Albert Oustric
Albert Oustric | |
|---|---|
| Born | 2 September 1887 Carcassonne, Aude, France |
| Died | 16 April 1971 (aged 83) Toulouse, France |
| Occupation(s) | Industrialist, financier, banker |
| Known for | Founder of Oustric & Cie bank; involvement in 1930 banking scandal |
Albert Oustric (2 September 1887 – 16 April 1971) was a notable French industrialist and financier. The son of a café owner, he held several positions before securing investment for a hydroelectric power initiative. In 1919, he established a modest bank focused on rescuing financially distressed companies by consolidating their debts and marketing shares at inflated values. Oustric's investments spanned sectors such as mining, leather manufacturing, and retail banking. His financial empire collapsed amid the 1929 economic downturn, devastating numerous small-scale depositors. Following convictions for fraud and embezzlement, he spent multiple years incarcerated. An inquiry revealed that certain politicians, including the Justice Minister, had shielded him; however, the Senate later cleared these officials of wrongdoing.
Early years
Albert Oustric was born on 2 September 1887 in Carcassonne, located in the Aude department. His father operated a café and subsequently managed a wine and spirits shop in Toulouse. Albert initially worked as a clerk for a lawyer and also served as a sales agent for Cusenier distilled beverages within the Aude region.
Upon his father's passing in 1910, he assumed control of the Toulouse shop while maintaining his role with Cusenier. During World War I, Oustric worked as an accountant at a munitions factory but was later released to develop hydropower rights inherited from his father in the Gripp valley of the Hautes-Pyrénées. He successfully raised capital to create Force & lumière des Pyrénées for this venture and also launched Electro-Métal to manufacture ferro-silicon in Haute-Garonne.
Early growth
In June 1919, Oustric founded Oustric & Cie, a banking institution initially capitalized with one million francs, which expanded to fifteen million by late 1921 after converting into a limited company. That same year, he married Madeleine de Rigny. The bank’s initial modest funds derived from his hydroelectric projects and consumer-related enterprises before it engaged in arbitrage activities involving coal and gold mining stocks.
Oustric's bank specialized in issuing shares of questionable companies, employing deceptive promotional tactics to artificially boost stock prices prior to selling them. In 1923, he disposed of shares in the artificial silk company la Borswich française. By 1926, he had invested in Bolivia’s Huanchaca silver mine, manipulating its share prices through false announcements of discoveries—causing stock values to surge tenfold before fluctuating again. Utilizing insider knowledge of these price swings, he profited by selling at peaks and repurchasing at lows while other investors suffered losses.
He capitalized on the protectionist nature of the French stock market, which was isolated from international financial centers and other exchanges.
Snia Viscosa
In 1926, Oustric became involved with Snia Viscosa, an Italian artificial silk manufacturer controlled by financier Riccardo Gualino, supported by Benito Mussolini and the Banca d'Italia. It ranked as the world’s second-largest producer of rayon. On 26 March 1926, Gaston Vidal, a director at Oustric's bank, sought permission to list 500,000 shares of Snia Viscosa on the French stock exchange despite Ministry of Finance opposition to foreign listings. After consulting with René Besnard, the French ambassador in Rome—who did not object—the Ministry ultimately approved the listing following assurances regarding a Franco-Italian textile industry agreement. Significantly, Raoul Péret, then serving as Minister of Finance who authorized this listing, later acted as legal counsel for Oustric's bank.
Industrial empire
Oustric transitioned from arbitrage activities to acquiring ownership of high-risk businesses, revitalizing them by consolidating debts and selling partial equity stakes. During the 1920s, he played a key role in rescuing companies such as the textile manufacturer Kahn, Lang & Manuel, the spinning firm Valentin Bloch, and the paper producer Papeteries de Gascogne, among others. His portfolio extended into sectors like oil extraction and leather manufacturing.
By 1929, his holding company had taken control of firms including Maréchal (specializing in reinforced fabrics), Sarlino (linoleum production), and Athos (sewing machine manufacturing). Utilizing intricate holding structures, his bank managed a network of shares with optimistic valuations, which encompassed the established regional institution Banque Adam located in Pas-de-Calais. The enterprise gained recognition for its ability to successfully rehabilitate struggling companies.
Bankruptcy
After tensions arose between Gualino and Mussolini, shares of Snia Viscosa suffered a steep decline amid the 1929 market crash, severely impacting Oustric's operations. To support the share prices, he diverted funds from Banque Adam to purchase stock in his own enterprises. This maneuver attracted legal examination, leading the attorney general to pursue an indictment.
In October 1930, Raoul Péret—then serving as Minister of Justice—postponed the indictment for twelve days during a period when the bank’s share value was plummeting. The shares were removed from the stock exchange on 31 October. Péret cautioned that proceeding with the indictment could provoke a financial crisis; consequently, on 4 November, the attorney general retracted the legal action.
The Oustric conglomerate declared bankruptcy on 5 November 1930, burdened with debts amounting to 125 million francs. Among the failed subsidiaries was Banque Adam.
Oustric was detained and incarcerated at La Santé Prison. The collapse inflicted severe losses on numerous small investors; notably, Peugeot lost its entire capital and nearly faced insolvency. The scandal resonated with ongoing repercussions from Marthe Hanau’s defunct banking enterprise. Media coverage accused Oustric of misappropriating depositor funds from Banque Adam.
Political inquiry
On 21 November 1930, the Chamber of Deputies established a commission to examine allegations of improper political interference. The investigation uncovered that Péret, acting as legal counsel for Oustric’s bank and its subsidiaries Paris Foncier and Holfra, received substantial payments without rendering actual legal services. The commission determined these fees were compensation for "political favors" and that Péret abused his position to protect his client from prosecution.
Georges Mandel served as a prominent member of this commission. The inquiry also revealed involvement by the Bank of France in Oustric’s speculative ventures, exposing a lack of due diligence among central bank officials. The commission faced criticism for publicly naming individuals, with some accusing it of sensationalism.
Following these revelations, Péret resigned along with undersecretaries Henri Falcoz and Eugène Lautier, who had also been recipients of payments from Oustric. Subsequently, André Tardieu’s administration was defeated and stepped down in December 1930.
On 25 March 1931, Péret was impeached by the Chamber before the High Court. The Senate convened on 20 July 1931 under President Albert Lebrun with Joseph Caillaux among the judges. Despite demands for harsh sanctions, Péret was acquitted on 23 July 1931; however, the court censured only the ethical dimensions of his conduct. The commission finalized its report in March 1932 but withheld its release to avoid influencing the forthcoming general election.
Later years
In January 1932, Oustric faced conviction for fraud, embezzlement, and various financial misconducts. He was sentenced to 38 months behind bars and ordered to pay 31,000 francs in restitution. After being released due to health concerns, he resumed employment at his reinstated bank, earning a monthly wage of 3,000 francs. On 15 May 1945, Oustric received formal rehabilitation. He passed away on 16 April 1971 in Toulouse at the age of 83.
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