The Great Depression in France started in about 1931 and lasted through the remainder of the decade. The crisis started in France a bit later than other countries.[1] The 1920s economy had grown at the very strong rate of 4.43% per year, the 1930s rate fell to only 0.63%.[2] The depression was relatively mild compared to other countries since unemployment peaked under 5%, the fall in production was at most 20% below the 1929 output and there was no banking crisis.[3]
The banking crisis in France was driven by a flight-to-safety away from banks, which led to a severe and persistent credit crunch.[4] However, the depression had some effects on the local economy, which can partly explain the 6 February 1934 crisis and, even more so, the formation of the Popular Front, led by the socialist SFIO and its leader, Léon Blum, who won the 1936 elections.
1920s economic crisis
Like the United Kingdom, France initially struggled to recover from the devastation of World War I and tried, without much success, to recover war reparations from Germany. However France had a more self-sufficient economy than Britain. In 1929, France seemed an island of prosperity for three reasons. One was that the country was traditionally wary of trusts and big companies. The French economy was especially founded in small and medium-sized businesses that were not financed by shares. Also, unlike the English-speaking world, particularly the United States, the French invested little on the stock exchange and put their confidence into gold, which was a currency of refuge during the crisis of 1929. Gold had played the same role in the First World War, one reason that explained the great French attachment to it. Finally, France had had a positive balance of payments[5] for some years thanks[neutrality is disputed] mainly to invisible exports such as tourism. French investments abroad were numerous.
The German reparations decided by the Treaty of Versailles in 1919 brought in large amounts of money which served principally to repay war loans to the United States.[5]:220 Reparations payments ended in 1923. In January of that year, Germany defaulted on its payments and the French prime minister, Raymond Poincaré, invoked a clause of the Versailles Treaty and sent troops to occupy the Ruhr valley in the hope of enforcing payment. Germany responded by flooding the area with inflated money, ruining its currency and denying France any hope of full reparations. Poincaré accepted an agreement mediated by the United States in which it received smaller payments, but Poincaré's government fell soon afterward.
While the United States experienced a sharp rise in unemployment, France had almost none. Much of that was due to a simple lack of manpower; at the end of the war, France had 1,322,000 dead and three million wounded, almost 4,000,000 casualties. One in four of the dead was younger than 24. That in turn lowered the birth rate, so that by 1938 France still had only half the number of 19- to 21-year-olds it would have had had the war not happened.[6] But whatever the causes of full employment, confidence in the government was high. The French economy was stronger than those of its neighbors, notably because of the solidarity of the franc. The introduction of the US economic model, inspired particularly by Ford, ended suddenly and, with it, the modernization of French businesses. Everything seemed to favour the French; production didn't weaken before 1930, particularly in primary materials, and the country was the world's leading producer of iron in 1930. France felt confident in its systems and proud of its vertu budgétaire, in other words the balancing of the budget, which France had managed more or less for nearly a decade.
In 1927, France gained from the world crisis in becoming the world's largest holder of gold, its reserves growing from 18 billion francs in 1927 to 80 billion in 1930.
Le Figaro said: "For our part let us rejoice in our timid yet prosperous economy as opposed to the presumptuousness and decadent economy of the Anglo-Saxon races."[7]
Problems of financial policy
There was a further contrast in the way France, the UK, and the US viewed their economies. The "Anglo-Saxon model" encouraged growth of the money stock, but France saw the Depression as a necessary evil that "purged" the excess liquidity in the world economy and pushed indebted companies into failure.[5]:230
Successive governments maintained restrictive policies until 1934, and interest rates were kept high to maintain the attractiveness of the franc. The absence of contracyclical policies kept the state budget in balance.
In 1934 and 1935, the Pierre-Étienne Flandin government had a less restrictive policy allowing short-term indebtedness. The Banque de France lost 15 percent of its reserves, and the government was replaced by one led by Pierre Laval, who installed a provisionally deflationist policy before he accepted a public deficit. The franc ran into a new crisis.[5]:226
Laval tried in 1935 to reduce salaries in an effort to lessen unemployment, but ran into the resistance of unions in the public sector.[5]:228
The inability of French production to take off was in contrast to the experience of the United Kingdom, which had devalued in 1931. Devaluation was so unpopular in France that it occurred only in 1936.[5]
The winter I spent on the streets - the winter of '32-33 - was no milder nor harder than any other winter; the winter cold is like labour pains - whether it lasts for a longer or shorter period of time there is always the same amount of pain. That particular winter, it snowed and it froze; thousands of young men, forced out of their jobs by the crisis, struggled on to their last penny, to the end of their tether then, in despair, abandoned the fight... On street benches and at métro entrances, groups of exhausted and starving young men would be trying not to die. I don't know how many never came round. I can only say what I saw. In the rue Madame one day I saw a child drop a sweet which someone trod on, then the man behind bent down and picked it up, wiped it and ate it.[8]
From depression to war
The distress of the population had political consequences. A riot on 6 February 1934 led to the fall of the government and a nation that had traditionally leaned to the right[citation needed] elected the socialist Popular Front government in 1936.
The Popular Front, an alliance of Socialists and Radicals with support outside the government of the Communists, was led by Léon Blum. The Popular Front introduced many measures such as the 40-hour working week and holidays with pay, but Blum felt handicapped from being able to introduce more than limited changes to the economy because of his dependence on the more right-wing Radicals. That did little to placate a population anxious for change, and a wave of strikes, involving two million workers,[9] caused factories to be occupied. Communist Party membership rose to 300,000 in 1937.
On the night of 7–8 June 1936, employers and unions signed the Matignon Agreements by which they raised wages by 7 to 15 percent to increase workers' buying power, stimulate the economy and bring an end to the strikes. Blum brought in measures to control cereal prices, to insist for the Banque de France to place the national interest above that of the shareholders and nationalise the armaments industry. The left wanted further change, and the right was still displeased and believed that state involvement in a capitalist economy would bring disaster.
The Radicals would not accept currency controls, and the unrest resulting in capital fleeing abroad, which weakened the economy. Employers trying to minimise the effects of the Matignon Agreements created more social tension and, in turn, a further flight of capital.
Devaluation of the franc by 30% became inevitable, despite earlier government assurances that it would not happen. In January 1937, Blum went further and announced "a pause" to social reforms. The Senate refused to give him emergency powers to cope with the recession, and he resigned on 20 June 1937. The first Popular Front began to fall apart, and a second had even less success.
French President Lebrun called on the Radical leader, Édouard Daladier, to form a new government without the Socialists. Daladier tried to rely on liberal economics to rescue or keep afloat the economy in a worldwide sea of financial difficulties. Employers and police acted harshly against strikers and were determined to root out "troublemakers". In 1938, the Senate gave Daladier the emergency powers that Blum had been denied, and the government favoured employers over workers in industrial disputes, particularly in companies that had come close to coming under the control of their workers.[10]
Under Daladier, economic conditions slightly improved,[citation needed] despite a backdrop of growing, increasingly vocal communist and fascist movements. The gains, however, were greatly caused by the growth of the armaments industry. On 3 September 1939, France declared war on Germany, which had invaded Poland.
Following their defeat in World War I, the Central Powers agreed to pay war reparations to the Allied Powers. Each defeated power was required to make payments in either cash or kind. Because of the financial situation in Austria, Hungary, and Turkey after the war, few to no reparations were paid and the requirements for reparations were cancelled. Bulgaria, having paid only a fraction of what was required, saw its reparation figure reduced and then cancelled. Historians have recognized the German requirement to pay reparations as the "chief battleground of the post-war era" and "the focus of the power struggle between France and Germany over whether the Versailles Treaty was to be enforced or revised."
The French Third Republic was the system of government adopted in France from 4 September 1870, when the Second French Empire collapsed during the Franco-Prussian War, until 10 July 1940, after the Fall of France during World War II led to the formation of the Vichy government.
André Léon Blum was a French socialist politician and three-time Prime Minister of France.
The Radical Party, officially the Republican, Radical and Radical-Socialist Party, is a liberal and social-liberal political party in France. Since 1971, to prevent confusion with the Radical Party of the Left (PRG), it has also been referred to as Parti radical valoisien, after its headquarters on the rue de Valois. The party's name has been variously abbreviated to PRRRS, Rad, PR and PRV. Founded in 1901, the PR is the oldest active political party in France.
Édouard Daladier was a French Radical-Socialist (centre-left) politician, and the Prime Minister of France who signed the Munich Agreement before the outbreak of World War II.
Camille Chautemps was a French Radical politician of the Third Republic, three times President of the Council of Ministers.
The Young Plan was a 1929 attempt to settle issues surrounding the World War I reparations obligations that Germany owed under the terms of Treaty of Versailles. Developed to replace the 1924 Dawes Plan, the Young Plan was negotiated in Paris from February to June 1929 by a committee of international financial experts under the leadership of American businessman and economist Owen D. Young. Representatives of the affected governments then finalised and approved the plan at The Hague conference of 1929/30. Reparations were set at 36 billion Reichsmarks payable through 1988. Including interest, the total came to 112 billion Reichsmarks. The average annual payment was approximately two billion Reichsmarks. The plan came into effect on 17 May 1930, retroactive to 1 September 1929.
The Hôtel Matignon is the official residence of the Prime Minister of France. It is located in the 7th arrondissement of Paris, at 57 Rue de Varenne. "Matignon" is often used as a metonym for the governmental action of the Prime Minister of France. The current tenant has been Prime Minister Gabriel Attal since he took office on 9 January 2024.
The Popular Front was an alliance of French left-wing movements, including the communist French Communist Party (PCF), the socialist French Section of the Workers' International (SFIO) and the progressive Radical-Socialist Republican Party, during the interwar period. Three months after the victory of the Spanish Popular Front, the Popular Front won the May 1936 legislative election, leading to the formation of a government first headed by SFIO leader Léon Blum and exclusively composed of republican and SFIO ministers.
The history of France from 1914 to the present includes:
The Occupation of the Ruhr was a period of military occupation of the Ruhr region of Germany by France and Belgium from 11 January 1923 to 25 August 1925.
The Cartel of the Left was the name of the governmental alliance between the Radical-Socialist Party, the socialist French Section of the Workers' International (SFIO), and other smaller left-republican parties that formed on two occasions in 1924 to 1926 and in 1932 to 1933. The Cartel des gauches twice won general elections, in 1924 and in 1932. The first Cartel was led by Radical-Socialist Édouard Herriot, but the second was weakened by parliamentary instability and was without one clear leader. Following the 6 February 1934 crisis, President of the Council Édouard Daladier had to resign, and a new Union Nationale coalition, led by the right-wing Radical Gaston Doumergue, took power.
The economic history of France involves major events and trends, including the elaboration and extension of the seigneurial economic system in the medieval Kingdom of France, the development of the French colonial empire in the early modern period, the wide-ranging reforms of the French Revolution and the Napoleonic Era, the competition with the United Kingdom and other neighboring states during industrialization and the extension of imperialism, the total wars of the late-19th and early 20th centuries, and the introduction of the welfare state and integration with the European Union since World War II.
The Lausanne Conference of 1932, held from 16 June to 9 July 1932 in Lausanne, Switzerland, was a meeting of representatives from the United Kingdom, France, Italy, Belgium, Japan and Germany that resulted in an agreement to lower Germany's World War I reparations obligations as imposed by the Treaty of Versailles and the 1929 Young Plan. The reduction of approximately 90 per cent was made as a result of the difficult economic circumstances during the Great Depression. The Lausanne Treaty never came into effect because it was dependent on an agreement with the United States on the repayment of the loans it had made to the Allied powers during World War I, and that agreement was never reached. The Lausanne Conference marked the de facto end of Germany's reparations payments until after World War II.
The 6 February 1934 crisis was an anti-parliamentarist street demonstration in Paris organized by multiple far-rightist leagues that culminated in a riot on the Place de la Concorde, near the building used for the French National Assembly. The police shot and killed 17 people, nine of whom were far-right protesters. It was one of the major political crises during the Third Republic (1870–1940). Leftist Frenchmen claimed it was an attempt to organize a fascist coup d'état. According to historian Joel Colton, "The consensus among scholars is that there was no concerted or unified design to seize power and that the leagues lacked the coherence, unity, or leadership to accomplish such an end."
The Riom Trial was an attempt by the Vichy France regime, headed by Marshal Philippe Pétain, to prove that the leaders of the French Third Republic (1870–1940) had been responsible for France's defeat by Germany in 1940. The trial was held in the city of Riom in central France, and had mainly political aims – namely to project the responsibility of defeat onto the leaders of the left-wing Popular Front government that had been elected 3 May 1936.
Pierre Jules Cot, was a French politician and leading figure in the Popular Front government of the 1930s.
The Great Depression (1929–1939) was a severe global economic downturn that affected many countries across the world. It became evident after a sharp decline in stock prices in the United States, leading to a period of economic depression. The economic contagion began around September 1929 and led to the Wall Street stock market crash of 24 October. This crisis marked the start of a prolonged period of economic hardship characterized by high unemployment rates and widespread business failures.
Interwar France covers the political, economic, diplomatic, cultural and social history of France from 1918 to 1939. France suffered heavily during World War I in terms of lives lost, disabled veterans and ruined agricultural and industrial areas occupied by Germany as well as heavy borrowing from the United States, Britain, and the French people. However, postwar reconstruction was rapid, and the long history of political warfare along religious lines was finally ended.
The French Section of the Workers' International was a political party in France that was founded in 1905 and succeeded in 1969 by the modern-day Socialist Party. The SFIO was founded during the 1905 Globe Congress in Paris as a merger between the French Socialist Party and the Socialist Party of France in order to create the French section of the Second International, designated as the party of the workers' movement.
References
↑ Henry Laufenburger, "France and the Depression," International Affairs (1936) 15#2 pp. 202–224 JSTOR2601740
↑ Jean-Pierre Dormois, The French Economy in the Twentieth Century (2004) p 31
↑ Price, Roger (1999); A Concise History of France, Cambridge University Press, UK, p245
Further reading
Beaudry, Paul, and Franck Portier. "The French depression in the 1930s." Review of Economic Dynamics(2002) 5#1 pp: 73–99; Uses mathematics and econometrics
Bridji, Slim. "The French Great Depression: A business cycle accounting analysis." Explorations in Economic History (2013) 50#3 pp: 427–445; Uses econometrics
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