RECONSTRUCTION 3/4: PARIBAS RELAUNCHES FRENCH PORTS

The port of Boulogne-sur-mer

Liberated in September 1944, the town of Boulogne was 60% destroyed and its port facilities had suffered 95% destruction. Considered as a “corporation” (omnium) in 1939, Boulogne was the 2^nd French port in terms of passengers and the 9^th in terms of goods, with one million imported and exported goods, notably coal, wood, ore, etc. It was also France’s leading fishing port – producing one third of French tonnage – with 98 trawlers and 100 other boats as well as equipment such as electric cranes and fairing. To facilitate distribution within France, the port had 27 km of railway tracks and a marine terminal that enabled insulated wagons to be sent throughout the country. In addition, there were 85 processing plants.

When the Liberation came, only 650 metres of viable quay remained. Everything was destroyed, including the ferry terminal, hangar and port facilities. Only one crane was left standing. The fleet, which was requisitioned, was non-existent. The Ministry of Reconstruction estimated the damage at 1.3 billion francs for the port’s equipment alone. This figure did not include the damage borne by the State for the port works. The damage for the 110 industrials affected was estimated at 1 billion francs.

If we take into account that these industrials represent only a fraction of all the industries impacted by the reconstruction of the port, it was no exaggeration to say that the amount of damage suffered by the industrials located at the port of Boulogne stood at 3 billion francs, excluding the port works themselves, which were managed by the government. Since the nation needed fish as a national commodity for its supplies, it is easy to see that the reconstruction of the port of Boulogne had to be part of an overall plan to be implemented methodically.

However, in spite of the many steps taken, whether at departmental or national level, nothing was done until 1947 and Vincent Auriol’s visit in June that year. However, the law of March 1947 had already brought about changes. On 21 November 1947, the “Consortium for the reconstruction of the port of Boulogne-sur-Mer and its related industries” (Groupement pour la reconstruction du port de Boulogne sur mer et de ses industries annexes) was created under the chairmanship of Jean Huret. The term ’related industries’ was a necessity for the fishmongers and salters whose fish processing warehouses, which were the pride and wealth of the city, had been totally destroyed. On 15 January 1948, this consortium created a public limited company with capital of 2 million francs (400 shares) in order to create a shareholding for the duration of the consortium. On 15 February, the agreement was signed between the consortium, René Mayer (French Minister of Finance and Economic Affairs), Wilfried Baumgartner (President of Crédit National) and the UIC – the bank responsible for carrying out the accounting operations. The loan of 500 million francs, in 100,000 bonds and at a rate of 4.75%, redeemable over 30 years, was arranged by Banque de Paris et des Pays-Bas, the sole lead arranger.

Of this 500 million loan, 418 million would be reserved for banks, with all the major banks taking part. While Crédit Lyonnais contributed 26.2% and Banque de Paris et des Pays-Bas “only” 4%, CNEP and BNCI contributed 13.1% and 12.9% respectively. The forerunner banks of BNP Paribas therefore contributed 30% of the subscribed capital.

Le Havre, the city and its port

One of the most painfully affected port cities, Le Havre suffered more than 123 bombing raids between May 1940 and the beginning of September 1944. From 2 to 9 September 1944, the siege of the city caused the death of more than 2,000 people and more than 10,000 of the 19,500 houses were destroyed. In the port area, only 11 hectares out of 200 escaped destruction and 1 billion francs would be needed to finance the clearing operations.

THE RECONSTRUCTION OF THE CITY

As regards the so-called civilian property used to house the population, from 1944 to 1948 the stricken population was assigned to the wooden barracks of three former US camps. 11,000 families, or approximately 60,000 people (1/3 of the population), were still living in cellars and storerooms, in blatantly insalubrious conditions.

The CNEP branch in Le Havre between the early 1930s and 1945. BNP Paribas historical archives, reference 10Fi833

For this reason, the “Groupement pour la reconstitution du Havre et de sa banlieue” (Consortium for the reconstruction of Le Havre and its suburbs) was created on 15 January 1948. On 15 March, the Board of Directors launched the 200 million franc bond issue, which paid subscribers 237.50 francs in annual interest. The images of this martyred city struck a chord with the public, which ensured that this loan, launched by Banque de Paris et des Pays-Bas, was a great success with the French people. So much so, that a second loan was launched in February 1950 with similar success, for an amount of 335 million francs.

THE CHALLENGE SURROUNDING THE PORT

For industrial property at the port, the task was more difficult. Notwithstanding its status as an autonomous port, which it obtained in 1924, it was able to benefit from state funding for clearing works. For infrastructure improvements, the financing was shared between the State and the port. However, for the reconstitution of the installations (equipment), the autonomous port only received compensation from the government for the entire cost minus any depreciation. But the importance of the port was not limited to its geographical location, the significant tonnage of goods transhipped or the number of transatlantic passengers. The port also supplied numerous local industries, such as oil refineries, metallurgical and engineering factories, shipyards and electrical construction, and food processing, wood and glass industries. The importance of the port in terms of French overseas trade radiated throughout the country. In 1939, it received half or even all of France’s imports of certain products and, in these times of shortage, the need for imports was increased by the demand of French industry for raw materials from overseas colonies or goods and manufactured products resulting from the Marshall Plan. This showed the importance of the port’s rapid reconstitution in terms of the recovery of the national economy.

A 1947 study estimated the total expenditure for refinancing the reconstruction at 12,805 million francs for the reconstruction and equipment of the autonomous port. For infrastructure such as roads, locks, dykes, docks and breakwaters, railway tracks, signposts and port authority buildings, the government reimbursement was 100% for clearing and replacing destroyed structures but 50% for infrastructure improvement costs. The port still had to find 1.1 billion francs. On the other hand, concerning the superstructures – which were in fact the hangars, machinery, basins and dry docks, electrical and telephone installations – only 85% of the costs were covered by the State, which represented a remaining cost to be covered by the port of more than one billion francs, i.e. a total amount of 2.210 billion francs for infrastructures and superstructures. As early as 1946, the State paid the autonomous port sums which enabled the work to begin and which constituted a down payment on the final settlement. In February 1948, the consortium issued a 650 million franc loan with 130,000 bonds of 5,000 francs, of which Banque de Paris et des Pays-Bas acquired 4.6%, the BNCI 14.48%, and the CNEP 14.72%. One third of the operation was therefore covered by the forerunner banks of BNP Paribas.

Financing from the US

Was the solution to be found in the US? By 1948, although the work carried out had enabled port traffic to recover, it was still burdened by heavy operating costs due, in particular, to the handling, transhipment and trucking carried out without unloading equipment and storage facilities. As a result, the planned works would enable the port’s traffic to increase, thereby increasing annual revenues, particularly in foreign currency, estimated at 100 million.

In this race for reconstruction, the port came up against the difficulties presented in 1948 to 1949 of manufacturing modern handling equipment for uniform and efficient tooling in France and within a limited timeframe. For these reasons, raising funds in the United States was considered in order to acquire, as soon as possible and at the best prices, the equipment required for unloading docks with high-powered handling equipment such as 20 quayside gantry cranes, ten 2-tonne semi-gantry cranes and four large 12-tonne gantry cranes. For this external financial operation, the expenditure totalled 1,090 billion francs, excluding exchange rate effects. In order to finance these purchases, Banque de Paris et des Pays-Bas obtained authorisation from Crédit National to enlist lenders in the United States to raise a USD 3.7 million bond with the guarantee from the ECA and the French government.

In February 1950, in response to the significant need for modernisation, the autonomous port carried out a second bond issue of 550 million francs, which was also successful.

Other ports

While the Channel ports and towns were the first to seek help from the public authorities and banks for their reconstruction, other ports were also putting together their requests.

This was the case in Nantes, where the loan was estimated at 300 million francs for the modernisation of the fruit and early produce reception facilities and in which Banque de Paris et des Pays-Bas was co-lead arranger with Société Générale and Crédit Nantais. This was also the case for Marseille which, in December 1948, launched its loan of 650 million francs to the consortium for the reconstruction of the port in Marseille and its annexes. Finally, this was also the case in Saint-Nazaire – a city that was two-thirds destroyed and had already been experiencing a housing crisis in 1939. As co-lead arranger with Société Générale, Banque de Paris et des Pays-Bas would bear the loan for the consortium for the reconstruction of Saint-Nazaire and its surrounding areas.

And what about the “Groupement pour la reconstitution des divers ports maritimes” (Consortium for the Reconstruction of Various Maritime Ports), which was born out of the concerted action of the chambers of commerce concerned and which, in December 1948, launched a loan of 200 million francs to help rehabilitate a number of ports on the French coast, including Bastia, Brest, Calais, Dieppe, Fécamp, Rochefort, Sète and Toulon. Some of these ports stood in ruins and would require subsequent loans.