At the start of the 19th century, the origin of much of France’s wealth was from land and much of this held by aristocrats. Even in urban and commercial Paris, aristocrats made up a considerable share of the wealthiest residents until well into the century. As the 1800s came to an end though the origin of more and more fortunes became more familiar to the modern observer as finance and industry assumed greater importance. Also, the split in wealth across generations, with the oldest holding most of the wealth, once again assumed a form familiar to us today. Lastly, the relative increase in the share of money tied up in financial wealth, as opposed to real estate wealth, particularly among the wealthiest, again became more familiar with time. 

Inequality, France, and Paris

            France saw increasing wealth inequality, especially between 1860 and 1913, peaking roughly with the onset of war in 1914. This increasing inequality was accompanied by a change in the composition of wealth as wealth of a financial and industrial origin replaced that of the aristocracy, particular in the latter half of the century. The wealth of France’s best-off 1% peaked at 54.9% of the total in 1913, up from 43.8% in 1837. In 1913, the country’s richest 10% controlled 86.3% of the wealth and the richest 0.1% alone controlled 26.0%.

Pont Neuf, Paris, painting by Pierre-Auguste Renoir

            While the change above may seem mild, especially considering the span of time involved, the situation and change were much more extreme in Paris. The political and commercial capital of France, Paris was home to a disproportionate share of the wealthy so a discussion of the wealth of the elite will inevitably be shaped by the experience in Paris. Parisians were four times more likely to belong to the wealthiest 1% of the population in 1902 and nearly half of the wealthiest 0.1% in France, determined at death by valuation of their estates, lived in Paris.

            Paris was not only particularly wealthy; it was also particularly unequal and this inequality grew more within Paris than outside. Already in 1837, 50.1% of the wealth belonged to the city’s richest 1%. This grew to 53.0% in 1867, 64.8% in 1902, and peaked around 72.1% in 1913. That year, 99.6% of wealth in the city belonged to the top 10% and 32.8% belonged to the top 0.1%. All these numbers are much more remarkable than those of the country at large.

            Over the course of the 19th century, while more fortunes may have been earned in finance or industry, which could in theory be earned more quickly than traditional landed wealth, wealth accumulation still favored the old. As inequality increased, the disparity in fortunes of those who died old and those who died young increased. Back in 1837, there was no relation between wealth at death and age of death. The average value of estates of those who died in their 20s, 50s, or 80s, and ages in between, were roughly equal.

            By 1867, a slight but clear trend emerged, those who died older died richer. In 1902, the pattern was extraordinarily stark. The average estate of those who died in their 80s was four times larger than who died in their 50s and nearly fourteen times larger than those who died in their 20s. Back in 1837, such a relation between age and wealth did not exist.

            The change outlined above is one of the starkest of the era and illustrates the changes that drove wealth composition in the 19th century. A possible explanation for this development is that in contrast to the elderly of the 1830s, the elderly of the 1900s did not live through nearly so much revolutionary upheaval and so their year of birth was not a hinderance. Relatedly, a more stable investment climate favors the elderly, even if they no longer earn an income. By contrast, a repressive and volatile investment climate would favor those with earned incomes and bring greater despair to the elderly. So, the late 19th century was a good time to be a rentier but slower economic growth, which characterized France between 1870 and 1895, may have also benefited rentiers over ordinary people.

Estates

            Historian Adeline Daumard studied the estates of Parisians. Valuations of estates are the most relied upon data on wealth in 19th century France. Near the turn of the century, the estates of Alphonse James Rothschild, who died in 1905, and his brother Gustave de Rothschild, who died in 1911, were worth close to 250 million francs each. They were the most extraordinary outliers. No other estate of a deceased person in Paris was valued at more than 100 million francs between 1902 and 1913. The average estate of people who had led large enterprises stood at just 1.5 million francs. For further comparison, a different study concluded the mean wealth would have been a mere 10,737 francs in the period 1895-1913 and even a wealth of 35,681 francs would have marked the 95th percentile.

            The share of aristocratic estates among the wealthiest actually grew in the early 19th century but declined thereafter. Nearly half of the largest 0.1% of estates in Paris belonged to deceased aristocrats in 1837 but just a quarter did in 1867 and fewer than 20% in 1907. Whenever one reckons the start of the Industrial Revolution in France, growing non-aristocratic wealth was a trend belonging almost entirely to the middle-years and second half of the century.

            Daumard’s study of the estates of wealthy Parisians in the middle of the 19th century revealed that financial assets and real estate comprised roughly an equal share of wealth and the ratio had changed little in a generation. Real estate made up 45.5% of the value of estates in 1847, down only slightly from 49.6% in 1820. Financial assets, inclusive of French government rentes, promissory notes, foreign bonds, and Banque de France and company shares, comprised 46.6% of estates, up only modestly from 44.7% in 1820. However, financial assets became more important later in the century and the start of the 20th century.

Real Estate

            In any case, real estate was of particular importance as stores of wealth for the middle classes. The poor were too poor to own real estate and the rich were invested in financial assets to a greater extent than real estate. In 1902, non-real estate assets already comprised 60-70% of the wealth of Parisians in the 90th to 99.9th percentile but comprised an even larger share, at the expense of real estate, at over 80% of the wealth of those in the richest 0.1% of the population.

            Still, as Daumard’s data suggests, investments in property were important stores of wealth. However, in 19th century Paris, home ownership was not nearly so much a source of pride as in 20th century America. Indeed, it was common in Paris for the wealthy to own apartment buildings as investments, often free and clear of any mortgage too, while at the same time preferring to rent from others the homes they actually chose to live in. Only about 40% of Parisian property owners lived in owner-occupied housing themselves; the majority rented. Even among those who owned ten or more buildings, 25% were tenants themselves.

            In the early 19th century, real estate actually comprised a rising portion of wealth in Paris as values recovered from the French Revolution and the city grew. From mid-century on, the share of wealth in Paris tied to real estate declined. This latter trend was not unique to Paris but reflected the growth in the importance of financial assets. Nonetheless, a growing Paris meant real estate wealth could maintain its considerable importance in terms of absolute value, even as it made up a declining share of total wealth. In neighborhoods with a larger amount of building activity, most notably those on the periphery of Paris, rental values of property increased significantly.

Financial Assets

            After 1880, the portion of wealth comprised of financial assets increased more meaningfully. Much o-f this would have been invested in rentes, or bonds. In a massive 1872 issue of French government rentes, people stood in lines all night to subscribe. Eventually, shares in private companies replaced rentes to a large degree, reaching 32% of investments in 1910-14. Among the wealthiest, financial assets were the most common form of wealth. While this group was also more likely to own real estate than even the middle classes, real estate was not what distinguished their wealth.

            By the turn of the century, there were many more investment opportunities to be found on the stock exchange; while there were 152 companies listed on the Paris Bourse in 1852, their number grew to 1,202 in 1902. Banking firms like Credit Lyonnais had growing numbers of clients with securities accounts. Many of these accounts likely would have held nothing but government bonds but amongst the wealthiest, there would be holders of shares in railroad companies and the like.

Since 1914

            The second decade of the 20th century marked the beginning of a remarkable compression in French wealth inequality. The two world wars reduced the income share of the top 1% of French earners from roughly 18-20% during the years of the First World War to under 10% after the Second World War. This was at least partially the result of higher taxes; France introduced a modern income tax in 1914.

           Inequality reversed as did accompanying trends that emerged in the late 19th century, such as a sharp divide in wealth by age. This suggests taxes were not the only factor. Just as with the French Revolution, the disorders of the early 20th century, namely the world wars, depression, and in the case of France, inflation, created something of a reset, flattening wealth disparities. In the early-to-mid 20th century, the large age disparities in wealth that emerged in the 19th century also diminished.

Lesson

            Whatever the specifics of an individual fortune, wealth in the aggregate and its composition across class and generation, and the form it takes, are shaped by an economy. A history of wealth is a history of how surpluses accumulate, where ready uses for these surpluses exist, and how these surpluses can be dissipated and lost. In this way, the wealth of a population reflects how its economy works. In the late 19th century, the French economy was conducive to the creation of large concentrated fortunes, a product of appreciated stability but also the giving way of rapid economic growth to stagnation. These conditions seem to reflect modern times and offer an explanation for wealth inequality today.

More from the Tontine Coffee-House

           Read about how a substantial part of the 19th century transformation of Paris was financed and how many Frenchmen lost their investments in the failed attempt to create a Panama canal in the 1880s. Consider subscribing to this blog’s newsletter or checking out book recommendations, which include many of the sources often referenced in my posts. 

Further Reading

1.      Bourdieu, Jérôme, et al. “Intergenerational wealth mobility in France, 19th and 20th century.” Review of Income and Wealth, vol. 65, no. 1, 2017, pp. 21–47.

2.      Choko, Marc H. “Investment or family home? Housing Ownership in Paris at the Turn of the Twentieth Century.” Journal of Urban History, vol. 23, no. 5, July 1997, pp. 531–568.

3.      Kindleberger, Charles P. A Financial History of Western Europe. George Allen & Unwin, 2007.

4.      Piketty, Thomas, et al. “Wealth concentration in a developing economy: Paris and France, 1807–1994.” American Economic Review, vol. 96, no. 1, Mar. 2006, pp. 236–256.

Leave a comment

Your email address will not be published. Required fields are marked *

Social Share Buttons and Icons powered by Ultimatelysocial
LinkedIn