Some historical illustrations of decisive actions relative to banks

Paris Commune, Russian revolution, F.D. Roosevelt, De Gaulle, Mitterrand

16 August by Eric Toussaint

What a government does or fails to do relative to banks has far-reaching consequences on the course of a country’s history.

The Paris Commune [1] made the mistake of not taking control over the Bank of France

The seat of the Bank of France, its main reserves and its board were located on the territory of the Paris Commune. The leaders of the Commune wrongly decided not to take control whereas that would have been essential.

In his History of the Commune of 1871 [2], Prosper-Olivier Lissagaray, an activist intellectual who participated in the Communards’ street fighting, fustigated the Commune’s leaders who “bent their knees to the budget of the bourgeoisie, which was at their mercy,” [3] meaning the Bank of France. More specifically he explained: “All serious rebels have commenced by seizing upon the sinews of the enemy — the treasury. The Council of the Commune was the only revolutionary Government that refused to so.” [4]
All serious rebels have commenced by seizing upon the sinews of the enemy — the treasury. The Council of the Commune was the only revolutionary Government that refused to so

The Commune’s only demand from the Bank of France was to receive the financial advances they needed to maintain a fiscal balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. while still paying wages to the National Guardsmen (Paris’s National Guard was a citizens’ militia in charge of law and order and of military defense). “In this respect, over the 72 days it existed, the Commune received 16.7 million francs: namely the 9.4 million of the city’s assets and 7.3 million actually loaned by the Bank. At the same time, the Versaillais received 315 million francs from the network of 74 branches of the Bank of France,” [5] that is, almost twenty times more. [6]

In a letter about the Paris Commune in 1881, ten years after it had been crushed, Karl Marx shared Lissagaray’s approach. He thought that the Commune had been wrong not to get hold of the Bank of France: “The appropriation of the Bank of France alone would have been enough to dissolve all the pretensions of the Versailles people in terror.” He wrote: “With a small amount of sound common sense, however, they could have reached a compromise with Versailles useful to the whole mass of the people — the only thing that could be reached at the time.” [7]

In Lissagaray’s words, "the members of the Council, in their childish impetuosity, had not seen the real hostages staring them in the face — the bank, the civil register, the domains and the suitors’ fund.” [8]

In 1891, Friedrich Engels similarly wrote: “The most difficult thing to understand is, indeed, the sacred respect with which the Commune reverently stopped before the portals of the Bank of France. This was also a portentous political error. The Bank in the hands of the Commune – that was worth more than ten thousand hostages. It would have meant the pressure of the entire French bourgeoisie on the Versailles government in the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. of peace with the Commune.” [9]

So in 1871 the Paris Commune allowed the Bank of France to finance its enemies, namely Thiers’ conservative government in Versailles and the army that served him. [10]

The Russian revolution, nationalization of banks and cancellation of Russian peasants’ debts in 1917

Among the very first measures that were implemented by the soviets’ government after the October 1917 revolution was the nationalization of banks, which made it possible to cancel the debts peasants owed them. A third of the banks’ capital was held by foreign capitalists, mainly French and German ones. Seven banks had a dominant position and were expropriated as a priority. All bank shares were cancelled. [11] The transfer of private banks to the public sector went hand in hand with the repudiation of foreign debt considered to be illegitimate and odious. [12] The combination of the two measures – expropriating banks and repudiating debt – was an essential move forward for the revolutionary power.

In 1933 President F. D. Roosevelt took a strong measure towards US banks

In the US in March 1933 an unprecedented bank crisis broke out in the wake of the Wall Street crash on October 1929. The newly elected president, Franklin Roosevelt, closed the banks for a week in March 1933 [13] and had the Banking Act (also known as Glass Steagall Act [14]) voted the same year; it enforced the separation between commercial and investment banks.

What a government does or fails to do relative to banks has far-reaching consequences on the course of a country’s history.

Franklin D. Roosevelt’s government thus infringed on the total freedom so far enjoyed by the financial and banking community. In the wake of this decision and under pressure of popular mobilizations in Europe during and after the Liberation at the end of World War II, the old continent’s governments forced a limitation to the freedom of manœuvering enjoyed by capital. As a consequence, during the ensuing thirty years, there was a very limited number of bank crises. This is shown by two US neoliberal economists, Carmen M. Reinhart and Kenneth S. Rogoff, in This Time Is Different: Eight Centuries of Financial Folly (2009). Kenneth Rogoff was the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
’s chief economist and Carmen Reinhart, a university professor, has also held influential positions with the IMF and was chief economist at Bear Stearns. According to those two economists, who definitely do not wish to question capitalism, the low number of bank crises can be explained “by the repression of the domestic financial markets (in varying degrees) and the heavy-handed use of capital controls that followed for many years after World War II.” [15]

In fact, during the post-war boom, the governments of the majority of the most industrialized countries had policies of regulation of capital movements from or to their countries. They also required banks to behave prudently and moved a part of the financial industry to the public sector. According to Reinhart and Rogoff, in order to avoid the risk of bank failures, governments imposed “high requirements for bank reserves, among other devices, such as directed credit and minimum requirements for holding government debt Government debt The total outstanding debt of the State, local authorities, publicly owned companies and organs of social security. in pension and commercial bank portfolios.” [16]

After the Liberation the government nationalized the Bank of France and other banks

In France, the nationalizations of banks at the end of the Second World War must “be seen in the context of the Resistance with ‘a movement from below’ […] the Liberation gave rise to the establishment of workers’ managing committees in certain companies and works councils who originated ‘spontaneous socialisations’.” [17] As Patrick Saurin points out, on 2 December 1945 the Bank of France and four custodian banks were nationalized. The following year, on 25 April 1946, certain insurance companies were also nationalized.

Benjamin Lemoine correctly writes in his book L’ordre de la dette: “At the end of the Second World War and for more than twenty years thereafter, the apparatus of the State, via what was called the Treasury Circuit (Circuit du Trésor), collected a sufficient mass of financial resources to escape from pressure from creditors in most cases. It controlled the activity of the banks and finance and bound its own treasury instruments to those regulations. Similarly, its financing was co-ordinated with national policies fixing currency quantities and orienting the credits set aside for the economy.” [18]

1959: Beginning with the first year of the Cuban revolution, the government appointed Che Guevara president of Cuba’s central bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.


A 5 pesos Cuban banknote bearing Che’s signature.

Placing one of the principal revolutionary leaders at the head of the central bank clearly showed the importance of overseeing the country’s monetary and financial policy for consolidating the victory of the Cuban people over the dictatorial Batista regime. The Cuban revolutionaries wanted to avoid repeating the error made by the Paris Commune. Control over banking aided in accomplishing a series of profound social reforms which, supported by powerful mobilisations of the people, had a positive impact on the beginnings of the Cuban revolution. [19]

France, 1982: Nationalization of the banks

The nationalization plan was part of the Programme Commun de Gouvernement or joint governmental program signed on 27 June 1972 between France’s Socialist, Communist and Radicaux de gauche parties. It was among the “110 Proposals” of presidential candidate François Mitterrand in 1980-81 (Proposal 21). The Nationalization Law of 13 February 1982 was adopted during President Mitterrand’s first seven-year term and promulgated by the government of Prime Minister Pierre Mauroy. Thirty-nine banks were nationalized, along with certain industrial and financial companies. [20] This wave of nationalizations was quickly followed by a swing to the right by Mitterrand and his government. The Banking Law of 24 January 1984 inaugurated a new banking system, built on the model of the universal bank Universal bank Sometimes described as financial supermarkets, universal banks represent a large financial set-up grouping together and covering the activities of commercial (deposit) banks and investment banks while also providing bank insurance. , which ended the separation between retail banks and investment banks and fully opened the door to deregulation. In 1986, the banks were re-privatized. [21]

Europe and the USA: Starting with 2008 following the crisis of the private banks that broke out in 2007–2008, several governments of major countries nationalized very large private banks in order to avoid failure and come to the aid of the banks’ major shareholders. Major banks such as the Royal Bank of Scotland (UK), Hypo Real Estate (Germany), ABN-Amro in Holland, Fortis, Dexia and Belfius in Belgium, Bankia in Spain, Banco Espírito Santo in Portugal and others were nationalized. In not a single one of these cases did the public authorities reorient the activities of the nationalized entities for the benefit of the respective populations. Often, they did not even have any power within the institutions, which remained entirely under the direction of representatives of the private sector. None of these banks were turned into instruments for financing investments by the State. The costs of nationalization were borne by the public finances and resulted in increased public debt. The next phase, as foreseen by the governments acting in the service of capital, will consist in re-privatizing these banks once their finances have been cleaned up and they again become attractive to the private sector. The CADTM and other organizations had promoted another way of responding to the banking crisis: refuse to save the bankers who were responsible for the crisis, expropriate the banks without paying compensation to their major shareholders and transfer them to the public sector under citizen control.

Greece 2015

The decision made by Tsipras and Varoufakis not to take action regarding the banks and not to suspend repayment of the debt had dire consequences for the Greek people. A historic opportunity was missed.

Action should have been taken to deal with the banks as soon as the Tsipras government was put in place. With the ECB ECB
European Central Bank
The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.
taking the initiative to worsen Greece’s banking crisis, action should have been taken as provided for in the Thessaloniki Programme, on the basis of which the Syriza government was elected on 25 January 2015 and which stated: “With Syriza in government, the public sector will take over control of the Hellenic Financial Stability Fund (HFSF) and exercise all its rights over the recapitalised banks. That means that it will make decisions about the way they are run." Keep in mind that in 2015 the Greek State, via the HFSF, was the principal shareholder of the country’s four largest banks, accounting for over 85% of Greece’s entire banking sector. The problem is that despite the numerous successive recapitalizations of Greek banks since October 2008, the State had no real weight in the banks’ decisions since the shares it held did not entitle it to voting rights, since no previous government had made the necessary political decision. That being the case, the Parliament, in conformity with Syriza’s commitments, should have turned the so-called preferential shares (having no voting rights associated with them) held by the public authorities into common shares with voting rights. Then the State, in a perfectly normal and legal way, would have been able to exercise its responsibilities and provide a solution to the banking crisis.

Lastly, three other important measures needed to be taken. Primo, to face the banking and financial crisis that had been exacerbated by the attitude of the Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

(the European Commission, the ECB and the IMF) since December 2014, which noisily warned of bank failures, and by the ECB’s decision of 4 February 2015, [22] the government should have implemented oversight over capital movements in order to end flight of capital abroad. Secundo, Yannis Stournaras should have been replaced as head of Greece’s central bank. Tertio, the government should have set up a parallel payment system.

The decision made by Tsipras and Varoufakis not to take action regarding the banks and not to suspend repayment of the debt had dire consequences for the Greek people. A historic opportunity was missed. That should not be allowed to happen again.

Translated by Snake Arbusto and Christine Pagnoulle


[1Insurrection period in the history of Paris that lasted just over two months, from 18 March 1871 to the “Bloody Week” from 21 to 28 May 1871. The people of Paris refused the French bourgeoisie’s capitulation in front of the Prussian army that had reached Versailles and proclaimed the Paris Commune, with the support of National Guard. Radical social measures were taken, driven by the popular impulse. This was one of the first proletarian revolutions in history.

[2Translated from French by Eleanor Marx Aveling, the first English translation was published by Reeves and Turner, London, 1886.



[5Georges Beisson, “La Commune et la Banque de France”, Association des Amies et Amis de la Commune de Paris 1871 (“The Commune and the Bank of France, Association of the friends Paris Commune of 1871)


[7Letter of 22 February 1881 from Karl Marx to Domela Nieuwenhuis,

[8Prosper-Olivier Lissagaray, op. cit.

[9The Paris Commune: including the “First manifesto of the International on the Franco-Prussian war,” the “Second manifesto of the international on the Franco-Prussian war,” “The civil war in France”, translated by Lucien Sanial, New York: New York labor new company, 1902, Introduction to the German edition, p. 14.

[10Representatives of major Parisian investment banks that ran the Bank of France celebrated the defeat of the Commune through granting shareholders dividends of 300 francs per share, compared with 80 francs in 1870.

[11Edward H. Carr, The Bolshevik Revolution 1917-1923, Vol. 2, London, MacMillan, 1952, chapter 16, “The Economic Order”, p. 132

[12Nathan Legrand and Éric Toussaint, “Russian debt repudiation, 100 years on”,, and for more details, “Russia: Origin and consequences of the debt repudiation of February 10, 1918”

[15Carmen M. Reinhart, Kenneth S. Rogoff, This Time is different. Eight Centuries of Financial Folly, Princeton University Press, 2009, p. 204.

[16Ibid, p. 106

[17Patrick Saurin, “Pourquoi la socialisation du secteur bancaire est-elle préférable au système bancaire privé actuel ?” (“Why is socialization of the banking sector preferable to the current private banking system?”), (in French)

[18Benjamin Lemoine, L’ordre de la dette. Enquête sur les infortunes de l’État et la prospérité du marché, La Découverte, Paris, 2016, p. 18.

[19On the beginnings of the Cuban revolution see Fernando Martinez Heredia - “Du 19e au 21e siècle : une mise en perspective historique de la Révolution cubaine”, (in French). On Che as head of the central bank, see and (in Spanish).

[21Patrick Saurin, “Pourquoi la socialisation du secteur bancaire est-elle préférable au système bancaire privé actuel ?” (“Why is socialization of the banking sector preferable to the current private banking system?”), (in French)

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

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