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Saint-Simonian Economic Ideas

John C. Eckalbar

• University of Saskatchawan

Ideas as well as narrowly defined economic interests often serve as causal forces in the flow of economic history. To understand economic history the historian must delve into and come to grips with the history of ideas. This article is a study of the relationships between the utopian ideas of the Saint-Simonians and the real world of investment banking and European industrialization, and as such it can serve as a useful methodological lesson for current cliometricians.

The followers of Henri de Saint-Simon (1760–1825) such as Enfantin, Chevalier and especially the Pereire brothers, Emile and Isaac, foresaw and labored to achieve a world of industrialism, peace, and harmony, a world united by railways and fueled by a mammoth credit institution.

The problem with laissez-faire as stated in The Doctrine of Saint Simon, is that “the accident of birth blindly distributes the instruments of production.” Fortunately, however, the capitalist system has within itself the seeds of the correct answer to the problem—the banking system itself. The banks serve as intermediaries between those with capital and those who have none. The banks perform the crucial function of directing the tools of production into the hands of those who most need them. It is the banking sector which will be expanded, strengthened, and centralized to carry out the function of determining and guiding the direction of the future industrialized economy. A central bank will organize and direct secondary banks which will in turn serve as feed back centers, sending information to the central bank concerning local conditions. Each industry is to have its own specialized bank designed to meet its own particular needs.

The success of these Saint-Simonian ideas can be measured by the magnitude of their implementation. Friedrich Hayek has pointed out that the Saint-Simonians, especially Enfantin, were forerunners of the Suez Canal Company in Egypt. Enfantin then went on to create the merger of the Paris-Lyon-Mediterranean Railroad. Michel Chevalier, coauthored the Anglo-French Treaty of 1860 which greatly expanded trade and industrialization throughout France. But by far the most significant implementation of Saint-Simonian ideas appears in the economic activities of Emile and Isaac Pereire who founded the Paris-St. Germain railroad and then were instrumental in creating the famous Credit Mobilier. The Credit Mobilier pioneered in numerous investment and central banking functions, including discounting, advances of long term credit, industry-wide rationalization and reorganizations.

Imitators of the Credit Mobilier sprang up all over Europe during the last half of the nineteenth century, often under the direction of the Pereire brothers: the Darmstadter Banks in Germany, Credito Mobiliario Espanol in Spain, Credito Mobiliare Italiano in Italy and the Credit-Anstalt in Austria. An indication of the perceived worthiness of the Saint-Simonian ideas can be seen in the fact that when the Rothchilds moved to block the Credit Mobilier, they were moved to adopt the same method of organization and operation as the institution they replaced.