France and the Nazi Threat: The Collapse of French Diplomacy 1932-1939 (73 page)

A heavy load of fifty-eight law decrees was published from November 12 to 15. Everyone found something to criticize. “The right was particularly aroused and upset,”
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due to the tax increases. Exchange controls were rejected. The left was incensed at the “misery-making law decrees” and expressed itself through the strikes that peaked on November 30. The forty-hour law, “an unprecedented suicide” as Sauvy was telling Paul Reynaud,
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was strongly amended. Working hours could be extended to fifty hours without administrative approval and were to be paid at higher wages by 10 to 25%. Beyond fifty hours a special authorization was required. The work week would be six days rather than five. Refusing to work overtime in the interest of national defense would be subject to imprisonment.

Jean Zay considered resigning because of this “patently reactionary and stock market-oriented plan.” Léon Blum and Herriot encouraged him to stay.
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De Monzie hated Paul Reynaud, “whose political assurance irritates me.” But Reynaud had the support of Mandel, Champetier de Ribes, at times of Bonnet and Pomaret and, above all, of Daladier.
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We shall not analyze the social and financial aspects of this reversal of policy but will examine its results. Paul Reynaud modestly termed what took place during the eight months that followed as the “French miracle,”
¹⁰
as the London
Times
stated. It is best to follow his collaborator Alfred Sauvy, whose figures are at least more reliable.

First of all there was the seriousness of the situation prior to Paul Reynaud’s arrival. On the basis of an index of 100 for 1928, by April
1936 industrial output had fallen from 88 to 82 in April 1938 and to 83 in October. By June 1939 it was at 100. The average workload went from 39.2 hours in October to 41.9 hours in July 1939. The trade deficit was reduced by 26%. The increases of monthly prices went from 1.1% (July to November 1938) to 0.25% (April to August 1939). Unemployment, which had increased by 9% from August 1937 to August 1938, declined by 10% from August 1938 to August 1939.
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For the first time since 1931 France was coming out of the crisis (way behind Germany and England). Capital funds returned and the gold reserves of the Bank of France went from 56 to 92 billion. “The result was,” wrote Paul Reynaud, “that I was able to find 55 billion for national defense in a country where tax collection during the preceding year had been a total of 47 billion…” “France has the largest gold reserve in the world after the United States.”
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This was a well-known idea at the time, that of the “war chest.”

The most important issue for a country threatened by war was obviously that of production. “
The French economy
,” wrote Sauvy, “
experienced under very difficult circumstances the fastest rebound in its history
.” [Emphasis added.] In the course of eight months industrial production increased by 20%.
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Some of the potential criticism was tied to a few demographically inspired measures—for example, the refusal to use the labor force represented by the 400,000 Spanish refugees in 1939. Sauvy, who had been informed by Claude Bourdet, failed to convince his minister. The man’s unpopularity was also an issue. “Paul Reynaud, who was wise but dry and unpopular, made the technical decisions and Daladier, whom the Chamber accepted more easily, would push them through politically.”
¹⁴
There was, in fact, a remarkable rebound but due to the absence of economic information the public by and large knew nothing about it; something was felt and diplomatic correspondence often refers to the “French rebound.” But the country, disillusioned by eight years of crisis and fifty rescue plans, did not sense that this one was better than any of the others.
¹⁵

France’s military budget, which had been declining from 1932 to 1935, was improving steadily since then. In millions of present-value francs (of 1930)
the actual payments
for military expenditures, including the colonies, were as follows:
¹⁶

Half of the financing was based roughly on tax revenue and half on loans. The law decrees of November 1938 increased taxes. The “confidence” of the capitalists, following the elimination of any threat of exchange controls, prompted the return of a lot of funds leading to the issue of Treasury bonds with a broad edge over redemptions and the launch of a successful large bond issue in May 1939. On March 19, 1939, on the other hand, full power was extended until November 30.
¹⁷

Theoretically this placed France in the best position to face a war.

The feverish and enthusiastic activity at the ministry of finance continued. It allowed France to enter the Second World War on September 2, 1939, with healthier finances than had ever existed during the preceding decade.
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After Munich the problem of stockpiles was also examined. The minister of public works, de Monzie, was mainly in charge, with the cooperation of the three branches of the military. The controller, General Robert Jacomet,
¹⁹
named by Daladier on October 27, 1936, to be general secretary of national defense, played a key role in “industrial mobilization.” Louis Pineau, the director of the office of fuel supply, did not get along with de Monzie who said of him that “he didn’t encourage friendship” but was “an honest and powerful servant of the state.”
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A law passed on July 11, 1938, after some ten years of debate, could be used for “the organization of the nation in time of war.” The absence of detailed historical studies will limit us to a few main points.

First of all, the differences compared with 1914–1918 were extremely clear in 1938, the main one being the relative weakening of British naval superiority. The French and British navies would certainly dominate the Atlantic, although Britain’s merchant marine did not amount to more than 26.4% of the world’s tonnage versus 41.6% in 1914. Discussions had been taking place in London since March 1938 between French and British representatives of supplies, services and transportation to examine the opportunities for cooperation. The issues examined dealt with food, coal, liquid fuels and raw materials. In order to avoid competition, it was decided to set up a “Franco-British coordinating committee” (actually created in September 1939 and headed by Jean Monnet). As far as tonnage went, however, the British did not hide the fact that they would not lend any to France, which represented less than 5% of world tonnage. A report by General Lelong reached the following conclusion:

Briefly, Great Britain is not a general store where we can go. It is even less of a freight forwarder. And, as far as we are concerned, we must draw the appropriate conclusions.
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The idea of economic cooperation was offered once again in the spring. On June 1, Paul Morand traveled to London, heading a delegation whose mission it was to “prepare for economic warfare.” He discovered that rather than insulated administrative services, as was the case in France, the British had an Industrial Intelligence Center. He wanted France to create an economic action service. That project, however, was not acted upon before the war.
²²

De Monzie prepared a whole set of decrees to regulate hydrocarbons—” the production and protection of combustible liquids in the interest of national defense.” Between September 1938 and April 1939, the date of the decrees, he ordered a number of very broad studies. He was hoping that the air force could use an “autonomous” source of gasoline which meant going in the direction of synthetic fuel. Louis Pineau, who worked at building French refineries, was not too favorable. A system similar to the German method—using hydrogenation—was shelved in December 1938. De Monzie then wrote to Eugène Houdry, a French engineer, “who had been disappointed by his industrial endeavors in France, and had been able to create his method called cracking with the help of a powerful company in the United States.” Houdry came to see him and gave a few demonstrations. The decree of April 1 provided incentives to the industrialists who would use the method.
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But this was a long-term project.

Along with the British, an attempt was made to find potential sources for oil supplies. On February 9, 1939, a meeting was held in London at the Petroleum Department attended by Pineau, the commercial attaché, and two other French experts. The French estimated their needs at 1 million tons for the air force and 1.4 million tons for the navy. A decision was reached to not rely on the oil supplied by the Dutch East Indies, nor on the Mediterranean route. Most of it could come from the United States and Iraq, and after that from Iran and Venezuela. However, oil tanker tonnage was insufficient, especially if the Mediterranean were closed. Pineau proposed the creation of a “transportation subcommittee.” The British were against it, saying it was not urgent.
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At the Franco-British military conversations of the spring of 1939
²⁵
the British were to reverse their position. The importance of economic preparation was no longer overlooked by anyone and the idea that only
joint operations could solve problems took hold.
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The effort at economic preparation was undeniable but fragmented. As Jacques Néré commented, Paul Reynaud had given himself three years to succeed. Was that compatible with a war that was imminent? On the other hand, the methods used were still very liberal. It was not at all an “industrial mobilization,” and even less of a “war economy.”
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2.

T
HE
A
IR
F
ORCE FROM
M
UNICH TO THE
W
AR

Germany had started rearming at the air force level in May 1934. England began in May 1935. France had really not started until March 1938 when the V plan was determined by the Superior Air Council. Consequently, France was very much behind. It was, wrote Bonnet to Air Minister Guy La Chambre, a “key element of the political as well as military situation.”
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The true results
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(number of war planes to come out of the factories and accepted by the receiving center for planes built in series) were:

BEFORE PLAN V

(see Plan II known as “1,500 planes” plan 1936)

PLAN V (SINCE MARCH)

The airplane deficit compared with Germany at Munich was sadly familiar. We have noted that General Vuillemin, air force chief of staff, had spent a week visiting the aircraft factories and Luftwaffe units beginning August 17, 1938.
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It is therefore easy to understand his pessimistic note of September 26, 1938. The air forces that were currently available in metropolitan France were: 250 daytime fighter planes, 320 bombers, and 130 strategic reconnaissance planes. There was “a huge disproportion of forces that was very heavily tilted in Germany’s favor.” He estimated French air force losses would be 40% by the end of the first month and 64% by the end of the second month. And those losses would not be replenished. Moreover, the performance of those planes was clearly insufficient. For example, French bombers could only operate at night.
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