Auguste Dreyfus

Auguste Dreyfus Marx (Wissembourg, France, June 30, 1827 – Paris, May 25, 1897) was a French businessman and banker of Jewish origin. He moved to Lima, Peru, where he engaged in the textile trade. In 1859, he became a shareholder of the company "Dreyfus Brothers," a commercial enterprise founded by his brothers in Paris, of which he gradually took control. In 1869, with the support of the Société Générale de Paris, he founded a company to extract guano from islands along the Peruvian coast, and that same year he signed the first "Dreyfus Contract" with the Peruvian government, granting him exclusivity over the guano trade. Thanks to this business, he amassed a great fortune, leaving behind an inheritance of over 50 million francs. His influence on Peruvian finance was significant throughout the 1870s, prior to the outbreak of the War of the Pacific.

Biography

Auguste Dreyfus was born in the town of Wissembourg, Bas-Rhin department, France. His parents were Eduard Dreyfus and Sara Marx, both of Jewish origin. However, at the age of 17, Auguste converted to Catholicism.

Accompanied by his brother León Dreyfus, a doctor, he arrived in Lima, the capital of Peru, in 1857 or 1858. Both engaged in the sale of jewelry and textiles in a shop located on Correo Street. Their annual import volume reached one hundred thousand francs. He soon gained a place in Lima's high society. On August 18, 1862, he married Sofía Bergmann, daughter of a prosperous Lima businessman.

Meanwhile, in Paris, his brothers Jérôme, Isidore, and Prosper Dreyfus had founded the "Dreyfus Brothers" company in 1852 with modest capital, aimed at exporting textiles and other goods to Peru. In 1859, Auguste Dreyfus joined the company after convincing his relatives of the advantages of expanding capital and diversifying operations. He started as a minority partner with 55,000 francs, while Prosper contributed 360,000, Jérôme 120,000, and Isidore 65,000 francs. This second partnership dissolved at the end of 1863. Isidore and Auguste became the sole owners of the business. In 1864, their doctor brother León joined the partnership, replacing Isidore in 1866. This third company dissolved in 1869. From that point on, Auguste became the leading figure of the company, thanks to his great business skill and perseverance.

It is said that, by chance, documents from a shipping company involved in the guano trade came into his possession, leading him to realize the enormous profits to be made from trading island guano, which was in high demand internationally for its fertilizing properties. Seeing this promising opportunity, Dreyfus formed a financial syndicate in Paris with capital of 60 million francs, of which 22.5 million were contributed by the Société Générale, a Paris-based bank. There were also Peruvian shareholders, such as Andrés Álvarez Calderón, who contributed 6 million francs.

With this syndicate led by Dreyfus, the Peruvian government signed the famous "Dreyfus Contract" on July 5, 1869, crafted by Nicolás de Piérola, Minister of Finance under President José Balta. According to this agreement, Dreyfus would purchase two million tons of guano, valued at 73 million soles, to be paid in monthly installments of 700,000 soles. He also advanced the Peruvian state two million soles and committed to covering the service of Peru's external debt, which amounted to five million soles annually.

Thanks to the Dreyfus Contract, the Peruvian state was able to temporarily alleviate its lack of funds. With this financial backing, it secured substantial loans from the Dreyfus Company, which were largely used to build railways and other public works. However, this period of prosperity was short-lived, as guano prices fell due to competition from nitrate. By 1872, Peru had one of the largest public debts in the world.

In the long run, the Dreyfus Contract proved disastrous for the Peruvian economy. From 1873, Dreyfus stopped sending the monthly remittances to the Peruvian state, claiming that all guano revenue only sufficed to cover debt payments. Eventually, he also stopped servicing the external debt, further damaging Peru's reputation on European markets. By December 1873, Peruvian bonds were trading at only 49% of their nominal value in Europe. In 1874, Dreyfus reached an agreement with the Peruvian government, committing to service the external debt for three semesters (July 1874, January 1875, and July 1875). After the final payment, the state resumed direct responsibility for its obligations and, in 1876, regained the right to sell guano on its own account. The Dreyfus Contract was thus officially terminated, although it was later revealed that the company had sold 360,000 tons of guano beyond what had been agreed.

Despite the efforts of successive governments under Manuel Pardo y Lavalle and Mariano Ignacio Prado to reverse the situation, Peru's economic crisis deepened, culminating in bankruptcy—just as the country urgently needed to arm itself to counter Chile's growing military power. At that time, Chile was pursuing expansionist policies in Bolivia's coastal territories and threatening southern Peru, all rich in guano and nitrate.

During the dictatorship of Nicolás de Piérola, in the midst of the War of the Pacific, the Peruvian government once again granted Dreyfus a monopoly over the guano trade (1880). But the new agreement was never fulfilled, as Chilean forces had already occupied the guano deposits.

Descendants

With his first wife, Sofía Bergmann Rubio de Dreyfus (who died in Paris in 1871), he had no children. He later married another Peruvian, Luisa María González Orbegoso, Marchioness of Villa Hermosa, daughter of Vicente González Pinillos and Emilia Orbegoso, and granddaughter of Marshal Luis José de Orbegoso y Moncada, former President of Peru. The wedding took place in Lima on January 18, 1873. From this union, Luis Dreyfus y González Orbegoso and Eduardo Vicente Dreyfus y González Orbegoso (born Paris, 1877) were born. Eduardo inherited the title Count of Premio Real and became a distinguished portrait painter. He married Princess Ana de Talleyrand-Périgord and Contaut de Biron, of the princely families of Sagan and Benevento, Dukes of Montmorency. Both visited Peru in October 1910 to inspect properties they owned in Lima and Trujillo.

See also

• Guano Era
• Dreyfus Contract