1942 five-year bond.

In 1942, the state of war made it impossible for French agriculture to invest in its modernisation and growth. Worse, destruction and disorganisation were causing global production to fall. At the same time, Crédit Agricole was seeing a withdrawal from the State, which gradually reduced the financing it traditionally provided to the institution via the Banque de France’s advances. Crédit Agricole was therefore forced to invent a new product to finance the needs of agriculture. It was in this context that the famous five-year bond was created. In addition to its undeniable role in increasing Crédit Agricole’s financing capacity, it would be a powerful tool for the bank’s transformation.

Poster for five-year bonds (ill. Eric, 1948).

A simple product

Designed by the Caisse Nationale’s Financial Controller, Gilbert Hervé-Gruyer, the five-year bond was based on an experiment previously carried out by the Loir-et-Cher Regional Bank. This was a bearer note issued at the rate of 3.25% to 3.50%, in denominations of 1,000, 5,000 and 10,000 francs. The note was original in that interest was payable at the time of subscription for the first two years and at maturity for the last three years. Anonymity and exemption from securities tax made it a product well suited to the farmer mentality of the time.

Bonds were issued in the name of the Caisse Nationale but placed by the regional banks, which quickly became aware of the interest in this new product. In the first year, 1942, more than 860 million francs were subscribed. Two years later, an annual subscription of nearly 1.8 billion francs was recorded. In 1950, 4.7 billion francs were subscribed in five-year bonds, and the success did not stop there; in 1959, the regional banks reached a record 55.8 billion francs subscribed. These funds, which drew on rural savings, made it possible to finance loans to farmers. It would prove all the more useful as the post-war reconstruction work required major investments, particularly in terms of what has been called “the tractor revolution”. Five-year bond issues therefore continued, and it is interesting to note that this product was the first of Crédit Agricole’s to benefit from a strong advertising campaign via high-quality colour posters. Some regional banks also promoted them in films intended for their cooperative shareholders.

Driving the expansion of the Crédit Agricole network

In the 1940s, the Crédit Agricole network consisted of the premises of the regional banks and the local banks (the latter sometimes at the homes of individuals, either the chairman or secretary) and auxiliary offices, many of which were only temporary. These were most often open on market days to allow cooperative shareholders to carry out their operations on site.

The placement of a growing number of five-year bonds, followed by other newly created products, required the regional banks to gradually increase their workforce and equipment. This was, then, the beginning of the network as it would develop to gradually become the largest in France in terms of branches.

Finally, as explained above, the State was gradually withdrawing from Crédit Agricole’s financing. The fact that the latter could collect its own resources by drawing on French people’s savings made it possible to gain financial autonomy. This was done in 1967: the Caisse Nationale could manage the resources it collected itself without having to deposit part of these funds with the Treasury. Crédit Agricole was now autonomous in its financial management.