The Pereire brothers, Émile (1800-1875) and Isaac (1806-1880), were French entrepreneurs and businessmen. They were important economic players at a time of strong development in the field of tourism in 19th-century France.
Born into a Jewish family that had been ruined by the declining trading business in Bordeaux, they settled in Paris in the early 1820s, at the invitation of their relatives, the Rodrigues family, who worked in the banking sector, in particular, at Fould bank.
Alongside this introduction to the intricacies of the world of finance, Émile and Isaac Pereire joined the Saint-Simonian ideological movement, which had significant influence in the 19th century. Wishing to replace a period of antagonism, of man exploiting man, with a period of universal collaboration, the Saint-Simonians were critical of the system of property and inheritance: they believed society had to recognise the value of each person, through education, and grant them means of production corresponding to their merits.
For the Pereire brothers, Saint-Simonism was also a way to meet bankers, polytechnicians, civil engineers etc. In a spirit of practical action, the brothers defined some principles to follow: work is sacred and industry is its most eminent expression; wealth exists and it simply has to circulate; the producer must benefit from his activity, and his well-being is the final goal of any economy.
Opportunistic investors in the railways
Inspired by railway development and its profitable operation in England, the Pereire brothers were interested to create a railway network in France, starting from Paris. The existing lines at the beginning of the 1830s were occasional local services outside Paris used for industrial activities. The new regime of the July Monarchy, starting in 1830, welcomed the rise of the industrial and banking sectors. Compagnie du Chemin de Fer de Paris à Saint-Germain railway company was founded in 1835, with the participation of the banker Adolphe d’Eichtal and the support of Baron James de Rothschild. The western Paris railway line, built at the company’s expense and operated at its own risk, was completed in 1837. It initially connected Place de l’Europe to Le Pecq, then Saint-Lazare station (completed in 1842) to Saint-Germain station (completed in 1845).
“Give Parisians the toy of Saint-Germain so that they develop a taste for railways.”
[attributed to Émile Pereire]
Until then, passenger land transport was by stagecoach; a mode of transport that did not generally promise a pleasant journey. However, at the time of creation of the railway, road traffic between Paris and Saint-Germain was estimated at 400,000 people per year, and there were enough attractive sites within a 25-km radius of the city to make a railway line profitable. The line connecting Paris to Saint-Germain-en-Laye (Yvelines) thus became the first tourist railway line in France. Parisians would travel to this town renowned for its “good air”. Intermediate stations were opened, facilitating access to new villages, such as Nanterre, which was then frequented by Parisian tourists for its local specialities and the Rosière celebrations.
While experimenting with innovations (including electric telegraph in 1843 and electric clocks), the early months of the line’s operation exceeded expectations, although the concentration of passenger flows on Sundays and reduced numbers during the winter months concerned the company. Travelling during the warmer months of the year seemed logical: third-class ticket-holders travelled in open-air carriages, and while those of the upper classes were certainly closed, they were not heated.
New railway projects were put out for tender by the government from 1837. The Pereire brothers participated by setting up new companies, usually with the shareholders of their previous companies. The law of 11 June 1842 designated the main railway lines to be created in France. Land acquisition, infrastructure and fare setting were the responsibility of the state; superstructure expenses and operations were reserved for companies under a temporary concession contract; departments and municipalities contributed to the payment of expropriation compensation.
Between 1845 and 1850, while the novelty was wearing off, competition was threatening the companies operating in the leisure travel sector. While continuing to be a railway for leisure travel, the Paris-Saint-Germain line more efficiently served the intermediate towns as developments west of the capital became denser. In 1855, the line was absorbed into Compagnie des chemins de fer de l’Ouest.
Inventors of France’s luxury hotel industry
The food crisis of 1846, the financial crisis of 1847 (following speculation in the railways), and the revolutionary crisis of 1848, destroyed the banking system of the July Monarchy. At the beginning of the 1850s, the Pereire brothers benefited from the benevolence of the government of the Second Empire (they maintained good relations, particularly with Achille Fould, Minister of Finance from 1849 to 1867, under two regimes (Second Republic and Second Empire), and simultaneously Minister of State from 1852 to 1860) because, thanks to the Crédit Mobilier foundation (1852), they freed Napoleon III from the control of what was known as the haute banque (an elite category of private banks), strongly associated with Orléanism, and from the Rothschild bank.
They successfully met the government’s expectations in the development of Paris. In December 1854, Société immobilière de l’hôtel et des immeubles de la rue de Rivoli was created: about 15,000 m² of buildings were developed, including Hôtel Osmond, in a neighbourhood having a nefarious reputation at the time. The brothers had a more ambitious project in mind: the articles of association for a company to work on the sanitation and beautification of cities. This idea did not receive imperial approval, however.
After this first real-estate transaction, the Pereire brothers decided to build a new hotel garni (i.e., a “furnished” hotel similar to a bed and breakfast) for travellers: Grand Hotel du Louvre, following the example of the great American hotels and the Great Western Hotel in London, opened in 1851. The brothers had thus created the luxury hotel industry in France: the ground floor was occupied by shops and hotel services (including a reception, café lounge, telegraph office and information office), a monumental gallery leads through to a grandiose dining room, where guests can enjoy cosmopolitan, even exotic cuisine. Spaces for socialising were multiplying and diversifying, adapting to the uses of the customers frequenting them.
The hotel they had in mind required great luxury and constant novelties (e.g., goods lifts, a ventilation system, and heaters). It had to enhance the entire Palais-Royal neighbourhood, echoing the magnificence of the Tuileries and the Louvre and the sites where the Pereire brothers had made their significant property investments. Partially opened for the 1855 Exposition universelle (World Fair), work was completed in 1856. The hotel had 750 rooms and apartments, of various sizes, to accommodate both wealthy travellers (on the first floor), more modest guests (on the other floors), and the servants of guests (on the top floor). The building had a metal structure, a staircase leading up to the door and a courtyard, and was decorated with works of art.
The Grand Hotel du Louvre was immediately recognised as a great success. In 1858, Société Immobilière changed its name to Compagnie Immobilière de Paris. It launched a new site: the Grand Hotel de la Paix, which was to have 700 rooms and follow the same planning principles. Travellers flocked to Paris, and the proximity of the future Opéra Garnier opera house, as well as Saint-Lazare station, used by the English and Americans after disembarking from liners from Le Havre, promised to attract rich foreign tourists. The Grand Hotel de la Paix was opened in the presence of the Empress in 1862.
Diversification of investments
The Pereire brothers continued to invest in the development of the railway. In 1852, they created Compagnie des Chemins de fer du Midi, for which they obtained the concessions of the lines from Bordeaux to Sète, then from Bordeaux to Bayonne and from Narbonne to Perpignan. In the 1850s, they also invested abroad in Société Autrichienne des Chemins de Fer de l’État (Austrian state railway) and in Grande société des chemins de fer russes (“large Russian railway company” or GSCFR). In 1858, they participated financially in the creation of Compagnie des chemins de fer du nord de l’Espagne (“railway company of Northern Spain” or Norte). The 1859 agreement for the creation of a second railway network in France, nevertheless represented a less lucrative investment for private companies than previous operations.
Like other members of the Parisian haute banque, the Pereire brothers were also engaged in financial transactions in thermal spas. Spa and seaside tourism played an important role in the development of Compagnie des Chemins de fer du Midi. In 1853, they acquired Établissement thermal de Vichy., and in 1863, Isaac Pereire acquired mineral springs in the spa resort of Amélie-les-Bains. The thermal establishment was thoroughly modernised. Promenades were created and chalets built. After the death of Isaac Pereire in 1880, the heirs created Société Pereire to manage the thermal estate, but no increase in attendance was seen.
In the middle of the 19th century, transatlantic navigation developed, controlled by vessels flying Anglo-Saxon flags. The government of Napoleon III and its surrounding economic circles feared that France would lag behind in the ocean. In 1854, the emperor signed the instrument of incorporation of Compagnie Générale Maritime. The object of the company was to conduct construction, armament and charter operations using all types of vessels and, in general, all maritime trade operations.
In 1855, the Pereire brothers bought a fleet of fishing schooners (ships for cod fishing around Newfoundland) at Granville, where they set up Compagnie Générale Maritime. The fleet was converted and quickly specialised in the maritime transport of passengers and goods, taking advantage of postal conventions. It received concessions for routes to New York and Brazil in 1855. Renamed Compagnie générale transatlantique (CGT, commonly called “La Transat” in France and “French Line” abroad) in 1861, after its transfer to Le Havre, it was one of the two main French shipping companies and would remain so until 1975, with Compagnie des Messageries Maritimes.
In 1864, the Pereire brothers created shipyards in Saint-Nazaire (Loire-Atlantique), called Chantiers de Penhoet, which merged in 1955 with Chantiers et Ateliers de la Loire to become Chantiers de l’Atlantique.
The Pereire brothers invested in sectors other than tourism and leisure, without being totally disconnected from their previous business. The appeal of the Mediterranean foreshadowed new economic horizons in the 1850s. The Pereire brothers first invested in Marseilles but the new buildings, in the Haussmann style, went unsold and proved difficult to rent.
In addition to investments in insurance companies or coal mining concessions, they also carried out many property transactions, via their Société immobilière. It was the difficulties faced by that company in 1867 that led to the bankruptcy and liquidation of Crédit Mobilier, accelerating the Pereire brothers’ decline.
A unique property transaction: the Ville d’Hiver (winter resort town) of Arcachon
In 1852, Compagnie des Chemins de fer du Midi bought the railway built by Compagnie de la Teste, which was commissioned in 1841 between Bordeaux and La Teste-de-Buch but placed into receivership in 1848, due to poor financial performance. The line was then extended to Arcachon, a seaside resort frequented by bathers since the 1820s. The line was opened on 26 July 1857, two months after the commune of Arcachon was officially inaugurated.
Over a century, the surroundings of the Arcachon basin were significantly transformed by the planting of a forest on the dunes. With the dunes thus stabilised, it was possible to create an agro-sylvo-pastoral system. From 1760 to 1770, the development of this territory was closely linked to the plan to develop the lagoon into a port and the heart of a system of canals spanning Southwest France (mentioned again in 1835, when the railway line was created). Lacking a port, the site retained its wild character and was seen as exotic in the eyes of 19th century contemporaries. The presence of the forest together with a climate known for its stability afforded the hygienic and medical qualities of a pleasant seaside stay to the Arcachon basin. The conditions were therefore favourable for the development of tourism.
Tourists were already coming to Arcachon, but the Pereire brothers decided to develop health cures by the seaside. In his book Arcachon et ses environs on the town and its surroundings (published in 1858), Oscar Dejean, former mayor of La Teste, promotes the organisation of a winter season that can only be
“An immense service to medicine, which would find there excellent curative means for very serious ailments and in particular pulmonary phthisis.”
The Pereire brothers took this idea up and created the winter resort town, Ville d’Hiver d’Arcachon, starting work in 1862. The real-estate project had to make the railway line profitable all year round.
Under the aegis of Dr Fernand Lalesque, a town emerged. Built on the dunes overlooking Arcachon (the Ville d’Été), sheltered by the pine trees with their life-saving emanations, the Ville d’Hiver was designed as an open-air sanatorium. The first cottages were completed during the winter of 1863-1864 and immediately rented out. To promote the benefits of the resort, in 1865 the Pereire brothers brought a national medical conference to Bordeaux, attended by 215 doctors, who were offered a day tour in Arcachon.
Paul Régnauld, nephew of Émile Pereire, engineer of Compagnie des Chemins de Fer du Midi, drew up the general plan in 1865: streets and alleys were drawn in the form of curves to ensure there are no exposure to draughts. The site was connected to services with the construction of a water tower and a gas plant for electricity. About twenty rental villas and a casino were built. A footbridge called “Saint Paul” was built according to plans by Gustave Eiffel to connect the dunes. While the first villas were owned by Compagnie des Chemins de Fer du Midi (205 units), the Pereire brothers owned the remaining 142. They built a villa on 41 hectares of land, facing Cap Ferrat. They also invested in the Ville d’Été, the summer town, building a large hotel there.
Hotels were added to the villas, and rich visitors were entertained at the Casino Mauresque. Given the cost of the villas, their maintenance and the wide range of recommended treatments, the winter resort town was a destination for the wealthy. Émile Pereire sold the estate to Compagnie Immobilière d’Arcachon in 1867. At a time of crisis in the banking world, he made a significant profit in this property transaction.
The end of the Pereire brothers’ financial empire
From the early 1860s, conflicts between the Pereire brothers and Banque de France escalated. The Pereire brothers had taken on considerable debt to build up the capital of Société Immobilière The profitability of Hôtel du Louvre, and then of Grand Hôtel, was becoming uncertain. Attacks by their opponents, echoed by the directors of Banque de France, forced the Pereire brothers to resign from Crédit Mobilier and Compagnie Immobilière in September 1867. Crédit Mobilier went bankrupt in 1868. On the eve of the outbreak of the Franco-Prussian War in 1870, they only controlled Compagnie des Chemins de Fer du Midi and a few service companies in France. Compagnie Immobilière was liquidated in 1872.
Emile Pereire died in 1875, having relinquished all his managerial positions in 1871. Isaac Pereire died in 1880.
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