, included Romanovs, Kerensky, Siberia, Duma, Horvat Rubles as well as Yen and Mexican Dollars. Since 1920/1921 the financial reports were prepared in Japanese yen. Accordingly gross profit was during that year 16,000 yen. But subtracting transfers of capital and taxes due, it was a loss. Next year the loss was even bigger, some tens of thousands of yen. During the next three years the factory did not make any profit but but lost 300,000 yen. In the financial report of 1923 there were new investments in the sugar refinery, and in the spirit distillery. The following year, the technical director Kossakowski, in the letter to the administrator, wrote about the very bad technical state of the factory and about overall neglect of the business in general. At that point the joint-stock company board understood that the business had no future. In the middle of 1923 The Joint Stock Company Sugar Factory and Refinery of Ashiho merged with French capital. A new enterprise under the name of Societe Anonyme Francais de la Sucrerie d’Ashiho was established to “continuation de l’exploitation sous la protection du Consul de France a Harbin”. It was controlled directly by a Frenchman named Panon. The administration of the factory remained in the hands of Poles and was directed from a Warsaw administration committee. Assets were without change (918,000 yen), but the share capital was lowered from one million yen into 750,000 yen because of heavy losses in previous years. The first production of the new French-Polish factory produced 2,560 tons of sugar, worth of 740,000 yen. However the profit was only 8,700 yen and if not for the profits from production of molasses (21,000 yen) and spirits (40,000 yen) the company would have closed the year with losses. The next production of 1924/1925 brought further losses of 138,000 yen. The sugar beet crop was very low. The following year factory bought in crystal sugar from Java and refined it, but still showed a small loss. The overall losses in 1926 amounted to 300,000 yen. In the creditor accounts of the factory there was a Mr. A. J. Kagan to whom factory was indebted in the amount of 200,000 yen. Within a few months the factory was wholly in Mr. Kagan’s hands. Eventually it was determined that with less money it would be possible to build bigger and more up to date sugar factories in Poland. By that time the Ashiho factory was neither big nor up to date. Huge costs had gone into the transportation of the machinery and materiel from Poland and into organizing a venture at such a distance. Ultimately the investment of Lublin landowners was an attempt to invest Polish capital abroad in spite of the backwardness of the Polish economy and the lack of experience and tradition in exporting of capital. Polish capital wanted “a piece of the Chinese cake” while the Kingdom of Poland itself was a place of imported German capital. As Polish press wrote about the venture of Lublin landowners: “They export money and people to the ends of the earth, while here in Poland the gaps left behind are filled by Germans”. Excerpted from: Jan Godlewski, Polski kapital przemyslowy w Chinach (Cukrownia Asziche – 1908-1927) Roczniki Dziejow społecznych i Gospodarczych, Vol. XLIII, Warszawa-Poznan 1983 pp.75-84 Edited for English clarity by your truly - JG
Posted on: Sun, 12 Oct 2014 06:00:50 +0000
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