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Was The Great War A Watershed ?

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Was the Great War a Watershed ?

The economics of World War One in France

Pierre-Cyrille Hautcoeur

UniversitÐ"© de Paris I PanthÐ"©on-Sorbonne (Matisse)

and DELTA (joint research unit CNRS-EHESS-ENS)

This paper has been prepared for a book edited by M. Harrisson and S. Broadberry on

The Economics of World War One, forthcoming at Cambridge University Press.


This paper presents a broad, quantitatively documented, overview of the French economy

during World War One, trying to answer the question of whether the war was a turning point

in French economic history. It first describes the various shocks the war imposed to the

economy, from invasion to labour and capital mobilisation. It then studies macroeconomic

policies, especially the finance of both the budget and the balance of payments deficits. It then

turn to government interventions in the economy, suggesting they were less important than

frequently asserted, and showing thanks to two quantitative tests that the economy probably

adapted to the war more spontaneously than usually believed. It ends with some remarks on

the effects of the war on future growth, arguing that the main problem for France resulting

from the war was the change in the international political and monetary environment.



Nous prÐ"©sentons une tentative de synthÐ"Ёse macroÐ"©conomique quantifiÐ"©e sur l'Ð"©conomie

franÐ"§aise pendant la premiÐ"Ёre guerre mondiale en cherchant Ð" Ð"©valuer dans quelle mesure la

guerre reprÐ"©sente un tournant majeur pour l'Ð"©conomie franÐ"§aise. Nous Ð"©tudions d'abord les

chocs que la guerre impose Ð" l'Ð"©conomie, depuis l'invasion d'une partie du territoire jusqu'aux

effets sur la demande de travail et de capital ou sur la balance des paiements. Nous Ð"©tudions

ensuite la politique macroÐ"©conomique, spÐ"©cialement les voies empruntÐ"©es pour financer les

dÐ"©ficits budgÐ"©taires et extÐ"©rieurs. Nous examinons ensuite les interventions directes de l'Etat

dans l'Ð"©conomie, suggÐ"©rant qu'elles furent sans doute moins importantes que ce que l'on

affirme parfois, et montrant par deux tests quantitatifs sommaires que l'Ð"©conomie s'est sans

doute adaptÐ"©e Ð" la guerre plus spontanÐ"©ment que l'on ne croit habituellement. Nous terminons

par quelques remarques sur les consÐ"©quences de la guerre pour la croissance postÐ"©rieure, en

soutenant que le problÐ"Ёme principal de la France est le changement de son environnement

international Ð" la fois politique et monÐ"©taire.


1. Introduction1

The dominant view is that the “Great War” represented for France the end of an economic and

social era considered sometimes with nostalgia in France and with condescension abroad : not

only the Belle Epoque, but the entire 19th century as an era in which economic liberalism was

compensated by a strong State which guaranteed the “equilibrium” of a well balanced

economy of “moderate” industrialisation, symbolised by the image of its “three pillars”,

agriculture, manufacturing and services, being of similar size, or the same for the urban and

rural areas. Another view, mostly developed by economic historians, highlights the rapid

changes of the French economy and society before the war : dynamic industrial change was

under way, best symbolised by the automobile and aircraft industries ; complex firms in

manufacturing or financial services were developing rapidly, whose mere size contradicts the

view of “garden-like France” ; social change and workers’ movements were important and

relatively well integrated in increasingly democratic politics. This view, when comparing the

Belle Epoque with the 1920s, leads to an emphasis on the continuity that dominated in terms

of technology and organisation at the firm level and even in the private economy as a whole.

But it was not sufficient to modify the dominant view, maybe because the War introduced to

new economic phenomena and policies, gave to the State a much increased role in

macroeconomic management, and started a long period of economic and international

instability2, in sum that it was as much a watershed as the Great Depression has been termed

for the U.S (Obstfeld & Taylor 1998).

Surprisingly, the economic history of the Great War had not been much used to discriminate




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