The Company in Riga - By Hendrik Hachmer
Edited and translated from the original by Jim Braafhart
This intriguing story was discovered by accident while preparations were being made for an exhibition, like finding a mammoth skull while fishing for cod. And like the skull of a mammoth, the stock bonds of the Archangelsk Wood- and Export Society in Hilversum give us a unique glimpse into a time long past, revealing an interesting story connecting Latvia with the Netherlands.
Our story begins with an advertisement from 1898 with which the timber trading company Hoogendijk from Hilversum hopes to find partners to establish an import connection with the Baltic region. They have a long history in the logging business and are hoping to cut out the middle man and start cutting down trees on their own. The Stoffel family from Deventer is convinced that this might be a lucrative offer and together the two parties form ‘De Compagnie te Riga’, the Company in Riga.
Mr Hoogendijk Jr settles in Riga and in 1902 he is joined by 19-year-old Cornelis Stoffel. It soon becomes clear that doing business in Riga, which was still part of the Russian Empire at this time, is not as simple as expected. Owing to some bad decisions, the company soon gets into financial trouble. Too much money has been spent prematurely while the forest that is supposed to provide the income has been severely overestimated in terms of its yield. Extra wood needs to be bought from another company to fulfill binding contracts, leading to even more expenditures. Finally the Revolution of 1905 makes the situation so dire that the company decides to lick their wounds, but they will not give up.
When the company returns in 1907, a lot of changes have been made to the organization. The enlarged company now includes entrepreneurs from Steenwijk and Purmerend, and they settle in Archangelsk, closer to the source of the timber. They still maintain an office in Riga and one in Saint Petersburg. One should be aware of the incredibly tense situation in the Russian Empire at this time. The 1905 Revolution may not have brought significant institutional changes, but the violent overthrow of the tsarist regime is on everyone’s mind and therefore quite inevitable.
And like the growing distrust between the Russian people and their leaders, there is also dispute between the families Stoffel and Hoogendijk. Their initial expectation about the ‘Saint Petersburg trees’ turns out to be wrong: the trees are of a bad quality, they are rotten, too high and too numerous for the felling capacity. Everything adds up to the increasing debts of the company which soon number some 200.000 guilders, about 2,5 million euros today adjusted for inflation.
Both families blame the other for making wrong judgements about either the investment pace or the profitability of the Russian forests. Neither are willing to take the blame for the company’s financial predicament. They ask the State Bank of Russia for a loan in 1909, but the bankers are unwilling to provide this to ‘the Capitalists’, a rather ironic statement with the knowledge of what happens eight years later, namely the October Revolution.
Drastic measures are taken to save the company which include the closure of the offices in Riga and Saint Petersburg. In Riga, all the wood in storage is sold at a loss and all employees are fired straight away. They manage to conduct their business with difficulties while continuing to sell shares. In 1912, the business finally succumbs to the growing odds against them. Russia is in turmoil, the military is preparing for war while the people are dreaming of a revolution. The families leave the Tsarist Empire, and while Hoogendijk seems unable to recover their losses, the Stoffel family manages to pull through and they later became a big name in Deventer.
A legal case was brought before court between Mr Hoogendijk and one of his clients from Amsterdam which proves that the Riga company was planning to expand their business to Narva in Estonia and Libau (Liepāja) in Latvia. Unfortunately the company was never able to realize their dreams of such a pan-Baltic timber network.
Access to the documents about this company will not be granted until 2021, so the further details of this story remain a mystery for now. It remains to say that the Riga company should have done better research into the area, both in terms of local economic conditions as well as political conditions. They had the misfortune that the Dutch Embassy had not yet found its way to Riga. Nowadays such a debacle would be unlikely thanks to the local expertise that we can provide to those partners that are interested in doing business here.