The Start to the French Depression:
Another country that suffered just as much as the United Kingdom had was France. Causes of their downward spiral were due to an underdeveloped economy. France’s industry was far inferior to Great Britain’s, particularly in farming. Tourism was also a big part of France’s economy, and during this time, many individuals simply did not have the money to travel around the world. France, like the United Kingdom, also suffered to recover from World War I. While not as bad, France relied heavily on German reparations, to pay for reconstruction. Once reparations had ceased, the Depression in France took place. Starting in 1931, France did not recover from the Depression until the remainder of the decade. During this time, in 1934, a riot took place that overthrew the current French government. A socialist group, named the Popular Front, took control of the government under the leadership of Leon Blum. As a result of the mixed new government, France was the last country to fully recover from the Great Depression.
Impacts of the Depression:
Tourism declined sharply as Americans and other foreigners could no longer aford foreign trips. And tourism was an important industry. Exports also declined. Many important French exports (perfumes, wine, chese,and food and other high-end foods) were luxury goods that Americans and others could no longer afford. Orders were cancelled and prices fell. The overall impact was to serious reduce French export income. Unemployment increased to 15 percent and industrial production declined 25 percent.
The French depression is considered to have been relatively mild (Hautcoeur,1997).
At its maximum,unemployment did not exceed one
million,less than 5% of the 1930 workforce.
The fall in production was also
relatively modest and never reached 20% of the 1929 output in commerce and manufactures. The depression in France was not accompanied by a banking crisis,as only one major bank failed. Starting in 1931,many countries decided to devaluate their currency. The pound sterling was devalued in 1931 and the U.S. dollar in 1933.
As stressed by Asselain (1995),for political reasons French governments rejected the options of devaluation and capital controls. Despite the inﬂow of gold (one-third of the world stock of gold was in France in 1933) and the relative price increase that followed, France did not devalue.
Furthermore,the government led by Pierre Laval
decided in 1935–1936 to implement a strict deﬂationary policy. A 1935 act reduced by 10% all public expenditures,including civil servant compensation. Some controlled prices were cut (bread,housing rents) and taxes were increased.
The undetrended measures presented in Table III show the collapse of exports and imports,the relative mildness of the depression from 1930 to 1932 and the long period of output stagnation from 1932 to 1935,the trough in 1936,and then the recovery at the steady growth rate.
A financial Crisis:
In 1934-35, the Pierre-Étienne Flandin government allowed a less restrictive policy allowing short-term indebtedness. The Banque de France lost 15 per cent of its reserves and the government was replaced by one led by Pierre Laval, who installed a provisionally deflationist policy before himself accepting a public deficit. The franc ran into a new crisis
Larger numbers of unemployed partially were prevented by the reduction in working hours, part of the struggle of the labour movement to establish better living conditions. The productivity of France's industry declined, as did prices for many products, and wages/salaries. A fact contributing to relatively low unemployment figures was the large sector of the population still engaged in agriculture. The STAVISKY AFFAIR of 1934, a financial scandal involving political figures, only gave legitimation to critics from the opposition of the far left and far right. About 2,000 protesters threatening to molest French...
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