1 - The depression in France

Summary

French economic performance in the interwar years was sharply divided by the onset of the depression in 1930. The 1920s were a period of strong growth as France rebuilt war-damaged areas, depreciation of the franc encouraged exports, and a “neocapitalist” economic reform movement pressed for the modernization of French industry. The arrival of the depression in 1930 has been described as an “economic Sedan” halting the modernization of the French economy. Late to arrive in France, the slump persisted through the decade, weakening and demoralizing the country as it faced the threat and then the reality of another war.

Two facets of the depression in France are treated in this chapter. The first is the extent to which monetary factors account for France's resistance to the economic crisis in 1929 and 1930 and for the persistence of the depression through the rest of the 1930s. The franc Poincaré, undervalued by its de facto stabilization in 1926 and overvalued after the fall of the pound sterling in 1931, has played the principal role in most accounts. There are difficulties with this interpretation that suggest the need for greater attention to domestic factors, particularly fiscal policy, in order to explain the peculiarities of the slump in France. The first section of this chapter reviews French economic performance between the wars and the debate on the importance of the franc Poincaré to French experience of the depression.

The second section examines the French reaction to the onset of the crisis, with particular attention to its monetary aspects. Perceptions of why the depression occurred and how it came to France influenced the means by which policy makers sought to restore prosperity.