13: London and Paris


The Great Depression was a worldwide phenomenon, but in this episode we focus on just two states: France and Britain.



  • China During the Great Depression: Market, State, and the World Economy, 1929-1937 by Tomoko Shiroyama
  • Germany and the Great Depression by Dieter Petzina
  • The Global Impact of the Great Depression: 1929-1939 by Dietmar Rothermund
  • Japan and World Depression: Then and Now Edited By Ronald Dore and Radha Sinha
  • The Failure of Economic Diplomacy: Britain, Germany, France and the United States 1931-36 by Patricia Clavin
  • The Forgotten Man by Amity Shales
  • The Great Crash of 1929 by John Kenneth Galbraith
  • The Great Depression in Europe, 1929-1939 by Patricia Clavin
  • The Politics of Depression in France 1923-1936 by Julian Jackson
  • The Slump: Britain and the Great Depression by John Stevenson and Chris Cook
  • The World in Depression 1929-1939 by Charles Kindleberger
  • Unemployment and the Great Depression in Weimar Germany Edited By Peter D. Stachura
  • The Gold Standard and the Great Depression by Barry Eichengreen and Peter Temin
  • Life Expectancy during the Great Depression in Eleven European Countries by Tim A. Bruckner, Andrew Noymer, and Ralph A. Catalano
  • The Origins and Nature of the Great Slump Revisited by Barry Eichengreen
  • Socialism and Wages in the Recovery from the Great Depression in the United States and Germany by Peter Temin


Hello everyone and welcome to History of the Second World War Episode 14, The Great Depression Part 3 - London and Paris. The Great Depression was a worldwide phenomenon, as we discussed last episode, this episode will be a bit different because we are going to focus on just two nations, who would be important participants in the First and Second World Wars. We will start off today by discussing the effects of the Great Depression, or as they would know it the Great Slump, in the British Empire. The Empire had entered the First World War as the undisputed economic king of the world, but it had exited the conflict in a very different position. During the 1920s many nations still looked to London for economic guidance and support, which was support that it would have trouble providing. Once the Depression started, the British government would prove to be pretty flexible, and that flexibility would allow it to be one of the first major economies to reject the gold standard, providing it with the ability to drastically change how it was able to react with the world of international commerce. In this change it would also be able to capitalize on its long economic relationships around the world by bringing many nations with it off of the standard, with those nations instead choosing to follow the floating pound. The second nation we will discuss today is France, which would choose to respond to the global economic crisis in a very different manner. Instead of rejecting the Gold Standard, which had served the country so well in the 1920s, the French instead clung to it far longer than almost any other nation. This was done even though the constant political and economic turmoil that it caused would result in governments cycling in and out of power after a few months. It would also cause economic hardship and distress among the people of France, contributing to what other nations saw as the radicalization of French politics.

One of problems that every nation would have to try and find a way to solve during the Great Depression was unemployment, and this was just as true in Britain as it was anywhere else. There would never be less than a million people out of work in Britain during the Depression, which represented about one tenth of the working population. The British workers were hit particularly hard by the reduction in international trade, and export industries like steel, coal, and textiles saw a drastic reduction in demand. These industries were also heavily concentrated in specific areas of Britain, which made the resulting mass unemployment even more heavily felt within some communities. All of these new unemployed individuals were added on top of a system that was already struggling to handle the levels of poverty within society. Two of the major problems in Britain during this period, and which resulted in large number of people living a life of poverty was an aging population and war widows. As life expectancy increased, and the standard of medical care available to everyone improved, Britons were living longer, but many elderly individuals could not find work, and so with no available income they were forced to live on very little. Along with this problem there were also war widows from the First World War, which had been provided with government pensions due to the death of their husbands, but these pensions were so low that they did not provide enough money to get the widows out of poverty. These women were also not able to get another job, because if they did and earned too much money the pension would be taken away which put them in a real catch 22. There were also many people who were working as much as they could but were still in poverty due to the nation of the work that they performed, and as the economic problems began the number of shifts available began to be reduced to compensate for the reduction in demand. One interesting feature of the government’s reaction to the unemployment crisis was the fact that Britain, unlike most other large nations, did not put in place any large public works programs. This was one of the reactions of many other governments but in London they concluded that such schemes would not have any real effect on the problems within society that were causing the unemployment in the first place, and that it was more important for the government to reduce costs as much as possible, even if it meant paying more unemployed workers until the economy corrected itself and they were able to find work.

The government would also make a concerted effort to keep unemployment benefits relatively high during this period, and after they came to power in 1929 the Labour government made the conscious decision to keep wages high, even if it reduced the total employment. To compensate for this choice, they also pushed to make sure that unemployment benefits were expanded. However, they would only really make this work by raising taxes, which reduced investment in a British economy that was already having investment issues. These problems dated back to the decisions made in 1925 when the British economy rejoined the gold standard. When this move was made the pound was overvalued, and this quickly caused the banks to have to institute deflationary measures to try and work within the restrictions of the standard. This made exports very expensive, and so some international markets that had previously been important markets for British industries instead took their business to other nations. It also resulted in a high interest rate, which meant that fewer loans were taken out for capital improvements in British industry, capital improvements which were greatly needed. Finally, the depression would see one of the primary sources of income for the British financial sector disappear very quickly, and this was the money that it made from various financial services: basically loan interest and profits made from various international trade activities. The drop in international trade was a topic we discussed last episode, but just as important to the British banks was all of the money that they had invested internationally. The interest and repayment of these investments was a large and important source of income for the British financial industry. However, one of the ways that many nations tried to cope with the Depression was through a suspension of international debt payments. This left a lot of British money stuck overseas, for example in Germany there were tens of millions of pounds that had been loaned to the German government and German businesses that they were suddenly unwilling to make their payments on. This was just one of several problems experienced by the British banks during this period, and the overall weakening of the pound, and the inability of the government and businesses to react to the situation caused discussions to begin about a move off of the Gold Standard. This decision would eventually be made, and it would prove to be the correct move in the situation. After the British government decided to float the pound other nations followed, with Portugal, the Scandinavian countries, and others around the world with Britain choosing to follow the floating pound with their currency. Of course the Empire and the Commonwealth nations also came along for the ride. In 1932 there would be a conference of the governments of the Empire and Commonwealth held in Ottawa where they would meet to coordinate economic policy. During that same year the first signs of recovery would be seen in the British economy, although it still had many rough years ahead of it.

While there were some economic and social disruptions caused by the Slump the overall changes in the political landscape were quite undramatic. In the 1931 election the Labour government would fall, even though it received a higher percentage of the votes that it had in previous elections, this was due to the fact their opposition was much more united. On the more radical side of politics there was a Communist Party which saw a rapid rise in membership during these years. However, given its very small starting point even this large increase in members was not enough to make it a party that was truly impactful on the national stage. The National Unemployed Workers Movement could have been a potent political movement, especially if it would have worked more closely with other groups on the political left. However, it often chose not to, and the organization as a whole spent far more time and resources trying to help its members directly and organizing protests than it did in trying to enact large systemic changes through political action. There were several instances where the group would organize public demonstrations, which at times had the support of other groups, but these were often few and far between. During these events, which often took the form of marches in some of the larger cities, there were several recorded acts of violence, which of course both sides blamed on the other. In these instances both side, the police and the NUWM, would be playing the game of public opinion with the police claiming that they were simply reacting to the protesters who had turned violent during the demonstrations while the NUWM claimed that the police had reacted with violence to the peaceful protests. It was really a tale as old as time, and one that continues in various manifestations to this day. Even if the group itself did not often support the more revolutionary actions taken by others, the NUWM was still seen as a threat by the government. It would be just one group of several that would gain traction during this time, along with political parties like the Communists and the British Union of Fascists, or the BUF. Due to concerns that these groups and others like them might prove to be problematic the Incitement of Disaffection act was passed in 1934, and the Public Order Act was put in place in 1936, both of which had various ways of containing more radical political movements. They included restrictions on the wearing of political uniforms, aimed primarily at the BUF, and on public demonstrations.

One of the reasons that more radical political movements did not have a chance to greatly shift the British political landscape was due to the fact that economic recovery began relatively quickly and after 1932 the country would see a steady upward trend. It would be the first major country to surpass its 1929 industrial production levels and between 1932 and 1937 unemployment would drop by 50%, and for those employed the overall standard of living would increase during the decade. This was driven almost entirely by a huge drop in the cost of living throughout the country, with the amount of money being spent by the average family on food and housing dropping from over 60% of income to around 44%. The resulting large increase in disposable income among many groups within society saw a large increase in the consumer goods industries, which fueled part of the recovery and part of the reduction in unemployment in the mid 1930s. Before moving on I do want to mention that, while all of this sound very rosy, it did come at a cost, just not as much to the people living in Britain. One of the drivers of the early stages of the economic recovery was the amount of gold and money that flowed into Britain from its possessions around the world, the most important of which was India. During the worst years of the Slump a large amount of wealth was extracted from India through the existing structure of landlords and British controlled lending institutions. This wealth was then transferred back to London and this extraction helped to bolster British gold and currency reserves at the most critical of moments, but would also cause hardship and poverty among Indian peasants to increase as they fell deeper and deeper into debt.

While the British government would experience relative stability during the early years of the 1930s, the French government would experience the opposite. From 1932 to 1936, just 4 years at the depth of the economic crisis in France, there would be 11 different governments in power in Paris. Now, to be fair, most of these governments were made up of the same group of people just shifting around to different positions, but it does make it clear that there were problems within the nation. This level of governmental churn was also not totally out of the ordinary for the French government during the interwar years. During the entire period, after Prime Minister Clemenceau’s government was replaced on January 20th, 1920 until Daladier’s government that entered the war in 1939 there were 31 different French cabinets, cabinets that would serve an average of just over 214 days. During the core of the Depression years, between June 1932 and June 1936 that number would decrease only slightly, with the 11 cabinets serving an average of just over 132 days. Not all of these governments would be replaced due to economic considerations, but over the course of the 11, 5 of them would be directly attributable to the inability of the French government to find an economic policy that worked. One interesting feature of the French situation is that it happened substantially later than it did in other nations. In fact during the early years of the depression, when some other nations were reaching their lowest points the French economy was still doing relatively well. For example, the output of French industry actually grew in 1930, one of the very few economy where this occurred. Unemployment would also not be as pervasive of a problem in France as it was in other nations, with the maximum unemployment figure reaching just 2.6%, far less than in countries like the United States, Germany, and Britain. Even if the Depression manifested differently in France, the nation itself was certainly effected, and by 1932 economic questions were an important feature of the election in that year. This election, which would be held in early May, would see the parties on the left with one of their most successful election outcomes. The Radicals and Socialists, both left leaning political groups, would combine to form a very comfortable majority. A note on terminology here, when I mention the Radicals, that is capital R Radicals, I am referring to the French political group of this period. In terms of their actual policies and ideologies they were not very radical. On the political spectrum they fell somewhere slightly to the left of center, although over the early 1930s they would become more conservative. One of the reasons that the Left coalition was able to get this majority was due to the economic situation, both from the wider economic crisis and the growing French budgetary deficit,which at the time was just as important to the French government.

The government formed in 1932 was not the first in which the Radicals were in power, and their choices during the Depression era were altered by the history of the party. During the 1920s it had been a Radical government which had led the nation at the period of greatest inflation, which had caused the government to fall. During the 1930s the Radicals would be very adamant that they had not caused the inflation, that they should not be in anyway linked to the inflation, and that there actions would not cause more inflation in the process. Or as the Radical politician Georges Bonnet would say about the inflationary period in the 1920s ’engraved for ever in my mind … the memory of this dramatic period and have kept at the bottom of my heart the desire to avoid a repetition of the days we lived through in those years.’ This was just one of the reasons that to summarize the position of the Radicals on the economy I would just say that they sought policies that would ensure, above all else, economy stability. In coalition with the Radicals were the Socialists, who had a more precise and ideologically driven program of reform. The Socialists came into conflict with the more conservative elements of French politics over the position of government debt within the framework of the economy. Many conservative politicians in France believed that a balanced government budget was essential, and the inability of the French government to balance its budget in the preceding years was one of the causes of the economic crisis that was being experienced. Hand in hand with this idea that the government should reduce spending was the idea that the French government should reduce how much it was altering the functioning of the economy through that spending. This was both from a business perspective as well as in social welfare, with the hope that such changes could roll back years of what they saw as the decay of the traditional French social order, or as they would say ’the extension of the idea of the all providing State has made very dangerous progress.’ On both of these topics the Socialists would strongly disagree. Of course in the area of social welfare they believed that the state should not reduce but instead increase its support for citizens. On the topic of a balanced budget, they would claim that the attempt to do so would result in no meaningful improvements, and it might even cause further issues. Instead of being the cause of the economic downturn, in the Socialist interpretation, an imbalanced budget was instead just another consequence, it was impossible to balance a budget when tax revenues had decreased. The Socialists did not go so far as to advocate for further deficit spending, which in the context of French politics at this time would have been suicidal at the ballot box, but they did believe that further reductions in spending to move closer to the pointless objective of a balanced budget should not be made. Instead they advocated for a patient approach, with the idea that once the economic crisis was past then a conversation about a balanced budget could begin.

From the elections in June 1932 the Radicals and the Socialists would have two years of governments, there would be several Prime Ministers and cabinets during this time, but generally they were always led by a Radical. However over time the governments would trend further and further away from the views of the Socialists, which would cause the Socialists to become far less enthusiastic about supporting them, which would cause the next government to value Socialist support even less. One of the reasons that the Radicals and Socialists had won the 1932 election was that they had joined together in a relatively unified manner, however after just a year this coalition was beginning to fray. During the Socialist congress in the summer of 1933 one of the primary topics was whether or not the party should even continue to support the government at all, due to how strongly the Socialists disagreed with some of the Radical economic policies that were being put in place. The collapse in Socialist support would cause one government after another to fall and soon the Radicals would be trying to form governments with Conservative ministers in the cabinet in the hopes of getting enough support from the right to gain a majority. In February 1934 this process would run to its conclusion, with a government being made up of a majority of Conservative members.

An important part of French economic policy during this period was one of deflation, even if the government was at times hesitant to openly admit it. Deflation is this case meant a purposeful effort to reduce the price of goods in the economy, this was done through government induced deflation which was evident in many areas of the French economy in the early 1930s, like agricultural prices and in government expenditures. However, up until Prime Minister Doumergue came to power in 1934 this had always been done with the least possible fanfare, with the government denying that it was pursing an aggressive policy of deflation, and promising to counteract any deflation with further expenditures on public works. Doumergue just came out and said that he was purposefully causing deflation as a way to maintain a balanced budget and to fit France within pre-existing economic ideologies. However, these consistent deflationary policies caused issues within the French economy that had been building over the years. Deflation within an economy can cause several problems, for example it can cause both individuals and businesses to be hesitant to spend money, which can cause unemployment to rise. All of the issues caused by deflation meant that Doumergue would be replaced in November 1934 after just 9 months. The new Prime Minister, Flandin, made the claim that his government would be the one to reverse the economic crisis because he believed that the need for further deflation was almost at an end. He would put in place a budget that did not have further deflationary cuts, and he also removed the minimum price on grain. Flandin also hoped that French industry could be reorganized through the introduction of government backed industrial cartels. Whether or not these plans would have had a positive effect on the French economy we will never know, because Flandin would be replaced in the spring of 1935.

While most conversations relating to the French economy had been on the subject of deflation and deficits, in the summer of 1934 another fact was added to the discussion, which just a few years earlier would have been almost unthinkable, devaluation. The campaign for devaluation, or the removal of the French franc from its gold standard based exchange rate, would gain a tremendous amount of support in the early 1930s. It would reach its peak in May 1935 and even though there were still very strong opponents of such a move during this period, many of them were eventually pushed into the position of not necessarily supporting devaluation, but at least seeing it as inevitable. During the 1933 World Economic Conference the French had restated their support for the gold standard, and had in fact tried to get other nations back on the standard, however in the years that followed there were the beginnings of recovery in many of the nations that had already devalued. This recovery had for the most part not been represent in nations that were still on gold, like Franc, Belgium, Switzerland, and the Netherlands. One of the reasons that devaluation was resisted for so long was due to how well France had weathered the early years of the global depression, while other nations were tumbling deeply into the depression as early as 1930s the French did not experience drastic economy issues until years later. This was partially due to their actions during the 1920s, by undervaluing the franc they had been able to gain an important economic advantage, an economic advantage that only grew as other nations began to experience problems. However, what became clear after the British and Americans had devalued was that most of the French advantage was only possible when other large economics had overvalued their currency. As those nations devalued the French advantage was first lost, and then that advantage turned into an almost crippling handicap. Eventually, but not until September 1936 the franc would be devalued. In retrospect, the delay in devaluation squandered whatever economic advantages the French could have gained from their strong position coming into the 1930s. If they had devalued earlier and made the appropriate concessions that such a move required they probably would have started their own economic recovery much sooner, and probably would have avoided the worst of the depression.

After the failures of the previous Socialist and Radical governments the Socialists began to try again to construct a coalition on the left, which would eventually use the name the Popular Front. During the years after 1934 this group would be in opposition to the government, claiming that the deflationary policies were causing greatly social inequity, and they were in any case economically futile. Due to the importance of economic matters the leaders of the Popular Front knew that they had to be united in terms of economic policy, or they would just have the same problems as they had experienced during 1932 to 1934. However, as usually happens, the eventually decisions made about those policies would leave many on the left heavily disappointed. The economic reform policies put forward by the Popular Front are what I would consider very much the expected moderate Socialist reform agenda from this period: a 40 hour work week, 12 days of mandatory leave, the right to strike, higher wages, and a major public works program. This program, plus the continued economic problems of early 1936 would give the Popular Front the support they needed to gain a majority in the elections of 1936. The new Popular Front government, led by Leon Blum, was put in place on June 4th and is significant because it would be the first Socialist controlled government in France. However, just because the Popular Front was in control, and just because they had a program of reform, did not mean that the reforms would cause all of the economic issues to just evaporate overnight. The Popular Front government would have to do work with many of the same issues that other governments had been trying to get a handle on, like a Treasury Crisis which was causing a run on the franc. Eventually Blum would feel forced to try and work through these problems through a set of financial emergency decrees, but these would be rejected by the Senate which would cause his government to fall. The resignation of Blum would result in several more Radical led governments, but the reforms put in place by the Popular Front would stay in place and some of those reforms, like the introduction of the 40 hour work week and other worker protections, will be an important part of our story when we revisit the French economy in later episodes as we begin to discuss the process of French rearmament.