The history of Jernkontoret

Royal confirmation on December 29, 1747

In the first half of the 18th century, Sweden was the largest iron exporter in the world. By the end of the 1730's the export of iron accounted for three-quarters of the total value of Swedish exports. Nevertheless, in 1729 a price fall occurred which became more acute in the years that followed. The owners of the ironworks received less and less for their product. Using all ways available, the authorities tried to save an industry so vital to the country but these attempts yielded meagre results.

In 1743, Anders Nordencratz, an ingenious businessman and assiduous writer on economic and political affairs, proposed that the crisis would be alleviated through the establishment of an 'iron office' – a kind of trading company. This he saw as an organisation that would buy up all Swedish iron and release it onto the market only when the price had risen to a reasonable level. Following discussions, this proposal was revised to cover just the support purchase of iron.

An agreement to establish an association was concluded by appointed representatives of the ironmasters on 17th March 1744, in Stockholm. The formation of this association marks the origins of Jernkontoret. Amongst the owners of the ironworks, however, support for the association was not so widespread as the promoters had hoped for.

Negotiations concerning the organisation of Jernkontoret continued over the following years and, on the initiative of the iron exporter and politician Thomas Plomgren, a reworked proposal was put forward. The driving forces behind this new proposal were the people who would subsequently form Jernkontoret's board; the mine-inspector Erik Stockenström; the district judge and ironworks owner in Värmland, Carl Gustav Löwenhjelm, and the ironmaster, Jean Lefebure. The proposal was approved in secret committee and, on 29th December 1747, king Fredrik I gave his sanction to Jemkontoret by way of a royal decree. This may be said to be Jernkontoret's corporate charter.

Jernkontoret's mission

In this royal edict, two main tasks were laid down for Jernkontoret. On the one hand they were to work for fair prices for a variety of different irons, possibly through support purchases and, on the other, to facilitate the financing of the iron trade through paying the interest on the loans granted by the Bank of Sweden on weighed iron. A fund for this would be established through the purchaser of the iron paying a fee, one daler per shipped pound of bar iron, given that the iron was weighed on the iron wharf.

Jernkontoret's task would also be to support the iron industry in every possible way. Not only would this include the provision of financial assistance to the proprietors of the ironworks but also finance for other activities. For example, Jernkontoret started to provide funds for foreign trips for the purposes of acquiring knowledge concerning the overseas iron industry – its production volume, quality, prices, consumption etc. One of the many who received travelling grants was Reinhold R. Angerstein, the owner of several factories and the director of Jernkontoret with responsibility for the heavier bar-iron forging. During the 1750's he travelled throughout Europe and described – both in words and pictures – all that he had experienced in the different countries visited. His extensive observations on Europe's iron industry fill eight thick volumes.

The development of the production process itself was also considered capable of improvement. The quality of Swedish iron was of great importance in competing successfully against foreign iron producers and in increasing exports. One way of maintaining the quality and reputation of Swedish iron was the establishment of the office of Superior Master of the Blast Furnaces in 1751. This office involved monitoring the production of pig iron and was the main task of the holder of the office until it was terminated in 1856. The first holder of the post was the well-known mining and metallugical scientist and chemist Sven Rinman. Subsequently, the number of superior masters was increased to a maximum of five, each with his own district. The post of supervisor for the area covering Finland, however, was discontinued in 1809 when Sweden ceded Finland to Russia.

Expanded responsibilities

To begin with, it was intended that the role of Jernkontoret, the Swedish Ironmasters' Association, would only encompass the bar iron business. But during the 'Era of Liberty', in the second half of the 18th century, there was a general ambition to carry out the further processing of the products of the iron industry so that the added value stayed within Sweden. Against this background it was natural for Jernkontoret to also support domestic production of iron manufucnues and their exports.  A royal decree in 1752 gave the first licence to a number of iron manufacturers to join Jemkontoret and, over a period of time, this was extended to apply to all iron and steel manufactories in the country.

Jernkontoret's new rules and legislations from 1751 decreed that the organisation's capital assets could also be used for making loans. Given that Jernkontoret's capital was to grow subsequently, financial support could also be provided through direct loans to the proprietors of ironworks and traders in iron.These loan functions, an essential part of Jernkontoret's earlier activities, now no longer exist but still remain part of Jernkontoret's current regulations.

Severe criticism was levelled at Jernkontoret's loaning activities during the economic crisis of the 1760's that gripped Sweden after the Seven Years' War. Indeed, it was believed to be one of the contributory factors to the crisis. The so-called Caps, then in a majority in the Riksdag, attempted to abolish Jernkontoret.The result of their attempts was that Jernkontoret acquired a wholly new set of regulations in 1766 which, among other thing, meant that lending to exporters and iron traders ceased. However, this new regulation only remained effective for three years until the so-called Hats, on returning to power, established new regluations restoring the functions of the former Jernkontoret.These regulations, dating from 1769, were to remain in force for a hundred years.

Economic liberalism

With the breakthrough of economic liberalism in Sweden in the mid-19th century the situation for Jernkontoret somewhat changed. Jernkontoret acquired a new set of regulations but the aim of the organisation remained as before: to give support to the iron industry, partly through providing capital for the co-partners and partly through providing grants for technical development. However, freedom of trade meant that many new ironworks sprung up all wishing to join Jernkontoret. For this reason an entrance fee was introduced, calcluated by the size of the ironworks' forge production.

During the period of economic liberalism the post of Superior Master of the Blast Furnaces and similar offices, previously established by Jernkontoret to improve iron manufacture from a technical point of view, were abolished. Instead, an annual allowance for the provision of scholarships was established, a number of which were tied to Jernkontoret as forge foremen or engineers. In this manner there emerged in Jernkontoret a 'technical assistance' group which by 1904 had acquired a chief engineer as director. 1817 marked the appeal of the first of the Jernkontoret Annals: publications for the science of mining and metlllurgy in which technical research and accounts of foreign visits were e reported.

By the1820's, and with financial support from Jernkontoret, the physical properties of materials were being analysed with the aid of a testing machine on the initiative of Pehr Lagerhjelm, mining and metallurgical scientist and ironworks proprietor in Bofors. In 1874 Jernkontoret purchased a testing machine for iron and steel which was installed at Liljeholmen in Stockholm. This testing department of Jernkontoret was transferred in 1896 to the Royal Institute of Technology in Stockholm and is the forerunner of the National Institute for Materials Testing. A another pioneering project was Jernkontoret's pilot plant in Trollhättan which was in operation during the period 1912–1916 to carry out trials on electric pig iron smelting. In 1926 a more solid organisation for conduct joint research was established so that the proprietors' contribution to technical progress could take more permanent form. This followed the pattern of the German body 'Verein Deutscher Eisenhüttenleute' but the administration has been subsequently modified and modernised.

Changing times

The era of free trade in the 1850's saw the lifting of most of the prohibitions on the iron industry's exports and imports.The tariffs that were introduced in there place were eased through a policy sympathetic to free trade across the western world.

Subsequently, periods of protection and free trade succeeded one another. On the initiative of the chief engineer Axel Wahlberg, Jernkontoret's activities, from the First World War onwards, were largely concerned with foreign treaty negotiations, tariff and trading matters.

Following the Second World War the tendency towards liberalisation has been in the ascendant. Since 1947 negotiations concerning trade barriers have been conducted within the framework of GATT among others.

During all these periods of differeent trade regulations, Jernkontoret has always played an important role as a negotiator on questions relating to the iron and steel industries.

Over the 275 years that have passed since its corporate charter the organisation has survived attempts to close it down, proposals to convert it into a purely banking business or into a joint-stock company. On severeal occasions it has changed its organisation, added or withdrawn from some activity or focused its efforts on particluar tasks in response to the changing requirements of the time. However, Jernkontoret's endeavor has always been to work for the quality of Swedish steel and thus its demand on foreign markets.