the world of private banking

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THE WORLD OF PRIVAtE BANKING
the second half of the seventeenth century in these two centres a number of branch
banks which very rapidly became independent Protestant private banking places.
Together with Geneva and Lyons, Protestant banking at Paris became at the end of
the seventeenth century even more important than all the native French financiers
together. The influence and power of the Genevan bankers at Paris upon French
State finance became so dominant that they were able to go on operating in France
in 1685 when the French Huguenots were officially eliminated from all economic
activities by the revocation of the Edict of Nantes. 16 They even reinforced their
position by organizing the transfer to foreign countries of the wealth of the exiled
French Huguenots. The sums entrusted to them were invested into the French
State treasury and paid to the owners in various foreign locations.
Parisian Protestant banking came to a new peak of influence with regard to
French State finances particularly during the Nine Years’ War (1688–97) and the
War of the Spanish Succession (1701–14). The historiography stresses the dominant
role played by Samuel Bernard, a Parisian Protestant banker from Sancerre who
abjured. Samuel Bernard furnished the Crown with enormous loans for the
acquisition of war materiel in France and for the maintenance of the operating
armies in Flanders, Bavaria, Alsace and Italy. A group of rich Protestant bankers,
among them the Fatios from Geneva and the Hogguers from Lyons, discounted
promissory notes of the treasury to the Crown, several financiers and fiscal tenants.
They paid the credits in advance, using the money entrusted to them by their clients
in France. Outside the country they transferred the money for the account of the
Crown by letters of exchange in foreign places. In 1702–5 the royal Almanach
also mentions names like Hogguer, Mallet, Tourton and Guiger. These two latter
families constituted a Company which was present simultaneously at Geneva,
Lyons, Amsterdam and London. Because of their international relationships and
the respect the Protestant bankers had won over the decades, they were able to use
an important part of the commercial capital flows to finance the French State.
The problem with this kind of public credit funding was that the letters of
exchange accepted by the Parisian bankers for the State treasury were not covered
by ordinary commercial transactions. They were guaranteed only by the promissory
notes of the treasury. But the excessive expenditures caused by the lengthy French
wars made the option of reimbursement of the State’s debt impossible. The
crown tried to save its public credit by reducing the interest rates, promulgating
a moratorium on the reimbursement of debts and other urgent appeasements.
But all these interventions were without success. In 1709 and subsequent years
quite a number of the Parisian Protestant bankers and some others were forced to
apply for bankruptcy. One of the consequences was a temporary diminution of the
Protestant bankers’ influence.
However, some of them survived this payment crisis and even that of the Law
System in 1720. Let us give a portrayal of one of these bankers, who was to later
16
The native Protestants were officially readmitted to French society in 1786 by a
new edict of tolerance under King Louis XVI.