The General Union (''Union générale'') was a French Catholic bank founded in

Lyon Lyon,, ; Occitan: ''Lion'', hist. ''Lionés'' also spelled in English as Lyons, is the third-largest city and second-largest metropolitan area of France. It is located at the confluence of the rivers Rhône and Saône, to the northwest of t ...

in 1875 by Catholic monarchists and then taken over in 1878 by Paul Eugène Bontoux. It went bankrupt in a resounding manner in 1882, during the stock market crash.

History

In 1878, Paul Eugène Bontoux, former head of department of the Rothschild bank, general counsel for Hautes-Alpes who had just been invalidated in the legislative elections of 1877 in Gap for vote fraud, former director of railway companies (the Staatsbahn (de) and the Südbahn) and who in 1874 successfully launched a loan on the public markets for lignite operations in

Austria Austria, , bar, Östareich officially the Republic of Austria, is a country in the southern part of Central Europe, lying in the Eastern Alps. It is a federation of nine states, one of which is the capital, Vienna, the most populous ...

, took over the management of the General Union founded in 1875 in

by a group of Catholic and monarchist bankers and who is in trouble. The Bank was officially created on June 3, 1878. The initial capital was to be 25 million francs, an amount which was immediately increased to 50 million francs. The bank met with great success in Catholic and Legitimist circles and obtained the support of the "

Count of Chambord Henri, Count of Chambord and Duke of Bordeaux (french: Henri Charles Ferdinand Marie Dieudonné d'Artois, duc de Bordeaux, comte de Chambord; 29 September 1820 – 24 August 1883) was disputedly King of France from 2 to 9 August 1830 as Hen ...

", pretender to the throne of

France France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...

. The bank grew rapidly by multiplying redemptions and risky investments, particularly in the regions of Central and Danubian Europe. In particular, it financed and built the first railway in

Serbia Serbia (, ; Serbian language, Serbian: , , ), officially the Republic of Serbia (Serbian language, Serbian: , , ), is a landlocked country in Southeast Europe, Southeastern and Central Europe, situated at the crossroads of the Pannonian Bas ...

. It acquired insurance companies, created the Lyons Water and Lighting Company and financed operations in

North Africa North Africa, or Northern Africa is a region encompassing the northern portion of the African continent. There is no singularly accepted scope for the region, and it is sometimes defined as stretching from the Atlantic shores of Mauritania in ...

and

Egypt Egypt ( ar, مصر , ), officially the Arab Republic of Egypt, is a transcontinental country spanning the northeast corner of Africa and southwest corner of Asia via a land bridge formed by the Sinai Peninsula. It is bordered by the Mediter ...

with other banks while speculating on the stock market. In January 1882 the company was forced to suspend its payments and eventually collapse. On January 19, 4 billion francs is wasted, a considerable amount at that time. This was the first “big puff” in contemporary financial history. In 1882, resulting both from overcapitalization of securities (the Stock Exchange had more securities than it could receive), from poor financial management (buyout by the company of its own shares, etc.) and a struggle between "bears" (notably,

Rothschild Rothschild () is a name derived from the German ''zum rothen Schild'' (with the old spelling "th"), meaning "with the red sign", in reference to the houses where these family members lived or had lived. At the time, houses were designated by signs ...

) and "bulls", mixing politics, religion and finance, the General Union collapses. It brought with it the bankruptcy of many stockbrokers near the Lyon Stock Exchange then had repercussions on the

Paris Stock Exchange Euronext Paris is France's securities market, formerly known as the Paris Bourse, which merged with the Amsterdam, Lisbon, and Brussels exchanges in September 2000 to form Euronext NV. As of 2022, the 795 companies listed had a combined market ...

(

Paris Bourse crash of 1882 The Paris Bourse crash of 1882 was a stock market crash in France, and was the worst crisis in the French economy in the nineteenth century. The crash was triggered by the collapse of l'Union Générale in January. Around a quarter of the brokers ...

). In January 1882, Bontoux was arrested and spent several months in prison. Feder and Bontoux were sentenced to five years in prison. A small group of major financiers, including Moïse de Camondo,

Louis Cahen d'Anvers Count Louis Raphaël Cahen d'Anvers (24 May 1837 – 20 December 1922) was a French banker. Born in 1837 as the son of Meyer Joseph Cahen d'Anvers and Clara Bischoffsheim (1810-1876), he was a scion of two wealthy Jewish banking families. He m ...

and the Banque de Paris et des Pays-Bas, organized the rescue of the banks caught in the crisis, by setting up a special fund of 20 million euros. The crisis of several years which followed mainly affected mines,

metallurgy Metallurgy is a domain of materials science and engineering that studies the physical and chemical behavior of metallic elements, their inter-metallic compounds, and their mixtures, which are known as alloys. Metallurgy encompasses both the sc ...

and the building industry leading to its procession of unemployment and violent social conflicts, which experienced in 1884 "the great miners' strike", and in

Decazeville Decazeville ( oc, La Sala) is a commune in the Aveyron department in the Occitanie region in southern France. The commune was created in the 19th century because of the Industrial Revolution and was named after the Duke of Decazes (1780–186 ...

. The crash of the General Union led to criticism of stock-trading (manoeuvres aimed at manipulating stock prices). It was regarded by his contemporaries as the result of a political struggle between the conservative and legitimist right (Bontoux had made this bank the bank for the conservatives: it notably had many clergymen among its shareholders) and the liberal left.

References

{{Reflist 1875 establishments 1875 establishments in France