Societe Generale put to the test in the Great War
Summer 1914. Like its competitors, Societe Generale made a critical contribution to the war effort by supporting the companies and organisations dedicated to national defence.
On 28 June 1914, Archduke Franz Ferdinand, heir to the Austro-Hungarian throne, was assassinated in Sarajevo. Alliances shifted and triggered a war, initially European and subsequently global in scale, the horrors of which no one could begin to imagine at the time. In France, the government called upon the Sacred Union. On 1 August 1914, President Poincaré signed the order for a general mobilisation. Two days later, Germany declared war on the French Republic. In the interest of national defence, the authorities quickly enacted measures - some of which were unpopular - that affected the entire banking sector. A run on the banks was launched in Paris and the provinces alike. In a bid to prevent money hoarding and cover the expenditures inherent in a state of belligerency, the government issued a debt moratorium extending to cash deposits and current accounts. Thus the wartime economy began taking shape, one to which the banks gave their fullest cooperation.
The events of summer 1914 triggered a sharp slowdown in activity. In a matter of days, Societe Generale saw its staff headcount collapse. Of its 15,000 employees, more than 8,000 were called to fight and of this number 2,000 lost their lives on the battlefield. Of course, the number of wounded and disabled soldiers must be included to appreciate the true extent of the casualties sustained. Like other companies, the bank recruited women to offset the drafted workforce members and ensure continuity of service. At the time, women accounted for up to 85% of Paris personnel. As the fighting continued non-stop in northern and eastern France, civilians were by no means spared. In the background, they fell victim to a higher cost of living, wage stagnation and food shortages, leading Societe Generale to adopt measures to help the families of its employees, and especially widows and orphans. The bank also contributed to solidarity efforts to benefit POWs (deliveries of packages, hospitals, fund transfer facilities).
As the German troops advanced in August 1914, the bank turned its focus to protecting its staff and securing their assets. This grew increasingly necessary as the enemy threatened communications and conducted confiscations and requisitions on the front line to meet its needs. At the request of the Minister of Finance, Societe Generale temporarily transferred the Management of provincial branches, the portfolio, staff, coupons, foreign services, General Management departments and the headquarters for Board meetings all to Bordeaux. On 5 September, on the eve of the First Battle of the Marne, the Bank considered retrieving the securities and other assets hidden away in the Trocadéro building. However, the sheer volume of the deposits made this plan impossible. With the approval of Marshal Joseph Gallieni, Military Commander in Paris, the decision was made to flood the building in the event of a threat, such as the occupation of the capital by the enemy. These precautions were not taken lightly. It was to this end that CEO Octave Homberg oversaw the transfer to the central branch at 29 boulevard Haussmann of all documents that could be used to reconstruct customer accounts, as well as bags of sand to be used to obstruct the stairway leading to the vault in the event of force majeure. In spring 1918, the Bank's Management demonstrated the same foresight when Paris again came under threat by a German counter-offensive.
For four years, commercial activity was predominantly centred on the war effort. Like its competitors, Societe Generale contributed to the placement of treasury securities (treasury notes, war bonds, annuity bonds, etc.) while supporting the weapons industries, including the fledgling military aviation sector. This work was especially sensitive in that part of its network was located right on the front lines. The destruction wrought in occupied regions bore witness to the intensity of the battle being waged. Sixteen branches or offices were completely wiped out, including those in Armentières, Lens and Soissons. Twenty-five others - in Lille, Roubaix, Valenciennes, Longwy and Douai, among others - sustained major damage. In 1917, branches located in German-occupied territories were seized, and yet despite the dangers incurred and the reduced staff, only a few offices closed their doors. Employees at the Nancy and Amiens branches, for example, bravely continued to receive the few customers to pass through their doors even as the canons roared throughout the city.
Generally speaking, World War I had adverse consequences for banks and insurance companies, not by jeopardising their solvency but by decimating their earnings. For Societe Generale, the first two years of the war were the most difficult, during the reconversion of the economy. The Bank saw its balance sheet assets plummet from 2.7 billion francs in April 1914 to 1.6 billion in December 1915. Over the same period, the amount of its portfolio shed almost 695 million francs. What's more, between April 1915 and February 1916, it had to repay the advances made by its counterparts on the eve of hostilities. Another complication arose in 1917, in the wake of the Red October uprising in Russia, where the Bank had established extensive operations. Soon after taking power, the Bolsheviks seized all the country's private and public banks, including the subsidiaries of foreign establishments. These were dismantled, while the financial and monetary mechanisms supporting them were suspended. Several French banks, such as Crédit Lyonnais and Paribas, were affected by these actions. Societe Generale lost the Banque Russo-Asiatique, along with the hope of repayment of the loans taken out by the Tsarist regime beginning in the 1890s.
Nevertheless, Societe Generale once again demonstrated its solidity by becoming the leading bank in France in terms of deposits once peace was restored. In the midst of everything that happened, it was able to hold on to its place in the flow of business that gradually arose during the war, all while conveying a message of solidarity and patriotic fervour to its customers and employees. From 1916 onward, as the economy was pieced back together, the volume of business transactions increased exponentially, with the use of credit facilities on the rise. Through a long-term, forward-looking policy, the Bank refocused its efforts on the development of deposits along with a profitable and liquid plan to reinvest them. Like other major banks, it was able to circumvent the draconian rules imposed by the 1914 Moratorium. In the private funding sector, its investments proved highly effective, from lending activities (City of Paris, railway companies) to capital increases (particularly in the weapons sector) to syndicated loans open to foreign investors and benefiting the State, départements and cities of France. Numbers don't lie: after sinking to 1.7 billion francs in 1916, its balance sheet assets had climbed to 2.7 billion by 1918. Thus, when the surviving members of staff drafted during the war returned to work, including more than 60 Légion d'Honneur recipients, Societe Generale was already able to face the future with confidence.
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