The 1929 American Wall Street Crash caused the intertwined European economy to crash as well. After WWI, Germany was depending on America for loans so she could pay back her war reparations, and the money countries such as France and Britain received money from Germany and going back to America to repay the war bonds. So, when the source of income disappears, so does this cycle. How did Britain and France, the two most prominent countries in the League of Nations, deal with this?
A similarity between the two nation’s policies is that both tried to alleviate the burden of workers and raise their spending power. Britain did so by trying to increase public works and unemployment benefits, and in France, the elected Popular Front government gave a forty-hour working week, paid holidays for workers, and rights to trade unions in hopes of raising recovery and workers’ spending power. Another similarity is that Britain and France both came to see as their current economic practices as ineffective and set off to a more protectionist policy. Britain introduced tariffs, and France attempted to hinder the free market as to prevent capital from leaving the country. A difference, however, is that Britain and France took polar economic policies. While Britain reinforced particular firms with policies intended to create monopolies, France nationalized sectors such as the Bank of France, railways, and the arms industry. Another difference is that France remained on the gold standard longer than Britain, who, in 1931, went off the gold standard in hopes of devaluing the pound. As well, while Britain’s general population were against radical political protests and did not want to overthrow their government, the French government was unable to solve the social unrest and as a result, the communists, socialists, and the Radical Party won the most seats in the next election.
Britain was more successful than France in combating the effects of the Great Depression. For one, France was the last among all nations to recover from her economic crises. There were many changes in France’s government throughout the Great Depression as well as opposition that delayed the ability of France to successfully make effective changes to her economic policies. However, Britain’s government was always supported by the public, and the government started off as a coalition between the Labour, Conservative, and Liberal parties. In France, the Popular Front’s decisions to nationalize sectors alienated business leaders and caused the wealthy to send their money out of the country. Even after nationalizing sectors, French industrial production did not regain the 1929 levels until a decade after. However, when Britain focussed on creating monopolies there was more industrial production and a small recovery but increase in employment rates, and the protective tariffs allowed money to circulate within Britain. France remained on the gold standard, which attracted international investors, however, the benefits of this did not remain long because France was not industrialized enough to combat the economic downturn that resulted from the Depression, and thus there was no more funds because investors were worried about the safety of their investments. France also tried to give more money to the workers, and by nationalizing the bank, they were able to do so. However, bank owners sent their money to different countries, and there was unrest in business and bank owners. Britain went off the gold standard relatively quickly and tried to increase employment benefits by not nationalizing the bank, but by taking loans from the banks, who gave what they could offer. The resulting currency devaluation and the increase in public spending was what was opposite to Britain’s policy before, where adherence to the gold standard and not spending in hard times was considered. However, this new policy that was opposite from the traditional caused Britain to combat the effects of the Great Depression better than France. The National Government in Britain was supported by the majority, the system of government was more compatible than France’s, and the increase in industrial production as well as they devaluation of the pound and increase in public spending all led to currency being circulated around Britain, which caused them to recover from the Depression much quicker than France.
France’s government during the Great Depression and interwar years did little to rectify the economic situation, relying on capitalism and the market to make amends of the aftermath of the war. The French government also believed that Germany should be punished and made to pay reparations and essentially France’s debt. When the Germans asked or a moratorium, Poincare sent troops to occupy the Ruhr. Through this, France wanted to protect herself from a stronger Germany. France did not want Germany’s economy to rise again in case that threatened her. Their rationale was that if they would receive their reparations through other means, not money, which would allow France to recover their economy but not allow Germany to flourish. This is what France thought would lead to collective security. This plan failed because it was seen as, by the Labour Party, French imperialism and a vengeful attempt to threaten the peace of Europe. France officially failed when the Dawes Plan came into effect where an aspect of the Treaty of Versailles came into Germany’s favour. France also believed in her own and the collective security through rejecting disarmament. She thought that disarming in front of Germany would lead to disaster, and Europe should only disarm if there was enough mobilization in the settlement of Versailles to fight against a potentially armed Germany, which would prove as a safety for everyone. Since Britain and the United States did not agree to France’s settlements, France thought that she should not be forced to disarm, as this would threaten her security. However, in the eyes of the Labour Party, France was a rich nation, yet they were benefiting greatly from the Young Plan. They thought that disarmament, since the armaments race led to war, would create peace. The French, in their search for security, especially during the Great Depression, failed mainly because of her isolation from Britain and the United States.
