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How Did The Depression Affect France?

1149 words - 5 pages

The closing days of the 1920’s were a start of what would be the worst economic disaster that had ever been witnessed. The effect that the Great Depression had on capitalist countries such as Germany and the United States, was that their stocks and shares heavy economy plunged, leaving businesses unable to trade, and poverty throughout the nation. In the case of France, the depression initially did not suddenly bring the economy down drastically as it had to the more industrialised nations. Although relatively unscathed at first, by 1931 the ripple effect had hit France which steamrolled the economic downturn of the French economy. With France following the gold standard, the economic downturn lasted much longer than other affected nations. The lack of international trade between nations caused by protectionism, effected the revenue that the French economy needed to recover fully from the end of World War one, and during the era of The Great Depression.
The end product of the Treaty of Versailles was that Germany was primarily responsible for the destruction of the war, and was enforced to pay reparations in which France benefitted financially. In 1932 Germany was again no longer able to pay these reparation payments, and reduced the payments from thirty-eight million marks, to a minor three million marks (Bury, 1969, p.271). Also the effects of the German extremes of socialist and communist influences left France contemplating that “The problem of disarmament was going to be still more difficult” at a time when France was really struggling in the economic crisis (Bury, 1969, p.272). Following the boom in worldwide economies rising in the aftermath of World War One, France experienced a rise in the value of the Franc with GDP increasing by over 140m Francs, between 1918 until 1930 (Beaudry, FIG.1, 2002). Although the French economy was stabilising and developing from the destruction of World War One, benefitting from the Treaty of Versailles was not enough to stop The Great Depression from hitting France hard, however France was lucky enough to avoid a major banking crisis, as only one bank had collapsed, unlike their allies the USA which encountered a disastrous banking crisis (Beaudry, 2002).
Unemployment in France had previously never exceeded 1.4 million, but at the peak decline the unemployment rate had hit 4 million according to statistics by J.P.T Bury. However another statistic used by Beaudry shows that the unemployment rate was considered relatively mild, at no more than one million out of work which equated to less than 5% of the working population during 1930 (Beaudry, 2002). Radical leader Herriot was trying to fight the economic decline by taking out loans, to avoid increasing taxation that would be highly unpopular within his own party, and Leon Blum’s “Popular Front” (Tint, 1970, p.51). A way, in which Herriot tried to reduce the budget deficit of ten thousand million francs, was to cut the defence budget which created more...

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