Period: 1880

Smith’s five most spectacular disputes

L.O. Smith’s short temper is well documented. He had countless arguments in his life, with everyone from businessmen to governments. Read about five of his most spectacular disputes.

Smith’s humiliating export failure
At the end of the 1880s, the vodka king found himself in serious trouble. As part of his export venture, he had shipped an enormous amount of liquor to Spain. According to a new law, the stock would now be subject to customs duty. The new fee was a breach of the trade agreement between Sweden and Spain, and Smith was mad with worry and rage. This was a real threat to his factory in Karlshamn.

He turned to Ehrensvärd, the minister of foreign affairs, and even to the Swedish king for support. They both hesitated, however, which made Smith furious. At this time, the Swedish-Norwegian ambassador Anton Grip was in Madrid. He seemed to side more with Spain (and Norway) than with Sweden.

A conflict between Spain and Sweden was inevitable, and Smith and Grip quickly became the two main players. Smith instructed his Spanish managers to request support from the Swedish consulates and to fly the Swedish flag if the law came into force. On June 28, 1888, the law was confirmed. Grip saw the Swedish flag, and took it as a sign that Smith challenged the Spanish government. At the same time, the Swedish state ordered Smith to sell any stock he had in Spain.

Smith tried to save his Spanish business in every way. Finally, the Swedish state requested that the question should be settled in court. Eventually, Spain agreed – but only if they could appoint the judge. In December the same year, the verdict was announced, entirely in Spain’s favour. Smith lost his fortune and had to close his business in Karlshamn.

”You’re scum! You’re scum!” This foul language was uttered by Prime Minister Per Axel Bergström as L.O. Smith was carried out from the first chamber of the Swedish parliament.

The row in the Swedish parliament
“You’re scum! You’re scum!” This foul language was uttered by prime minister Per Axel Bergström as L.O. Smith was carried out from the first chamber of the Swedish parliament. What on earth provoked these strong emotions? The answer is a political disagreement related to the Swedish banking system.

A year earlier, at the end of 1885, Smith had been asked to represent Blekinge County in the first chamber of the Swedish parliament. He accepted without hesitation – in parliament, he would have a chance to join and influence the polarized debate about how to develop the banking system. One end of the debate spectrum was led by A.O. Wallenberg, founder of Stockholms Enskilda bank. At the other end were the liberals, who wanted the state to take over the whole issue. Smith joined the liberals on the matter and argued passionately against Wallenberg. One of Smith’s propositions was to introduce a central bank that would be responsible for issuing banknotes. The private banks would lose their right to print banknotes. The suggestion caused an uproar: It turned out that several members of parliament owned shares in banks around the country. Smith responded by printing a list with the names of the ministers.

In May 1886, Smith was going to hold his first parliament speech. But as soon as he stepped into the first chamber, everything went wrong. The rest of the parliamentarians started criticizing Smith heavily. Fighting back, he managed to humiliate both A.O. Wallenberg (who had died unexpectedly some time before) and the members of the first chamber as a whole. When he revealed his view on private banks and printing of bank notes, complete chaos broke out. All of a sudden, Smith sank down from the pulpit, grabbing his heart as if he had a cramp. The insult that Bergström yelled at Smith is considered to be the rudest thing that anyone has uttered in the Swedish parliament.

Police intervention at chaotic liquor store
During Easter in 1883, turmoil broke out at one of the Fjäderholmarna islands, just outside Stockholm. The reason was L.O. Smith’s vodka store, which attracted hordes of people from the city. The crowd was so tumultuous and unmanageable that people’s lives were in danger. Nine policemen were called to the scene to try to keep order.

Stockholm’s city council had tried to close the store for some time. But there was nothing they could do, as Fjäderholmarna belonged to Lidingö municipality and not to the city of Stockholm. The reason Smith set up his shop here was that the city council had ignored Smith’s bid to become a liquor supplier to the city. The council had also spread rumors that Smith was a dishonest businessman who was known for breaching agreements. Smith went ballistic and declared war against the city. He set up an agreement with a restaurant owner at Fjäderholmarna and opened up a shop, just as he had done at Reimersholme five years earlier.

The shop was a huge success. The city authorities complained about Smith’s rudeness and tried to stop the business, but it was all in vain. After Easter Eve in 1883, the city managed to bribe the restaurant owner, who managed the shop on Smith’s behalf. The shop had to close down.

Smitt was furious, of course, and promptly responded by telling Smith to go to hell.

Smitt about Smith: Robber baron!
In 1877, there was a war of words in the Stockholm newspapers. To the readers’ delight, the two businessmen J.W. Smitt and L.O. Smith took turns to humiliate each other in public. Smith started by calling Smitt “a societal evil in concentrated form” whereupon Smitt countered with “robber baron!”.

The reason was that Smitt had invested in Smith’s liquor company, which was not doing well. Smitt wanted his capital back. When Smith refused, Smitt sued him and demanded that the company be dissolved.

The dispute went on for some time. Smitt wrote a 25-page (!) long account of his life as a businessman and sent it to the magazine Figaro. Perhaps his intention was to boost his public image before the trial. When the magazine wanted money to publish the article, Smitt hit the roof. Smith found out and wrote a letter to Figaro where he gave his opinion on Smitt’s character. He offered to pay for the publication as “… it would be a shame to withhold Mr Smitt’s self-proclaimed opus from the public”. Smitt was furious, of course, and promptly responded by telling Smith to go to hell. Smith was sentenced for defamation. What was worse, however, was that both J.W. Smitt and A.O. Wallenberg had become his bitter enemies.

Smith intervenes shareholder’s meeting in disguise
Everything seemed to go according to plans for the management at Reymersholms Spritförädlings AB. An extra shareholder’s meeting was about to start, with the intention of dissolving the company and get rid of L.O. Smith once and for all. This was on December 27, 1880. As the chairman began the negotiations, the doors suddenly opened and Smith, disguised in a fake beard, sunglasses and a turban, entered with an array of lawyers and reporters.

While away on holiday abroad, Smith had found out that the mangement at his company Reymersholms Spritförädlings AB had plans to dissolve the company, in which he owned 60% of the shares. He had already renounced his right to vote, according to agreement. But he was not going to accept this kind of betrayal. He paid a fortune to hire a train that took him all the way from Malaga to Stockholm. When he arrived, he kept himself disguised so as not to be recognized, which would ruin his plan.

The conflict ended with Smith giving up his shares for 1,900 SEK each, which earned him a total of 1.2 million SEK. The company was dissolved and renamed Reymersholms Nya Spritförädlings AB.