Some building booms are powered by discoveries of natural resources. Plantations require irrigation works, oil wells require pipelines, and almost all resource booms stimulate the clearance of land, the construction of roads, railways, and ports, and the development of accompanying industries. Other building frenzies are the result of urbanization which allows some cities to grow very quickly regardless of overall population growth. These cities need housing and can support a broader array of urban amenities, and their accompanying development opportunities, than small communities. In more recent decades, the development of leisure destinations has seen small villages or towns, sometimes rather out of the way, inundated with capital and labor. One of the earliest corners of the world to see such a boom was Monaco which was transformed from a relatively obscure part of Europe to its foremost resort town.
François Blanc
François Blanc was born in the village of Courthézon in France in 1806. He grew up from modest origins and became perhaps the most important figure in the history of Monaco, one of Europe’s smallest states. The young Blanc tried to make money gambling on cards and dice as well as by speculating in securities. Looking for advantages gave him good numeracy, especially in probabilities which help in gambling. He also looked to build some advantage for his speculations in markets. This ended with Blanc being arrested and tried in 1837 for bribing several government semaphore operators to send messages that relayed to him how bond prices were moving before such information could reach other traders.
He avoided prison and was forced to pay only a modest fine. In the next chapter of his life, François Blanc learned how to manage a casino when he was taken in as a sort of apprentice for a Parisian gambling club manager, Jacques Bénazet.
Blanc later built and operated a casino in the German spa town of Bad Homburg. A prince was financially pressed and looking for ways to boost his income by granting a gambling concession in his fiefdom; it wouldn’t be the last time. The casino was successful, and Blanc earned a reputation as a good manager, a reputation that came to be known of far away from Bad Homburg. Later, François Blanc was in Paris when the opportunity to acquire a gambling concession in Monaco was presented to him.
Monaco
Monaco was a small principality that had over a decade earlier gotten even smaller. In 1848, the towns of Menton and Roquebrune split with Monaco, at least in part on account of high taxes, and declared themselves to be Free Cities. The two breakaway towns made up a significant share of Monaco’s population. The principality was then ruled by Prince Florestan who was left with a very small territory. Most of the small remaining population lived on the Rocher (the Rock) where the palace was located; below that was a minor harbor and otherwise the small territory of Monaco was still agrarian.
The royalty of Monaco spent the next decade selling off many of their assets, like paintings and jewels, so that the palace came to be surprisingly empty. In the 1850s, Charles III, Prince of Monaco, was looking for means of increasing revenues and stimulating the economy of the city-state. Charles III would later receive a payment of four million French francs when he formally ceded Menton and Roquebrune to France, but this was not enough. As early as 1856, the prince’s advisor Adolphe Eynaud suggested the prince establish a casino and baths. Other small states like the German principalities of Baden-Baden and Bad Homburg had established themselves as spa towns prior to then and they offered an enticing model for the Mediterranean town. Some of these spa destinations were already establishing casinos before Monaco joined them. Fortuitously, nearby Savoy had banned gambling at its resort town of Aix-les-Bains so a ready audience might be found in the form of the stranded gamblers nearby.
When Monaco did become a gambling hub though, it would be the French and not Savoyards who became its principal customers. A casino was opened very soon after Eynaud made his suggestion but in the early days, it failed to attract many visitors. It was relocated a few times over its short history, into different mansions, and a purpose-built casino began to be erected in 1858. The casino had also changed ownership a couple times in well under a decade. François Blanc was not involved in this venture yet.
Société des Bains de Mer
A fresh attempt at establishing Monaco as a gambling and leisure destination came in 1863 when François Blanc arrived in Monaco. He was unimpressed with the casino then in operation, finding the structure lacking. Unlike the operations, the casino building itself could not be straightened out cheaply and easily. Still, he wanted to give it a go himself. A new firm, the Société Anonyme des Bains de Mer et du Cercle des Etrangers à Monaco, was established that year. Its ownership was divided into 30,000 shares of 500 francs each and it acquired the casino concession for a mere 1.7 million francs. In addition to running the casino, the company was given a monopoly over tobacco.
Blanc set about expanding the operation tremendously. A new city was built around the Monte Carlo casino, which was renovated substantially and re-opened in 1866. Further renovations and additions would follow. Crucially, in 1868, a railway connecting Nice to Menton, stopping at Monaco along the way, was opened. This sparked substantial new development as the railway would bring more visitors, both those destined for the casino or those looking to enjoy the baths or other amenities.
Blanc’s company operated not only the casino but the entire neighborhood around it. The scale of accompanying development was massive. Some 1,000 construction workers were employed by the Société des Bains de Mer (SBM). Over fourteen years, two million francs were spent on the construction of accompanying streets, housing, and utilities alone. More remarkably still, these amounts were paltry compared to the money that would be generated by the casino in the course of time.
By 1870, there were nineteen hotels in the neighborhood around the Monte Carlo casino, the largest operated by SBM itself. More visitors were arriving in the 1870s; 161,000 came by railway in 1872 and 215,000 by 1875. In 1879, an opera house designed by Charles Garnier, behind the Garnier opera house in Paris, was built as an addition to the casino.
In 1881, a new road was built into the rocky shore connecting Nice to Monaco. The next year, the company was re-constituted and the share count doubled. SBM was still majority held by the family of François Blanc, who died in 1877.
The railways alone brought 394,000 in 1888 and, during 1889, the year celebrating the centenary of the French Revolution, over 500,000 came. In 1898, the company’s concession was extended for another fifty years. A fee of twenty-five million francs was paid; 40% due upon the date the renewal was agreed and the rest upon what would have been the expiry of the old concession, in 1913. The pace of growth was remarkable over the 1890s and the first decade of the 20th century; over a million arrived in 1902, and by 1909, nearly 1.5 million visited in a single year.
Revenues
The casino contributed large revenues to the government of Monaco, so much so that, in 1870, all direct taxes in the principality were abolished. Besides some stamp taxes, only customs duties remained, and even this would have likely been abolished if not for the fact that Monaco’s customs union with France required it to collect this money.
Under the terms of its concession, SBM paid a 3% tax to the principality on the first twenty-five million francs of gross revenues and 5% of any excess. For some context, perhaps 1.5 million or so were visiting Monaco each year at the end of the first decade of the 20th century and while many tourists would, then as now, never actually set foot in the casino, those who did had to pay an admission fee before they gambled anything at all. The casino’s gross receipts were forty-four million francs at the end of its 1912 fiscal year, so the variable royalty was substantial. On top of this, the company paid the government a fixed 1.25 million francs annually.
By around 1912, the casino generated total public revenues of about 2.75 million francs annually. Across a population of under 20,000, this implied a rate of public revenue per person comparable to that of the richest countries in the world, the United Kingdom included. This money came only from foreigners since locals were not allowed to gamble at the casino. However, locals benefited from the abolition of most taxes and they could benefit from the employment opportunities the casino created; over five hundred people were employed by the casino just to manage the table games. That said, the casino largely relied on foreign labor, most of it settling across the border in France. Besides the casino itself though, the tourism created very meaningful retail opportunities; by 1920, the casino neighborhood hosted over fifteen jewelers and many restaurants and shops.
The casino also supported the public finances in other ways, namely by paying for various expenses that would ordinarily be borne by the government. The SBM paid for policing which cost the company 57,000 francs in 1879. This was about as much as was spent on upkeep of the casino’s gardens each year. The company even built roads, gasworks, and sewers for the district of Monte Carlo. Under the terms of the 1898 extension of its concession, the company was also required to contribute five million francs to the construction of a harbor that could accommodate the yachts of prospective visitors. This was more or less a company town, though a rather unique one.
Lesson
The principal activities of a given place are so often determined by the successes of particular entrepreneurs or firms. In the case of Monaco, that it looks the way it does today owes a lot to François Blanc. Of course, ventures rarely last forever and not every resort town has enjoyed the longevity of success that Monaco has. Some of this is down to the fact that the casino at Monte Carlo, under François Blanc’s management, afforded the SBM and the principality the money to develop the city-state’s real estate more broadly and even to abolish direct taxation, which has also helped attract the rich.
More from the Tontine Coffee-House
Read about Kirk Kerkorian, a developer in another casino town, Las Vegas. 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. Braude, Mark. Making Monte Carlo: A History of Speculation and Spectacle. Simon and Schuster, 2017.
2. Franke, Paul. “‘Nobody Came to Monte Carlo to Be Bored’: The Scripting of the Monte Carlo Pleasurescape 1880-1940.” Journal of Urban History, vol. 48, no. 6, May 2022, pp. 1247–60.
3. Johnson, Mark R. The Casino, Card and Betting Game Reader: Communities, Cultures and Play. Bloomsbury Academic, 2022.
4. Smith, Adolphe. Monaco and Monte Carlo. Grant Richards, 1912.
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