The founder: Zsigmond Kornfeld

A young Jewish man from a modest family, twenty-six years of age, soft spoken and of small stature came to Budapest from Vienna in 1878, not speaking a single word of Hungarian. His name was Sigmund Kornfeld. He died in Budapest as Baron Zsigmond Kornfeld in 1909. By this time he had already been fluent in Hungarian, presided over the Stock Exchange, and been member of the upper house of the Parliament. During his lifetime he transformed the Hungarian monetary system, stabilized the state budget and saved it from collapsing in the last minute. How did he do it?

 Zsigmond Kornfeld

Zsigmond Kornfeld

Kornfeld was born in the Czech town of Goltsch-Jenikau (today: Golčûv Jenikov) in 1852. His father, who rented a distillery, wanted his children to be educated: Zsigmond’s brothers became lawyers and doctors. When his turn was about to come, his father lost his eyesight and died soon after. Zsigmond had to drop out of high school and look for a job. He began to work in a Prague bank as a general servant. Thanks to his skills and endurance he fast climbed up the ladder. At age twenty he was one of the managers of the newly established Bömischer Bankverein, four years later he already was the deputy-director of Credit-Anstalt.
The influential banker, Albert Rothschild called for Kornfeld in December 1877. Following a thorough job interview he called upon Kornfeld to take part in the management of the Hungarian General Credit Bank, the Hungarian twin-bank of Credit-Anstalt, itself a Rotschild affiliate. The Rothschilds had a lot at stake in Hungary. The country was on the verge of a financial crisis in 1873, five years before Kornfeld arrived in Hungary. The budget was saved from collapsing by a Rothschild-led consortium of investors that put up a loan worth 153 million Austrian silver forints. Due to this huge investment, the stability of the Hungarian financial system was of primary importance for the Rotschild family.

Despite the somewhat hostile welcome during his first visit to Hungary, Kornfeld decided to move to Budapest and take up his duties. The government soon realized Kornfeld’s capabilities and listened to his advice. Budget reconciliation was also aided by Kornfeld, who, using his network of bankers and financiers, managed to achieve ever better repayment terms. The process of financial consolidation culminated in the monetary reform of 1892, in which Kornfeld played a decisive role, and the subsequent introduction of a new currency, the Crown.
Zsigmond Kornfeld fulfilled the position of president of the Stock Exchange. In one of his most important measures he replaced German with Hungarian as the compulsory language of communication at the Bourse. Those resisting were soon convinced by Kornfeld who ordered that business agreements made in languages other than Hungarian would be null and void.
At age forty, Kornfeld wished to retire to his manor he bought back in 1890 to pursue his literary and artistic interests. His cultural affinity was also manifest in sponsoring Franklin, a publishing house that later became one of the most important players in the Hungarian publishing market. His retirement plans were shattered by the bankruptcy of his wife’s family as Kornfeld repaid all the debts of the Frankfurters. While he was wealthy, his fortune however was not comparable to those of the Weiss’ or the Hatvanys as he was not an owner but an employee of the Hungarian General Credit Bank. He therefore had to give up his retirement plans and continue working.

Staying Jewish
By the first decade of the 20th century, Kornfeld was already a respected member and a key figure of the Hungarian political-economic elite. He was a life member of the upper house of the Parliament from December 1901 and was given the title of Baron shortly before his death in 1909. As the result of this exceptionally successful integration path, within thirty years the son of a distiller became a Hungarian nobleman. Like many other members of his generation of other great 19th century Jewish dynasties, Kornfeld too decided to remain loyal to his religion during the process of integration. He took an active role in Jewish matters. Since 1897 he was a member of the governing board of the Rabbinical Seminary and became the Head of the Charitable Trust Department of the Pest Jewish Community in 1905. After 1906 he filled the position of vice-president of the Community. He also founded a Jewish community in his countryside estate.
According to an anecdote, he refused an award following a successful credit agreement he assisted obtaining for Russia saying to the Russian ambassador who visited to thank him “I am a banker and did this job under the request of the government. Your gratitude is acknowledged, however I want no part of the award. I am Jewish and my people is being persecuted, even murdered in your country, I therefore refuse to accept a Russian award.”