Monaco's Prince Rainier Dead At 81

She was a Hollywood star. He was a European prince. They wed, capturing hearts worldwide, but didn't live happily ever after.

The final chapter in the fairy tale and tragedy that was Grace Kelly and Prince Rainier III closed Wednesday with the monarch's death at age 81.

Prince Albert II, their only son, takes over the principality no larger than New York City's Central Park. Some fear Monaco's golden days will end with Rainier.

"It was a life, a way of living, of managing the principality," said Odette Sainsaulieu, a 66-year-old resident who went to the hospital overlooking Monaco's yacht-filled harbor where Rainier died at 6:35 a.m., with Albert at his side.

Sainsaulieu said she wanted "to say a final goodbye."

Europe's longest-serving monarch, in power for 56 years, Rainier was the only ruler many of Monaco's 32,000 residents had ever known.

Monaco is a very different place from the one Rainier inherited, reports CBS News Correspondent Elaine Cobbe. He increased its stature, its wealth and its size, by reclaiming land from the sea. And by marrying Kelly, he brought glamour — and the jet set — to the tiny state.

A veritable father-figure to some, he dragged Monaco into the modern age, worked to overcome its reputation as "a sunny place for shady people," while preserving much of its Mediterranean charm and royal trappings.

But he also endured the tragedy of Princess Grace's death in a car accident on Sept. 14, 1982, and the indignity of seeing their children become the target of paparazzi who pursued their divorces and dalliances. Rainier never remarried — and often cut a lonely figure in the latter years of his life.

"She was always present and ready to do things either with me or for me if I couldn't do them," Rainier said of Grace in a 1983 interview. "Let's say the change is that we worked as a team and the team has been split up."

Albert, 47 and groomed from birth to succeed Rainier, has been spared the tabloid torment to some extent — partly because he has yet to marry. But that, too, was a source of consternation for Rainier, who worried about continuing his ancient Grimaldi family line.

"Prince Albert possesses all the qualities to one day become the next sovereign prince," Rainier said in an interview with the French daily Le Figaro published in 2000. "But first I want him to have descendants because this is essential for the future of the principality and that of our family."

Multilingual, U.S.-educated and a five-time bobsledding Olympian, Albert already had taken over royal powers — but not the throne — last Thursday because Rainier, in intensive care with heart, breathing and kidney problems, was too sick to rule.

Rainier's funeral will be held at midday April 15 at the 19th-century Monaco Cathedral where he and Princess Grace wed. He is expected to be buried alongside her.

Rainier's death will briefly transform this Mediterranean enclave noted for high-end fun. The government said there would be no musical entertainment open to the public until after Rainier is buried.

Flags will be kept at half-staff until after the funeral. The royal family and the palace will hold a three-month period of mourning. Civil servants will mark an official mourning period of one month.

Monaco's famous Monte Carlo casino was closed Wednesday and will be closed again the day of the funeral, as will schools and public offices. Monaco's soccer team postponed a weekend match against French First Division rival Lille.

"Each of us feels like an orphan because the principality has been marked by his imprint over the 56 years" of his reign, said Patrick Leclercq, head of Monaco's government.

Rainier's doctors called Albert about 30 minutes beforehand to tell him the end was near, the palace said. It did not say if Rainier's daughters, Princesses Caroline and Stephanie, were with him when he died.

Christopher Le Vine, whose mother is Princess Grace's youngest and last surviving sibling, said Albert and Caroline called to inform him of Rainier's death.

"They're doing remarkably well under the circumstances," he said.

He said he and other Philadelphia-area relatives plan to go to Monaco for Rainier's funeral. He said the prince had a "unique sense of humor" but he expects Albert to make his own imprint on the French-speaking principality.

"It's not something that he hasn't anticipated over these many years. He will make his own space there," Le Vine said.

Because Albert has no heirs, Monaco changed its succession law in 2002 to allow power to pass from a reigning prince who has no descendants to his siblings. Albert's sisters have children.

From his palace's sandy-colored walls, perched high on a cliff that dominates Monaco, Rainier could survey the domain he turned from a Riviera backwater into a playground for the rich and famous. Its winding streets are turned into a racetrack every spring for the Monte Carlo Grand Prix.

Under Rainier, Monaco expanded its territory by 20 percent with land reclamation from the sea — allowing the government to crow that Monaco was the only country to grow so much by peaceful means.

Rainier oversaw the construction of a new port, an artificial beach, a sparkling culture center and an underground railway station. A new breakwater project to allow large yachts and cruise liners to dock in the main harbor cost $420 million.

Monaco worked to overcome a reputation as a haven for questionable financial transactions, secretive bankers, drug barons, money-launderers and tax dodgers.

In 1993, Monaco gained the political recognition Rainier sought with its entry into the United Nations.

Last year, having enacted reforms in a series of sectors, ranging from electoral rights to money laundering, Monaco joined the Council of Europe, Europe's foremost human rights organization.

After the Sept. 11 attacks, Monaco began investigating its banks and financial institutions for terror-related funds. It also signed onto the U.N.'s International Agreement for the Repression of Terrorist Funds, pledging to detect and freeze ill-intended assets.

When Rainier assumed the throne on May 9, 1949, Monaco's economy was driven by its roulette tables: Gambling proceeds represented 45 percent of government revenue. Now, casinos contribute less than 4 percent and Monaco relies economically on industries like pharmaceuticals, plastics, banking and tourism.

"I am like the head of a company," Rainier once said.

In an outpouring of condolences, world leaders praised Rainier's leadership.

He "remained dearly loved by his people and deeply respected by his peers as well as the world community," said U.N. Secretary-General Kofi Annan.

Britain's Queen Elizabeth II sent a message of condolence. Rainier's death means the queen, who acceded to the throne in 1952, becomes the longest-serving monarch in Europe.

Rainier was the 30th descendant of Otto Canella, who founded the house of Grimaldi. Born May 31, 1923, the son of a princess born out of wedlock, Rainier was heir to a family with a stormy past — a harbinger of scandals to come.

The marriage of his great-grandfather Prince Albert to Lady Mary Douglas Hamilton was dissolved in 1880. Albert's son, Prince Louis II, had a youthful romance with a French girl in Algeria that produced Princess Charlotte, Rainier's mother.

In 1920, Charlotte married Rainier's father, Prince Pierre de Polignac. Rainier was born three years later, shortly before his parents divorced.

Educated in England, Switzerland and France, Rainier undertook military service near the end of World War II. He became Monaco's ruler at age 26 when his grandfather died in 1949.

As a youth, Rainier had a long romance with French actress Gisele Pascal, became a fan of jazz and studied oceanography, later helping to finance Jacques Cousteau's Oceanographic Institute in Monaco. He also developed a love of fast cars.

He met Kelly in 1955 when he was 31 and she was the 25-year-old star attraction of the Cannes Film Festival. Kelly already had an Oscar from the 1954 film "The Country Girl," one of only 11 movies she made.

In January 1956, they announced their engagement and were married in April. Ten months later they had the first of their three children, Caroline. Albert's birth came the following year, on March 14. Stephanie was born Feb. 1, 1965.

In the years following Princess Grace's death, Monaco's royal family increasingly became tabloid grist.

Princess Caroline's rocky first marriage ended in 1980, and her second husband was killed in a boating accident in 1990. Her third husband, German prince Ernst August of Hanover, was ordered to pay more than US$440,000 in 2001 for yelling at an editor of a newspaper that reported he had urinated in public.

Stephanie had two children by a former bodyguard, then married him in 1995. The marriage lasted 18 months, ending after he was photographed cavorting poolside with a Belgian stripper. She had a third child in 1998 and refused to reveal the name of the father. She married a Portuguese circus acrobat in 2003; the palace has declined to say if they are still together.