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How was France affected by the Great Depression?
Transcript of How was France affected by the Great Depression?
than Germany or Great Britain? From an economic point of view, this decade opened auspiciously for France. Agriculture had been a large component of the French economic picture, but the role of agriculture in the French economy had been slowly receding in the face of industrialization.
In contrast to the other countries of Europe, France was generally more self-sufficient because of its agricultural base. As a result, France was one of the last countries to feel the impact of the Great Depression.
Although dark economic clouds started to appear on the distant horizon in 1929, the years 1929 though 1931 were actually boom years for the French. The Great Depression really did not hit France until 1932. As with the rest of western Europe, France experienced a sharp increase in unemployment during the Great Depression starting in 1932. Yet, out of 40 million French people, fewer than one-half million found themselves unemployed even at the worst of the Great Depression.
Certainly, France never suffered the unemployment during the Great Depression that hit Germany and Great Britain. And when French workers did lose their jobs, they tended to head for the countryside where they lived with peasant relatives.
Nor did France experience a financial panic during the Great Depression,
only a steady drop in production. Why the French Government Did Little to Act
in Response to the Great Depression: 1.Weak executive power
2. The psychological component exceeded all others in importance because France had suffered an inflationary spiral that had long-rate results. French inflation had left the country with a kind of neurosis. France had been plagued by a nagging fear of national decline. By the time Poincare came along, it had developed a kind of psychological block against any tampering with the currency. During the Great Depression, other nations abandoned the gold standard and devalued their currency. The French refused to do so with disastrous results.
2. Conviction of many French people that there was no French crisis--that France was a healthy country caught in a world of sick nations. This notion lead to a conviction that France needed to seal herself off from the world in order to keep the world's germs out of France. As a result, France fought the Great Depression by raising a high tariff wall. It also so many tax exemptions that whereas 700,000 farmers paid income tax in 1927,
only 97,000 did so in 1935.
1. France was largely a country of small farmers--and believe it! Its farms were archaic and small. In the towns, it burghers, or shopkeepers, were more of a medieval type than a capitalist type. Capitalism was not so existent in France as in Germany, Great Britain, or the United States.
2. Because French bankers had been so conservative during the 1920s, few banks failed during the 1930s. One of the biggest failures in French banking, though, was Andre Citroen, known as the "King of Paris." His banking empire collapsed in 1934. Shortly thereafter he died as a result of an ulcer operation.
3. The franc had been stabilized at a level too low to reflect its true exchange value.
4. The bad harvest of 1930 postponed agricultural surpluses that drove down prices in other countries during the early years of the Depression. Why the Great Depression Was Slow in France: At the same time, public works for priming
the economy could have increased production, but
France stood against deficit spending for fear
of inflation. A Reluctance to Prime the Economy: The Effect of Currency Fluctuations: What really hurt France financially were fluctuations in world currency. When, for example, the French devalued the franc in 1931, As a result, French goods became more expensive on the world market while British exports enjoyed an advantage. France was also hurt by the devaluation of the American dollar in 1933 and the conversion of the German mark to a managed currency.
The devaluation of the franc could well have helped French trade, but the French government was too afraid of the electorate to do so. Fear of future devaluations took over and caused investors to ship capital into other areas. There was little new investment in France during the 1930s. The story of France from 1929 to 1939 is the story of democracy undergoing a long ordeal.