Lazard 175: The Battle of the Franc
As we celebrate the 175th anniversary of Lazard's founding in 1848, we are commemorating this momentous occasion by highlighting some of the most celebrated episodes and leaders from the firm's history.
Below, we share the story of Lazard and The Battle of the Franc.
Lazard’s close relationship with the French government stretches back to the 1870s.
Following the opening of the Paris office in 1854 – just six years after Lazard was incorporated in New Orleans – the firm quickly established an expertise in shipping gold between the United States and France on behalf of French émigré clients sending the precious metal home to their families.
In time, a trusted relationship developed between Lazard and the Banque de France, a relationship that was only strengthened by the assistance the firm provided the French government during the First World War. Lazard sourced financing to support the French war effort, becoming the French government’s privileged intermediary for its provisioning needs in U.S. currency.
Despite emerging victorious, following the armistice in 1918, France faced massive costs to reconstruct its war-ravaged economy, and spent liberally on the assumption that German reparations and foreign aid would offset the spending.
The expected payments did not come, and by the early 1920s, the country suffered from spiraling debt, a swelling budget deficit, and a limping economy. International currency speculators began to sell the French franc, further hindering recovery. By 1924, the short-selling had gained momentum; the franc’s value was collapsing and France’s economy was in jeopardy.
Internal documents in Lazard’s archives show that a counter-offensive to save the franc was conceived by Frank Altschul, Director of Lazard New York, who sent a memo to his French partners outlining a strategy to beat the short-sellers.
The strategy was to coordinate with the Banque de France, London’s City banks, and the major U.S. banks (especially the formidable J.P. Morgan), to sell massive amounts of the world’s major currencies while buying the franc. With no other viable options, the government of France agreed to the plan, under the condition that Lazard would lead and orchestrate the execution, due to its expertise in currency trading and strength in major trading markets.
For twelve days in March 1924, the “Battle of the Franc” raged on the world’s biggest markets — Paris, New York, London, Milan, Berlin, Madrid, and Vienna. In the end, the short-sellers were routed and many prominent speculators driven into bankruptcy.
Considering its work a patriotic duty, Lazard waived all fees or other remuneration for its services. With the franc now stabilized, the French press heaped praise on Lazard.
Of course, France’s economic fundamentals had not changed, and further currency trading battles would ensue for several years. But Lazard’s reputation for international insight, influence, and power was established in Europe for decades to come.