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Tobit Vandamme

Proefschrift voorgelegd tot het behalen van de graad van Doctor in de Geschiedenis

Tobit VandammeBeyond Belgium: The business empire of Edouard Empain in the First Global Economy (1880-1914)

BEYOND BELGIUM:

THE BUSINESS EMPIRE OF EDOUARD EMPAIN

IN THE FIRST GLOBAL ECONOMY (1880-1914)

voor An-Sofie

Promotor Prof. dr. Eric Vanhaute

Vakgroep Geschiedenis

Copromotor Dr. Robrecht Declercq

Vakgroep Geschiedenis

Decaan Prof. dr. Gita Deneckere

Rector Prof. dr. Rik Van de Walle

Kaftinformatie: "L'Art de rouler", L'Etoile coloniale, 21 Mar 1903

Beyond Belgium

The business empire of Edouard Empain in the

First Global Economy (1880-1914)

Tobit Vandamme

Proefschrift voorgelegd tot het behalen van de graad van Doctor in de Geschiedenis 2019
v

Table of Contents

List of Tables ......................................................................................................................... ix

List of Figures ......................................................................................................................... xi

List of Abbreviations ............................................................................................................. xiii

Acknowledgments................................................................................................................ xvii

General Introduction ................................................................................................................ 1

Setting the scene: The First Global Economy as an era of economic integration

and political fragmentation .......................................................................................... 2

The diversity of international business....................................................................... 6

Introducing the globalization paradox ..................................................................... 10

Small countries in a complex world .................................................................................... 12

The place of Belgium .................................................................................................... 15

Exploiting the paradox of the First Global Economy: Strategies of MNEs from

small states .................................................................................................................... 23

Sources, heuristic strategies and methods ......................................................................... 31

Outline of the dissertation .................................................................................................... 35

Part 1 Business beyond borders, sectors and classic corporations ........................................................37

Chapter 1 The bumpy road to a global business empire ............................................. 39

1.1 Introduction .................................................................................................................. 39

1.1 Belgium, France and Europe (1878/1880-É ............................................................. 48

1.1.1 Business in Belgium before the group ........................................................... 48

1.1.2 Boomerang expansion: To France and back to Belgium ............................. 51

1.1.3 The lesser neighbors ........................................................................................ 59

1.1.4 Southern and Eastern Europe ......................................................................... 61

1.2 The first steps overseas: Latin America (1888-É .................................................... 64

1.3 "USINNSS IN ÀTHN IRINNTÁ7 THN -IMMLN %AST ANM .ORTH !ŃRICA BD6B-É .................... 69

1.4 Half-hearted rush to Russia (1895-É ........................................................................ 72

1.5 Neutral Belgium in China (1897-É ............................................................................ 75

vi

1.6 0RNSTIGN IN HNOPOLMÁS #ONGO B6C-É ........................................................................ 77

1.7 Conclusion ..................................................................................................................... 79

Chapter 2 Escaping steam, embracing electricity ....................................................... 83

2.1 Introduction .................................................................................................................. 83

2.2 %ÓPAINÁS TPO-track strategy for transportation ..................................................... 87

2.2.1 Steam-powered railways (1880-É ................................................................. 87

2.2.2 Embracing the electric revolution in urban transport (1894-É .............. 93

2.3 Powering cities, transport and industry (1903-É ................................................. 101

2.4 Becoming its own manufacturer (1904-É .............................................................. 109

2.5 Hop off in a new city: The development of Heliopolis (1905-É .......................... 116

2.6 Chasing other opportunities (1890-É ..................................................................... 119

2.6.1 Water management ........................................................................................ 121

2.6.2 Natural nitrate ................................................................................................ 121

2.6.3 Tropical agriculture ....................................................................................... 123

2.6.4 Steamshipping ................................................................................................ 124

2.7 Conclusion ................................................................................................................... 125

Chapter 3 The business group: A corporate structure for worldwide expansion ...129

3.1 Introduction ................................................................................................................ 129

3.2 Snapshot and genesis of the holding company maze ........................................... 131

3.3 The Empain group, a business group? ..................................................................... 138

3.4 2ISO SPRNAMING7 ÀGROUP SOLIMARITYÁ ............................................................................ 142

3.5 The quest for finance and the concern for independency ................................... 147

3.5.1 Empain, the banks and joint ventures ........................................................ 148

3.5.2 Going public: Stock and bond markets ....................................................... 152

3.5.3 Lenders within the group: Inter-firm loans ............................................... 158

3.6 Control: The open family firm .................................................................................. 159

3.7 Pooling of managerial and technical resources ..................................................... 163

3.7.1 The thirty leading executives of the business group ................................ 164

3.7.2 Between Brussels, Paris and elsewhere: The centralization and

circulation of human resources ................................................................... 169

3.8 The multinational business group: A political chameleon? ................................. 174

3.9 Conclusion ................................................................................................................... 181

Part 2 Securing investments: Political strategies towards home and host countries ....................... 185

Chapter 4 Belgium and the Congo: ! ÀHOÓN GAÓNÁ ..................................................187

4.1 Introduction ................................................................................................................ 187

4.2 The rise of an ambitious businessman (1880-1900) ............................................... 189

4.3 A peculiar friendship: Empain and King Leopold II ............................................... 192

4.4 A private interurban between Brussels and Antwerp? (1900-1903) ................... 198

4.5 HOCAL POPNR VNRSUS #ATHOLICS ÃSAVING THN NATIONAL INMUSTRYÄ B60-1904) ....... 202

4.6 An uncontested leader in business and society (1904-1914) ................................ 210

4.7 Congo: The interdependence of the King and Empain ......................................... 214

vii

4.8 Conclusion ................................................................................................................... 220

Chapter 5 France and its empire: From psychic distance paradox to

assimilation ................................................................................................. 223

5.1 Introduction ................................................................................................................ 223

5.2 Foreign railway entrepreneurs welcome? .............................................................. 224

5.2.1 Economic nationalism ................................................................................... 225

5.2.2 The dark shadow of Philippart ..................................................................... 229

5.3 The breakthrough: The Paris Métro ........................................................................ 232

5.3.1 4HN ÃCOSÓOPOLITAN COALITIONÄ ANM NATIONALIST OPPOSITION ....................... 233

5.3.2 Building a local network for resilience ....................................................... 238

5.4 Accepting French influence to face pre-war nationalism .................................... 243

5.5 Contrasting colonial contexts: Ivory Coast, Ethiopia and Congo ........................ 246

5.6 Conclusion ................................................................................................................... 251

Chapter 6 Venezuela: Failing forward? ...................................................................... 255

6.1 Introduction ................................................................................................................ 255

6.2 Prelude: General contracting of a Venezuelan railway ........................................ 256

6.3 The Caracas waterworks: A promising public utility? .......................................... 261

6.4 A controversial concession ....................................................................................... 269

6.4.1 Financial and political risks .......................................................................... 269

6.4.2 The nationalization of the Eaux de Caracas ................................................. 274

6.5 The Empain group in the midst of an international conflict ............................... 277

6.6 Conclusion ................................................................................................................... 282

Chapter 7 China: Belgian neutrality with a whiff of French perfume ..................... 287

7.1 Introduction ................................................................................................................ 287

7.2 Mixed up in the Scramble for Concessions ............................................................. 289

7.3 After the Boxer Rising: Consolidating and giving in to France ........................... 300

7.4 Lunghai: A tenfold extension of the Pienlo ............................................................ 307

7.5 Conclusion ................................................................................................................... 314

General Conclusion ............................................................................................................... 317

Moving beyond the small early-industrialized economy ............................................... 319

Transcending the simple family firm ................................................................................ 321

Overcoming imperialism, nationalism and the small state ........................................... 323

Bibliography ...................................................................................................................... 327

Appendices ...................................................................................................................... 353

Appendix 1: A note on money and currencies ................................................................. 353

Appendix 2: Structure of the personal database (MS Access) ........................................ 354

Abstract (EN/NL) ................................................................................................................... 355

ix

List of Tables

Table 1 (Light) rail networks operated by the Empain group worldwide in

chronological order ............................................................................................ 92

Table 2 Evolution of the rail network of the Empain group, in km (1894-1914) ..... 96 Table 3 Tramway networks operated by the Empain group worldwide in

chronological order ............................................................................................ 99

Table 4 Electricity production in Belgium before WW1 ........................................... 104 Table 5 Electricity production by the Empain group in France (1915) ................... 105 Table 6 Top 22 best-performing companies of the Empain group (1911-13) ........ 145 Table 7 Top 11 worst-performing companies of the Empain group (1911-13) ...... 146 Table 8 Top directors holding half of all the directorships within the Empain

group (1880-1914) ............................................................................................. 166

Table 9 The Empain headquarters in Brussels, Paris and locally (1914) ................ 171

Table 10 Shareholders of the CFL at incorporation (1902) ......................................... 216

Table 11 Stages of the construction of the CFL railroad (1902-1915) ........................ 219 Table 12 Initial composition of the board of directors of the CMP (1898) ................ 236 Table 13 Composition of the board of directors of the Cie des Eaux de Caracas

(1891-1896) ......................................................................................................... 266

Table 14 Estimated revenues and expenses of the Cie des Eaux de Caracas for

1895 vs actual income in 1894 ......................................................................... 268

Table 15 Financial arrangement between the Venezuelan government and the

Eaux de Caracas (1895) ....................................................................................... 275

Table 16 Sums claimed and recognized by mixed Venezuelan-foreign commissions after the 1903 Washington Protocols ..................................... 281 Table 17 Composition of the board of directors, after the rearrangement of

1905 ..................................................................................................................... 302

xi

List of Figures

Figure 1 Foreign capital stocks (1870-2000) ......................................................................4

Figure 2 Regional distribution of investments: total nominal capital of controlled companies per country in sample years (1885-1914) ................. 42 Figure 3 Net capital account outflow through FDI of the Empain group, currently yearly averages in % (1880-1914) .................................................... 46 Figure 4 Net capital account outflow through Belgian FDI, current yearly

averages in % (1879-1913) .................................................................................. 47

Figure 5 Main and secondary railway lines ever operated in France (1831-

2001) ...................................................................................................................... 52

Figure 6 Growth of the local rail-/tramway and SNCV network in Belgium in km, logarithmic scale - base 10 (1869-1913) ................................................... 54 Figure 7 Map of all the investments of the Empain group in Belgium, the Netherlands and northern France (1880-1914) .............................................. 56 Figure 8 Map of all the investments of the Empain group in France (northern

departments excl.) (1880-1914) ........................................................................ 58

Figure 9 Map of all the investments of the Empain group outside Belgium, France and the Netherlands (1880-1914) ........................................................ 63 Figure 10 Relative share of sectors for sample years, based on total nominal

capital (1885-1914) .............................................................................................. 85

Figure 11 Total nominal capital per sector for sample years in million francs

(1885-1914) ........................................................................................................... 86

Figure 12 Tramway and (light) railway network per country in km (1894-1914) ...... 90 Figure 13 Light railway station of the Chemins de fer économiques du Nord in

Champier (FR) ...................................................................................................... 93

Figure 14 Nitrate price per ton, converted to 1995 US dollar (1880-1930) ................ 122 Figure 15 Archetypal structure of a pyramidal business group .................................. 132 Figure 16 Stylized representation of the ownership structure of the Empain

group (1905-1914) ............................................................................................. 133

Figure 17 The financial performance of the five main holding companies, weighted average of ROE (1882-1913) ............................................................ 143 Figure 18 The ratio of equity versus bonds as a source of finance of the top

holding companies (1882-1913) ...................................................................... 154

Figure 19 Deflated price evolution of all shares of the Empain group listed on the Brussels Stock Exchange compared to the sector index, 1880=100

(1880-1914) ......................................................................................................... 155

xii

Figure 20 A stylized pyramidal business group .............................................................. 159

Figure 21 Edouard and François Empain (early twentieth century) ........................... 160 Figure 22 The direct offspring of François-Julien and Cathérine Empain .................. 162

Figure 23 Hotel de Knuyt de Vosmaer (rue du Congrès 33-33A) .................................. 170

Figure 24 Press cartoon depicting Edouard Empain and Leopold II (1903) ................ 195

Figure 25 Coat of arms of Baron Edouard Empain (1907) .............................................. 198

Figure 26 Map of the territorial concessions granted to private companies in

the CFS as of 1905 ............................................................................................... 218

Figure 27 Map (drawing) of the network of the CMP and Nord-Sud (lines 12-13)

as of 1914 ............................................................................................................. 241

Figure 28 Carenero railway (Carenero-San José) and extension (San José-El Guapo-Altagracia de Orituco), 1886-1891 ....................................................... 258

Figure 29 Map of Caracas (1889) ........................................................................................ 262

Figure 30 Eaux de Caracas: Distribution of share ownership at creation and

dissolution........................................................................................................... 265

Figure 31 Price evolution of the Eaux de Caracas bonds (500 frs, 5%) quoted on the Brussels Stock Exchange, in francs (1891-1895) ..................................... 270 Figure 32 Ã+AIŃNNG-Honanfu line: The first locomotive engine entering Central

#HINAÄ .................................................................................................................. 304

Figure 33 Map of Central China (1913) ............................................................................. 309

xiii

List of Abbreviations1

ACB= Archives of the City of Brussels

ACDC= American China Development Company

*ACEC= Ateliers de constructions électriques de Charleroi *ACENE !TNLINRS MN CONSTRUCTIONS œLNCTRIQUNS MU .ORM NT MN LÁ%ST AGO= Assemblée générale ordinaire [annual general meeting of shareholders]

AMB= Annexes au Moniteur belge

ANF= Ateliers du Nord de la France

ANMT= Archives nationales du monde du travail

ARA= National Archives of Belgium

ARA2= National Archives 2 : Cuvelier repository

BE= Belgium

Bénard&Jarislowsky= Banque Bénard et Jarislowsky *BIB= Chemin de fer à voie étroite de Bruxelles à Ixelles-Boendael

BMFA= Belgian Ministry of Foreign Affairs

CA= CONSNIL MÁAMÓINISTRATION [board of directors]

CAEF= #NNTRN MÁARCHIVNS œCONOÓIQUNS NT ŃINANCI›RNs (Archives of the Ministry of Finance)

*CAEN #OÓPAGNIN !UXILIAIRN MÁ%LNCTRICITœ MN .ANTNS *Cairo Suburban= The Cairo Suburban Building Lands Company Carenero Company= Carenero Railway and Navigation Company Limited CCCI= Compagnie du Congo pour le CommerCN NT LÁ)NMUSTRIN *Cdf Vicinaux= Compagnie générale des Chemins de fer vicinaux

Cdf=chemin de fer [railroad]

CEO= chief executive officer

1 Companies are written in italics. Those belonging to the Empain group are marked with a *.

xiv *CFL= Compagnie des Chemins de fer du Congo supérieur aux Grands Lacs africains

CFS= Congo Free State

CGER #AISSN GœNœRALN MÁ%PARGNN NT MN 2NTRAITN *CGT= Compagnie générale de Traction

*Chemins de fer de la Banlieue de Reims= Compagnie des chemins de fer de la banlieue de Reims et extensions

Chemins de fer économiques= Société générale des Chemins de fer économiques (Belgium)

*Cie Générale= Compagnie générale de Chemins de fer et de Tramways en Chine Cie impériale= Compagnie imperiale des chemins de fer éthiopiens CIE #OÓPAGNIN )NTNRNATIONALN MÁ%LNCTRICITœ

Cie=Compagnie

CIWL= Compagnie Internationale des Wagons-Lits et des Grands Express Européens *CMP= Compagnie du Chemin de fer métropolitain de Paris

CMT= Compagnie Mutuelle de Tramways

DLC= dual-listed company

E&H= Electricité et Hydraulique

*Eaux de Caracas= Compagnie générale des Eaux de Caracas *Eclairage de Tournai= Eclairage, chauffage et force motrice de Tournai et extensions *Econord= Société des chemins de fer économiques du Nord

EDF= Electricité de France

*EGN= Electricité et Gaz du Nord *Egyptian Mail Steamship= Egyptian Mail Steamship Company Ltd

Elec.= Electricité or électrique(s)

*Exploitation économique 3! MÁNXPLOITATION œCONOÓIQUN MN RAILPAYS

FA= Foreign Affairs

FDI= foreign direct investment

*Fédération FR-BE= Fédération française et belge de tramways

Fr/frs=franc

FR= France

FRAN= French Archives Nationales

FSC= free-standing company

GDP= gross domestic product

*Heliopolis Palace Hotel= Heliopolis Palace Hôtel du Caire *HOC= The Cairo Electric Railways and Heliopolis Oases Company

IPO= initial public offering

KMMA= AfricaMuseum (Koninlijk Museum voor Midden-Afrika) *la Longueville= Forges et Ateliers de la Longuevillequotesdbs_dbs25.pdfusesText_31

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