Right after the World War One, in the year 1919, France was left with some damages. In the northern area of France, the heavily shelled combat areas, about 11,000 square miles had been devastated, including the destruction of residences, railways, roads, and bridges. About 1.3 million French lives had been lost, and more than 3 million men were disabled. In addition, in 1919, France lost about 166,000 people from the Spanish influenza. Also, France acquired a long-term damage because it had not given enough leave to its soldiers during the World War One as Germany had. As a result, there was a low birth rate in the war generation.
On the other hand, France did have some gains. France gained new colonies from Germany, Cameron and Togo in Africa, and from the Ottoman Empire, Syria and Lebanon. Furthermore, Saargebiet, the coal-rich region, was separated from Germany, was administrated by the French, and was economically united with France.
From 1918 to 1919, the socialists experienced a great increase in party membership, and the Chamber of Deputies passed some social legislation in favor of labor: a law on collective bargaining and a law promulgating the eight-hour workday.
After the war, when the government lifted currency controls, the franc lost 50 percent of its value in 1919, 80 percent of its value by 1920, and continued to depreciate through the early 1920. Such economic troubles made France much more insistent on the question of German reparations. Germany paid only a small fraction of what France had demanded. As a result, France��s demanded even more, and in 1923, French and Belgian troops occupied the Rhineland. This turned out to be a mistake because they met a campaign of nonviolent resistance, which made the world sympathize with the German side. Consequently, international negotiations repeatedly reduced the sum to be paid by Germany.
Soon after the war ended, there were frequent changes in the French administration, which caused fluctuations in the French economy. In 1924, the parties of the left won the election, and France experienced capital flight. Fearing that banks and industries might be nationalized, financiers and the wealthy took their capital out of the country into the Swiss or American banks and securities. However, the government was short-lived, and Poincare succeeded it.
Poincare gave confidence in the French economy. He moved decisively to end financial instability in France. In June 25, 1928, a law was passed, and it ended the obligatory acceptance of paper money and returned the franc to the gold standard at 20 percent of the pre-war value. This caused dissatisfaction among bondholders. However, this devaluation enabled the treasury to pay off debts with highly debased currency. Also, because of the depreciation of the franc, France benefited from exports. Consequently, in 1928 and 1929, France had a considerable budget surplus. As a result, such economic stabilization allowed France to partly prevent the initial international financial turbulence following the Wall Street crash in 1929.
The French economy boomed during the 1920s. Its reconstruction was already 80 percent finished by 1924. Because of its great loss in population, France recruited about 2 million foreign laborers, mainly from Eastern and Southern Europe. Most of these workers filled the low-paying jobs in the mines, factories, fields, and construction sites. These workers were vital to France��s 1920s expansion. New industries, especially iron and steel, rubber, autos, airplanes, petrochemicals, and electrical equipment, did particularly well. In spite of the economic dynamism in these certain sectors, agriculture and retail distribution hindered in economic development.
France seemed to be influenced by the Great Depression less than other industrialized nations, such as Britain, Germany, and the United States. For almost two years after the Wall Street crash, France seemed to be prosperous. France��s exports were continually successful until Britain devaluated the Pound Sterling in 1931. Large numbers of unemployed were partially prevented by the decreased working hours. However, from the autumn of 1931, France began to feel the effects of the Great Depression. It slowly showed declining productivity in its industries.
In 1935, the parties of the left founded the Popular Front, which won the election of 1936, and Leon Blum, a socialist, formed the new administration. He introduced some reform legislation on the 40-hour workweek and the two weeks paid vacation. He nationalized the arms industry and strengthened state control over the national bank. Moreover, wages rose, while wages were cut in other countries. As a result, capital flight set in France again. Due to internal dissent, the Popular Front government fell.
Although the impact of the Great Depression was rather late in hitting France, France took much longer to recover. Even in 1938, when Britain and Germany were getting ready for war, French economy stagnated, and its share of international trade shrunk from 11.2 percent in 1929 to 5.8 percent in 1937.
Another factor that threatened the well being of France was the artificial over-development of Paris. Until 1936, about 3.3 million people moved from the provinces to Paris. This resulted in a decrease in the population outside of Paris and a tripling of the population of Paris. Some of the growth of Paris may have been because of natural market factors, but much of it was because of the past program of centralizing government administration and the transportation system in Paris.
From 1918 to 1929, France had a boom in its economy. There were some difficult times in 1923, when Poincare invaded the Rhineland, and in 1924, when there was capital flight because of the parties of the left. Still, due to Poincare��s successful economic policy and the inflow of foreign workers, the French economy boomed during the years from 1918 to 1929.
From 1929, when the Great Depression occurred, to 1939, France went through a slow economic decline. Due to frequent political confusion, capital flight caused by Blum��s administration, and the over-development of Paris, France had difficult times in the economic aspect, and it also was slow in recovering from the impact of the Great Depression.
In brief, from the economic history of France from 1918 to 1939, it can be said that a country��s political status and the way its politicians administrate are closely related to its economic condition.
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