The New International Encyclopædia/Crédit Mobilier

CRÉDIT MOBILIER, krắ'dḗ' mṓ'bḗ'yắ'. A well-known financial institution of France. On November 18, 1852, the French Government sanctioned the statutes of a new bank under the name of the Société Générale du Crédit Mobilier, with a capital of 60,000,000 francs. The name was intended as a contrast to the Sociétés du Crédit Foncier, which are of the nature of land banks, and advance money on the security of real or immovable property, while the Crédit Mobilier proposed to give similar aid to the owners of movable property. The declared object of the new bank was especially to promote industrial enterprises of all kinds, such as the construction of railways and the opening of mines, by placing loans and handling stock. Various privileges were conferred upon it under its charter; among others it was allowed to acquire shares in public companies, and to pay calls made upon it in respect of such shares by its own notes or obligations; also to sell or give in security all shares thus acquired. The operations of the society were conducted upon a very extensive scale. In 1854 it subscribed largely to the Government war loan, raised during the Crimean campaign, to the Grand Central Raihvay Company, to the General Omnibus Company of Paris, and to various other important undertakings. The dividend declared for 1854 was 12 per cent. In 1855 it loaned two sums to the Government — the one of 250,000,000 and the other of 375,000,000 francs. Its operations were vast during this year, and the net dividend declared amounted to 40 per cent. The directors then proposed to avail themselves of their privilege of issuing their own obligations, and thought to issue two kinds of notes — the one at short dates, the other at long dates, and redeemable by installments. The proposed issue was to amount to 240,000,000 francs; but the public became alarmed at the prospect of so vast an issue of paper money, and in March, 1856, the French Government deemed it necessary to prohibit the carrying out of the proposed scheme. This was a severe blow to the institution. In 1856 its dividends did not exceed 22 per cent.; in 1857 they were only 5 per cent. Several attempts to resuscitate its credit failed, and finally, in November, 1871, it was reorganized and put under a new board of management. In 1877 its assets were 77,000,000 francs, but its shares, the par value of which was 500 francs, sold for 200 francs only. In 1878-79 the capital was first reduced to 32,000,000 francs, and then raised to 40,000,000. In 1884 it was a second time reduced to 30,000,000 francs, but the company never regained its lost ground. The Crédit Mobilier was undoubtedly useful in developing the industrial power of France, but its operations were hazardous, and had they not been checked in time, they would in all probability have ended in disaster. See Crédit Mobilier of America.