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Like most European financial institutions, French banks joined the war reluctantly. While bankers, insurers and finan- ciers could not predict the duration and exorbitant cost of the conflict, all knew with certainty that a European war would weaken the financial system and destroy many acquired po- sitions. Nobody, however, could have foreseen the sometimes far-reaching effects of the war on banking operations, the po- sition of banks within the financial system, and their internal organisation. In a way, bankers shared the assumption set forth by British journalist Norman Angell, presented in his best-selling book The Great Illusion, published in 1910. To put it simply, Angell, without precluding the possibility of war, believed that such an alternative would be rejected by rational decision-makers aware that the prosperity of all relied on international bonds of com- mercial and financial confidence, embodied by the City of Lon- don. But the greatest illusion of all was perhaps to believe that reason could triumph over nationalistic passion and political ambition.

Powerful banks: an evolving banking sector

France s major banks joined the war in the same manner as most of the French population: with resignation as well as de- termination, and with a justified sense of power. Yet the French banking system, skillfully analysed in 1914 by a German (!) au- thor, had two main flaws. First, since the crisis of 1882-1889, the major retail banks had initiated (but not completed) the transition from a mixed bank model to a specialist bank model, based on the expan- sion of the network of branches and on short-term transactions as well as the issuance and brokerage of shares and bonds.

Patrice Baubeau Université Paris Ouest Nanterre / Sciences Po / IDHES (UMR 8533)

WORLD WAR ONE AND THE BIRTH OF THE "20TH CENTURY FOR THE FINANCIAL SECTOR"

Counter of Crédit du Nord by the Statue de Lille, Place de la Concorde, Paris, 1918.

Société Générale, Historical Archives Department, Crédit du Nord Collection