Dividends and Alfred Nobel

If you were asked about the Nobel Peace Prize or Nobel Prize for Literature or Chemistry or Medicine or Economic Science, hopefully you had ever heard about the prize or maybe even know  someone in your community that has won one. The prizes have been awarded since 1895. Did you ever wonder who are they named after or who the person was? The answer is Alfred Nobel who was born in Sweden. There likely are many books about him but the one which was read was called Alfred Nobel – The man and his work by Ehik Bergengren published by Thomas Nelson and Sons Ltd, London, 1960.

Alfred’s father Immanuel was a natural genius with the manufacturer of equipment and inventor. He was fortunate all his 3 sons were interested in the same skills and they all could and did work together. Immanuel had many ideas and some involved mining and explosions. Imperial Russia was interested in his ideas and he moved there. After a sickly childhood, Alfred matured to be a young man through his Dad’s firm he was trained as chemist, he learned 5 languages – German, English, French, Russian and Swedish, he enjoyed literature.

While in Russia, Immanuel had many ideas which were useful to the Crimean War effort and along the way he continued to experiment with powder-charged mines trying to find something that is more effective. Eventually father and son were introduced to a remarkable, violently explosive substance called nitroglycerin. There was a long road from experimentation to production to selling because the material is violently explosive. Eventually it lead to Nobel’s patent detonator. With the blasting cap, the Little Ignition Principle was introduced it made possible the effective use of nitroglycerin and to study their explosive properties. The year was 1864 and Nobel was 30 years of age.

Inventing a better mousetrap and selling it are two different skill sets. Alfred Nobel had them both. Upon perfecting the blasting cap so the explosive could be used outside the laboratory, factories were set up in Europe and America. In is noteworthy to consider the big American gunpowder industries lead by DuPont fought back. However there was a boom in railway building sweeping Europe and America and the best way through mountains was with Alfred Nobel’s Giant Powder Blasting Caps made in factories in New York and San Francisco.

The history of the company was made safer when the nitroglycerin was mixed with kieselguhr which combines the lack of chemical reactivity with great porosity and thus power of absorption. The net effect is to make the transfer of material to the worksite safe. You will know the product as dynamite.  Nobel’s factories went from 11 tons of production in 1867 to 3,120 tons in 1874.

In 1882, the Standard Oil Co trust was formed to ensure there was a monopoly by Standard Oil to control the oil industry. Shortly afterwards most industries moved in the trust business and The Nobel Company went into the Anglo-German Trust. For years Nobel’s assistants Paul Barbe and Henry de Mosenthal ran the operations.  In the 1880’s owning the shares of Nobel’s companies and trusts with their large dividends were in great demand as investments.  Alfred Nobel while keeping track of his investments and ensuring those that went astray ( and it did happen – he had placed a great deal of independence with his partners) for the most part Nobel was happiest in the lab for he said I have a 1,00 ideas a year, if one turns out to be good, I am satisfied. After Nobel’s death the trust became known as Imperial Chemical Industries Ltd (ICI). and the Nobel companies were a division of the company. The World Wars inferred with the trusts, but afterwards conditions improved (there must be interesting stories about this relationship). The Nobel name still is strong today, the parent company ICI was taken over and is now called Azko Nobel N.V.

Linking to dividend paying stocks, in the 1890s till the early 1900s trusts were an effective use by companies to keep out the competition and to make profits. For the most part they are illegal but quasi monopolies do exist. There is always been a great challenge to move from inventor to manufacturer to seller in the marketplace. It is rare than someone has the skills to do them all, it is much easier to be inventor and allow someone to sell and the inventor receive a royalty. When investing try the easier way.

There are more questions than answers, till the next time – to raising questions.

 

 

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