Bethel Henry Strousberg
Speculator or Busisness Genius Of The Boom Years?

Concerning the dubious business of Bethel Henry Strousberg,
Doctor of Philosophy at Jena University, called the Railroad King

Grave on St. Matthäus-Cemetery Schöneberg (Großgörschenstraße 12)

Was he really the ruthless speculator, who was squandering the money of his investors, as one of his sharpest critics, the Member of Parliament Eduard Lasker, claimed in his famous speeches in the Prussian Parliament in 1873, or was he a businessman of European rank, whose achievements for Europe, Germany and especially Berlin could not be valued too highly, as the steel mill owner Gottfried Reitböck from Völklingen/Saar put it in an essay in 1924?

The National Liberal MP Lasker in his speeches had launched an attack on the excesses of the boom years a few months before the great stock market crash . He revealed that railroad builders had lined their pockets shamelessly by disregarding laws, evading taxes, working with false calculations, delivering bad and overpriced work and evading responsibility with the system of general management. Most of this held true for Henry Bethel Strousberg, who visibly felt hit by the criticism.

The exciting career of Bethel Henry Strousberg had begun as 12 year old Barthel Heinrich Strausberg, from Neidenburg in East Prussia and Jewish parents, in the then leading city of industry and commerce, London, where he went, recently orphaned, to work in the export business of his uncle Gottheimer. There he anglicized his name, converted to Christianity and started, with apparent success, to study the world of English finance and insurance. As a journalist he got to know the ways of English parliament and the stock exchange, as the editor of two magazines he made his first small fortune, which he added to in a year in the United States. Thus experienced, he and his family moved to Berlin in 1855.

Laskers speech was an overwhelming success, even though his contemporaries knew full well that hundreds of well known personalities were lining their pockets in the railroad business. The inconsistent railroad policy of Bismarck´s government was almost inviting fraudulent business.

Supporters of Strousberg´s enterprises, like Reitböck, point out the revolutionary importance of the railroads for economic growth as well as their pioneering role in technical development and that basically sufficient capital was lacking in Prussia and , later, in Germany. Thus two of Strousberg´s lines, the one leading from Insterburg to Tilsit in East Prussia and the Southern East Prussian Railroad, could only be built with English capital, as just one third of the sum needed was raised in Germany. This lack of capital made interested licensees approach Strousberg for help in their business matters. Even an explicit supporter of the railroads as the minister for economy, Freiherr August von der Heydt, in office for 14 years, had to forgo his plans of a major state-owned railroad due to the prevailing economic conditions.

Srousberg succeeded in overcoming these obstacles with ideas and endeavor. He was focusing his interests by founding railroad companies and by using noblemen such as Earl Pückler auf Branitz or Earl zu Lynar for the Berlin-Görlitz line or the dukes von Ujest and von Ratibor and the count von Lehndorff for the infamous Romanian railroad as trust-inspiring "fronts". They usually only gave their names for princely sums from Strousberg. In an authority-centered Prussia these names inspired confidence in projects, helped raising money from investors and getting concessions from the governments. With the idea of "Generalunternehmer" (General entrepreneur, one who is responsible for finishing a larger building project for a fixed sum) that Strousberg introduced and practiced himself, he not only developed a form of management still used today, but also overcame financial straits, as the Generalunternehmer was usually paid with shares from the railroad he was building. High and guaranteed interests for the investors created a strong flow of capital, as the bonds were seemingly without risks, and led to an enormous speed in the building of the railroads in order to pay for the interests every half a year out of the profits.

The building of lines such as the one from Berlin to Görlitz via Cottbus helped to develop whole regions industrially and agriculturally. It also helped Berlin to turn from an unimportant capital into a metropolis. Among the manifold activities Strousberg undertook that made Berlin a leading city were the building of the big Görlitz Station and a combined slaughterhouse/cattle market in the Brunnenstraße in Wedding, built, as his own palace, by the architect August Orth. The first central indoor market in the Friedrichstraße was even built by the famous Georg Heinrich Hitzig. Both slaughterhouse and indoor market had been vehemently demanded for hygienic reasons by the city deputies.

Even in social matters Strousberg was quite modern: he lowered the daily working hours in his factories from twelve to ten without cutting wages and built living quarters for his workers in Hanover, canteens and the first company kindergarten. Many of his ideas were so modern that they were bound to fail.

(Manfred Nillius)


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