Hostname: page-component-78c5997874-v9fdk Total loading time: 0 Render date: 2024-11-15T07:05:13.140Z Has data issue: false hasContentIssue false
  • English
  • Français

The Early Evolution of Business Organization in France

Published online by Cambridge University Press:  24 July 2012

Judah Adelson
Judah Adelson
Affiliation:
Instructor of History at the City College of New York
Get access Rights & Permissions [Opens in a new window]

Abstract

National divergencies in economic development produce variant national patterns of business organization. But the reverse is also true. In France, the legal structuring of business has been a causative factor of some importance, imparting a distinctive character to the timing and nature of French economic growth. At the same time, however, the history of organizational evolution in France has a certain universality. Here, as elsewhere, such evolution essentially has taken the form of a series of compromises between the need for greater corporate flexibility and the fear of abuse. From 1673, when the unlimited liability of partners was affirmed, the pressures of economic expansion produced a succession of devices aimed at facilitating the flow of investment funds into commerce and industry. When, however, that point was finally reached where limited investor liability, freely negotiable shares, and recognition of a corporate autonomy had been achieved, fear of fraudulent practice became a dominant factor. Legislative steps to protect the investing public introduced rigidities into French business at the very time when internal growth and international competition for markets called for a highly adaptable business system.

Type
Research Article
Information
Business History Review , Volume 31 , Issue 2 , Summer 1957 , pp. 226 - 243
Copyright
Copyright © The President and Fellows of Harvard College 1957

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Ballantine, H. W., Ballantine on Corporations (rev. ed.; Chicago: Callaban and Company, 1946), p. 1.Google Scholar

2 Déak, F., Cases and Materials on Selected Topics in the haw of Business Organization in France (Unpublished text in the Columbia Law School Library, Sept., 1932), p. 1Google Scholar; Pic, P. and Kréher, J., Des Sociétés commerciales (Paris: Librairie Arthur Rousseau, 1940), p. 2.Google Scholar

3 Lagarde, P. and Batardon, L., Les Sociétés commerciales en nom collectif; en commandite simple; anonyme; en commandite par actions; en participation; à capital variable (2e éd.; Paris: Dunod and E. Pinet, 1910), p. 3.Google Scholar The fundamental laws regulating French sociétés are to be found in the Civil Code and in the Code of Commerce. From time to time certain special laws have been passed having an important bearing on the société. The most important of these is the Law of July 24, 1867. Important modifications have been made in this law by the Laws of Aug. 1, 1893, July 9, 1902, and Nov. 16, 1903. Déak, op. cit., p. 1.

4 Lagarde and Batardon, op. cit., p. 3. It is the declared purpose of a société which, in principle, gives to it the character of being civile or commerciale. The mining, quarrying, and farming industries are considered civile and not commerciale in nature. A société commerciale is able to declare itself in a state of bankruptcy or judicial liquidation whereas this is not possible for a société civile. Sociétés commerciales are required to keep account ledgers under Article 8 of the Code of Commerce and are also subject to the commercial courts and to the special fiscal laws which do not apply to other sociétés. Pellerin, P., French Company Law (Société Anonyme). Á Practical Handbook for Lawyers and Businessmen (London: Stevens & Sons, Ltd., 1920), p. 30Google Scholar, note B, makes this point succinctly. “In French Law, there is a difference between ‘Sociétés Civiles’ and ‘Commerciales.’ They are either civil or commercial according to the nature of the operations carried on by them. Acts of trade are characteristic of a ‘Société Commerciale.’”

5 The sociétés de personnes (associations of persons) are the société en nom collectif and the société en commandite simple. The sociétés de capitaux (associations of capital) are the sociétés par actions (joint stock companies).

6 Lévy-Bruhl, H., Histoire juridique des sociétés de commerce en France aux XV W et XVIII' siècles (Paris: Domat Montchrestien & F. Loviton & Cie., 1938), pp. 30 ff.Google Scholar The last term is the most descriptive one because the typical firm name is derived from it. The names of such organizations were sometimes formed from the names of the associates tied together by the conjunction et, e.g., Dupont et Durand en Compagnie. In most instances when the société was formed by more than two individuals, one or two would be designated by name and the remainder would be gathered under the final phrase en compagnie.

7 Ashley, W. J., An Introduction to English Economic History and Theory (London: Longmans, Green, and Co., 1912), II, 412.Google Scholar

8 Ed. Higgs, H., Palgrave's Dictionary of Political Economy (4th ed.; London, 1925), III, 67Google Scholar, s.v. Partnership. “The trade of these family associations was carried on in a common workshop, or warehouse, known by some well-known sign which was used as a comprehensive designation of the persons using it as the center of operations. Hence arose the use of firm names, and the personification of the mercantile unit, represented by the sign of the house, as well as the custom to recognize every partner as agent for the partnership.” Ashley, op. cit., II, 415.

9 Pic and Kréher, op. cit., pp. 111–12.

10 One need think only of the early Italian bankers or even of the later Fuggers of Augsburg to see clearly that there were occasions when truly great sums of capital were amassed and put into business ventures which were merely partnerships. Lévy-Bruhl, op. cit., p. 31. The Société de banque Tourton et Ravel, founded in 1783, had a capital of a million livres. Thus the accumulations of capital in banking and related operations continued to be very large.

11 Lévy-Bruhl, loc. cit.

12 Ibid., pp. 31–32. Lévy-Bruhl points out that in this instance the rule is by no means imperative, and if the associates wish to limit their losses, they are able to do so on the condition of making it known to the public in the charter of the société.

13 Ashley, op. cit., p. 412. See ako Appendix 1.

14 Higgs, Palgrave's Dictionary of Political Economy, III, 68. “The phenomena of business partnerships (Societas) [sic] presented themselves for judgement before the schoolmen and canonists of the middle ages, chiefly in their relation to the theory of usury. A partnership wherein each member shared in the management of the business raised no difficulties: the profit (lucrum) might in such a case be regarded as the reward of labour. Not only so, but a partnership in which some of the members contributed capital only, without labour, and yet expected profit, was regarded as equally allowable, — on one condition, viz. that the investor really ‘adventured,’ i.e., really shared in the ‘risk,’ both as regards the sum invested and the gain to be derived from it. The running of risk was held both to furnish an ethical justification for gain, and also to prove that the investor remained the owner of the sum in vested, so that the contract was clearly distinguishable from one of Loan (q.v.) or Mutuum, in which the ownership of the money was held to pass over to the recipient. Any attempt by subsidiary contracts to assure the in vestor against the loss of his capital, or to guarantee a profit independent of the chances of trade, brought the arrangement within the scope of the prohibition of usury.” Also see Nelson, B. N., The Idea of Usury from Tribal Brotherhood to Universal Otherhood (Princeton: Princeton University Press, 1949), pp. 3–28Google Scholar, who deals with the changing concepts of usury during the Middle Ages.

15 Ashley, op. cit., pp. 411–12. “Like the custom of creating rent-charges, so ako the mediaeval practice and theory of partnership have been explained as primarily due to the effort to escape from the operation of usury law. But recent research has shown that this is a gross exaggeration. The practice and legal doctrine grew up independently out of the needs and circumstances of the earlier Middle Ages, and had reached a complete shape before any serious effort was made to enforce the prohibition of usury in ordinary business life. The effort to enforce that prohibition did indeed, as we shall see, prevent certain developments of the practice of partnership which might otherwise have taken place; but it did not create the practice, nor did it contribute in any positive manner towards its modification. We have not then, to trace a series of adroit subterfuges, introduced or apologized for by the canonists in order to meet the necessities of commerce; we have rather to observe the way in which the cannonist doctrine, as it gradually formed itself, treated a practice which was already established.”

16 Sée, H., Histoire économique de L· France (Paris: Armand Colin, 1948), I, 60.Google Scholar

17 Lévy-Bruhl, op. cit., pp. 33 ff.

18 Sée, Histoire économique de la France, I, 230, note 5. Le Parfait négociant, 2e partie, chap. I. The nobility had the right of being commanditaires. Moreover, by the edict of Dec. 5, 1664, Colbert permitted gentlemen to engage in sea commerce without derogation provided they did not engage in retail sales (vendre en détail).

19 Sée, op. cit., I, 361.

20 Lévy-Bruhl, op. cit., pp. 40–41. Savary, the political economist, in his writings differentiated four varieties of the société anonyme. The first, according to him, was that in which a convention was concluded between a merchant who received a cargo and another merchant, who, for a share in the gains or losses, sold the cargo. This example can be extended to virtually all cases where for a single operation two or more merchants share in the gains and losses connected with an enterprise. Savary distinguished it from his second category wherein two or more merchants joined together for the importation and the sale of certain commodities in exceptional circumstances such as the sale of wheat in France during the wheat famine. His third type was that one which was formed at fairs and consisted of agreements among the merchants not to outbid each other, but rather to share the merchandise according to a just arrangement or proposition which had been agreed to in advance. Finally, the last kind of société anonyme consisted of an agreement among the great merchants who had a monopoly on several products and agreed to sell only at monopoly prices fixed in advance by convention. Needless to say, Savary's classification is not generally accepted by modern scholars, nor was it even universally accepted in the France of his day.

21 Lévy-Bruhl, op. cit., p. 43.

22 Ibid., pp. 44–45. The extensive nature of some of the concessions was one of the reasons for royal control of the companies, for the king was depriving himself of some of his rights as sovereign to the profit of the company. Thus he might, on occasion, grant them the right to cany on war and to administer justice.

23 Pic and Kréher, op. cit., p. 115.

24 Ibid., pp. 115–16.

25 Bonnassieux, L. J. P. M., Les Grandes compagnies de commerce. Etude pour servir à l'histoire de la colonisation (Paris: E. Plori, Nourrit et Cie., 1892), p. 166.Google Scholar

26 As quoted in Pic and Kréher, op. cit., p. 116; Bonnassieux, op. cit., pp. 261 ff.; Beard, M., History of the Business Man (New York: The Macmillan Company, 1938), pp. 370–71.Google Scholar

27 Pic and Kréher, op. cit., pp. 116–17; Sée, H., Modem Capitalism (New York: Adelphi Company, 1928), trans, by Vanderblue, H. B. and Doriot, G. F., p. 91.Google Scholar

28 Rault, J., Les Sociétés commerciales (Paris: Librarie du Recueil Sirey [Société Anonyme], 1950), p. 10.Google Scholar

29 Lévy-Bruhl, op. cit., p. 43.

30 Ibid., p. 50.

31 Ibid., p. 51.

32 Idem.

33 Idem.

34 Idem. The Law of 26 Germinal, Year II (1793), suppressed equally the sociétés financières.

35 Ibid., p. 52.