The Compagnie du chemin de fer Grand-Central de France (Grand-Central Railway Company of France), commonly known as the Compagnie du Grand-Central, or more simply the Grand-Central, was a railway company which operated in France from 1853 to 1857.
Recalling the name of the English Grand Junction Railway (1833–1846) or the Grand Trunk Railway Company of Canada (1852–1919), the Grand-Central existed for a brief period in the history of French railways that was marked by a government keen to instigate public works, notably the extension of the railway network. The new Second Empire regime decided to give railway companies a long-term monopoly over a specific geographical region in return for a greater involvement of the State in constructing a network of branch lines within these territories.
The Grand-Central was disadvantaged by having an isolated network in a rugged geographical area which had limited economic opportunities. It lacked a terminus in Paris or a main line to the capital that benefited from the feeds of branch lines of the type that existing companies had already built. It soon suffered from the manoeuvres of key players (specifically government, competing companies, and bankers), and from the financial crisis that began in 1856.
The Grand-Central story is also a consequence of the business climate of the era and the tussle between the Pereire brothers, with their innovative financial methods executed through the Crédit Mobilier bank, and James de Rothschild and the powerful Banque de France....
These handicaps led to its rapid failure and dismemberment.
Background
The birth of the Second Empire led to the resumption of business confidence and a revived interest in railway securities. Several figures in the new regime had interests in Central France, including the Dordogne deputy Pierre Magne, who was Minister of Public Works and subsequently Minister of Finance and was keen on a line from Limoges to Agen, and Charles de Morny, a deputy from Puy-de-Dôme and president of the Corps Législatif, who owned a sugar factory near Clermont-Ferrand.
Napoleon III decided that economic expansion could be stimulated by encouraging the private sector to invest in major projects, and in particular the extension of the railway network. The Ponts & Chaussées administration was now allowed to grant 99-year concessions and underwrite the bond coupons of the companies behind these projects.
The new regime promoted a scheme of networks centred on a geographical region and served by a main line from which branch lines would extend. This doctrine was set out by de Morny in 1852 during the debate on an act relating to the Lyon-Méditerranée railway. The regime would award railway concessions competitively, and would also use legislation to impose its will. This would ensure that regions that were not immediately attractive to major investment could be serviced, whilst exercising a degree of control of the companies.
The railways were expected to become more efficient through the operation of coherent routes that avoided transshipment costs and delays between networks; overheads would be reduced and traffic fluctuations could be absorbed. Moreover, thanks to the "network" effect, companies could reduce tariffs to stimulate new traffic. Finally, sustainable long-term revenues would attract investor confidence and assist companies to raise capital.
The rational development of a network within an exclusive region was seen as beneficial to the development of the economy of the region and to the nation as a whole.
This policy was in contrast to that carried out under the July Monarchy, which "feared that the existence of too powerful companies would be a danger to the state and to public power. Hence its preference for fragmented lines and to weaken their grip."
The ambitions of the Paris-Orléans Railway
Context
From the inception of the July Monarchy, a north-south link lay at the heart of all of schemes promoted by railway interests (the state, companies and bankers). "A revolution in the speed, regularity and capacity of transport is imminent. It is running late and has made its mark abroad before it has in France, leading to an attempt to divert the Mediterranean-North Sea traffic to Trieste and Genoa at the expense of Marseille. It is therefore imperative to build a major Le Havre-Paris-Lyon-Marseille link as quickly as possible."