The establishment of Crédit Agricole as we know it today was a long process. Although the first local bank in Salins-les-Bains (Jura) was created in February 1885, it took almost ten years for the French government to seize this experience and encourage the creation of agricultural credit societies throughout France. That is the whole purpose of the Law of 5 November 1894.
The example of Salins-les-Bains
When the Caisse locale de l’arrondissement de Poligny, headquartered in Salins-les-Bains, was created in February 1885, the problem was financing: farmers could not find anyone to lend them money at a reasonable rate to develop their farms. French agriculture is stagnating and is also suffering from foreign competition and health crises such as phylloxera.
Two Salins-les-Bains notables, Louis Milcent and Alfred Bouvet, who were aware of the developments of their time, decided to apply the mutualist model to the financing of agriculture. They therefore create the first Caisse locale fund by bringing together cooperative shareholders who pool their contributions. This “cash register” is used to finance the purchase of tools, equipment, livestock, fertilisers and seeds. Applications are reviewed by cooperative shareholders and loans are secured by sureties. In accordance with the mutualist model, governance is democratic with the principle of 1 man = 1 vote.
The 1894 Act
Following this first project, which was a success, further trials are being tried in France and the idea of a generalised agricultural credit is gaining ground. The legal framework was then laid down by Jules Méline, who passed the law of 5 November 1894. He is a Vosges lawyer who, after a career in politics, has been a member of Parliament, a senator and a minister on many occasions. His area of focus is agriculture, and he has a long track record in this portfolio.
The 1894 law, “on the establishment of agricultural credit societies”, is his great work. These funds will have to have a local area of action, which “allows a good knowledge of the borrowers and a mutualist organisation that facilitates a control of the use of funds, the reduction of profit, therefore of costs, and the integration of small farms in the modern economic world”. In a rhetorical flurry typical of the Third Republic, Jules Méline extolled the mutualist model: “This, gentlemen, is the great principle on which our project is based, it is the great and powerful lever with which we will, I am convinced, lift and transform our society, and by him alone, that we will peacefully accomplish the evolution that is preparing ourselves in the world of work.”
This promotion of mutualism is also seen as a way of softening the supposed individualism of peasants of that era: the law gives them the possibility of organising among themselves to finance their needs. The introduction of a democratic governance model also made it possible to consolidate civic practice in the countryside at a time when the Republic was still a young regime. The law also requires that the capital of local banks be made up of mutual shares and not shares.
The next steps
However, this law passed 130 years ago is only one step in the building of the Crédit Agricole. 1899 a new law was passed to create regional banks whose role was to federate local banks in their territories and serve as central banks, to promote the practice of mutualism and to distribute state advances. At the level of the Ministry of Agriculture, a commission is also set up to distribute these advances. It brings together representatives of the regional banks and the French state.
In 1920, this allocation commission was replaced by a public institution, the Office national du Crédit Agricole - which took the name of Caisse nationale de Crédit Agricole in 1926. It is the Group’s central institution and direct ancestor of Crédit Agricole S.A.
Crédit Agricole Group’s three-tier structure (local, regional and central institution) was thus built over 35 years, from the creation of the first local bank in Salins-les-Bains in 1885 to that of the National Office in 1920. And the “parliament of the regional banks”, the Fédération nationale du Crédit Agricole, was born after the Second World War. This story is well representative of the way our Group operates: starting from a clearly identified need, as close as possible to the regions, and gradually building an adapted response combining the mutualist principles of governance with operational pragmatism.