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Richard Kablitz concession in USSR (1920s)

Excerpts from Antony C. Sutton «Western Technology and Soviet Economic Development 1917 to 1930»

In 1922 a concession was granted to Richard Kablitz, a Latvian firm, which took back its old prewar Petrograd factory and started again to produce steam boilers, mechanical stokers, fuel economizers, and similar equipment. This was by far the largest such plant in the U.S.S.R. Production expanded rapidly, and by the end of the decade Kablitz had equipped over 400 Russian factories with boilers and stoking equipment. In the last two years of the decade, Kablitz turnover was substantial: more than 900,000 rubles in 1925-6, 1.4 million in 1926-7 and more than 1.6 million in 1927-8.

In brief, the Kablitz concession, operating from 1922 to 1930, enabled the Soviets to eliminate importation of boilers almost completely since the firm organized production and trained Russian workers in boiler production. It made a very significant contribution to the re-equipment of Soviet industry. The success may be established by the decline of boiler imports in the face of increasing boiler age. By 1929, Kablitz had served its purpose. Taxation was increased to the point where production was no longer profitable, and the Soviets took over the Kablitz operation.

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One wonders if the State Department realized that all stoking appliances, including dampers, were being produced by the Richard Kablitz concession and that this was an area where purely Russian technology was nonexistent.

Excerpts from Antony C. Sutton «Western Technology and Soviet Economic Development 1930 to 1945»

When concessions were profitable, domestic taxes were used to force expropriation. A prominent example is the Richard Kablitz Company, a Latvian concession which operated six plants in the U.S.S.R. from 1921 to 1930. Kablitz manufactured stokers, economizers, and boilers, and was the only manufacturer of this equipment in the Soviet Union. Although working conditions were not good, the company undertook a very large quantity of work, installing, for example, boilers in more than 400 Soviet factories. Until 1926 Kablitz made significant revenue and, although taxes limited profits, some earnings were exported.

In June 1926 Kablitz was forbidden to send currency abroad - a breach of the concession agreement. After negotiation, Kablitz was granted permission to export 40,000 rubles per year, but the necessary export certificates were not forthcoming in either 1928 or 1929. An explicit demand by the company to export 40,000 rubles in 1929 was countered with a Soviet demand for a "normative tax" of 300,000 gold rubles. This tax forced the company into liquidation.

While admitting loss of its six factories and all invested capital, Kablitz requested compensation only for exploitation of its patents. This is in itself a revealing episode. One year previous to the imposition of the "normative tax", the OGPU had ordered Ramzin, a first-rate Russian engineer, to work out designs to replace those of Kablitz. This was done, but the Ramzin-Kotloturbin designs developed were found to be useless and, in spite of protests of the now-expropriated firm, the Soviets continued to use the Kablitz patents without compensation.

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The U.S. Riga Consulate did not know of the "normative tax." Kablitz provided a jocular explanation: "The telephone number of the respective concessionary is multiplied by the age of his wife. If the amount thus calculated looks insufficient, one or two ciphers are added to it."

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Kablitz was the only U.S.S.R. manufacturer of economizers, stoking devices, and furnaces. Operating six plants in the U.S.S.R., Kablitz equipped more than 400 Soviet plants in the 1920s. An advertisement in Izvestia Teplotekhnicheskogo Instituta was used by the Kablitz concession to stress patenting of its devices in the U.S.S.R., and indeed the company habitually referred to its economizer as "Pat. Kablitz" rather than just "Kablitz." The company obviously strove to publicize the claim of patent protection to inhibit Soviet organizations anxious to produce similar devices.

When the Kablitz concession was expropriated, the patented devices were also expropriated and taken over by the Soviets, notwithstanding Soviet patent protection. Kablitz finally limited its suit in the German courts to compensation for these expropriated patents and dropped the concession property claim. The only reason, therefore, that evidence is available in this case is that Kablitz operated a concession inside the U.S.S.R. and had evidence in company files.

Sources

• Antony C. Sutton. Western Technology and Soviet Economic Development 1917 to 1930 ia804606.us.archive.org...pdf...
• Antony C. Sutton. Western Technology and Soviet Economic Development 1930 to 1945 ia600601.us.archive.org...pdf...