Brioni’s transfer to the sovereignty of the Italian state

In 1919, Paul Kupelwieser died and left his son Karl the legacy of Brioni, who completed the extensive reconstruction of the island which his father had begun. The high capital requirements for all investments led to the founding of the “Società Anonima Brioni” with the issue of bonds, as the mortgages concluded with the banks were insufficient.

In 1926, Ing. Pietro Cunoldi became executive Director of S. A. Brioni.

Later, in September 1928, the company received a mortgage from the “Istituto di Credito di Fondiario dell’Istria”, but the economic situation was still very tense. The Board of Directors, following a previous rejection, justified its then surprising decision by stating that “the Board felt compelled, mainly because the company, which employed about 600 people and was of great interest to the Istrian economy, was currently in a state of economic recovery”.

Memorandum of State Secretary Commissioner Maliverno entitled “The Brijuni Crisis”: “The owner of the same, Mr. Carlo Kupelwieser, had only made one mistake: to rely on the credit that the directors of the institute had promised him since 1925, when the company flourished and he still achieved the perfect balance between income and expenditure. However, on the basis of those credit promises, Kupelwieser decided to reorganize the plants radically, thereby making considerable economic investments. The recent rejection of the institute, which came after two years of hopes, put Mr. Kupelwieser in a very difficult situation – which most likely corresponded exactly to the calculations of a group that had long been hoping for a chance not to pay much for what had been the fruit of 35 years of faith and work, of two whole lives and of huge capital, earned with your own sweat, spent to make a malaria steppe a true paradise. The one who had not kept his promise, accused Kupelwieser then, to have gone crazy. […] In fact, Kupelwieser was not a bit crazy when he bravely took into account the new situation and the new needs of the post-war period and knowingly confronted them, as much as his father had done before. When both did not hesitate to invest all their savings and make new debts, the profits were gradually realized, which all wise and experienced people of the time considered to be a great undertaking. In an effort to gain favour with the cause, the author of the memorandum appealed to the patriotic sentiment and described the Italian spirit of Carlo Kupelwieser and his support for the Italian and fascist cause in the years immediately following the war. Before the war, Kupelwieser, although native German, always took an open position in favour of the Italian party against the Austrian Navy in the urban battles of Pula. He was city councillor with the national list in contrast to the German-military list. With the rise of fascism in Istria (1920 – 21) he was the only one who spontaneously provided the necessary resources for the fascists of the province: All of the petrol used by the punitive expeditions that liberated the province of Istria from the Austro-Slavic-Communist remains was procured by the means given by him without hesitation and with true, sincere enthusiasm. In the time of Matteotti, when he was asked by the then federal secretary for a sum for the needs of the federal government, Kupelwieser ordered the doubling of that amount and stated that it was his duty in those moments to make every effort to help the party. Even when he himself was in distress, he still gave his signature for the necessary bills. Kupelwieser therefore deserved to be helped. He and no one else could guarantee Pula that Brioni would not become an object of speculative exploitation, but increasingly an element of the well-being of the city. […] »

In 1930 Karl Kupelwieser put an end to his life and the company Brioni was seized by the court at the request of the “Istituto di Credito di Fondiario dell’Istria”. The judge awarded the bank the disposal of the entire company assets.

1931 was the beginning of the financial crisis: Although the prefect of Pula stated in one of his letters “that after the creation of the Free Zone of Rijeka, the tourist flow was then moving and first poured into Brijuni and could save the economy of the island. Therefore, it would be reasonable to satisfy the owners necessities to improve the hotel facilities and to equip them also for the winter season. In order to implement that project, the islands’ management intended to cover the problem with issuing bonds and requested the Ministry of Finance to grant a tax exemption for the issuing of bonds.”, on January 9, 1931, the Italian Ministry of Finance did not grant a tax exemption for the admission of debenture bonds to meet the needs of accommodating guests.

In 1933, S.A. Brioni concluded a rental contract with the “Società Anonima Esercizio Brioni”; that was done under the direction of Ing. Dr. Pietro Cunoldi. However, the debts were immense and their total amount was calculated at more than 16 million lira. In fact, in addition to the debt from the Swiss franc bonds, which corresponded to about 7 million lira, and to other bonds for 1 million, of which one did not know how many of them were in circulation, unsecured debts came in favour of various suppliers and individuals for a total of about 660,000 lira. There were also substantial mortgage debts of around 9 million in favour of the “Istituto Fondiario di Verona” and the “Istituto di Credito Fondiario of Istria”. A mortgage of 400,000 lira was also granted to the “Banca Cooperativa Giuliana”, another for 1 million lira in favour of the “Opera Nazionale Combattenti”. The figures showed how serious the situation of the society was and how serious it would become as a result of the general crisis and the fact that the influx of passengers was failing. Although the island was exclusively owned by the company and the Kupelwieser heirs (with the exception of two cottages, located on land that was transferred by regular contract to the people Failchenfeld, Federico Guglielmo, Olga von Mostig, Giovanna Perco and Margherita Crocchi), it was nevertheless the case that the population was a part of the community of Pula, which also received substantial levies from Brioni. Pula was therefore requested to repay to Brijuni the entire amount of municipal taxes and duties imposed in the years 1932 to 1933 and to waive payment of the same taxes and duties for the years to come.

The Prime Minister then asked the Ministry of the Interior (under mediation of Guido Buffarini) to find a more sustainable solution that could save the company. As a result, it was decided on December 11, to create the autonomous community of Brioni Maggiore and to separate it from Pula. That decision brought some financial benefits, but it was not enough for economic recovery.

1935, May 27: The Società Anonima Esercizio Brioni was declared bankrupt by the Pula Civil Court. Pietro Cunoldi was arrested on suspicion of fraudulent bankruptcy and handed over to the fact-finding committee of the “Corte di Appello”, but released on bail at the end of the same year. With that aim in view, one of his villas in Punta Naso di Brioni was mortgaged for a total of three million in favour of the Italian public finances. The company was then managed by one of the creditor banks, the “Istituto di Credito di Fondiario dell’Istria”. That bank had signed a contract with a Belgian company that wanted to buy Brioni. Owner of that company was the lawyer Roberto Compagnone. Compagnone`s strategy, however, seemed speculative, as it did everything to delay the final contract to further reduce the purchase price. Also, the contract for the management of the maritime route Brioni-Pula was not renewed (the line was operated in the years before by Cunoldi`s “Società Anonima Esercizio Brioni”). Although Guidi Buffarini was interested in ensuring that that line could continue to be operated by said company, the management of the transport line in October 1935 was transferred by a state grant to the “Istituto di Credito di Fondiario dell’Istria”. In the meantime, some documents were presented to Mussolini which verified speculative attacks on Compagnone’s foreign company, and which also raised both political and criminal concerns.

1935, 23 October: Since the territory of Brioni was too valuable from a military and strategic point of view, the commander of the Italian Royal Navy stopped any attempt to sell the islands to foreign investors. The agreement between the “Istituto di Credito di Fondiario dell’Istria” and the company of Roberto Compagnone was subsequently cancelled. Senator Innocenzo Chersi, president of the “Istituto di Credito Fondiario dell’Istria”, claimed that a solution had been found that did no harm to his bank. In addition, the “Prefect of Pula” was beginning to raise some issues relating to the management of the territory of Brioni, thus promoting the application for repatriation of the island to the Pula administration: Brioni was in fact a municipality, but all of its land was privately owned by a bankrupt enterprise; all residents were thus employees of a bankrupt company. Furthermore, it was impossible to send a prefect, a mayor, etc.

Between the end of 1935 and the beginning of 1936, Cunoldi (free on bail) strangely acted as an intermediary for the purchase of Brioni by the Italian State. He was successful, and it seemed that that sale had brought him a lot of profit. According to documents and police records that exist on Cunoldi and describe him as a defrauder, the conclusion was obvious that Manfred I Mautner Markhof had misinterpreted the situation (in his memoirs). According to a note from “Pula’s Questura” about Cunoldi, “Overall, his reputation in this province is very shaken because he is known to be a person politically unreliable and with few scruples”. Also a report of March 10, 1938, by the priest Don Maghet, a close confidant of Cunoldi “He left Gorizia in 1926 and was commissioned by the heirs Kupelwieser as director of Brioni. But even there, as in Gorizia, he committed irregularities, fraud, embezzlement and was arrested. Cunningly, he succeeded in making all his capital over to his wife, so that his creditors could not get anything back. He stayed in prison for a long time; and when he was released, he returned with his wife Bolko and a son to Gorizia, where he has now settled again. He is not a man, but his wife has a lot of money”.

It was obvious that Cunoldi had no intent to save the family business Kupelwieser, but rather speculated about it in order to profit from it. Brioni had been at the centre of a series of political and military interests, and Pietro Cunoldi appeared as a tool of Buffarini, who had helped him twice in a verifiable way (in this regard, there is a “red file” in the archives).

On March 30, 1936, the failed “Società Anonima Esercizio Brioni” was expropriated and transferred to the territory of the Italian state. The “Regia Azienda di Brioni” was founded (Decree 30.3.1936 No. 956) and the maritime transport line was also managed by it from then on. The transition to the sovereignty of the Italian state is therefore definite.

“At the beginning of 1936 there was the collapse, the salaries of the employees could not be paid, and they declared themselves bankrupt. The island came into the possession of the Italian state, but the purchase price did not even cover the outstanding balance, so that the family Kupelwieser lost all claim to Brioni and left the island. The business itself was not changed, the grand feudal style was maintained, even the polo, however expensive it was, found the support of the government … Previously the island’s leadership had been rightly described as below par and amateurish but it had undoubtedly brought a personal touch to the business, which was missing then. A certain originality got lost.” Maria Lenz, unpublished manuscript