The process that led to the creation of the haute banque ended during the first half of the nineteenth century. This term refers to approximately 20 respected banking houses in the capital which belonged to very rich banking families
Some of them such as the Mallets, who had been settled in Paris since 1713, had been in the profession since before 1789. Others, such as the Rothschilds, came towards the end of the Empire (James de Rothschild was in the capital for the first time in 1812); still others, such as the Mirabauds, settled there only after the July monarchy (1830-48). Although many of them were protestant or Jewish, of Swiss or German origin, or occasionally English or Dutch, some were also catholic, often having come from the provinces as was the case with the Periers of
Grenoble. Some of these firms proved to be surprisingly long-lived.
In the nineteenth century, the heads of these firms used their personal fortunes and the capital with which their families and rich relations had entrusted them, as well as the funds which they drew from their acceptances in numerous activities. These merchant bankers played an active role in the trade of important raw and manufactured goods, such as wheat, tobacco, mercury and cotton fabrics. They financed international trade and maintained close relations with the principal money markets of Europe, in particular with the City in London. In joining together to form investment associations, they furthered the qualification of major public loans, French as well as foreign, and they contributed to the circulation of transferable securities. They launched the first savings banks and the new insurance companies; they largely financed the development of new urban neighbourhoods; they founded industrial firms, particularly in metallurgy and mining. Finally, they actively participated in the fever of railway construction, which marked the last years of the July monarchy. Many of these merchant bankers played an important political role under this regime.
James de Rothschild was by far the most powerful of these big bankers. Thanks to the solidarity that united him with his brothers, to his frenzied work, to the privileged relations he maintained in the ruling circles without ever linking up with any form of government, and to his exceptional business sense, he was able to move with the times and build up a company that outclassed all of its rivals. He was also the promoter of the very powerful Compagnie du Chemin de Fer du Nord (Northern Railway Company), which would remain in the Rothschild empire until 1937. At his death in 1868 he left a fabulous fortune, for the times, of 150 million francs. Having remained a foreigner, he had not been able himself to become one of the directors (régents) of the Banque de France, but in 1855 his son Alphonse, at the age of 28, joined the board of directors, on which the most influential families of the haute banque were represented. They were thereby able to manage the issuing institution, working with a governor, whose post was introduced in 1806 and who was appointed by the head of state.
Besides these powerful bankers, in most of the towns there were local bankers, whose numbers had multiplied between the years 1830-70. At the beginning of the Third Republic there were perhaps 2000 of them, and France thereby had a banking structure of often undreamed-of wealth. These local bankers, called discounters (or even usurers, by those who complained about them) constituted a complex and hierarchical set. Their means were limited, but in cases of need they could rely on the support of the Parisian firms of which they were the correspondents, and the generally refinanced themselves through the nearest branch of the Banque de France. The latter, which had enjoyed an issuing monopoly since 1848 (at which time it had absorbed the nine departmental issuing banks, which had been having difficulties), committed itself in return, when the law of 1857 renewed its privilege, to opening at least one branch in each department. The bankers of good repute still had the possibility of rediscounting part of the bills of exchange that they held.
When these local bankers who had been close to their clients and well integrated in the economies of their regions were eliminated, particularly after 1930, they were missed. Thus banking, which in England was already represented by large establishments in the form of limited companies with large networks of branches, remained for a long time in France a world of bankers, whether small (local bankers) or large (the haute banque), who relied on credit from the Banque de France, which was the keystone of a remarkably coherent System. This System was to be disrupted by the arrival of the big deposit banks.
Source: Alain Plessis