Poland 1917 -1939. The sugar industry and its scripophily

Introduction

Before the Great War Poland had lost its independent statehood for over 100 years - partitioned and part of the German, Austro-Hungarian and Russian empires. Towards the end of the Great War Germany and its ally Austria-Hungary initially sought to establish a Polish puppet state in the areas formerly controlled by the Russian empire. This naturally failed with the collapse of the so-called Middle Powers - and an independent Polish republic sprang into life made up of parts that previously had been parts of the three empires mentioned above. Initially the state of the new Polish republic was quite precarious, and it had to fight off an attempt by the Soviet Union to conquer it and itself sought to gain control over territories that had significant Polish populations.

It is unsurprising that in this context of war, upheaval and uncertainty the sugar industry suffered. On top of which it had started with three distinct groups of companies each developed under the specific circumstances of their prior countries - with the formerly German and the formerly Russian part clearly dominant. The legal entities owning the factories remained in place and their ownership structures were not systematically altered - but will have changed on a case-by-case basis - especially in the formerly Russian areas.

The industry quickly regained its status as a leading producer of beet sugar in the European context and as a global exporter. Whilst the 1920s saw a significant increase in production beyond pre-war levels the economic crisis of the 1930s meant production quotas, cuts and a decline in production - with many companies struggling. The trends towards increasing efficiency were as elsewhere: fewer and bigger factories. WWII brought another partition of Poland and an exceedingly brutal occupation regime. Whilst in the parts of Poland that Germany annexed the ownership of the factories was apparently not touched by direct government orders the owners in the rest of Poland occupied by Germany or the Soviet Union lost control.

The early years (1917-1924)

The first Polish securities were actually issued under the occupation of the Middle Powers which had created a Polish state under their control. In the turmoil after the Great War few securities were issued but there is evidence that at least in some cases pre-war securities continued to be used - sometimes later side by side with new issues using a different design and the new Polish name. Maybe somewhat surprisingly the Polish republic seems to have been relaxed. The early years were marked by a lack of workers and working capital and factories often cut off from their normal supplies of machinery and spare parts as well as their refiners and customers. Whilst attempts were made to form industry wide bodes eventually two organizations were formed that would later turn into cartels - one for the central and southern companies and one for the companies in the formerly German regions. The differences between the typical companies were simply too large: on the one hand relatively many, smaller factories and poor traffic infrastructure and on the other relatively few, large factories with strong traffic infrastructure producing raw sugar that needed to be refined elsewhere.

In 1924 the period of hyperinflation ended and the Marek polskich was replaced by the ZŁoty. Whilst production in 1924 was still below the pre-war level it had more than doubled from its bottom in 1919/20. The earliest example in my collection is the piece by the Towarzystwo Akcyjne Cukrowni i Rafinerjii "Gosławice" - a fairly average size factory in the Lódź voivodeship built in 1911 when the area was part of the Russian empire. The factory actually had the same director in 1931 as listed for the factory in 1918. Expropriated by the communist regime after WWII. The certificate is primarily in Polish and maybe surprisingly in French but has an excerpt from the statues in German on the reverse and uses some Polish words of German origin that do not appear on later certificates (e.g. Buchalter for bookkeeper). The piece itself echoes other early 20th century German pieces.

The Cukrowni i Rafinerji "Przeworsk" operated a factory in the Lwów voivodeship. Initially built in 1895 when this was part of the Austro-Hungarian empire. The Polish public limited company was evidently a 1920 conversion of the Austro-Hungarian Galizisch-Bukowiner-Zucker-Industrie-Actien-Gesellschaft in Przeworsk. The factory was larger than the average firm in Poland. Expropriated by the communist state after WWII. Note the similar look and feel of the new company shares and the old shares - which is particularly striking for the reverse - and the excerpt from the statues. The old Austro-Hungarian pieces remained valid next to the new Polish pieces and had stamps evidencing the conversion of the currency first to Marek polskich in 1921 and then to ZŁoty in 1924. The shares of the Polish company also share the stamp evidencing conversion to ZŁoty in 1924.

Relative stability (1925-1929)

Sugar prices declined in 1925 but stayed on a level that Polish sugar industry could live with to at least 1928 given a relatively high domestic sugar price. But the lower global sugar price meant that exports would lead to losses and therefore either cuts in capacity or an agreement on quotas were needed. The Polish government introduced a system which guaranteed domestic sales - contingent on total production - effectively creating an incentive for firms to increase production to acquire a higher share of the domestic market. This contributed to a significant and economically unsustainable increase in production.

A significant number of firms issued new certificates given the currency reform of 1924 and the requirement for all firms to rebase accounts. It is also in this period that a process of closing down the least efficient factories becomes notable. Usually, these factories are acquired by others who look to utilize their production quotas but do not need their capacity. Sugar production actually peaked in 1929/30 at a level over 50% than the last pre-war campaign.

Industry in crisis (1930-1939)

By 1930 the high prices of the years immediately after the Great War were long gone. In 1930 the average raw sugar price in New York was less than 20% of the level prevalent in 1920 and only a little over half of what they had been in the years leading up to 1914. At the same time the economic depression also caused domestic consumption - which had risen sharply - to decline. In the five years to 1935 Polish exports of sugar declined by around 75%. Of the 78 factories I have identified in the industry year books 18 cease production by 1938 and almost all run significantly below capacity for much of the 1930s.

Things began to improve for the global sugar industry in the second half of the 1930s - an expansion in production and a modest recovery in prices. Amongst the Polish companies the Warszawskie Towarzystwo Fabryk Cukru stands out - it is the only firm openly owning and operating a number of factories - all in the Warszawa voivodeship. It is also actively pruning the smallest and least efficient factories in its area. The company had been established in 1870 and reregistered in 1918. Presumably stock-exchange listed and expropriated after WWII by the communist regime. The shares on the right are relatively typical for the shares issued in the 1930s: portrait format, small, a wavy cut on the left and a decorative border. These shares were manufactured by the national security printing company - which together with Warsaw printer G. Watson accounts for 50% of all securities in my collection.

Other considerations

In over 30 years I have acquired 28 pieces issued by 18 companies - presumably a representative sample but likely far from complete. The companies of the Polish industry in the interwar period are covered quite well by the year books of the German sugar industry. Another important source was a German dissertation covering the industry history to the 1935 reorganisation. The Polish securities are an interesting case - appealingly and often recognisably designed, occasionally echoing German and Austro-Hungarian styles.

Whilst most securities are monochrome or black plus one other colour, those are vivid colours. Many certificates are at least bilingual with French followed by German and English as second languages. With the end of WWII private ownership ended - quite a few of the shares bear stamps evidencing registration with Polish trade chambers in the late 1940s. Today the Polish sugar industry easily exceeds the production of the interwar period and ranks third within Europe.