The Crédit Mobilier (full name Société Générale du Crédit Mobilier, "general company for movable
ollateral-backedcredit") was a French banking company created by the
Pereire brothers, and one of the world’s most significant and influential financial institutions in the mid-19th century.
The Crédit Mobilier had a major role in the financing of numerous railroads and other infrastructure projects by mobilizing the savings of middle class French investors as capital for vast lending schemes. Its operations resulted in vast debts for the countries which accepted its infrastructure loans, and the bank was thus indirectly involved in European encroachment on countries whose governments subsequently defaulted on these loans, not least during the worldwide
economic depression
An economic depression is a period of carried long-term economical downturn that is result of lowered economic activity in one major or more national economies. Economic depression maybe related to one specific country were there is some economic ...
of the 1870s.
It became a powerful and dynamic funding agent for major projects in France, Europe, North Africa and the world at large. As
Napoleon III
Napoleon III (Charles Louis Napoléon Bonaparte; 20 April 18089 January 1873) was the first President of France (as Louis-Napoléon Bonaparte) from 1848 to 1852 and the last monarch of France as Emperor of the French from 1852 to 1870. A neph ...
redeveloped Paris, the Crédit Mobilier speculated on real estate with inside information and collaborated with
Baron Haussmann to develop neighborhoods such as rue de Rivoli, Opéra, and place de l'Etoile. Beyond France, it specialized in mining and railway development, for which it also funded or sponsored other banks including the Imperial Ottoman Bank and the Austrian Mortgage Bank, as well as insurance companies and building contractors. The bank had large investments in
transatlantic
Transatlantic, Trans-Atlantic or TransAtlantic may refer to:
Film
* Transatlantic Pictures, a film production company from 1948 to 1950
* Transatlantic Enterprises, an American production company in the late 1970s
* ''Transatlantic'' (1931 film ...
steamship lines, urban
gas lighting
Gas lighting is the production of artificial light from combustion of a gaseous fuel, such as hydrogen, methane, carbon monoxide, propane, butane, acetylene, ethylene, coal gas (town gas) or natural gas. The light is produced either directly ...
, a newspaper and the Paris
public transit
Public transport (also known as public transportation, public transit, mass transit, or simply transit) is a system of transport for passengers by group travel systems available for use by the general public unlike private transport, typic ...
system.
In 1866-1867, the bank underwent a severe crisis, and the
Pereire brothers were
forced to resign at the demand of their longtime adversaries in the
Banque de France
The Bank of France (French: ''Banque de France''), headquartered in Paris, is the central bank of France. Founded in 1800, it began as a private institution for managing state debts and issuing notes. It is responsible for the accounts of the Fr ...
. The Crédit Mobilier never recovered its former importance.
Creation, development and collapse
Established in 1852, the French Government sanctioned the statutes of the new bank with the name of the Société Générale du Crédit Mobilier, with a capital of 60,000,000 francs. It was permitted to issue obligations up to ten times its assets - 600 million francs of debt for 60 million francs of equity. It was founded by the
Pereire brothers with a view to countering
James Mayer Rothschild's alliance with the industrialist
Paulin Talabot regarding competition for the railway expansion. It was allowed to acquire shares of public companies, and to pay calls made upon it in respect of such shares by its own notes or obligations; also to sell or give in security all shares thus acquired.
The operations of the society were conducted upon a very extensive scale.
[ A ]joint-stock company
A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareholders a ...
operating on a principle of limited liability
Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...
, its initial investments came from large industrialists, but its capital was vastly increased by accepting investments from the general public.
In 1854 it subscribed largely to the war loan of the French government, raised during the Crimean War
The Crimean War, , was fought from October 1853 to February 1856 between Russia and an ultimately victorious alliance of the Ottoman Empire, France, the United Kingdom and Piedmont-Sardinia.
Geopolitical causes of the war included t ...
, to the Grand Central Railway Company, to the General Omnibus Company of Paris, and to various other important projects. The dividend declared for 1854 was 12%. In 1855, it lent two sums to the government—the one of 250,000,000 and the other of 375,000,000 francs. Its operations were vast during this year, and the net dividend declared amounted to 40%. The directors then proposed to avail themselves of their privilege of issuing their own obligations, and thought to issue two kinds of notes—the one at short dates, the other at long dates, and redeemable by installments. The proposed issue was to amount to 240,000,000 francs, but the public became alarmed at the prospect of so vast an issue of paper money, and in March 1856, the French government deemed it necessary to prohibit the proposed scheme.
The prohibition was a severe blow to the institution. In 1856, its dividends did not exceed 22%; in 1857 they were only 5%. Several attempts to resuscitate its credit failed, and finally, in November 1871, it was reorganized with a new board of management. In 1877 its assets were 77,000,000 francs, but its shares, the par value of which was 500 francs, sold for 200 francs only. During 1878–79 the capital was first reduced to 32,000,000 francs, and then increased to 40,000,000. In 1884 it was a second time reduced to 30,000,000 francs, but the company never regained its losses.[
]
Later history
In 1902, a group of investors led by Jacques de Lapisse acquired control of the Crédit Mobilier from the Pereire family and merged it with the Office des Rentiers, adopting the name (CMF) for the merged entity. The CMF was initially headquartered at 3-5, rue Saint-Georges in the former seat of the , and moved in 1912 to a larger building at 30-32, rue Taitbout and 26, boulevard Haussmann, which is now the seat of the . The CMF was acquired in 1922 by the Banque de l'Union Parisienne
The Banque de l'Union Parisienne (BUP) was a French investment bank, created in 1904 and merged into Crédit du Nord in 1973.
History
Société Française et Belge de Banque et d'Escompte
From its inception, the Société Générale de Belgiq ...
.
See also
* Saint-Simonism
Saint-Simonianism was a French political, religious and social movement of the first half of the 19th century, inspired by the ideas of Claude Henri de Rouvroy, comte de Saint-Simon (1760–1825).
Saint-Simon's ideas, expressed largely through ...
References
Further reading
* Cameron, Rondo E. "The Crédit Mobilier and the economic development of Europe." ''Journal of Political Economy'' (1953): 461-488
in JSTOR
External links
*
{{DEFAULTSORT:Credit Mobilier
Defunct banks of France
Banks established in 1852
French companies established in 1852