The Volkart Brothers, pioneers of modern commodity trading

From the shores of Lake Constance to a global trading house

 

One of the earliest major commodity trading names in Switzerland was that of Volkart Gebruder, a company set up in 1851 simultaneously in Winterthur, along the shores of Lake Constance in Switzerland, and in Bombay in British-governed India. It grew to become the 4th largest cotton trader worldwide.

Cotton: at the heart of the industrial revolution

Switzerland at the time was one of the leading industrialised nations and the Swiss textile industry had dramatically changed with the introduction of new mechanised machines. As the Swiss cotton industry was suffering mightily from machine-made yarn from Britain, in 1800 the Swiss consul in Bordeaux, Marc Antoine Pellis, approached the government of the Swiss Confederation to import French-made copies of English spinning mules. They were eventually put up in a nationalised monastery in 1801 and their 2014 spindles put to work. A year later, some Wintherthur merchants brought forty-four of Arkwright’s spinning machines to a factory in Wülflingen. As a result, by the early 1820s no hand spinners were left in the Swiss countryside.

Cotton was back then the driving force behind the rapid industrialisation in Europe and market information was already of crucial importance. The Landbote, a journal published in Wintherthur, would thus publish regular news about the cotton market of Le Havre after 1840.

As nations competed for markets, Swiss manufacturers, like their British counterparts, responded to the increasing protectionism around them by investing in Italian and German cotton industry, and by looking for markets further afield. This is when Volkart Brothers was created.

In the 1850s and 1860s, the production of batiks for South-east Asia and cotton head shawls for the Islamic world was important to Swiss manufacturers, and notably for the Wintherthur merchant house Gebrüder Volkart, which was by then selling Swiss cotton goods to India, the Eastern Mediterranean, and East Asia.

The importance of trading networks


Up to that time, commodity trading relied to a large extent on what Pr. Beckert of Harvard University calls “relational capitalism”.

When the Volkarts wanted to establish themselves in the European cotton trade, they listed a number of Indian, German, English and Swiss merchant houses as references that testified to their respectable character.

Besides relationships, global networks had to be built and maintained, something that still holds true today. Forging such global networks took courage and imagination. When Johannes Niederer tendered his services to Swiss merchant house of Volkart in 1854, he offered to scout market opportunities in Batavia, Australia, Macassar and Mindanao, Japan, China, Rangoon, Ceylon and Cape Town. Such globetrotting traders, as one historian concluded, “ruled the industry”.

Volkart Brothers, trading pioneers


Perhaps furthest ahead of its time was a Swiss house that incorporated far-flung networks into the firm itself: Volkart Brothers. Founded in 1851 by Salomon Volkart simultaneously in the Swiss town of Winterthur –an important center of the cotton industry- and in Bombay, the firm began by purchasing raw cotton in India and exporting manufactured wares to India. As they opened more branch offices, Volkart Brothers increasingly organised the purchasing of cotton not only in India but also in other parts of the world, transporting that cotton to various European ports and then selling it to spinners. By the late 1850s, Volkart brothers incorporated a whole range of selling and buying activities.

The trading company imported cotton, tea, oil, coffee, cocoa, spices, rubber and other colonial goods from India and exported for soap, paper, matches, watches, textiles, machinery and other industrial goods in the subcontinent. The business was successful, and so branches in Colombo (1857), Cochin (1859) and Karachi (1861) were founded. In Winterthur, the family built the famous Villa Wehntal on Römerstrasse which served as both corporate office and private residence.

Yet, at mid-century, Volkart was exceptional, as most cotton was still traded between independent houses mediated by networks of trust, not between branches of a single company.

In the last third of the nineteenth century, however, Volkart Brothers moved their capital ever closer to the actual cotton growers, creating purchasing agencies in cotton-growing regions of India, including Khamgaon, and erecting cotton gins and presses. Agents in the employ of Volkart Brothers would purchase cotton from the local dealers, have it processed in the firm’s own gins, then press it as “Volkart’s Press” and sent it by rail to Bombay, where it was branded by Volkart agents to be shipped to Liverpool, Le Havre or Bremen to be sold to mill owners who put great trust in the “VB” stamped on the bales. While the old system had relied on many intermediary merchants, Volkart now single-handedly connected cotton growers and cotton manufacturers.

By 1882, sixteen Volkart presses dotted the Berar countryside and by 1920 Volkart would be the largest shipper of Indian-grown cotton, selling more than 180,000 bales, or one-quarter of total exports.

The legacy of a trading dynasty


When Johann Georg Volkart 1861 died suddenly, Salomon Volkart continued the business with non-family partners. At this time, the London branc was set up (1868). Due to political and economic difficulties, high staff turnover and his ailing health Salomon Volkart retreated from active oversight of the business in 1875, despite working until his death in 1893.

Besides the Villa Wehntal, the company made a big impact in Winterthur with its first large administrative buildings, the Volkart-Haus, built in 1904-05 next to the train station.

The marriage of Lilly Volkart with Theodor Reinhart in 1912 saw the effective transfer of Volkart into the hands of the Reinhart family, which still controls the fate of the trading house to this day. In 1926 the company recorded no less than 80 branches in India and was thus virtually representative of Switzerland in India. Two sons of Theodor, Oskar and Werner were also later involved in the company.

In 1985, Andreas Reinhart took over and bought out the rest of the family, remaining the sole owner of the business. He launched an active investment and participation policy, which largely failed, thus weakening the company. At the same time, he reinforced the family’s commitment to the arts and cultural sector, in which the company funds several foundations, and was instrumental in the founding of the Fotomuseum Winterthur.

In 1989 the company sold its coffee trade at the Erb Group, the coffee business subsequently traded under the name Volcafe, reminiscent of the origin. Until it exited from the cotton trade in 1999 Volkart Trading was the fourth largest cotton merchant worldwide. The Volkart the company website refers now only to the various foundations and its own financial holding activities but is no long a significant trading company.


Find out more about Volkart Brothers (in German)