"Free Incorporation and its Discontents: State, Society, and the Corporation in France, 1852-1886"

Until 1867, sociétés anonymes (SAs), i.e. limited-liability joint-stock corporations, required to government authorization in France. This centralized authorization procedure considered public interest and the composition of the securities markets when evaluating prospective corporations. Laws passed in 1863 and 1867 removed this legal hurdle and the aura of privilege surrounding SAs, which became increasingly incompatible with the economic acceleration and gradual liberalization promoted by Napoleon III (1852-1870). After 1867, the number of SAs (including joint-stock banks) skyrocketed, fueling market instability that ultimately erupted in a major financial crisis in 1882—considered the first financial “crash” in France. Bank failures spurred renewed debate about the virtues and vices of free incorporation, understood as a form of capital market deregulation. The “triumph of free incorporation” was highly contested. Both before the passage of the law and after the financial crisis, the French government solicited opinions from legislators, local governments, and chambers of commerce, while public debates animated the print media. Positions on free incorporation were divided across social classes, political alliances, regional interests, and industry sectors. Certain regions championed the preservation of state discretion over incorporation as a public safeguard, rejecting the state’s renunciation of this responsibility as inviting moral hazard or financial instability. Others advocated for the complete removal of state discretion over incorporation, construed as an exercise of arbitrary power. This paper examines how these positions evolved over the course of the 1860-80s and considers factors influencing their distribution. One striking feature of the geography of discontent is that regions that were opposed to free incorporation in the 1850-60s witnessed surging popular antisemitism in the late nineteenth century. The French experience offers historical perspective on the relationship between market regulation and economic populism.