Setting out to conquer rail

Driven by ideals of progress, Societe Generale embarked very early on in the financing of railway infrastructures, at a time when the industrial revolution was at its height. A deliberate policy that enabled it to attach its name to the execution of major projects of public interest, work for the development of the economy and extend international trade relations.

From its foundation, Societe Generale wanted to be a tool for the modernisation of the economy, focused on driving the financial market and open to technological progress. As such, it nurtured the ambition of being the accredited partner of major industrial projects. Railway building was one of its priorities in terms of financing. There is nothing surprising in this. The entrepreneur Paulin Talabot, one of its founders, built his reputation by working on the development of the railway network in France, notably through the operation of the “Paris-Lyon-Mediterranean” (PLM) line – the forerunner of the SNCF – which played a major role in boosting the French economy. It was as a result of his initiative that Societe Generale, of which he was a director (1865-1885), occupied the forefront of the “transport fever” generated by the industrial revolution.

On a national scale, the bank encouraged the extension of the railway network in different ways. According to the circumstances, it supported the launch of industrial firms, by taking shareholdings and granting loans, or granted communal loans repayable against government funds. At the turn of the century, it established itself, far ahead of its competitors, as the reference bank in this field of activity. The PLM network, which encouraged the circulation of goods and people, partially owes its extension, its equipment and its maintenance to it. Moreover, this effort was not confined to ensuring a link between the capital and the Mediterranean via the Rhone. Loyal to its corporate name, Societe Generale supported the construction of secondary lines (Pyrenees, Midi, Médoc, Dauphiné, Nord-Pas-de-Calais, etc.) at a time when the Freycinet plan, launched in 1878, undertook to open up France through a series of public works. Having become one of the largest shareholders of the “Société des chemins de fer économiques”, it also took an active role in the building of roads, canals, tramways and shipyards. As early as 1883, with its wealth of expertise, it announced itself as an interested party when the negotiations between the government and the City of Paris intensified on the subject of the Paris underground railway. Ambitious works, evidence of modernity for the period, with which it was involved at the time of their implementation at the end of the 1890s.

This policy extended outside national frontiers. Societe Generale became involved upstream in the launch and running of public services companies in order to obtain securities for investment. Moreover, until the First World War, most of its industrial shareholdings were acquired in railway companies. Amongst others, it contributed to the financing of the line linking Italy to Switzerland via the Simplon pass, in the heart of the Valaisan Alps. Furthermore, the bank supported the development of railway lines in Spain, Portugal, Austria and Hungary. The Bank of Salonica, its subsidiary, proceeded in a similar manner in the Balkans region. In African countries under French administration, Societe Generale participated in the installation of the first lines, notably in Algeria, where the authorities wanted transport infrastructures for the export of grains, livestock, skins and wool, as well as the import of foodstuffs and manufactured goods.

Latin America was also a major area of action for Societe Generale. On the lookout for new future growth drivers, Societe Generale carried out the activity of a finance bank in that region. Brazil and Argentina were its two main investment locations, although it was also involved in Mexico and Peru. In 1880, it underwrote a third of the 300,000 shares issued by the Brazilian railway of Dona Theresa Christina. At the beginning of the 20th century, it placed the bonds of the Sao Paulo-Rio Grande railway company and formed an association with the Brazil Railway Company, largely calling on French savings and participating, when the circumstances required, in cash advances. In Argentina, it demonstrated the same dynamism, promoting the securities of the railway company from Rosario to Puerto Belgrano and those of the railway company of the province of Santa Fe. Sometimes, it joined forces with other establishments to minimise the risks, notably Paribas and the Banque de l’Union parisienne, as in the case of the railway company of the province of Buenos Aires.

Russia and the Far East were not neglected, far from it. In the tsarist empire, Societe Generale sought to invest and support the metallurgical and rail development called for by Alexandre III and his successor Nicolas II in order to launch their country on the path of modernity. The bank was very much involved in these transactions which boosted the Paris market. In France, it placed securities issued by the railway companies, while its subsidiary the Banque du Nord (1901), which became the Russo-Asiatic Bank after its merger with the Russo-Chinese Bank in 1910, made advances to civil engineering contractors. In 1908, it was the co-leader with Paribas in the financing arrangement for the North-Donetsk railway company. A few years later, it provided its assistance in the construction of a section of the Trans-Siberian Railway. In addition, Societe Generale was involved in several Chinese lines and more specifically the Yun-Nan line, whose construction enabled France to extend its influence to the north of Tonkin. In 1899, it participated in the Peking-Hankeou bond issue, for a 1,000 kilometre railway line built by the Belgians and French from 1898. Lastly, in 1913, through the Russo-Asiatic Bank, it devised railway investment projects in the Shan-Hsi province (Peking-Szechuan) and in Manchuria. A dynamism displayed in the four corners of the world that already prefigured the emergence of a major global banking group…

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