Economic history of France
since its late-18th century Revolution was tied to three major events
and trends: the Napoleonic Era, the competition with Britain and its
other neighbors in regards to 'industrialization', and the 'total wars'
of the late-19th and early 20th centuries.
Medieval France
The collapse of the Roman Empire
unlinked the French economy from Europe. Town and city life and trade
declined and society became based on the self-sufficient manor. What limited international trade existed in the Merovingian age — primarily in luxury goods such as silk, papyrus, and silver — was carried out by foreign merchants such as the Radhanites.
Agricultural output began to increase in the Carolingian
age as a result of the arrival of new crops, improvements in
agricultural production, and good weather conditions. However, this did
not lead to the revival of urban life; in fact, urban activity further
declined in the Carolingian era as a result of civil war, Arab raids,
and Viking invasions. The Pirenne hypotheses
posits that at this disruption brought an end to long-distance trade,
without which civilization retreated to purely agricultural settlements,
and isolated military, church, and royal centers. When trade revived
these centers became the nucleus of new towns and cities around which
suburbs of merchants and artisans grew.
The High Middle Ages
saw a continuation of the agricultural boom of the Carolingian age. In
addition, urban life grew during this period; towns such as Paris expanded dramatically.
The 13 decades from 1335 to 1450 spawned a series of economic
catastrophes, with bad harvests, famines, plagues, and wars that
overwhelmed four generations of Frenchmen. The population had expanded,
making the food supply more precarious. The bubonic plague ("Black Death")
hit Western Europe in 1347, killing a third of the population, and it
was echoed by several smaller plagues at 15-year intervals. The French
and English armies during the Hundred Years War
marched back and forth across the land; they ransacked and burned
towns, drained the food supply, disrupted agriculture and trade, and
left disease and famine in their wake. Royal authority weakened, as
local nobles became strongmen fighting their neighbors for control of
the local region. France's population plunged from 17 million, down to
12 million in 130 years. Finally, starting in the 1450s, a long cycle of
recuperation began.
Early Modern France
(Figures cited in the following section are given in livre tournois,
the standard "money of account" used in the period. Comparisons with
modern figures are extremely difficult; food items were comparatively
cheap, but luxury goods and fabrics were very expensive. In the 15th
century, an artisan could earn perhaps 30 livres a year; a great noble
could have land revenues from 6000 to 30,000 livres or more. A late seventeenth-century unskilled worker in Paris earned around 250 livres a year, while a revenue of 4000 livres a year maintained a relatively successful writer in modest comfort.
At the end of the 18th century, a well-off family could earn 100,000
livres by the end of the year, although the most prestigious families
could gain twice or three times that much, while, for provincial
nobility, yearly earnings of 10,000 livres permitted a minimum of
provincial luxury).
Renaissance
The economy of Renaissance
France was, for the first half-century, marked by dynamic demographic
growth and by developments in agriculture and industry. Until 1795,
France was the most populated country in Europe and the third most
populous country in the world, behind only China and India.
With an estimated population of 17 million in 1400, 20 million in the
17th century, and 28 million in 1789, its population exceeded even Russia and was twice the size of Britain
and Holland. In France, the Renaissance was marked by a massive
increase in urban populations, although on the whole, France remained a
profoundly rural country, with less than 10% of the population located
in urban areas. Paris was one of the most populated cities in Europe, with an estimated population of 650,000 by the end of the 18th century.
Agricultural production of a variety of food items expanded: olive oil, wine, cider, woad (Fr. "pastel", a source of blue dye), and saffron. The South grew artichokes, melons, romaine lettuce, eggplant, salsifys, celery, fennel, parsley, and alfalfa. After 1500 New World crops appeared such as beans, corn (maize), squash, tomatoes, potatoes, and bell peppers.
Production techniques remained attached to medieval traditions and
produced low yields. With the rapidly expanding population, additional
land suitable for farming became scarce. The situation was made worse by
repeated disastrous harvests in the 1550s.
Industrial developments greatly affected printing (introduced in
1470 in Paris, 1473 in Lyon) and metallurgy. The introduction of the
high-temperature forge
in northeast France and an increase in mineral mining were important
developments, although it was still necessary for France to import many
metals, including (copper, bronze, tin, and lead).
Mines and glasswork benefited greatly from royal tax exemptions for a
period of about twenty years. Silk production (introduced in Tours in 1470 and in Lyon
in 1536) enabled the French to join a thriving market, but French
products remained of lesser quality than Italian silks. Wool production
was widespread, as was the production of linen and of hemp (both major export products).
After Paris, Rouen was the second largest city in France (70,000 inhabitants in 1550), in large part because of its port. Marseille (French since 1481) was France's second major port: it benefited greatly from France's trading agreements signed in 1536 with Suleiman the Magnificent. To increase maritime activity, Francis I founded the port city of Le Havre in 1517. Other significant ports included Toulon, Saint Malo and La Rochelle.
Lyon
was the center of France's banking and international trade markets.
Market fairs occurred four times a year and facilitated the exportation
of French goods, such as cloth and fabrics, and importation of Italian,
German, Dutch, English goods. It also allowed the importation of exotic
goods such as silks, alum, glass, wools, spices, dyes. Lyon also contained houses of most of Europe's banking families, including Fugger and Medici. Regional markets and trade routes
linked Lyon, Paris, and Rouen to the rest of the country. Under
Francis I and Henry II, the relationships between French imports and the
exports to England and to Spain were in France's favor. Trade was
roughly balanced with the Netherlands, but France continually ran a
large trade deficit
with Italy due to the latter's silks and exotic goods. In subsequent
decades, English, Dutch and Flemish maritime activity would create
competition with French trade, which would eventually displace the major
markets to the northwest, leading to the decline of Lyon.
Although France, being initially more interested in the Italian
wars, arrived late to the exploration and colonization of the Americas,
private initiative and piracy brought Bretons, Normans and Basques early to American waters. Starting in 1524, Francis I began to sponsor exploration of the New World. Significant explorers sailing under the French flag included Giovanni da Verrazzano and Jacques Cartier. Later, Henry II sponsored the explorations of Nicolas Durand de Villegaignon who established a largely Calvinist colony in Rio de Janeiro, 1555-1560. Later, René Goulaine de Laudonnière and Jean Ribault established a Protestant colony in Florida (1562–1565).
By the middle of the 16th century, France's demographic growth,
its increased demand for consumer goods, and its rapid influx of gold
and silver from Africa and the Americas led to inflation (grain became
five times as expensive from 1520 to 1600), and wage stagnation.
Although many land-owning peasants and enterprising merchants had been
able to grow rich during the boom, the standard of living fell greatly
for rural peasants, who were forced to deal with bad harvests at the
same time. This led to reduced purchasing power and a decline in manufacturing. The monetary crisis led France to abandon (in 1577) the livre as its money of account, in favor of the écu in circulation, and banning most foreign currencies.
Meanwhile, France's military ventures in Italy and (later)
disastrous civil wars demanded huge sums of cash, which were raised with
through the taille
and other taxes. The taille, which was levied mainly on the peasantry,
increased from 2.5 million livres in 1515 to 6 million after 1551, and
by 1589 the taille had reached a record 21 million livres. Financial
crises hit the royal household repeatedly, and so in 1523, Francis I
established a government bond system in Paris, the "rentes sure l'Hôtel
de Ville".
The French Wars of Religion
were concurrent with crop failures and epidemics. The belligerents
also practiced massive "torched earth" strategies to rob their enemies
of foodstuffs. Brigands and leagues of self-defense flourished;
transport of goods ceased; villagers fled to the woods and abandoned
their lands; towns were set on fire. The south was particularly
affected: Auvergne, Lyon, Burgundy, Languedoc—agricultural
production in those areas fell roughly 40%. The great banking houses
left Lyon: from 75 Italian houses in 1568, there remained only 21 in
1597.
Rural society
In the 17th century rich peasants who had ties to the market economy
provided much of the capital investment necessary for agricultural
growth, and frequently moved from village to village (or town).
Geographic mobility, directly tied to the market and the need for
investment capital, was the main path to social mobility. The "stable"
core of French society, town guildspeople and village laborers, included
cases of staggering social and geographic continuity, but even this
core required regular renewal. Accepting the existence of these two
societies, the constant tension between them, and extensive geographic
and social mobility tied to a market economy holds the key to a clearer
understanding of the evolution of the social structure, economy, and
even political system of early modern France. Collins (1991) argues that
the Annales School
paradigm underestimated the role of the market economy; failed to
explain the nature of capital investment in the rural economy, and
grossly exaggerated social stability.
Seventeenth century
After 1597, the French economic situation improved and agricultural production was aided by milder weather. Henry IV, with his minister Maximilien de Béthune, Duc de Sully, adopted monetary reforms. These included better coinage, a return to the livre tournois
as account money, reduction of the debt, which was 200 million livres
in 1596, and a reduction of the tax burden on peasants. Henry IV
attacked abuses, embarked on a comprehensive administrative reform,
increased charges for official offices, the "paulette",
repurchased alienated royal lands, improved roads and the funded the
construction of canals, and planted the seed of a state-supervised mercantile philosophy. Under Henry IV, agricultural reforms, largely started by Olivier de Serres were instituted. These agricultural and economic reforms, and mercantilism would also be the policies of Louis XIII's minister Cardinal Richelieu. In an effort to counteract foreign imports and exploration, Richelieu sought alliances with Morocco and Persia, and encouraged exploration of New France, the Antilles, Sénégal, Gambia and Madagascar, though only the first two were immediate successes. These reforms would establish the groundwork for the Louis XIV's policies.
Louis XIV's glory was irrevocably linked to two great projects, military conquest and the building of Versailles—both
of which required enormous sums of money. To finance these projects,
Louis created several additional tax systems, including the "capitation"
(begun in 1695) which taxed every person including nobles and the
clergy, though exemption could be bought for a large one-time sum, and
the "dixième" (1710–1717, restarted in 1733), which was a true tax on
income and on property value and was meant to support the military.
Louis XIV's minister of finances, Jean-Baptiste Colbert, started a mercantile system which used protectionism
and state-sponsored manufacturing to promote the production of luxury
goods over the rest of the economy. The state established new
industries (the royal tapestry works at Beauvais, French quarries for marble), took over established industries (the Gobelins tapestry works), protected inventors, invited workmen from foreign countries (Venetian glass and Flemish
cloth manufacturing), and prohibited French workmen from emigrating. To
maintain the character of French goods in foreign markets, Colbert had
the quality and measure of each article fixed by law, and severely
punished breaches of the regulations. This massive investment in (and
preoccupation with) luxury goods and court life (fashion, decoration,
cuisine, urban improvements, etc.), and the mediatization (through such
gazettes as the Mercure galant) of these products, elevated France to a role of arbiter of European taste.
Unable to abolish the duties on the passage of goods from
province to province, Colbert did what he could to induce the provinces
to equalize them. His régime improved roads and canals. To encourage
companies like the important French East India Company (founded in 1664), Colbert granted special privileges to trade with the Levant, Senegal, Guinea and other places, for the importing of coffee, cotton, dyewoods, fur, pepper, and sugar,
but none of these ventures proved successful. Colbert achieved a
lasting legacy in his establishment of the French royal navy; he
reconstructed the works and arsenal of Toulon, founded the port and arsenal of Rochefort, and the naval schools of Rochefort, Dieppe and Saint-Malo. He fortified, with some assistance from Vauban, many ports including those of Calais, Dunkirk, Brest and Le Havre.
Colbert's economic policies were a key element in Louis XIV's
creation of a centralized and fortified state and in the promotion of
government glory, including the construction they had many economic
failures: they were overly restrictive on workers, they discouraged
inventiveness, and had to be supported by unreasonably high tariffs.
The Revocation of the Edict of Nantes in 1685 created additional economic problems: of the more than 200,000 Huguenot refugees who fled France for Prussia, Switzerland, England, Ireland, United Provinces, Denmark, South Africa and eventually America,
many were highly educated skilled artisans and business-owners who took
their skills, businesses, and occasionally even their Catholic workers,
with them. Both the expansion of French as a European lingua franca in the 18th century, and the modernization of the Prussian army have been credited to the Huguenots.
The wars and the weather at the end of the century brought the
economy to the brink. Conditions in rural areas were grim from the
1680s to 1720s. To increase tax revenues, the taille
was augmented, as too were the prices of official posts in the
administration and judicial system. With the borders guarded due to
war, international trade was severely hindered. The economic plight of
the vast majority of the French population — predominantly simple
farmers — was extremely precarious, and the Little Ice Age resulted in further crop failures. Bad harvests caused starvation—killing s tenth of the people in 1693-94.
Unwilling to sell or transport their much-needed grain to the army,
many peasants rebelled or attacked grain convoys, but they were
repressed by the state. Meanwhile, wealthy families with stocks of
grains survived relatively unscathed; in 1689 and again in 1709, in a
gesture of solidarity with his suffering people, Louis XIV had his royal
dinnerware and other objects of gold and silver melted down.
Eighteenth century
France
was large and rich and experienced a slow economic and demographic
recovery in the first decades following the death of Louis XIV in 1715.
Birth rates were high and the infant mortality rate was in steady
decline. The overall mortality rate in France fell from an average of
400 deaths per 10,000 people in 1750, to 328 in 1790, and 298 per 10,000
in 1800.
Monetary confidence was briefly eroded by the disastrous paper money "System" introduced by John Law from 1716 to 1720. Law, as Controller General of Finances, established France's first central bank, the Banque Royale, initially founded as a private entity by Law in 1716 and nationalized in 1718.
The bank was entrusted with paying down the enormous debt accumulated
through Louis XIV's wars and stimulating the moribund French economy.
Initially a great success, the bank's pursuit of French monopolies led
it to land speculation in Louisiana through the Mississippi Company, forming an economic bubble in the process that eventually burst in 1720.
The collapse of the Banque Royale in the crisis and the paper currency
which it issued left a deep suspicion of the idea of a central bank; it
was not until 80 years later that Napoleon established the Bank of
France. In 1726, under Louis XV's minister Cardinal Fleury,
a system of monetary stability was put in place, leading to a strict
conversion rate between gold and silver, and set values for the coins in
circulation in France.
The amount of gold in circulation in the kingdom rose from 731 million
livres in 1715 to 2 billion in 1788 as economic activity accelerated.
A view of the port of Bordeaux in 1759
The international commercial centers of the country were based in Lyon, Marseille, Nantes, and Bordeaux. Nantes and Bordeaux saw phenomenal growth due to an increase of trade with Spain and Portugal. Trade between France and her Caribbean colonies (Saint-Domingue, Guadeloupe, and Martinique) grew ten-fold between 1715 and 1789, with Saint Domingue the single richest territory in the world by 1789.
Much of the lucrative imports from the Caribbean were re-exported to
other European countries. By the late 1780s, 87% of the sugar, 95% of
the coffee, and 76% of the indigo imported to Bordeaux from the
Caribbean was being re-exported. Cádiz was the commercial hub for export of French printed fabrics to India, the Americas and the Antilles (coffee, sugar, tobacco, American cotton), and Africa (the slave trade), centered in Nantes. The value of this export activity amounted to nearly 25% of the French national income by 1789.
Industry continued to expand, averaging 2% growth per year from
the 1740s onwards and accelerating in the last decades before the
Revolution.
The most dynamic industries of the period were mines, metallurgy, and
textiles (in particularly printed fabrics, such as those made by Christophe-Philippe Oberkampf). The advancements in these areas were often due to British inventors. For example, it was John Kay's invention of the flying shuttle that revolutionized the textile industry, and it was James Watt's steam engine
that changed the industry as the French had known it. Capital remained
difficult to raise for commercial ventures, however, and the state
remained highly mercantilistic, protectionist, and interventionist
in the domestic economy, often setting requirements for production
quality and industrial standards, and limiting industries to certain
cities.
In 1749, a new tax, modeled on the "dixième" and called the
"vingtième" (or "one-twentieth"), was enacted to reduce the royal
deficit. This tax continued throughout the ancien régime. It was based
solely on revenues, requiring 5% of net earnings from land, property,
commerce, industry and from official offices, and was meant to touch all
citizens regardless of status. However, the clergy, the regions with
"pays d'état" and the parlements protested; the clergy won exemption,
the "pays d'état" won reduced rates, and the parlements halted new
income statements, effectively making the "vingtième" a far less
efficient tax than it was designed to be. The financial needs of the Seven Years' War
led to a second (1756–1780), and then a third (1760–1763), "vingtième"
being created. In 1754, the "vingtième" produced 11.7 million livres.
Improvements in communication, like an expanding network of roads and canals, and the diligence
stagecoach services which by the 1780s had sharply reduced travel times
between Paris and the provincial cities, went a long way towards
expanding trade within France. However, most French markets were
overwhelmingly local in character (by 1789 only 30% of agricultural
produce was being sold in a place other than where it was produced).
Price discrepancies between regions and heavy internal customs barriers,
which made for exorbitant transportation costs, meant that a unified
national market like that of Britain was still far off. On the eve of the Revolution, a shipment of goods travelling from Lorraine to the Mediterranean coast would have been stopped 21 times and incurred 34 different duties.
Agriculture
Starting
in the late 1730s and early 1740s, and continuing for the next 30
years, France's population and economy underwent expansion. Rising
prices, particularly for agricultural products, were extremely
profitable for large landholders. Artisans and tenant farmers also saw
wage increases but on the whole, they benefited less from the growing
economy. The ownership share of the peasantry remained largely the same
as it had in the previous century, with around 1/3 of arable land in the
hands of peasant smallholders in 1789.
A newer trend was the amount of land which came into the hands of
bourgeois owners during the 18th century: fully 1/3 of the arable land
in France by 1789.
The stability of land ownership made it a very attractive investment
for the bourgeois, as did the social prestige which it brought.
Pivotal developments in agriculture such as modern techniques of crop rotation
and the use of fertilizers, which were modeled on successes in Britain
and Italy, began to be introduced in parts of France. It would, however,
take generations for these reforms to spread throughout all of France.
In northern France the three-field system of crop rotation still
prevailed, and in the south the two-field system. Under such methods, farmers left either one third or half of their arable land vacant as fallow
every year to restore fertility in cycles. This was both a considerable
waste of land at any one time which might otherwise have been
cultivated, and an inferior way of restoring fertility compared to
planting restorative fodder crops.
Farming of recent New World crops, including maize
(corn) and potatoes, continued to expand and provided an important
supplement to the diet. However, the spread of these crops was
geographically limited (potatoes to Alsace and Lorraine, and maize in the more temperate south of France), with the bulk of the population over-reliant on wheat for subsistence.
From the late 1760's onwards harsher weather caused consistently poor
wheat harvests (there were only three between 1770 and 1789 which were
deemed sufficient).
The hardship bad harvests caused mainly affected the small
proprietors and peasants who constituted the bulk of French farmers;
large land owners continued to prosper from rising land prices and
strong demand. The more serious recurrent threat was that of bread
shortages and steep price rises, which could cause mass disruption and
rioting. The average wage earner in France, during periods of abundance,
might spend as much as 70% of his income on bread alone. During
shortages, when prices could rise by as much as 100%, the threat of
destitution increased dramatically for French families.
The French government experimented unsuccessfully with regulating the
grain market, lifting price controls in the late 1760s, re-imposing them
in the early 1770s, then lifting them again in 1775. Abandoning price
controls in 1775, after a bad harvest the previous year, caused grain
prices to skyrocket by 50% in Paris; the rioting which erupted as a
result (known as the Flour War), engulfed much of northeastern France and had to be put down with force.
Slave trade
The slaving interest was based in Nantes, La Rochelle, Bordeaux, and
Le Havre during the years 1763 to 1792. The 'négriers' were merchants
who specialized in funding and directing cargoes of black captives to
the Caribbean colonies, which had high death rates and needed a
continuous fresh supply. The négriers intermarried with each other's
families; most were Protestants. Their derogatory and patronizing
approach toward blacks immunized them from moral criticism. They
strongly opposed to the application of the Declaration of Rights of Man
to blacks. While they ridiculed the slaves as dirty and savage, they
often took a black mistress. The French government paid a bounty on each
captive sold to the colonies, which made the business profitable and
patriotic. They vigorously defended their business against the abolition
movement of 1789.
1770-1789
The
agricultural and climatic problems of the 1770s and 1780s led to an
important increase in poverty: in some cities in the north, historians
have estimated the poor as reaching upwards of 20% of the urban
population. Displacement and criminality, mainly theft, also increased,
and the growth of groups of mendicants and bandits became a problem.
Overall about one third of the French population lived in poverty,
approximately 8 million people. This could rise by several million
during bad harvests and the resulting economic crises.
Although nobles, bourgeoisie, and wealthy landholders saw their
revenues affected by the depression, the hardest-hit in this period were
the working class and the peasants. While their tax burden to the state
had generally decreased in this period, feudal and seigneurial dues had
increased.
Louis XVI distributing money to the poor of Versailles, during the brutal winter of 1788
In these last decades of the century, French industries continued to
develop. Mechanization was introduced, factories were created, and
monopolies became more common. However, this growth was complicated by
competition from England in the textiles and cotton industries. The
competitive disadvantage of French manufactures was sorely demonstrated
after the 1786 Anglo-French commercial treaty opened the French market
to British goods beginning in mid-1787.
The cheaper and superior quality British products undercut domestic
manufactures, and contributed to the severe industrial depression
underway in France by 1788.
The depression was worsened by a catastrophic harvest failure during
the summer of 1788, which reverberated across the economy. As peasants
and wage earners were forced to spend higher proportions of their income
on bread, demand for manufactured goods evaporated.
The American War of Independence
had led to a reduction of trade (cotton and slaves), but by the 1780s
Franco-American trade was stronger than before. Similarly, the Antilles represented the major source for European sugar and coffee, and it was a huge importer of slaves through Nantes. Paris became France's center of international banking and stock trades, in these last decades (like Amsterdam and London), and the Caisse d'Escompte was founded in 1776. Paper money was re-introduced, denominated in livres; these were issued until 1793.
The later years of Louis XV's reign saw some economic setbacks. While the Seven Years' War,
1756–1763, led to an increase in the royal debt and the loss of nearly
all of France's North American possessions, it was not until 1775 that
the French economy began truly to enter a state of crisis. An extended
reduction in agricultural prices over the previous twelve years, with
dramatic crashes in 1777 and 1786, and further complicated by climatic
events such as the disastrous winters of 1785-1789 contributed to the
problem. With the government deeply in debt, King Louis XVI was forced to permit the radical reforms of Turgot and Malesherbes. However, the nobles' disaffection led to Turgot's dismissal and Malesherbes' resignation 1776. Jacques Necker replaced them. Louis supported the American Revolution in 1778, but the Treaty of Paris (1783)
yielded the French little, excepting an addition to the country's
enormous debt. The government was forced to increase taxes, including
the "vingtième." Necker had resigned in 1781, to be replaced
temporarily by Calonne and Brienne, but he was restored to power in 1788.
1789–1914
French economic history since its late-18th century Revolution was
tied to three major events and trends: the Napoleonic Era, the
competition with Britain and its other neighbors in regards to
'industrialization', and the 'total wars' of the late-19th and early
20th centuries. Quantitative analysis of output data shows the French
per capita growth rates were slightly smaller than Britain. However the
British population tripled in size, while France grew by only third—so
the overall British economy grew much faster. François Crouzet has
succinctly summarized the ups and downs of French per capita economic
growth in 1815-1913 as follows:
- 1815-1840: irregular, but sometimes fast growth
- 1840-1860: fast growth;
- 1860-1882: slowing down;
- 1882-1896: stagnation;
- 1896-1913: fast growth
For the 1870-1913 era, Angus Maddison gives growth rates for 12
Western advanced countries—10 in Europe plus the United States and
Canada.
In terms of per capita growth, France was about average. However
again its population growth was very slow, so as far as the growth rate
in total size of the economy France was in next to the last place, just
ahead of Italy. The 12 countries averaged 2.7% per year in total
output, but France only averaged 1.6%. Crouzet argues that the:
- average size of industrial undertakings was smaller in France than in other advanced countries; that machinery was generally less up to date, productivity lower, costs higher. The domestic system and handicraft production long persisted, while big modern factories were for long exceptional. Large lumps of the Ancien Régime economy survived...On the whole, the qualitative lag between the British and French economy...persisted during the whole period under consideration, and later on a similar lag developed between France and some other countries—Belgium, Germany, the United States. France did not succeed in catching up with Britain, but was overtaken by several of her rivals.
French Revolution
Early Assignat of 29 Sept, 1790: 500 livres
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The value of Assignats (1789-1796)
"The French Revolution abolished many of the constraints on the
economy that had emerged during the old regime. It abolished the guild
system as a worthless remnant of feudalism."
It also abolished the highly inefficient system of tax farming,
whereby private individuals would collect taxes for a hefty fee. The
government seized the foundations that had been set up (starting in the
13th century) to provide an annual stream of revenue for hospitals, poor
relief, and education. The state sold the lands but typically local
authorities did not replace the funding and so most of the nation's
charitable and school systems were massively disrupted.
The economy did poorly in 1790-96 as industrial and agricultural
output dropped, foreign trade plunged, and prices soared. The
government decided not to repudiate the old debts. Instead, it issued
more and more paper money (called an "assignat") that supposedly were
grounded seized lands. The result was escalating inflation. The
government imposed price controls and persecuted speculators and traders
in the black market. People increasingly refused to pay taxes as the
annual government deficit increased from 10% of gross national product
in 1789 to 64% in 1793. By 1795, after the bad harvest of 1794 and the
removal of price controls, inflation had reached a level of 3500%.
Throughout January and February 1795, the Seine River(the
main source of import and export of goods at the time) froze, making it
impossible to transport anything through there, such as food, luxury
goods, and materials that factories depended on in order to keep
running.
Many factories and workshops were forced to close because they had no
way to operate, this led to an increased amount of unemployment. With
unemployment soaring, many of the poor (most of the population) were
forced to sell their belongings.
On the other hand, the very few who were wealthy, could afford anything
they needed. "The markets were well stocked, but the food could only be
bought at excessive prices".
The value of the assignats "had plunged from 31 percent of that of the silver currency in July 1794 to 8 percent in March 1795"
The main cause of assignat depreciation was over-issuance by successive
revolutionary governments, who turned to printing more and more paper
notes to fund escalating expenditure, especially after the advent of war
in 1792. Some 45 billion livres worth of paper had been printed by
1797, which collectively were worth less than one seventh that amount
based on 1790 prices.
The depreciation of the assignat not only caused spiraling inflation,
but had knock-on effects across the entire economy. Because assignats
were legal tender, they could be used to service debt repayments at face
value, although their real value stood at only a fraction of this. The
losses that lenders suffered as a result led them to tighten credit and
raise interest rates. Likewise the real value of national lands, which
the assignats were pegged to, sank to only 25% of their face value. The assignats
were withdrawn in 1796 but the replacements also fueled inflation. The
inflation was finally ended by Napoleon in 1803 with the gold franc as
the new currency.
The diminution of the economic power of the nobility and the
clergy also had serious disruptive effects on the French economy. With
the closure of monasteries, chapters, and cathedrals in towns like Tours, Avignon or Bayeux,
thousands were deprived of their livelihoods as servants, artisans, or
tradesmen. Likewise, the exodus of nobles devastated the luxury trades
and led to still greater hardship for servants, as well as industries
and supply networks dependent on aristocratic consumption. For those
nobles who remained in France, the heated anti-aristocratic social
environment dictated more modest patterns of dress and consumption,
while the spiraling inflation of the assignats dramatically reduced
their buying power. The plunging market for silk, for example, meant
that output in the silk capital of Lyons fell by half between 1789–99, contributing to a loss of almost one-third of Lyons' pre-revolutionary population.
In the cities entrepreneurship on a small scale flourished, as
restrictive monopolies, privileges, barriers, rules, taxes, and guilds
gave way. However, the British blockade which began in 1793 severely
damaged overseas trade. The wartime exigencies enacted that year by the National Convention
worsened the situation by banning the export of essential goods and
embargoing neutral shipping from entering French ports. Although these
restrictions were lifted in 1794, the British had managed to usurp
transatlantic shipping lanes in the meantime, further reducing markets
for French goods. By 1796, foreign trade accounted for just 9% of the
French economy, compared to 25% in 1789.
Agriculture
Agriculture
was transformed by the Revolution. It abolished tithes owed to local
churches as well as feudal dues owed to local landlords. The result
hurt the tenants, who paid both higher rents and higher taxes.
It nationalized all church lands, as well as lands belonging to
royalist enemies who went into exile. The Government in Paris planned to
use these seized lands to finance expenditure by issuing assignats.
With the breakup of large estates controlled by the Church and the
nobility and worked by hired hands, rural France became permanently a
land of small independent farms. The rural proletariat and nobility both
gave way to the commercial farmer. Cobban says the revolution "bequeathed to the nation "a ruling class of landowners." Most of these new landowners were bourgeois in origin, as the economic uncertainties of the 1790s and the abolition of venal office made land ownership an attractive and safe investment.
However, the recruitment needs of the wartime French Republic
between 1792 and 1802 led to shortages of agricultural workers. Farmers
were also subject to requisition of their livestock by passing armies;
the consequent losses of manure negatively impacted the fertility and
productivity of the land.
Overall the Revolution did not greatly change the French business
system and probably helped freeze in place the horizons of the small
business owner. The typical businessman owned a small store, mill or
shop, with family help and a few paid employees; large-scale industry
was less common than in other industrializing nations.
Napoleon and Bourbon reaction: 1799-1830
Napoleon
after 1799 paid for his expensive wars by multiple means, starting with
the modernization of the rickety financial system.
He conscripted soldiers at low wages, raised taxes, placed large-scale
loans, sold lands formerly owned by the Catholic Church, sold Louisiana
to the United States, plundered conquered areas and seized food
supplies, and did requisitions on countries he controlled, such as
Italy.
The constant "war-footing" of the Napoleonic Era,
1795–1815, stimulated production at the cost of investment and growth.
Production of armaments and other military supplies, fortifications,
and the general channeling of the society toward the establishment and
maintenance of massed armies, temporarily increased economic activity
after several years of revolution. The rampant inflation of the
Revolutionary era was halted by not printing the new currency quite as
fast. The maritime Continental Blockade, implemented by Napoleon's opponents and very effectively enforced by the Royal Navy,
gradually cut into any economic arena in which the French economy was
not self-sufficient. 1815 saw the final defeat of the French forces and
the collapse of its war footing.
This gave rise to a relatively peaceful period in the whole of Europe
until 1914, during which important institutional reforms such as the
introduction of a highly rationalized legal system could be implemented.
Napoleon's impact on the French economy was of modest importance
in the long run. He did sweep away the old guilds and monopolies and
trade restrictions. He introduced the metric system and fostered the
study of engineering. Most important he opened up French finance by the
creation of the indispensable Bank of France.
However, entrepreneurs had little opportunity to take advantage of
these reforms. Napoleon provided a protected continental market by
systematic exclusion of all imports from Britain. This had the effect
of encouraging innovation in Britain, where the Industrial Revolution
was well underway, and diverting the need for innovation in France.
What innovation took place focused on armaments for the army, and was of
little value in peacetime. In France the business crisis in 1810-1812
undermined what successes entrepreneurs had achieved.
With the restoration of the Bourbons in 1814, the reactionary
aristocracy with its disdain for entrepreneurship return to power.
British goods flooded the market, and France responded with high tariffs
and protectionism, to protect its established businesses especially
handcrafts and small-scale manufacturing such as textiles. The tariff
on iron goods reached 120%.
Agriculture had never needed protection but now demanded it from the lower prices of imported foodstuffs, such as Russian grain.
French winegrowers strongly supported the tariff – their wines did not
need it, but they insisted on a high tariff on the import of tea. One
agrarian deputy explained: "Tea breaks down our national character by
converting those who use it often into cold and stuffy Nordic types,
while wine arouses in the soul that gentle gaiety that gives Frenchmen
their amiable and witty national character." The French government falsified the statistics to claim that exports
and imports were growing – actually there was stagnation and the
economic crisis of 1826-29 disillusioned the business community and
readied them to support the revolution in 1830.
Banking and finance
Perhaps the only successful and innovative economic sector was banking. Paris emerged as an international center of finance in the mid-19th century second only to London.
It had a strong national bank and numerous aggressive private banks
that financed projects all across Europe and the expanding French
Empire. Napoleon III had the goal of overtaking London to make Paris the
premier financial center of the world, but the war in 1870 reduced the
range of Parisian financial influence. One key development was setting up one of the main branches of the Rothschild family.
In 1812, James Mayer Rothschild arrived in Paris from Frankfurt, and set up the bank "De Rothschild Frères". This bank funded Napoleon's return from Elba and became one of the leading banks in European finance. The Rothschild banking family of France funded France's major wars and colonial expansion. The Banque de France, founded in 1796 helped resolve the financial crisis of 1848 and emerged as a powerful central bank. The Comptoir National d'Escompte de Paris
(CNEP) was established during the financial crisis and the Republican
revolution of 1848. Its innovations included both private and public
sources in funding large projects and the creation of a network of local
offices to reach a much larger pool of depositors.
The Péreire brothers founded the Crédit Mobilier.
It became a powerful and dynamic funding agency for major projects in
France, Europe and the world at large. It specialized in mining
developments; it funded other banks including the Imperial Ottoman Bank
and the Austrian Mortgage Bank; it funded railway construction.
It also funded insurance companies and building contractors. The bank
had large investments in a transatlantic steamship line, urban gas lighting, a newspaper and the Paris Paris Métro public transit system. Other major banks included the Société Générale, and in the provinces the Crédit Lyonnais.
After its defeat in 1871, France had to pay enormous reparations to
Germany, with the German army continuing its occupation until the debt
was paid. The 5 billion francs amounted to a fourth of France's GNP –
and one-third of Germany's and was nearly double the usual annual
exports of France. Observers thought the indemnity was unpayable and
was designed to weaken France and justify long years of military
occupation. However France paid it off in less than three years. The
payments, in gold, acted as a powerful stimulus that dramatically
increased the volume of French exports, and on the whole, produced
positive economic benefits for France.
The Paris Bourse
or stock exchange emerged as a key market for investors to buy and sell
securities. It was primarily a forward market, and it pioneered in
creating a mutual guarantee fund so that failures of major brokers would
not escalate into a devastating financial crisis. Speculators in the
1880s who disliked the control of the Bourse used a less regulated
alternative the Coulisse. However, it collapsed in the face of the
simultaneous failure of a number of its brokers in 1895–1896. The Bourse
secured legislation that guaranteed its monopoly, increased control of
the curb market, and reduced the risk of another financial panic.
Industrialization
France
in 1815 was overwhelmingly a land of peasant farms, with some
handicraft industry. Paris, and the other much smaller urban centers had
little industry. On the onset of the nineteenth century, GDP per capita
in France was lower than in Great Britain and the Netherlands. This was
probably due to higher transaction costs, which were mainly caused by
inefficient property rights and a transportation system geared more to
military needs than to economic growth.
Historians are reluctant to use the term "Industrial Revolution"
for France because the slow pace seems an exaggeration for France as a
whole.
The Industrial Revolution was well underway in Britain when the
Napoleonic wars ended, and soon spread to Belgium and, to a lesser
extent to northeastern France. The remainder remained little changed.
The growth regions developed industry, based largely on textiles, as
well as some mining. The pace of industrialization was far below
Britain, Germany, the United States and Japan. The persecution of the
Protestant Huguenots
after 1685 led to a large-scale flight of entrepreneurial and
mechanical talents that proved hard to replace. Instead French business
practices were characterized by tightly held family firms, which
emphasized traditionalism and paternalism. These characteristics
supported a strong banking system, and made Paris a world center for
luxury craftsmanship, but it slowed the building of large factories and
giant corporations. Napoleon had promoted engineering education, and it
paid off in the availability of well-trained graduates who developed the
transportation system, especially the railways after 1840.
Retailing
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Au Bon Marché
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Paris became world-famous for making consumerism a social priority
and economic force, especially through its upscale arcades filled with
luxury shops and its grand department stores. These were "dream
machines" that set the world standard for consumption of fine products
by the upper classes as well as the rising middle class.
Paris took the lead internationally in elaborate department stores
reaching upscale consumers with luxury items and high quality goods
presented in a novel and highly seductive fashion. The Paris department
store had its roots in the magasin de nouveautés, or novelty store; the first, the Tapis Rouge, was created in 1784. They flourished in the early 19th century, with La Belle Jardiniere (1824), Aux Trois Quartiers (1829), and Le Petit Saint Thomas (1830). Balzac described their functioning in his novel César Birotteau.
In the 1840s, the new railroads brought wealthy consumers to Paris
from a wide region. Luxury stores grew in size, and featured plate glass
display windows, fixed prices and price tags, and advertising in
newspapers.
The entrepreneur Aristide Boucicaut in 1852 took Au Bon Marché,
a small shop in Paris, set fixed prices (with no need to negotiate with
clerks), and offered guarantees that allowed exchanges and refunds. He
invested heavily in advertising, and added a wide variety of
merchandise. Sales reached five million francs in 1860. In 1869 he moved
to larger premises; sales reached 72 million in 1877. The
multi-department enterprise occupied fifty thousand square meters with
1788 employees. Half the employees were women; unmarried women employees
lived in dormitories on the upper floors. The success inspired numerous
competitors all vying for upscale customers.
The French gloried in the national prestige brought by the great Parisian stores. The great writer Émile Zola (1840–1902) set his novel Au Bonheur des Dames
(1882–83) in the typical department store. Zola represented it as a
symbol of the new technology that was both improving society and
devouring it. The novel describes merchandising, management techniques,
marketing, and consumerism.
Other competitors moved downscale to reach much larger numbers of
shoppers. The Grands Magasins Dufayel featured inexpensive prices and
worked to teach workers how to shop in the new impersonal environment.
Its advertisements promised the opportunity to participate in the
newest, most fashionable consumerism at reasonable cost. The latest
technology was featured, such as cinemas and exhibits of inventions like
X-ray machines (used to fit shoes) and the gramophone.
Increasingly after 1870 the stores' work force became feminized,
opening up prestigious job opportunities for young women. Despite the
low pay and long hours they enjoyed the exciting complex interactions
with the newest and most fashionable merchandise and upscale customers.
By the 21st century, the grand Paris department stores had
difficulty surviving in the new economic world. In 2015, just four
remained; Au Bon Marché, now owned by the luxury goods firm LVMH; BHV; Galeries Lafayette and Printemps.
Railways
In France, railways became a national medium for the modernization of
backward regions, and a leading advocate of this approach was the
poet-politician Alphonse de Lamartine.
One writer hoped that railways might improve the lot of "populations
two or three centuries behind their fellows" and eliminate 'the savage
instincts born of isolation and misery."
Consequently, France built a centralized system that radiated from
Paris (plus lines that cut east to west in the south). This design was
intended to achieve political and cultural goals rather than maximize
efficiency. After some consolidation, six companies controlled
monopolies of their regions, subject to close control by the government
in terms of fares, finances, and even minute technical details. The
central government department of Ponts et Chaussées (bridges and roads,
or the Highways Department) brought in British engineers and workers,
handled much of the construction work, provided engineering expertise
and planning, land acquisition, and construction of permanent
infrastructure such as the track bed, bridges and tunnels. It also
subsidized militarily necessary lines along the German border, which was
considered necessary for the national defense.
Private operating companies provided management, hired labor,
laid the tracks, and built and operated stations. They purchased and
maintained the rolling stock—6,000 locomotives were in operation in
1880, which averaged 51,600 passengers a year or 21,200 tons of freight.
Much of the equipment was imported from Britain and therefore did not
stimulate machinery makers. Although starting the whole system at once
was politically expedient, it delayed completion, and forced even more
reliance on temporary exports brought in from Britain. Financing was
also a problem. The solution was a narrow base of funding through the Rothschilds
and the closed circles of the Bourse in Paris, so France did not
develop the same kind of national stock exchange that flourished in
London and New York. The system did help modernize the parts of rural
France it reached, but it did not help create local industrial centers. Critics such as Émile Zola complained that it never overcame the corruption of the political system, but rather contributed to it.
The railways helped the industrial revolution in France by
facilitating a national market for raw materials, wines, cheeses, and
imported manufactured products. Yet the goals set by the French for
their railway system were moralistic, political, and military rather
than economic. As a result, the freight trains were shorter and less
heavily loaded than those in such rapidly industrializing nations such
as Britain, Belgium or Germany. Other infrastructure needs in rural
France, such as better roads and canals, were neglected because of the
expense of the railways, so it seems likely that there were net negative
effects in areas not served by the trains.
Total War
In 1870 the relative decline in industrial strength, compared to Bismarck's Germany, proved decisive in the Franco-Prussian War.
The total defeat of France, in this conflict, was less a demonstration
of French weakness than it was of German militarism and industrial
strength. This contrasted with France's occupation of Germany during the
Napoleonic wars. By 1914, however, German armament and general
industrialization had out-distanced not only France but all of its
neighbors. Just before 1914, France was producing about one-sixth as
much coal as Germany, and a quarter as much steel.
Modernization of peasants
France
was a rural nation as late as 1940, but a major change took place after
railways started arriving in the 1850s–60s. In his seminal book Peasants Into Frenchmen (1976), historian Eugen Weber
traced the modernization of French villages and argued that rural
France went from backward and isolated to modern and possessing a sense
of French nationhood during the late 19th and early 20th centuries.
He emphasized the roles of railroads, republican schools, and universal
military conscription. He based his findings on school records,
migration patterns, military service documents and economic trends.
Weber argued that until 1900 or so a sense of French nationhood was weak
in the provinces. Weber then looked at how the policies of the Third
Republic created a sense of French nationality in rural areas. The book
was widely praised, but was criticized by some, such as Ted W.
Margadant, who argued that a sense of Frenchness already existed in the
provinces before 1870.
French national policy was protectionist with regard to
agricultural products, to protect the very large agricultural
population, especially through the Méline tariff
of 1892. France maintained two forms of agriculture, a modern,
mechanized, capitalistic system in the Northeast, and in the rest of the
country a reliance on subsistence agriculture on very small farms with
low income levels.
Modernization of the subsistence sector began in the 1940s, and
resulted in a rapid depopulation of rural France, although protectionist
measures remained national policy.
1914–1944
The overall growth rate of the French economy shows a very strong
performance in the 1920s and again in the 1960s, with poor performances
in the 1910s, 1930s, and 1990s.
World War I
The economy was critically hurt by the German seizure of major
industrial areas in the northeast. While the occupied area in 1913
contained only 14% of France's industrial workers, it produced 58% of
the steel, and 40% of the coal. Considerable relief came with the massive influx of American food, money and raw materials in 1917-1928.
French credit collapsed in 1916 and Britain began loaning large sums to Paris. The J.P. Morgan & Co
bank in New York assumed control of French loans in the fall of 1916
and relinquished it to the U.S. government when the U.S. entered the war
in 1917.
On the other hand, the economy was helped by American loans which were
used to purchase foods and manufactured goods that allowed a decent
standard of living. The arrival of over a million American soldiers in
1918 brought heavy spending for food and construction materials. Labor
shortages were in part alleviated by the use of volunteer and forced
labor from the colonies.
The war damages amounted to about 113% of the GDP of 1913,
chiefly the destruction of productive capital and housing. The national
debt rose from 66% of GDP in 1913 to 170% in 1919, reflecting the heavy
use of bond issues to pay for the war. Inflation was severe, with the
franc losing over half its value against the British pound.
1919–1929
At the Paris Peace Conference, 1919,
vengeance against defeated Germany was the main French theme. France
demanded full payment by Germany of the damages it imposed in the
German-occupied areas. It also wanted the full cost of postwar veterans
benefits. Prime Minister Clemenceau was largely effective against the
moderating influences of the British and Americans. France obtained
large (but unspecified) reparations, regained Alsace-Lorraine and obtained mandates to rule parts of former German colonies in Africa.
In January 1923 as a response to the failure of the German to
ship enough coal as part of its reparations, France (and Belgium)
occupied the industrial region of the Ruhr.
Germany responded with passive resistance including printing vast
amounts of marks to pay for the occupation, thereby causing runaway
inflation. Inflation heavily damaged the German middle class (because
their bank accounts became worthless) but it also damaged the French
franc. France fomented a separatist movement pointing to an independent
buffer state, but it collapsed after some bloodshed. The intervention
was a failure, and in summer 1924 France accepted the American solution
to the reparations issues, as expressed in the Dawes Plan.
Great Depression
The worldwide decline after 1929 affected France a bit later than other countries, hitting around 1931.
The depression was relatively mild: unemployment peaked under 5%, the
fall in production was at most 20% below the 1929 output; there was no
banking crisis.
But the depression also lasted longer in France than in most other
countries. Like many other countries, France had introduced the gold
standard in the nineteenth century, meaning that it was generally
possible to exchange bank notes for gold. Unlike other countries (e.g.
Great Britain, which abandoned the gold standard in 1931), France stuck
to the gold standard until 1936, which caused a number of problems in
times of recession and deflation. France lost competitiveness relative
to Great Britain, because the latter was able to offer its products at a
cheaper price due to the devaluation of its currency after leaving the
gold standard.
Furthermore, terminating fixed exchange rate regimes opened up
opportunities for expansive monetary policy and thus influenced
consumers’ expectations of future inflation, which was crucial for
domestic demand. The French economy only started to recover when France
abandoned the gold standard.
However, the depression had some effects on the local economy, and partly explains the February 6, 1934 riots and even more the formation of the Popular Front, led by SFIO socialist leader Léon Blum, which won the elections in 1936.
France's relatively high degree of self-sufficiency meant the damage was considerably less than in nations like Germany.
Popular Front: 1936
Hardship and unemployment were high enough to lead to rioting and the rise of the socialist Popular Front, which won the 1936 elections with a coalition of Socialists and Radicals, and support from the Communists. Léon Blum became the first Socialist prime minister.
The election brought a massive wave of strikes, with involving 2
million workers, and their seizure of many factories and stores. The
strikes were spontaneous and unorganized, but nevertheless the business
community panicked and met secretly with Blum, Who negotiated a series
of reforms, and then gave labor unions the credit for the Matignon Accords. The new laws:
- confirmed the right to strike
- generalised collective bargaining
- enacted the law mandating 12 days of paid annual leave
- enacted the law limiting the working week to 40 hours (outside of overtime)
- raised wages (15% for the lowest-paid workers, and 7% for the relatively well-paid)
- stipulated that employers would recognise shop stewards.
- ensured that there would be no retaliation against strikers.
- created a national Office du blé (Grain Board or Wheat Office, through which the government helped to market agricultural produce at fair prices for farmers) to stabilise prices and curb speculation
- nationalised the arms industries
- made loans to small and medium-sized industries
- began a major public works programme
- raised the pay, pensions, and allowances of public-sector workers
- The 1920 Sales Tax, opposed by the Left as a tax on consumers, was abolished and replaced by a production tax, which was considered to be a tax on the producer instead of the consumer.
Blum persuaded the workers to accept pay raises and go back to work.
Wages increased sharply, in two years the national average was up 48
percent. However inflation also rose 46%. The imposition of the 40-hour
week proved highly inefficient, as industry had a difficult time
adjusting to it.
The economic confusion hindered the rearmament effort, and the rapid
growth of German armaments alarmed Blum. He launched a major program to
speed up arms production. The cost forced the abandonment of the social
reform programs of the popular front had counted heavily on.
Legacy of Popular Front
Economic
historians point to numerous bad financial and economic policies, such
as delayed devaluation of the franc, which made French exports
uncompetitive.
Economists especially emphasize the bad effects of the 40-hour week,
which made overtime illegal, forcing employers to stop work or to
replace their best workers with inferior and less experienced workers
when that 40-hour limit was reached. More generally the argument is
made that France could not afford the labor reforms, in the face of poor
economic conditions, the fears of the business community and the threat
of Nazi Germany.
Some historians have judged the Popular Front a failure in terms
of economics, foreign policy, and long-term political stability.
"Disappointment and failure," says Jackson, "was the legacy of the
Popular Front." However, it did inspire later reformers who set up the modern French welfare state.
Vichy France, 1940–1944
Conditions in Vichy France
under German occupation were very harsh, because the Germans stripped
France of millions of workers (as prisoners of war and "voluntary"
workers), and as well stripped much of the food supply, while demanding
heavy cash payments. It was a period of severe economic hardship under a
totalitarian government.
Vichy rhetoric exalted the skilled laborer and small businessman.
In practice, however, the needs of artisans for raw materials was
neglected in favor of large businesses.
The General Committee for the Organization of Commerce (CGOC) was a
national program to modernize and professionalize small business.
In 1940 the government took direct control of all production,
which was synchronized with the demands of the Germans. It replaced free
trade unions with compulsory state unions that dictated labor policy
without regard to the voice or needs of the workers. The centralized,
bureaucratic control of the French economy was not a success, as German
demands grew heavier and more unrealistic, passive resistance and
inefficiencies multiplied, and Allied bombers hit the rail yards;
however, Vichy made the first comprehensive long-range plans for the
French economy. The government had never before attempted a
comprehensive overview. De Gaulle's Provisional Government in 1944-45,
quietly used the Vichy plans as a base for its own reconstruction
program. The Monnet Plan of 1946 was closely based on Vichy plans.
Thus both teams of wartime and early postwar planners repudiated prewar
laissez-faire practices and embraced the cause of drastic economic
overhaul and a planned economy.
Forced labor
Nazi
Germany kept nearly 2.5 million French Army POWs as forced laborers
throughout the war. They added compulsory (and volunteer) workers from
occupied nations, especially in metal factories. The shortage of
volunteers led the Vichy government to pass a law in September 1941 that
effectively deported workers to Germany, where, they constituted 17% of
the labor force by August 1943. The largest number worked in the giant Krupp
steel works in Essen. Low pay, long hours, frequent bombings, and
crowded air raid shelters added to the unpleasantness of poor housing,
inadequate heating, limited food, and poor medical care, all compounded
by harsh Nazi discipline. They finally returned home in the summer of
1945. The forced labour draft encouraged the French Resistance and undermined the Vichy government.
Food shortages
Civilians suffered shortages of all varieties of consumer goods.
The rationing system was stringent but badly mismanaged, leading to
produced malnourishment, black markets, and hostility to state
management of the food supply. The Germans seized about 20% of the
French food production, which caused severe disruption to the household
economy of the French people.
French farm production fell in half because of lack of fuel, fertilizer
and workers; even so the Germans seized half the meat, 20 percent of
the produce, and 2 percent of the champagne.
Supply problems quickly affected French stores which lacked most
items. The government answered by rationing, but German officials set
the policies and hunger prevailed, especially affecting youth in urban
areas. The queues lengthened in front of shops. Some people—including
German soldiers—benefited from the black market,
where food was sold without tickets at very high prices. Farmers
especially diverted meat to the black market, which meant that much less
for the open market. Counterfeit food tickets were also in circulation.
Direct buying from farmers in the countryside and barter against
cigarettes became common. These activities were strictly forbidden,
however, and thus carried out at the risk of confiscation and fines.
Food shortages were most acute in the large cities. In the more remote
country villages, however, clandestine slaughtering, vegetable gardens
and the availability of milk products permitted better survival. The
official ration provided starvation level diets of 1300 or fewer
calories a day, supplemented by home gardens and, especially, black
market purchases.
From 1944
Historical GDP growth of France from 1961 to 2016 and the latter part of Les Trente Glorieuses.
The great hardships of wartime, and of the immediate post-war period,
were succeeded by a period of steady economic development, in France,
now often fondly recalled there as The Thirty Glorious Years (Les Trente Glorieuses).
Alternating policies of "interventionist" and "free market" ideas
enabled the French to build a society in which both industrial and
technological advances could be made but also worker security and
privileges established and protected. In the year 1946 France signed a
treaty with US that waved off a large part of its debt. It was known as The Blum-Byrnes agreement
(in French accord Blum-Byrnes) which was a French-American agreement,
signed May 28, 1946 by the Secretary of State James F. Byrnes and
representatives of the French government Léon Blum and Jean Monnet. This
agreement erased part of the French debt to the United States after the
Second World War (2 billion dollars).
By the end of the 20th century, France once again was among the
leading economic powers of the world, although by the year 2000 there
already was some fraying around the edges: people in France and
elsewhere were asking whether France alone, without becoming even more
an integral part of a pan-European economy, would have sufficient market
presence to maintain its position, and that worker security and those
privileges, in an increasingly "Globalized" and "transnational" economic world.
Reconstruction and the Welfare State
Reconstruction began at the end of the war, in 1945, and confidence in the future was brought back. With the baby boom
(which had started as soon as 1942) the birthrate surged rapidly. It
took several years to fix the damages caused by the war – battles and
bombing had destroyed several cities, factories, bridges, railway
infrastructures. 1,200,000 buildings were destroyed or damaged.
In 1945, the provisional government of the French Republic, led by Charles de Gaulle and made up of communists, socialists and gaullists, nationalized key economic sectors (energy, air transport, savings banks, assurances) and big companies (e.g. Renault), with the creation of Social Security and of works councils. A welfare state was set up. Economic planning was initiated with the Commissariat général du Plan in 1946, led by Jean Monnet.
The first « Plan de modernisation et d’équipement », for the 1947-1952
period, focused on basic economic activities (energy, steel, cement,
transports, agriculture equipment); the second Plan (1954–1957) had
broader aims: housing construction, urban development, scientific
research, manufacturing industries.
The debts left over from the First World War, whose payment had been suspended since 1931, was renegotiated in the Blum-Byrnes agreement of 1946. The U.S. forgave all $2.8 billion in debt, and gave France a new loan of $650 million. In return French negotiator Jean Monnet
set out the French five-year plan for recovery and development.
American films were now allowed in French cinemas three weeks per month.
Nationalized industries
Nationalization
of major industries took place in the 1930s and 1940s, but was never
complete. The railways were nationalized in 1937 because they were
losing money, but were strategically important. Likewise the
aeronautics and armaments industries were nationalized. During the war,
the Vichy government froze wages, froze prices, controlled external
trade and supervise distribution of raw materials to the manufacturing
sector. The French economy accepted increasing levels of
nationalization without major political opposition. After the war the
power industry, gas, and electricity were nationalized in 1946, with the
goal of bringing increased efficiency. Banking and insurance were
nationalized along with iron and steel. However oil was not considered
so important, and was not nationalized. Enlarge role of government
necessitated systematic national planning, which was a key feature of
the postwar industries.
Monnet Plan
To aid the rebuilding of the French economy, the value of stolen resources were recovered from defeated Germany under the Monnet Plan. As part of this policy, German factories were disassembled and moved to France, and the coal-rich industrial Saar Protectorate was occupied by France, as had been done post-World War I, in the Territory of the Saar Basin.
Thus in the 1947–1956 period, France benefited from the resources and
production of the Saar, and continued to extract coal from the Warndt
coal deposit until 1981. The Saarland reunited with Germany in 1957, and resolution of its situation led to the formation of the European Coal and Steel Community, precursor to the European Union, which played a significant role in Europe and France's economy in the later post-war period.
Economic recovery
Although
the economic situation in France was very grim in 1945, resources did
exist and the economy regained normal growth by the 1950s. The US government had planned a major aid program, but it unexpectedly ended Lend Lease
in late summer 1945, and additional aid was stymied by Congress in
1945-46. However there were $2 billion in American loans. France
managed to regain its international status thanks to a successful
production strategy, a demographic spurt, and technical and political
innovations. Conditions varied from firm to firm. Some had been
destroyed or damaged, nationalized or requisitioned, but the majority
carried on, sometimes working harder and more efficiently than before
the war. Industries were reorganized on a basis that ranged from
consensual (electricity) to conflictual (machine tools), therefore
producing uneven results. Despite strong American pressure through the
ERP, there was little change in the organization and content of the
training for French industrial managers. This was mainly due to the
reticence of the existing institutions and the struggle among different
economic and political interest groups for control over efforts to
improve the further training of practitioners.
The Monnet Plan
provided a coherent framework for economic policy, and it was strongly
supported by the Marshall Plan. It was inspired by moderate, Keynesian
free-trade ideas rather than state control. Although relaunched in an
original way, the French economy was about as productive as comparable
West European countries.
The United States helped revive the French economy with the Marshall Plan
whereby it gave France $2.3 billion with no repayment. France agreed to
reduce trade barriers and modernize its management system. The total of
all American grants and credits to France, 1946–53, came to $4.9
billion, and low-interest loans added another $2 billion.
The Marshall Plan set up intensive tours of American industry.
France sent 500 missions with 4700 businessmen and experts to tour
American factories, farms, stores and offices. They were especially
impressed with the prosperity of American workers, and how they could
purchase an inexpensive new automobile for nine months work, compared to
30 months in France.
Some French businesses resisted Americanization, but others seized upon
it to attract American investments and build a larger market. The
industries that were most Americanized included chemicals, oil,
electronics, and instrumentation. They were the most innovative, and
most profitable sectors.
Claude Fohlen argues that:
- In all then, France received 7,000 million dollars, which were used either to finance the imports needed to get the economy off the ground again or to implement the Monnet Plan....Without the Marshall Plan, however, the economic recovery would have been a much slower process – particularly in France, where American aid provided funds for the Monnet Plan and thereby restored equilibrium in the equipment industries, which govern the recovery of consumption, and opened the way... To continuing further growth. This growth was affected by a third factor... decolonization.
Les Trente Glorieuses: 1947–1973
Between 1947 and 1973, France went through a booming period (5% per year in average) dubbed by Jean Fourastié Trente Glorieuses, title of a book published in 1979.
The economic growth is mainly due to productivity gains and to an
increase in the number of working hours. Indeed, the working population
was growing very slowly, the baby boom
being offset by the extension of the time dedicated to studies.
Productivity gains came from the catching up with the United States. In
1950, the average income in France was 55% of an American and reached
80% in 1973. Among the major nations, only Japan and Spain had faster
growth in this era than France.
Insisting that the period was not that of an economic miracle,
but a mere catching up following an economic lag, French historian Jacques Marseille noted that if the economy had constantly grown at the same rate as that of the « Belle Époque », the wealth would have been the same at the beginning of the 1970s as that actually reached after the Trente glorieuses.
Rural living
With
government support, active farmers bought out their neighbors, enlarge
their properties, and use the latest in mechanization, new seeds,
fertilizers, and new techniques. The result was a revolution in
agricultural output, as well as a sharply reduced number of active
farmers from 7.4 million in 1946 to only 2 million in 1975. It also
resulted in millions of empty old farm houses. They were promptly
purchased and upgraded by Frenchmen who wanted a rural retreat away from
the frenzy of their primary work in the cities. For many it was in
nostalgia for family memories of rural living that drew the city
dwellers back to the countryside. By 1978, France was the world leader
in per capita ownership of second homes and L’Express reported an
"irresistible infatuation of the French for the least Norman thatched
house, Cévenol sheep barn or the most modest Provençal farmhouse."
The economic crisis
By
the late 1960s, France's economic growth, while strong, was beginning
to lose steam. A global currency crisis meant a devaluation of the Franc
against the West German Mark and the U.S. Dollar in 1968, which was one
of the leading factors for the social upheaval of that year.
The Trente glorieuses era is usually considered to end with the 1973 oil crisis, which increased costs in energy and thus on production. Economic instability marked the Giscard d'Estaing government and the early years of the presidency of François Mitterrand, including a recession in the early 1980s, which led to the abandonment of dirigisme
in favour of a more pragmatic approach to economic intervention. Growth
resumed later in the decade, only to be slowed down by the economic
depression of the early 1990s, which affected the Socialist Party.
Liberalisation under Jacques Chirac
in the late 1990s strengthened the economy. However, after 2005 the
world economy stagnated and the 2008 global crisis and its effects in
both the Eurozone and France itself dogged the conservative government
of Nicolas Sarkozy, who lost reelection in 2012 against Socialist Francois Hollande.
In spite of this, France's recent economic history has been less
turbulent than in many other countries. The average income in France,
after having been steady for a long time, increased elevenfold between
1700 and 1975, which constitutes a 0.9% growth rate per year, a rate
which has been outdone almost every year since 1975: By the early
Eighties, for instance, wages in France were on or slightly above the EEC average.
The financial crisis of 2008 and aftermath
France,
like a number of countries, was affected by the 2008 financial crisis.
However, during the worst part of the crisis, between 2008-2010, France
fared better than other industrialized countries. For example, the Euro
zone's overall GDP decreased by 4 percent, while France's GDP only
decreased by 2.2 percent. This resilience is linked to France's social
protection system, which, through the transfers it organizes (47 percent
of gross disposable household income in 2007) equips France with strong
economic stabilizers. However, these stabilizers weigh inversely on
recovery. Starting in 2012, many countries experienced economic
recoveries, where the analysis of the indicators of economic activity in
France do not show a clear recovery, or rather do not show an increased
growth during this time.
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