A small mystery solved
How much was Pictet’s initial capital of 125,000 Geneva pounds (livres argent de Genève) worth in today’s money? And was it something to do with the British pound sterling?
After the Revolution, the French Directory had imposed the French franc on Geneva as the main currency of exchange. Had Pictet’s founders engaged in a minor act of rebellion in not using the currency of the occupying forces? The truth is probably more prosaic. The livre argent was one of the two accounting currencies used in Geneva. It first appeared in the 16C, mainly to facilitate trade with foreign countries1. The other accounting currency – the florin – was mostly used by individuals and by the city treasury. Accounting currencies were necessary to compare prices by expressing various coinages with differing silver or gold purities in terms of an equal weight of silver.
Despite the French occupation between 1798 and 1813, this currency remained in intermittent use until 1838, when the franc de Genève was adopted – some years before emergence of the Swiss franc itself. The livre argent, or livre courante, de Genève, had gradually replaced the French livre tournois on which it was based from the beginning of the 17C. The livre argent was divided into 20 shillings = 20x12 pennies, as was the British pound sterling. But its value was related to French denominations then in circulation.
There are three main ways to calculate the purchasing power of a currency over time: first, based on the gold price, second on a price index, and third according to per capita income. This last is probably the most accurate, as it also takes into account rising productivity2. This last basis, using a multiplier of 250, would convert 125,000 Geneva pounds into an initial —and substantial — capital investment of around 30 million Swiss francs in today’s money.
1 Eugène Demole, Histoire monétaire de Genève de 1535 à 1848, Genève: Slatkine, 1978, pp54-55
2 Youssef Cassis, Les Capitales du Capital: Histoire des places financières internationales (1780 -2005), Genève: Slatkine, 2005, p350