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A Chapter in the Financial Revolution of the Nineteenth Century: The Rise of French Deposit Banking*
Published online by Cambridge University Press: 03 February 2011
Extract
The terminal dates of this study are the year of the foundation of the Crédit Lyonnais and the year of the transfer of the management from Lyons to Paris. Until 1882, the siège social remained in the south, though from the late 1860's on, the initiative in the larger financial operations lay with the “succursale” in the capital. To satisfy the requirements of what Bouvier calls a two-headed direction, an extensive, daily correspondence was indispensable. The result is one of the richest banking archives ever opened to an inquiring researcher. It is not only their abundance that makes these records of the Crédit Lyonnais so valuable; it is their quality, the subjects they treat, the insights they give into the problems and minds of the directors of the bank. These papers deal with matters that today would be confined to conversation—directly or over that bane of the future researcher, the telephone; they concern not only decisions, but the reasons for decisions and the debates that lay behind them. Even if such thoughts were consigned to paper today, the records would in all likelihood end by being removed from the premises as the personal property of their authors. Given the catholicity of interests of the Credit Lyonnais—its activity in the regional and national economy, its innovations in French banking practice, its wide excursions into the field of international finance—its archives are a broad gateway into the economic history of the late nineteenth century.
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- Copyright © The Economic History Association 1963
References
1 See his “L'installation des groupes financiers au Moyen-Orient: eraprunts gouvernementaux, interets bancaires et rapports internationaux (1860–1882),” Bulletin d'histoire moderne et contempormne, 12e série, no. 10 (1959), 10–13Google Scholar; “Des banquiers devant l'actualité politique en 1870–1871,” Revue d'historie moderne et contemporaine, V (1958), 136–51Google Scholar; “Les intéréts financiers et la question d'Egypte (1875–1876),” Revue historique, CXXIV (1960), 75–104Google Scholar; “L'installation du Crédit Lyonnais en Russie tsariste et la préhistoire des emprunts russes,” Revue d'histoire économique et sociale, XXXIX (1961), 84–112Google Scholar.
2 They also distinguished between the more speculative investments of the Cre'dit Mobilier, which worked largely with its own capital and the large current accounts of institutional depositors, and the solid, short-run holdings they would confine themselves to in order to meet the liability of demand deposits. The principle of short-run debts-short-run credits had always been the basic canon of English private deposit banking. It was even more rigidly imposed on the joint-stock commercial banks by their spiritual father William Gilbart, who saw in the purest financial orthodoxy the one way to overcome the public's suspicion of the joint-stock form in a custodial service like banking, which was not only confidential in character but, unlike commerce, was not supposed to involve risk for the depositor. Yet in fact, French deposit banking was never “pure” in its devotion to solid short-run assets and eventually found a middle way between the conservatism of the English system and the speculative investment banking of the Cre'dit Mobilier. For that matter, the English banks were not pure: we are dealing here with a spectrum, and the differences arc of degree rather than kind.
3 Actually, the Banque de France surpassed it in resources, thanks to its monopoly of the issue of paper money, and in activity, thanks to its role as the bank of rediscount. But although the two institutions did compete in certain areas, they are not really comparable either in function or character. The Banque de France was sui generis.
4 Compare the movement of the Midland Bank to London; or of the Darmstäder and Dresdner banks to Berlin.
5 The English themselves were puzzled by the large profits of the most successful joint-stock banks. “Can you tell us,” asked the Select Committee of 1857 on the Operation of the Bank Act of 1844, “how it is that joint-stock banks have been able to make profits varying from 15 to 25 per cent, and even more, when the rate of interest during the preceding ten years has been so low-an average of something below 4 per cent?” They never got an adequate answer. S. Evelyn Thomas, The Rise and Growth of Joint-Stock Banking, Volume I [only one published]: Britain, to 1860 (London: Sir I. Pitman & Sons, Ltd., 1934), p. 559Google Scholar. The explanation would seem twofold: even small earnings on a volume of deposits far greater than capital meant a large return on investment; and the banks did undertake some more speculative operations, among other things, loans to business enterprises on the security of real property, equipment, or accommodation paper. The latter led to a number of failures, but sometimes these risks paid off. There is still no scientific study of the operations of the British commercial banks.
6 See the excellent thèse complémentaire of Bouvier: he krach de I'Union Générale, 1878–1885 (Paris: Presses Universitaires, 1960)Google Scholar.
7 Bouvier rejects the accusation that the Crédit Lyonnais was actually part of a syndicate of bears that deliberately set about to ruin the Union Générale. There may or may not have been such a syndicate-Bouvier has found no evidence of its existence-but the Cre'dit Lyonnais clearly did what it had to do in its own interest.
The abruptness of the impersonal joint-stock banks in time of contraction seemed to contrast unfavorably with the forbearance of private and merchant banks, with their intimate clienteles. At least the British detected this difference in policy, which one observer attributed to the greater flightiness of joint-stock deposits. Cf. , Thomas, Rise and Growth, p. 561Google Scholar.