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History HL Research Essay Discuss and evaluate the effects of the Great Depression on France

The Great Depression is a name for a worldwide economic depression lasting from 1929 to the late 1930s or 1940s, depending on individual countries. Depression in economical terms is defined as a severe downturn in economic activity. These are considerably worse than recessions.1. It is thought that it started with the crash of the stock market in USA on Black Tuesday 29th October 1929, but some economics and historians debate whether this is a start or just a symptom of the Great Depression. Other major causes and symptoms of such a severe economic crisis were the quantities of gold stockpiled by particular countries, large number of banks failing during the 1930s, the reduction in money spent by people and huge international trade barriers placed by governments. During this period it is estimated that international trade reduced by as much as 33% because of various factors. Even though the mentioning of the Great Depression indicates and is connected mostly with the USA it was a global event and a global economic depression. Every nation was in some way affected by the Great Depression, some more, some less, but it is considered that Chinas silver standard contributed to making this country almost completely avoid the Great Depression. Countries in Europe experienced the depression differently and tried to fight it off differently. It also significantly affected international relations and policies, political situations of countries, changing the public opinion and the types of governments. The most obvious examples are countries were there was a rise of extreme nationalistic, militaristic or fascistic groups like Germany, Italy, Japan and so on. For countries like France and Britain it changed their economies significantly and made the public lose faith in capitalism as the best economical system.

The French recovered their self-confidence after WWI as they did manage to defeat their long lasting enemies, the Germans. But French economy was devastated during WWI and much of its industrial zone was, for the most of the war, under German control which made imminent recovery very difficult. Also it had huge war debts and lack of manpower and labor force which further slowed recovery. But France would manage to rebuild its economy during the roaring 1920s, mostly through the aid of US investment and German war reparations. The Great Depression came late in France compared to other countries and its economy was mainly holding out until 1931. The French economy at this period can be considered archaic compared to economies of other developed countries like Britain, Germany or USA. There was practically no concentration of capital and agriculture, the country's strength for centuries, was totally unmechanized. Three-quarters of French farms in the 1930s were of less than 10 hectares. 2 France was also gaining significant income from its tourism and once the depression started this part of French economy was hit hard, but still France was not in such a bad position as other countries at the beginning of the Great Depression. In France the Great Depression caused a rise of welfare capitalism and socialism, in which radical, communistic and socialistic parties increased their powers and influences. The main idea of the French government was to keep up the high value of franc and make it attractive for others. But what was helping the French economy were the war reparations they were receiving from Germany and used them to pay off their war loans to the USA, but still these reparations alone were not enough and further USA investments was needed to pay off the huge debts. So when the Great
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Depression hit the USA and Germany, and foreign investments from USA dropped to almost zero, this cycle of money was terminated and this caused many problems for France in paying off its debts. The French government, as was shown throughout the Third Republic of France, was very much weak and the decisions they made were largely inefficient and not enough to fight off an economical crisis as big as the Great Depression. The government rarely wanted to implement any major changes and devaluate the franc as many other countries did with their values. The government also insisted on maintaining the gold standard and started buying off huge quantities of gold, mainly because this kind of action worked during WWI. Gold standard meant that the value of a nations currency depended by the amount of gold they had stored in their reserves, about 40% was required to cover the value of the currency. But the government, even though it had huge quantities of gold to back it up, did not inject more money into the French economy. This caused a reduction of money available for loans and investments throughout the country and the world, and made the French economy to stagnate and change very slowly which further explains why it took so long for the Great Depression to significantly affect France. Another major difference in how the Great Depression affected France differently than other countries is in the fact that even though in the world unemployment rates quickly soared high, in Germany by early 1932 it had reached 6 million workers, or 25 percent of the work force3, French employment rates fell by a much smaller amount. The reason for this was the overall lack of manpower in France after WWI in which at the end of the war, France had 1,322,000 dead and three million wounded. One in four of the dead was younger than 244. This means that there was also a reduced natality rate which further decreased the manpower of France and thus, much less people lost their jobs and many remained employed during the early stages of the Great Depression. The Great Depression also caused major political and social changes in many countries over the world, as well as in France.

The main idea by which the French government was acting during the 1930s was 'welfare capitalism' in which, government assumed ultimate responsibility for promoting a reasonably fair distribution of wealth and power and for providing security against the risks of bankruptcy, unemployment and destitution.5 This in the end and did contribute to the rise of the left, radical and socialism parties and the collapse of the long favored right. From a political standpoint, the decades of the 1930s started with a great deal of political instability. For example, from mid-1932 to February 1934, France was governed by total six cabinets. The biggest change came on the 6th of February 1934 when antiparliamentary far-right leagues overthrew the current second Cartel des gauches (a center-left coalition government).6. Even though the 'left' part of the government was overthrown, the riots did not succeed in overthrowing douard Daladier's Radical-Socialist government. In the end these riots caused an anti-fascist movement to be created in France and would later help the Popular Front party lead by Lon Blum to come to power in 1936. The Popular Front (french: Front populaire) was an alliance of left-wing movements which included several radical, socialist and communist parties. Lon Blum's government lasted from June 1936 to June 1937 and after him came a period of very rapid and numerous exchanges and replacements at the head of the French government. The Popular Front dissolved in 1938 confronted by many troubles caused by the Spanish Civil War and the effects of the Great Depression which were devastating the nation's economy because the government was unable to stop it. After this, Radical leader Edouard Daladier again came to power in France and formed a new government without the Socialists. His economic decisions and actions helped improve economic conditions of France, but this was mostly due to the growth of armaments

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industry because of the feeling of an impending war with Germany to whom France and did declare war in September 1939. As seen the Great Depression caused numerous changes in the political situation of France with several parties coming to power but soon losing it and dissolving. In the end the Great Depression further showed the weak governmental power of the French Third Republic and contributed to its demise during and after the WWII. The French depression is considered to be relatively mild.7 Even thought the value of 'franc' was slowly devaluated during the 1920s, in 1928 its devaluation was completely stopped by the French government and would remain in this condition for almost a decade. During the Great Depression despite the huge gold inflow created by the enormous amounts of gold which the French government was buying off, the government did not devaluate the value of 'franc' and kept it high. Furthermore, during 1935-36 the government implemented a strict deflationary policy in which all public expenditures were reduced by 10%, some controlled prices were cut, mostly for necessity goods like bread, and taxes were increased. When in 1936 Socialists, lead by Leon Blum, came to power, there were many changes in wages and working hours in the labor market of France. The working hours per week were reduced from 48 to 40 and wages for workers were increased. Also the workers were given two weeks of paid holidays. During this time there was also a nationwide strike movement resulting in the signing of The Matignom agreements(French: Accords de Matignom) between the French government, employers and labor. In these agreements not only were the wages increased by 12% but the French workforce gained significant advantages of which the most important ones were the removal of all obstacles to union organization and the legal right to strike. All these changes came during the Great Depression and were majorly caused by it. Also at this time the French franc was finally devaluated by 30% following other countries which also devaluated their currencies, but done so much earlier. Its interesting that in general the sooner the countries devaluated their currencies the better off they were in the future dealings with the Great Depression. As already mentioned, during the Great Depression, the French government implemented high tariffs on imported goods in order to protect their own production and goods. This was done by many countries in the world because of the Great Depression and in the end it led to further isolation and independence of French economy. All these actions by the French government were not effective enough to significantly improve the condition of French economy and thus France was one of the last countries to start recovering and rebuilding its economy after the effects of the depression.

The Great Depression affected Frances spending in arms and armament which was reduced as this money was redirected elsewhere and with the world disarmament policy during this period it was to be expected. The French, even though they have defeated Germany, and almost completely disarmed that country after WWI, still feared their revenge. This fear was further increased when Hitler came to power and with the Nazi power getting stronger day by day, the feeling of an impending war increased. But all actions taken by Hitler which directly violated the Versailles treaty went unopposed by the French and the British who mostly just wanted to maintain peace in Europe. The French desperately hoped to strengthen the League of Nations and tried to act through it to weaken Germany and prevent it from rearming, but this was hard to achieve as their biggest ally, the British did not fully share their desires and allowed for Germany to grow in strength. This was mostly because Britain wanted to rebuild its economy and create a strong trading partner in Germany because Great Depression crippled its main source of income, trade, significantly. This kind of international policy by French and British would later prove to be a fatal mistake.

Pierre-Cyrille Hautcoeur, Universit d'Orlans et DELTA in 1997

Even if most historians blame the USA as the main country that caused the Great Depression, other economists and historians think that France also had a major if not greater contribution to the start of the Great Depression. Partly as a result of the undervaluation of the franc in 1926, the Bank of France began to accumulate gold reserves at a rapid rate. Frances share of world gold reserves soared from 7% in 1926 to 27% in 1932.It is thought that France through her restrictive and gold accumulating policies severely hampered the world economy by placing other countries under enormous deflationary pressure. "France could have released 13.7 percent of the worlds gold stock, while the US could have released 11.7 percent, and still have maintained their 1928 cover ratios. 8 Even though both USA and France were doing this, after the start of the Great Depression, France exerted a much larger part of deflationary pressure on other countries, thus prolonging and strengthening the effects of the Great Depression on the world. Particularly as it caused a major drop in world prices reducing the value of money in global economy and thus hampering it even more. This is considered to be one of the main causes of such great length of the Great Depression and because of this Douglas Irwin 9 says that France bears much of the blame for the Great Depression.

The Great Depression had major impacts on the world during the period in which it lasted and on future events. It is thought that many countries were by the late 1930s managing to cope with the Great Depression and slowly recovering their economies but what is often considered the final end of the Great Depression is WWII when much more people were employed in the war effort and in the military. The Great Depression was the largest ever economical crisis and downfall of the 20th century and it is very unlikely that a depression of this magnitude will ever happen again simply by the knowledge that todays economists have, most of it coming from this depression. It also caused many political and social changes, like those in the labor market of France, the changes in the ruling parties and rises of extremist parties. Frances archaic economic system was mostly destroyed by the Great Depression and after WWII French economy will rapidly move forward with major reforms and modernization. In Germany, because of the Great Depression, Hitlers power and influence increased drastically during that period and eventually helped him come to power in 1933. The Great Depression also caused several changes in international relations which further damaged the already unstable peace in Europe. Thus the Great Depression is one of the most important and contributing causes of WWII which will again devastate countries and their economies all around the world.

8 9 Douglas A. Irwin an economist at Dartmouth Colledge, USA

Websites(all last accessed on 11th of February 2012): - contains the .pdf file used, Douglas A. Irwin Did France cause the Great Depression?

Books and papers: H. Clark Johnson Gold, France, and the Great Depresion, Paul Beaudry and Franck Portier The French Depression in the 1930