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Stormogulen. C.F. Tietgen – enfinansmand, hans imperium og hans tid1829–1901Sven FritzPublished online: 12 May 2009.

To cite this article: Sven Fritz (2009) Stormogulen. C.F. Tietgen – en finansmand, hansimperium og hans tid 1829–1901, Scandinavian Economic History Review, 57:2, 213-215, DOI:10.1080/03585520902799539

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Stormogulen. C.F. Tietgen � en finansmand, hans imperium og hans tid 1829�1901, by

Ole Lange, Gyldendal, 2006, 594 pp., ISBN 87-02-05278-4

When the newly organized Privatbanken i Kjøbenhavn opened for business in

November 1857, one of its two directors was the 28 year-old wholesale merchant

Carl Frederik Tietgen. He had been born and raised in rather simple circumstances

in the city of Odense, but was to have a spectacular career in a society where social

mobility otherwise was limited. By the time of his death in Copenhagen, he had,

suitably showered with decorations, reached the highest levels of honor in Denmark.With this biography ‘Stormogulen’ (‘The Great Mogul’) � his contemporaries’

both pet and curse name for Tietgen � Professor Ole Lange of the Center for

Business History at the Copenhagen Business School, following several decades of

Tietgen research, has succeeded in filling to overflowing a gap in Danish

historiography. It now has a comprehensive, substantial and critical account of

Denmark’s greatest businessman and financier of truly international stature,

something that previously was missing. According to Lange, the reason no one

else had previously written such a biography is Tietgen’s multifarious and many sided

activities, as well as the ‘paralyzingly’ large amount of source material available.

Thankfully, however, Lange has managed to overcome the paralysis and elegantly

mastered the huge material.

Laura and Fritz Tietgen remained close during their lengthy marriage, even

though they had no children. Business was his life, but not hers. His accounts of his

business successes elicited her comment that such matters were meaningless and that

he should think of his eternal soul � which he actually did. Tietgen’s children were his

firms. Otherwise we learn little of his family life since Lange believes that too many

biographies put excessive emphasis on the private and personal. Thus the book

principally deals with the informal corporate empire that Tiegen built up and then

maintained in his capacity as board chairman of the companies and director of their

bank connection. He was also assisted by a group of business associates, many of

them from the leadership of Privatbanken.

Stormogulen is a well-documented life’s work biography. It describes successes

and skillfully implemented transactions, as well as failures and shortcomings. By

current legal standards of transparency and loudly trumpeted business ethics, there

are also gross violations. Tietgen and his corporate empire’s position within its

Danish and international political environment is illuminated. The book is easy to

read, both stylistically and typographically, and is richly illustrated. A pedagogical

innovation, at least for me, is that the Tolstoy-like mob of characters (400

individuals, of which 15 are women) is made easier to grasp by a chapter-by-chapter

listing of the relevant actors. The book lacks a traditional summary, but Professor

Lange’s excellent article about Tietgen in Dansk biografisk leksikon XIV (1983), can

serve as a good substitute.

When Tietgen was first employed by Privatbanken, he had not much business

experience to recommend him. He had, however, been able to display his abilities in

administering a large bankruptcy estate, in which two influential founders of

Privatbanken also participated. The bank, and its young director, was an immediate

success in Copenhagen’s 1857 business world thanks to its successful role, together

with Nationalbanken and with the government acting as lender of last resort, in

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handling the international financial crisis. Most of the credit for the good result,

however, was due to the bank’s chairman rather than to Tietgen.

During 1863�1864, Tietgen was deeply involved in the establishment of

Skandinaviska Kreditaktiebolaget in Gothenburg (Sweden). It was intended to

emulate the, at that time modern, international credit-mobilier banks, but instead

became a Swedish-owned deposit bank. In its place, Privatbanken was transformedfrom a deposit bank to a ‘founding’ or universal bank. During the powerful

international boom that lasted until 1874, Tietgen and Privatbanken established

more than a dozen joint stock companies. In addition, they were engaged in railroad

building and the construction of port facilities in the city of Esbjerg. Company

formation reached its peak in 1872. Their corporate flagship was Det Store Nordiske

Telegraf-Selskab. It had been formed through a number of mergers (the last in 1872),

accompanied by a major increase in its capital. With a nominal capital of £1.5

million or 13.5 million Riksdaler (or, after the monetary reform of 1875, 27 million

Crowns) it became Scandinavia’s largest joint stock company.

The business cycle reversal following the intense international boom reached

Denmark in 1874. Not least among its victims were Tietgen’s many infant

companies. For the rest of the 1870s, he had to struggle for his own, for

Privatbanken’s and the companies’ economic survival. In the meantime, Privatbanken

was outdone as a commercial bank by the newly established Landmandsbanken and

Handelsbanken. Most troublesome was the development in the flagship company Det

Store Nordiske. The remarkable story of how Privatbanken, with the assistance of

much Tietgen trickery, ended up with a fifth of Store Nordiske’s pumped up shares,which then were sold with large losses that Tietgen shared with the bank, cannot be

summarized briefly. It must be read.

It was not until 1880 that Tietgen resumed founding new firms. Seven companies

were established or re-organized before he suffered a minor stroke in 1894, and in

1896, he left his post as director of Privatbanken to become its honorary chairman.

The two largest of these new companies were competition-inhibiting combinations of

a number of distilleries and breweries. A similar attempt to combine Danish pig

slaughtering, however, failed. During the early 1880s, he also worked on grandiose,

but rather unrealistic, plans for expanding Danish activities in China: in addition to

telegraph and railway construction, these activities concerned the brokering of huge

government loans and ship deliveries. In 1894, a twenty-year project close to

Tietgen’s heart was completed. In that year, the Frederikskirken, or Marmorkirken

(the Marble Church) � a third of which Tietgen had financed out of his own pocket �was inaugurated with royal pomp and circumstance.

In 1894, when Tietgen lost control of his empire, it consisted of 21 joint stock

companies with a collective capital of between 100 and 110 million Crowns, inaddition to quantitatively unknown, but certainly substantial, investments in a

harbor and a railway. By comparison, Lange notes that agriculture, Denmark’s

principal economic sector, then had a production value of 385 million Crowns. Lange

has identified some constant tendencies within Tietgen’s empire-building: the

exploitation of science and technology, of new types of organizations, institutions

and financing methods, of Tietgen’s systematic striving to reduce competition

through secret agreements, cartels and other monopolization efforts.

Lange emphasizes that the strategies for empire-building were not originally

thought out and specified. Such was probably the case because Tietgen, in addition

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to great self-confidence, industriousness, daring and the ability to consider non-

economic factors and act quickly, also had a knack for seizing an opportunity. In

order to provide systematization, overview and insight, Lange uses various

theoretical approaches to empire-building, but the theoretical assumptions are not

always subjected to empirical verification.

The basic strategy was to limit competition through corporate concentration, large

units and economies of scale. In so doing, he applied the same expansion techniques

described by Alfred D. Chandler Jr.: horizontal and vertical integration, geographic

expansion, diversification and the development of ‘organizational capabilities’. Lange

identifies another important aspect of the growth strategy with the help of Michael

Porter’s contention that clusters of firms with related activities, but not necessarily

with the same owner, support each other and facilitate each other’s evolution. The

Tietgen firms are divided into three clusters or branch groupings: the communications

group, which was the largest; the foodstuffs group, which was the second largest; and

the construction industry group, which was considerably smaller. A third strategic

element was that Tietgen carefully and systematically developed networks that

included foreign financiers and the elite within Danish commerce, industry,

agriculture and public administration. If required, he could also count on support

from the king and the royal family, who he served as financial advisor.

Tietgen’s dual roles, financial manipulations and improper accounting were made

possible by Denmark having old, non-enforced, stock market regulations. In contrast

to Sweden, there was no legislation whatsoever concerning joint stock companies or

banks, and no public bank inspection. Thus Tietgen only barely broke the law, but

violated in grand style the commandments of the good-hearted and child-like Christ-

ianity that he, according to a close friend, combined with brutal ruthlessness in busi-

ness. According to Lange, he motivated or defended these transgressions by claiming

they were necessary lest he and his works be destroyed by murderous free competition.

Personally, I regret that Lange did not delve more deeply into the fascinating

question of Tietgen and his religion. Would it have been too much of the personally

private, or would it have been too speculative? A pair of observations of my own

concerning the matter may, however, be permitted in conclusion. I am unable to find

any concrete manifestations of his good-hearted and child-like Christianity in

Stormogulen. The fact that Tietgen, like earlier bigwigs and a somewhat younger

Swedish ‘Finance Prince’ (K.A. Wallenberg), built churches is just as likely to be the

result of the well-developed vanity that Lange ascribes to him or of an attempt to

purchase atonement from God � brutally put, an attempt to bribe Our Lord, since

bribery was one of the his network-building tools. It is also rather frequently

repeated that Tietgen professed to follow the direction within Danish Lutheranism

called ‘Grundtvigianism’. For a Dane, the implications of this allegiance for Tietgen’s

life and works might be obvious; for the Swedish reviewer, it is not. The most

obvious affinity between N.F.S. Grundtvig and C.F. Tietgen that I have found is that

they both thought that they knew best.

Sven Fritz

Stockholm University

Email: sven.fritz@ekohist.su.se

# 2009, Sven Fritz

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