As I continue to cover and uncover the stories of the great Armenians of today, sometimes I come across profiles of Armenians of the past whose stories are still of value and astonishment today. I would like to share with you the story of Calouste Gulbenkian, also known as Mr. Five Per Cent, who was an entrepreneur, philanthropist, millionaire of Armenian origin and the largest oil magnate of the mid-20th century.
Calouste Gulbenkian was born on March 23, 1869, in Constantinople. The Gulbenkians were merchants and money changers who were in constant, regular communication with partners in major cities such as Izmir, Beirut and Baghdad. They exported the Ottoman Empire’s raw cotton, wool, mohair and opium, importing cloth from Manchester, glassware from France and kerosene from Baku.
Alongside the Armenian members of the family, the household also included Turks, Greeks and servants of other nationalities. The Gulbenkians only had to clap their hands, and a fresh cup of coffee would appear before them. Often, servants would carry Calouste to school and back on their shoulders.
Gulbenkian attended the local Armenian school, Aramyan-Uncuyan. It was at this school that he made the first financial deal of his life: the seven-year-old student received a silver coin for excellent academic progress, earning his first, but definitely not last, financial profit. His family wanted to see how Calouste would spend his money, as they believed that spending money is an art in itself in which not everyone is talented. They sent him to the market, and to everyone’s surprise, Calouste did not buy candy or toys, as many seven-year-old children would. Instead, he exchanged the silver coin for an old Armenian coin.
This was upsetting news for Calouste’s father, as he concluded that his son had a poetic soul, and therefore, he would never get as rich as him and the rest of the family, who were known for their wealth and numerous donations to the community. Sarkis decided to instill a fearsome work ethic in Calouste, teaching the young boy to enjoy hard work for its own sake and not for parental or societal approval. When Calouste turned 15, the family sent him to France to improve his French at a high school in Marseilles. This was common in the Gulbenkian family, who would send young sons to foreign territories in quest of new experiences and acquisition of new languages. The family was known for its educated, polyglot and mobile nature. Later in his life, Calouste learned not only French but also seven other languages, proving himself a real Gulbenkian.
After completing his high school education in France, Gulbenkian was admitted to King’s College in London, where he studied engineering. His mother urged him to study less, while his father demanded even higher grades. In his response letters, Gulbenkian asked why, in the Ottoman Empire, they knew so little about geology, and why they did not have a good understanding of minerals. The interests and passions of the young Armenian were slowly outlined.
Gulbenkian was a brilliant student, and in 1887, he graduated from Oxford University at the age of 18, with a first-class degree in Petroleum Engineering and Applied Sciences.
After graduating, Gulbenkian followed his father’s advice and went to Baku to examine the Russian oil industry and bring his theoretical knowledge of oil into practice. Within a year, Gulbenkian fully mastered the skills and secrets of the oil business. He wrote an article describing his travels to Baku and the state of the oil industry in the region. The article was entitled “La Transcaucasie et la péninsule d’Apchéron; souvenirs de voyage [Transcaucasia and the Absheron Peninsula – Memoirs of a Journey]”, which appeared in the Revue des deux Mondes, a French-language magazine. Later, the article was published as a standalone book, extremely valuable for research purposes in the oil industry.
In 1887, another prominent Armenian, Hagop Pasha, was appointed Ottoman Minister of Finance. After his appointment, he requested Gulbenkian to prepare an oil survey of Mesopotamia (modern Syria and Iraq). To develop the survey, Gulbenkian read travel books and interviewed railroad engineers who were building the Baghdad Railway. Gulbenkian’s oil survey led Hagop Pasha to believe that vast oil deposits lay in Mesopotamia; he acquired tracts of land for the Sultan’s oil reserves and established the Ottoman oil industry.
In 1896, Gulbenkian and his family had to flee the Ottoman Empire due to the Hamidian massacres of Armenians. They ended up in Egypt, where Alexander Mantashev, a wealthy and renowned Armenian oil magnate and philanthropist, introduced Gulbenkian to influential contacts in Cairo.
Still in his twenties, Gulbenkian moved to London in 1897, where, thanks to his substantial knowledge and wide-ranging contacts, he arranged top-level deals in the oil business.
In 1907, the British company “Shell” was only a transportation company and had just decided to enter the oil industry. They were trying to buy the Dutch oil company “Royal Dutch,” and Gulbenkian took on the role of mediator. Living up to his reputation as a talented negotiator, Gulbenkian managed the deal, becoming a shareholder himself. His policy of retaining five percent of the shares of the oil companies he developed earned him the nickname “Mr. Five Per Cent.” This is how, through Gulbenkian’s mediation, the Royal Dutch Shell appeared in the world. Today, Shell is the largest company in Europe with an annual turnover of half a trillion dollars.
After the royalist countercoup of 1909, Gulbenkian became a financial and economic adviser to the Turkish embassies in London and Paris, and later, chief financial adviser to the Turkish government and a director of the National Bank of Turkey.
In 1912, Gulbenkian was the driving force behind the creation of the Turkish Petroleum Company (TPC) — a consortium of the largest European oil companies aimed at obtaining oil exploration and development rights in the Ottoman territory of Mesopotamia. German interests would be limited to a 25% share, with 35% for the British and the remaining for Gulbenkian to choose. He gave Royal Dutch Shell 25% and kept 15% for himself as “the conceiver, the founder, and the artisan of the Turkish Petroleum combine.” At first, the British Foreign Office supported William Knox D’Arcy, the founder of British Petroleum, to gain a share and replace Gulbenkian’s share. However, Gulbenkian worked closely with French concerns, arranged for the French to receive the German’s share as the spoils of victory, and in return, the French protected his interest.
During the dismantling of the Ottoman Empire after the war, most of Ottoman Syria came under the French Mandate for Syria and Lebanon, and most of Ottoman Iraq came under the British Mandate. Heated and prolonged negotiations ensued regarding which companies could invest in the Turkish Petroleum Company. The TPC was granted exclusive oil exploration rights in Mesopotamia in 1925. The discovery of a large oil reserve at Baba Gurgur provided the impetus to conclude negotiations. But when it came to defining the “Ottoman Empire in Asia” as it had been in 1914, the oilmen who found themselves in Ostend that day in 1928 were confused and unsure about what to do, until Gulbenkian intervened. He called for a large map of the Middle East, took a thick red pencil and slowly drew a red line around the central area. “That was the Ottoman Empire which I knew in 1914,” he said. “And I ought to know. I was born in it, lived in it and served it. If anybody knows better, carry on…”
Gulbenkian’s TPC partners inspected and approved of the map. This account, taken from Ralph Hewins’s 1957 biography, continues: “Gulbenkian had built a framework for Middle East oil development which lasted until 1948: another fantastic one-man feat, unsurpassed in international big business.”
This San Remo Oil agreement came to be known as the “Red Line Agreement,” and it served to determine which oil companies could invest in TPC and reserved 5% of the shares for Gulbenkian. The name of the company was changed to the Iraq Petroleum Company in 1929. The Pasha gave Gulbenkian the entire Iraqi oil concession. Gulbenkian, however, saw an advantage in divesting from the vast majority of his concession so that corporations would be able to develop the whole. Gulbenkian grew wealthy on the remainder. He reputedly said, “Better a small piece of a big pie, than a big piece of a small one.”
As a secretive man without loyalties to any one empire, state or company, Gulbenkian could present himself as the ultimate honest broker. For “westerners,” he was a trusted source of intelligence on the Middle East. For “easterners,” he was someone to turn to in order to find out what the Great Powers and their mighty oil companies were up to. No other business figure in the history of the oil industry wielded such influence, over such a scale, for so long. Inspired by his experience in the oil world, Gulbenkian observed: “Oilmen are like cats; one never knows when listening to them whether they are fighting or making love.”
Speaking of love, Gulbenkian’s marriage was also a very profitable deal. In 1892, at the age of 23, Gulbenkian married Nvard Essayan, the daughter of wealthy Armenian entrepreneur Hovhannes Essayan. They were married for 60 years and had two children.
Milena Baghdasaryan
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An excellent article on the life of a remarkable man. As a young university student in the early eighties I was fortunate enough to benefit from two scholarships from the Gulbenkian Foundation for which I am forever thankful. I believe the foundation is still supporting Armenian students worldwide.
What do the descendants of Mr Gulbenkian do today and where are they?
There’s a “Gulbenkian Library” in Jerusalem, founded in 1932, with a treasure of books. In addition, there’s a permanently established Gulbenkian exhibit in Portugal, which my sister and brother-in-law recently visited. I first became aware of the incredibly wealthy Gulbenkian some two or three decades ago, from a Public Broadcasting System (PBS) biographical documentary about him. It was some hour or more long, and quite detailed about his success story and life.
Gulbenkian has contributed greatly to Portugal, with the establishment of his libraries in every corner of Portugal.
Also The Gulbenkian museum in Lisbon, though small but contains the finest examples of each category