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

Lyon Lyon (Franco-Provençal: ''Liyon'') is a city in France. It is located at the confluence of the rivers Rhône and Saône, to the northwest of the French Alps, southeast of Paris, north of Marseille, southwest of Geneva, Switzerland, north ...

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

de Rothschild Frères The Banque Rothschild, formally known as ''de Rothschild Frères'' () until 1967, was the family-controlled bank of the Rothschild banking family of France. It was established in 1817, expropriated by Vichy France in 1940, returned to the Roths ...

, general counsel for

Hautes-Alpes Hautes-Alpes (; ; ) is a Departments of France, department in the Provence-Alpes-Côte d'Azur Regions of France, region of Southeastern France. It is located in the heart of the French Alps, after which it is named. Hautes-Alpes had a population ...

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, formally the Republic of Austria, is a landlocked country in Central Europe, lying in the Eastern Alps. It is a federation of nine Federal states of Austria, states, of which the capital Vienna is the List of largest cities in Aust ...

, 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, pretender to the throne of France. 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 , image_flag = Flag of Serbia.svg , national_motto = , image_coat = Coat of arms of Serbia.svg , national_anthem = () , image_map = , map_caption = Location of Serbia (gree ...

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

North Africa North Africa (sometimes Northern Africa) is a region encompassing the northern portion of the African continent. There is no singularly accepted scope for the region. However, it is sometimes defined as stretching from the Atlantic shores of t ...

and

Egypt Egypt ( , ), officially the Arab Republic of Egypt, is a country spanning the Northeast Africa, northeast corner of Africa and Western Asia, southwest corner of Asia via the Sinai Peninsula. It is bordered by the Mediterranean Sea to northe ...

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 from overcapitalization of securities (the Stock Exchange had more securities than it could receive), poor financial management (buyout by the company of its own shares, etc.) and a struggle between "bears" (notably,

Rothschilds The Rothschild family ( , ) is a wealthy Ashkenazi Jews, Ashkenazi Jewish noble banking family originally from Frankfurt. The family's documented history starts in 16th-century Frankfurt; its name is derived from the family house, Rothschild, ...

) and "bulls", mixing politics, religion and finance, the General Union collapsed. This resulted in the bankruptcy of many stockbrokers near the Lyon Stock Exchange and also had repercussions on the

Paris Stock Exchange Euronext Paris, formerly known as the Paris Bourse (), is a regulated securities trading venue in France. It is Europe's second largest stock exchange by market capitalization, behind the London Stock Exchange, as of December 2023. As of 2022, th ...

(

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 Count Moïse de Camondo (15 March 1860 – 14 November 1935) was an Ottoman Empire-born French banker and art collector. He was a member of the prominent Camondo family. Biography As a child, Camondo moved with his family from their home in Con ...

, Louis Cahen d'Anvers,

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

and the

Banque de Paris et des Pays-Bas The Banque de Paris et des Pays-Bas (, ), generally referred to from 1982 as Paribas (), was a French investment bank based in Paris. In May 2000, it merged with the Banque Nationale de Paris to form BNP Paribas. History Background In the ...

, organized the rescue of the banks caught in the crisis, by setting up a special fund of 20 million francs. 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 ...

and the building industry, leading to a series of unemployment and violent social conflicts, including in 1884 "the great miners' strike", and in

Decazeville Decazeville () 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 (1780–1860), the ...

. The crash of the Union Générale 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 French companies established in 1875 1882 disestablishments in France Banks established in 1875 Banks disestablished in 1882 Henri, Count of Chambord Defunct banks of France Monarchism in France