"Une Eventualite Absolument Exclue": French Reluctance to Devalue, 1933-1936

Abstract

Speaking of French gold and currency policy in 1930, John Maynard Keynes told the Macmillan Committee, Both in official and academic circles in France it is hardly an exaggeration to say that economic science is non-existent. French thought on these matters is two generations out of date.'1 Five years later, French thought might have been three and a half generations out of date by Keynes's accounting. In 1930 the French economy was benefiting from an undervalued franc, with industrial production increasing, no unemployment, and rising gold reserves, while the rest of the world slid deeper into depression. By 1935 the French economy was in a severe slump, seemingly immune to recovery despite a reviving international economy. The French government was committed to defense of the franc and to a price deflation which produced stagnation as economic activity contracted. At the same time, protectionist measures on behalf of French agriculture and industry helped render deflationary efforts ineffective.2 French tenacity in defending the 1928 franc Poincare was the most striking error in French economic policy during the Great Depression. Explanations have rightly focused on French currency experience in