The Merchant of Death's Change of Heart

Hello! This is Deep Pockets #13.

In the last edition of “Deep Pockets,” we told the story of Calouste Gulbenkian, AKA “Mr 5%.” In case you missed that email… or already forgot, Calouste was one of the richest people in the world when he died in 1955. He earned billions of dollars in royalties thanks to one shrewdly negotiated asset: 5% of all the revenue generated by selling Iraq’s oil. That’s why people flatteringly called him “Mr. 5%.”

One of the ancillary characters in Calouste’s story was an inventor named Alfred Nobel. Alfred also earned a fortune and a nickname during his lifetime. Unfortunately, his nickname was slightly less flattering:

The Merchant of Death

However. Thanks to a morbid twist, that’s not how Alfred’s legacy ultimately ended up… ending up.

DEEP DIVE: “The Merchant of Death” Changes His Mind

Alfred Nobel was born in Stockholm, Sweden, in October 1833. He was the third of eight children born to inventor/engineer Immanuel Nobel and his wife, Andriette. Only four of the eight Nobel children survived childhood. Their surviving children were, from oldest to youngest:

• Robert Nobel

• Ludvig Nobel

• Alfred Nobel

• Emil Nobel

The same year Alfred was born, his father’s failed business ventures sunk the family into bankruptcy. For the next several years, Immanuel Nobel struggled to find consistent work and was haunted by his looming debts. In 1837, he actually had to flee Sweden after learning his creditors were planning to send him to debtor’s prison. He ultimately settled in Russia. The family stayed in Sweden, living in very meager conditions, hoping their father’s luck would change.

In Russia, Immanuel opened a workshop and found some early success making wheel hubs for horse-drawn carriages. In 1842, his family joined him in Russia.

In addition to wheel hubs, Immanuel tinkered with new inventions and tried to improve current products like the common household radiator. He actually invented a machine that drastically improved the production of plywood.

Over time, the business performed well enough to afford private educations for the Nobel boys. In 1850, 17-year-old Alfred spent a year in Paris studying chemistry. During his time in Paris, Alfred befriended and was mentored by an Italian chemist named Ascanio Sobrero. Four years earlier, Sobrero synthesized three nitrate compounds with glycerol to create a colorless, oily liquid that was EXTREMELY explosive. He called it…

Nitroglycerine.

We’ll come back to this in a minute.

After his year in Paris, Alfred returned to Russia to work at what was now the family’s factory. A factory that primarily produced weapons.

In 1854, Russia went to war against an alliance of Britain, France, and the Ottoman Empire (Turkey) in what we today call the “Crimean War.” A key weapon in the Russian Navy’s arsenal was one of Immanuel Nobel’s inventions:

A self-contained floating explosive device that would explode on contact. Also known as a naval mine.

When you see the Crimean War’s theater of battle, you can understand why Immanuel Nobel’s naval mines were such a crucial weapon:

In March 1855, at the height of the war, Russian ruler Tsar Nicholas I died from pneumonia that many believe was brought on by the stress of his country’s brutal losses in such a short period. His death hastened Russia into calling for peace. The war officially ended in 1856.

With the war over, Immanuel Nobel once again found himself overextended and on the verge of bankruptcy. In 1859, his finances were so bad that he was forced to give up his Russian assets to creditors. He moved back to Sweden with his wife and youngest sons, Alfred and Emil. His sons Ludvig and Robert remained in Russia to manage the former family business for the creditors.

Once settled back in Stockholm, the 27-year-old Alfred became obsessed with finding a way to use nitroglycerin for industrial demolition applications like mining and construction.

Why?

Imagine you're trying to blast a tunnel through a mountain in the 1850s to make room for a railroad.

Using gunpowder, which was the common method, you would drill hundreds of holes in the rock face and fill them with massive quantities of gunpowder. All of these holes would be intricately connected, which left lots of room for human error. The gunpowder would be ignited, creating a controlled explosion that would blast away some of the rock. You would then load up hundreds of new holes and go again. And again. And again. This process would be slow and laborious, requiring multiple blasts over a long period of time to create a tunnel of significant length.

With nitroglycerin, you could drill a single hole in the rock face, fill it with a comparatively small amount of nitroglycerin, and boom, the whole mountainside would be gone.

A job that previously would have taken months or years would take a few weeks.

But there was a serious downside. Nitroglycerin is highly unstable. It can explode with a slight change in temperature or pressure. If a worker drops a small vile of the substance, a large explosion would occur. If he dropped a vile in a storage facility, the result would be catastrophic. These accidents happened frequently. Even Ascanio Sobreror, nitroglycerine’s inventor, was highly, highly, highly opposed to using nitroglycerine commercially.

Nitroglycerine’s inherent danger struck home for the Nobles on September 3, 1864. That day, a nitroglycerine explosion at Alfred’s factory killed five people. One of the victims was his baby brother Emil Nobel. Emil was 21. Soon after hearing of his youngest son’s death, Immanuel Nobel hade a stroke. He never recovered and died in 1872.

Reeling but undaunted by the double tragedy, Alfred persisted. He was actually more motivated than ever to find a way to make nitroglycerine safe to use. A major step forward came in 1865 when he invented the “blasting cap.” Essentially a tiny spark plug, the blasting cap allowed for detonations to be done from a great distance with very precise outputs. This invention was the first step in truly unlocking the explosive potential of explosive materials.

In 1867, Alfred had the breakthrough that would eventually earn him a fortune, change the world, and earn him that very unflattering nickname.

One fateful day, by complete accident, Alfred discovered that when nitroglycerine was combined with diatomaceous earth (powder made of fossilized algae, shells, and rocks), the formerly unstable oily substance absorbed into a dry powder. That dry powder proved to be just as explosive but significantly more stable. It could be packaged and stored safely. It could be transported on bumpy train tracks or a donkey’s back without fear of accidental detonation. Alfred called his new invention…

Dynamite

The name was a reference to the Greek word for power, “dynamis.”

Alfred applied for and received patents in Germany (where his factory was now located), Sweden, England, and the United States. Patents in every major country would eventually be granted. These patents, coupled with Alfred’s willingness to protect them at any cost in any courtroom around the world, would prove to be a major factor in securing his fortune (though, some enterprising Americans eventually found a way around his US patent by slightly changing the formula).

Alfred formed a company and proceeded to build factories all over the world to produce dynamite. He initially marketed the product as “Nobel’s Blasting Powder” but later rebranded it as “Nobel’s Extra Dynamite.”

Word of this new miracle explosive spread fast and dynamite quickly became the global standard anytime someone needed to blast a massive piece of earth.

Perhaps against his original intentions… or not… dynamite was also adopted by armies around the world as a highly effective instrument of war and, therefore, death. In addition to being used to blow up enemy infrastructure, dynamite was used to power landmines, torpedoes, cannon balls, and even some experimental small-arms dynamite guns. Practically overnight, the power of dynamite significantly increased the casualties and damage caused by warfare.

Branobel Oil Empire

As sales of dynamite exploded, so did Alfred’s personal fortune, and at this point, we connect to our previous story about Calouste Gulbenkian. In the early 1870s, Robert and Ludvig Nobel purchased their first oil field in Baku (modern Azerbaijan, but then still part of Russia) using money raised from their newly-rich baby brothers.

They called their oil company “Branobel,” which literally means “Nobel Brothers” in Russian. Within just a few years, Branobel had grown into the second-largest oil company in the world, behind only John D. Rockefeller’s Standard Oil. Branobel’s growth came thanks to three innovations:

• 1) Instead of transporting oil by donkey, Branobel laid thousands of miles of pipes from the oil fields to the ports of Baku.

• 2) They invented the modern oil tanker - ships that could connect directly to the pipes and store oil free floating in the ship’s hull as it traversed the globe.

• 3) They blasted through mountains to connect previously landlocked cities to the global markets via railroads. Guess what they used to blast through the mountains 🤯 

Branobel’s oil profits made the brothers immensely wealthy. The were among the richest people in the world in the late 1800s.

Seeing more opportunity for diversification, Alfred used his dividends to launch over 100 armament factories throughout Sweden and Russia. Between these weapons factories and his dynamite empire, Alfred was single-handedly the biggest creator of war products on the planet. And unbeknownst to him, this empire made Alfred very unpopular in some European social circles.

A Change of Heart

On April 12, 1888, Alfred's brother Ludvig died in Cannes, France. Upon hearing of the death, several French newspapers with bad info accidentally printed obituaries for Alfred instead of Ludvig. One of those accidental obituaries carried the following headline:

"Le Marchand de la Mort est Mort."

In English:

"The Merchant of Death is Dead."

The obituary included such lines as:

"Dr. Alfred Nobel, who became rich by finding ways to kill more people faster than ever before, died yesterday."

Alfred was understandably appalled to find himself a) reading his own obituary and b) seeing that he would eventually be remembered in such a way.

Either he was foolish or simply had his head in the sand, but he never knew people looked at him and his empire with such disgust.

Prior to reading his accidental obituaries, Alfred - who never married and had no children - had been planning to leave his fortune to his extended family. After reading those accidental obituaries, he had a dramatic change of heart. But the world would not learn of this change of heart until his own death eight years later.

Alfred Nobel died on December 10, 1896, at the age of 63.

His will instructed his estate to liquidate 94% of his assets and use the funds to establish a new charitable foundation. The foundation would hand out annual awards to “those who, during the preceding year, shall have conferred the greatest benefit to humankind.”

There would be five categories for the awards:

• Physics

• Chemistry

• Medicine

• Literature

• Peace

(In 1968, Sweden’s central bank added a sixth category for Economics.)

Today, we call it the…

Nobel Prize

It took several years, but selling Alfred’s many assets generated 31,225,000 Swedish Kronor. After adjusting for inflation and converting to USD, that’s the same as around $200 million in today’s money. A significant portion of the funds came from the sale of Alfred’s shares of Branobel. Interestingly, their timing may have been really good because those shares would have been worth significantly less two decades later when Bolsheviks seized power in Baku and nationalized all oil production in April 1920.

Today, the Nobel Foundation’s assets are worth $600 million. 

In addition to a gold medal and an honorary annual dinner, today each Nobel Prize winner receives an award of 11 million Swedish krona. That’s around $1,079,000 USD.

Some notable Nobel Prize winners include:

In 1901, Wilhelm Conrad Röntgen received the first Nobel Prize in Physics for discovering X-rays.

Marie Curie was the first woman to receive the prize, receiving the honor in 1903. She then won a SECOND prize in 1911. She was the first person to ever win two prizes. She remains only one of four people to win more than once and she is the only person in history to win a prize in two fields (she won in Physics and Chemistry).

Albert Einstein won the Physics Prize in 1921 for his theory of relativity.

Martin Luther King Jr won the 1964 Peace Prize for his non-violent struggle for civil rights in the United States. At age 35, he was the youngest winner of all time up to that point, a distinction he lost in 2014 when Malala Yousafzai won at the age of 17. Mother Teresa won the Peace Prize in 1979. Nelson Mandela won in 1993.

FINAL WORD

On the next edition of “Deep Pockets,” we’re gonna tell one more unbelievable oil tycoon story (there are so many amazing oil tycoon stories). The tycoon we’re going to talk about has a direct relationship to a very famous (and controversial) actor.

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