Capitalism and the State in Modern France: Renovation and Economic Management in the Twentieth Century 0521234743, 9780521234740

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Capitalism and the state in modern France

Capitalism and the state in modern France Renovation and economic management in the twentieth century

RICHARD F. KUISEL State University of New York, Stony Brook

CAMBRIDGE UNIVERSITY PRESS Cambridge London New York New Rochelle Melbourne Sydney

Published by the Press Syndicate of the University of Cambridge The Pitt Building, Trumpington Street, Cambridge CB2 iRP 32 East 57th Street, New York, NY 10022, USA 296 Beaconsfield Parade, Middle Park, Melbourne 3206, Australia © Cambridge University Press 1981 First published 1981 Printed in the United States of America Library of Congress Cataloging in Publication Data

Kuisel, Richard F Capitalism and the state in modern France. Bibliography: p. Includes index. 1. France - Economic policy - 20th century. I. Title. HC276.K94 338.944 81-616 ISBN o 521 23474 3 AACRi

For Wade and Courtney

Contents

Preface Abbreviations

page ix xiii

1 The liberal order of 1900 The limited role of the state in managing the economy The state's goal: protection of a balanced economy The rise of employers' associations Weaknesses in the economy

1 8 15 20 26

2 The interruption of the Great War, 1914-1918: ministerial plans for reconstruction Albert Thomas Etienne Clémentel Louis Loucheur Postwar transition

31 34 37 48 51

3 The twenties: "normalcy" or modernity? The CGT's bid to remodel the economy The Bloc National: decontrol and retrenchment Moves toward nationalization: the mixed companies Rebuilding the northeast: renewal versus restoration The franc crisis of 1924-1928 Syndicalism and rationalization Neocapitalism, industrial trends, and nationalization

59 59 62 66 69 71 77 84

4 The thirties: experiments and alternatives to liberal economics The proliferation of economic plans Neo-liberal planners Syndicalist-socialist planners Left-wing politics and planning, 1934-1936 The Popular Front and economic reform The economy on the eve of war

93 98 105 108 114 119 125

vii

Contents 5 The National Revolution at Vichy, 1940-1944: survival and renovation Economic survival: the industrial control system Design for a corporatist society: the Labor Charter Designs for a planned economy

128 132 144 146

6 The resistance and structural reform, 1940-1944 De Gaulle's economic study commission, London Neo-liberal planning in France: the Courtin report Socialist plans: the Philip report The provisional government's short-term policy

157 159 163 173 179

7 The turning point: the liberation and early postwar years, 1944-1949

Mendès-France and the drive for radical reform The nationalizations of 1945-1946 The new economic order of the late 1940s

187

191 202 212

8 The Monnet Plant, 1945-1932: the prototype of planning Drafting the PME, 1945-1946 Executing the PME, 1947-1949 Adapting the PME, 1949-1952

219 224 237 242

9 The neo-liberal order: the managed economy of the early 1950s The changing structure of public economic management Planning and its effects on economic performance Public policy under the Fourth Republic The controversy over economic growth

248 252 260 267 270

10 Conclusion: reflections on renovation

272

Notes

281

Bibliographical note

332

Index

335

viii

Preface

The aim of this study, briefly stated, is to present an interpretation and an explanation of the renovation of the French political economy in the first half of the twentieth century. I discern two principal changes: a shift in goals from stability to modernity and the develop­ ment of economic management. "Modernity" here denotes a dynamic capitalism bent on expansion, productivity, competitive­ ness, and technological advance. "Economic management" means conscious direction from above. In this case the state became the manager; it came to rely on a wide range of controls and incentives as well as on the collaboration of private interests with public au­ thorities. Management thus complemented and substituted for mar­ ket forces without supplanting them. The vastness and complexity of the subject require selectivity. With respect to the state this history explains the long-term changes in the outlook of decision makers, the institutional framework, and the di­ rection of public economic policy. There is no attempt to narrate the policies of every government over a half century. Similarly, capitalism will be examined for alterations in the structure, behavior, and at­ titudes of industrial, commercial, and financial enterprise. Agricul­ ture is on the periphery of this study. My inquiry concentrates on the movements, events, and forces that transformed public policy and capitalist performance. My focus is the dynamic of renovation. Reformers of all stripes inspired movements that attempted to overturn the status quo. These advocates of renova­ tion were prompted by a desire to modernize, organize, or socialize the existing capitalist order, that is, to turn it in one or more of these directions. The programs and struggles of these reformers are central to my investigation. Capitalist renovation endured a long apprentice­ ship of trial and error in France as reformers searched for the right formula. In the end innovating liberals like Jean Monnet found the answer. The period under examination was also marked by cata­ strophic economic, political, and military events that undermined traditional ways and beliefs and eventually brought a reassessment in IX

Preface the 1940s. Long-term economic and social forces also account for this overhaul of an old order; escalating needs such as the desire for economic security or structural changes in capitalism promoted the turn to economic management. Men, events, and forces were all part of the quest for modernity and economic management. The internal transformation of capitalism, the so-called develop­ ment of "organized" or "managed" capitalism will be mentioned but not fully explored. Such phenomena as the integrated firm, oligopoly or other forms of private market control, and the "managerial revolu­ tion" paralleled and shaped the changes I am addressing. Yet my investigation is less about the internal trends of capitalism than it is about the relationship between the state and capitalism. My thesis is that France moved from a liberal political economy and a cautious pattern of industrial activity to a managed and dynamic order by 1950 mainly because of a perceived need to overtake the most advanced capitalist nations. Because the urge to catch up was, in the end, the most profound impetus to reform, I treat modernization as the alter ego of economic management. Modernity and management interacted and reinforced one another in the process of renovation. The pre-1914 system featured small-scale producers and weak self­ organization; a market ideology yet anemic competitive pressures; a theoretically noninterventionist state that practiced protection; a par­ liament tied to liberal principles that also accommodated powerful interests and preserved the status quo; a passive state administration dedicated to liberal ways and neutrality in economic affairs; and a pattern of restrained economic growth. Between 1914 and 1950 this liberal order experienced massive overhaul. It survived this midcen­ tury renovation but only by consenting to fundamental institutional change and adopting new goals. By 1950 an interventionist state with new priorities and new instruments of economic management existed. Full-scale industrialization, selective promotion and control, an open economy, and the ideal of an économie concertée were only some of the features of the new order. The market and liberalism did not disappear with these changes, but they had to share their place with the agents of economic management. My treatment of this change begins with the period 1890-1914 when the liberal order was intact. Like the final chapter, this opening essay is one of static analysis. Conceptually the first and last chapters func­ tion as "bookends" that bracket the whole study and delineate the character and magnitude of renovation. The second chapter conceives of the First World War as a major break with the past: much of what was to come began in the war. In the chapter on the 1920s the focus is on the debate between the partisans of "normalcy" and the x

Preface modernizers. The subsequent chapter on the 1930s examines the dis­ location of capitalism and the search for alternatives; here, for exam­ ple, was the genesis of planning. With the 1940s the analysis deepens. The chapters on the Second World War present the initiatives of the Vichy regime and the schemes spawned by the resistance as parallel drives for renovation. The turning point comes in 1944-9 and this chapter stresses the creation of such new institutions as nationalized enterprise and the adoption in ruling circles of a new commitment to modernization and management. Planning is so critical to the change that another chapter treats the genesis and execution of the Monnet Plan. Following these chapters that treat the dynamic aspects of change there is a concluding chapter that describes the shape of a new or neo-liberal political economy in the 1950s and also accounts for the transformation. This study owes much to the generous assistance of three French scholars. Professors Jean Bouvier, Patrick Fridenson, and Maurice Lévy-Leboyer encouraged and supported my project from beginning to end. Professor Fridenson made detailed recommendations for im­ proving the manuscript and kept me abreast of current research in France. My manuscript also benefited from critical readings by Professors Robert Paxton, Martin Wolfe, and Gordon Wright. Others who con­ tributed suggestions include: John Cairns, Paul Gagnon, Robert Gates, Stanley Hoffmann, Charles Kindleberger, Charles Maier, John Sherwood, Judith Stone, Marc Trachtenberg, and George Weisz. I wish also to acknowledge those who enriched the scholarly basis of my work. The late Jean Monnet opened his personal papers to me. Pascal Fontaine and John Haight helped me gain access to this impor­ tant archive. The lengthy interviews granted by the former planners Etienne Hirsch and Robert Marjolin were of immense value. Mme Diane de Bellescize readily shared her rare collection of documents on the wartime resistance with me. The staff at the Archives Nationales, especially MM. Cézard, Hubert, and Langlois-Berthelot, called my attention to reserved archives, especially those of de Gaulle's pro­ visional government. I also profited from the archival skills of Mme Merrier at the Comité d'Histoire de la Deuxième Guerre Mondiale and Mile Guillemain at the Ministry of Finance. Mrs. Agnes Peterson made materials from the Hoover Institution available, and Gerhard Vasco of the university library at Stony Brook provided continual assistance. A fellowship from the American Council of Learned Societies allowed me to spend much of 1976 in France for research. Grants from xi

Preface the Research Foundation of the State University of New York also subsidized research in France. The Lehrman Institute in New York, where I was a fellow in 1976-8, sponsored seminars at which I pre­ sented chapters of my study. For this most constructive experience I am endebted to Lewis Lehrman, chairman, and Nicholas Rizopoulos, executive director, of the institute. Finally I wish to express my special appreciation to my family for enduring the long trial of this scholarly enterprise. Richard F. Kuisel Stony Brook, New York February 1981

Abbreviations

Footnotes

AN JO

Archives Nationales (Paris) Journal officiel de la République française

Archivai collections at the Archives Nationales

AP F 1a F7 F 12 F 30 F 6o

Archives Privées Ministry/Commissariat of the Interior Police Ministry of Commerce and Industry Ministry of Finance Secretariat of the President of the Council of Ministers

Text

ANEE CFLN CFP CFTC CGA CGE CGP CGPF

Association Nationale d'Expansion Economique Comité Français de Libération Nationale Compagnie Française des Pétroles Confédération Française des Travailleurs Chrétiens Confédération Générale de l'Agriculture Comité Général d'Etudes Commissaire Général du Plan Confédération Générale de la Production Française; after 1936, Confédération Générale du Patronat Français CGPME Confédération Générale des Petites et Moyennes Entreprises CGT Confédération Générale du Travail CGTU Confédération Générale du Travail Unitaire CNE Conseil National Economique CNPF Conseil National du Patronat Français CO Comités d'Organisation DGEN Délégation Générale à l'Equipement National ENA Ecole Nationale d'Administration FDES Fonds de Développement Economique et Social FME Fonds de Modernisation et d'Equipement xiii

Abbreviations INSEE MEN MRP OCM OCRPI OEEC PME PTT SEEF SNCF TPC UIE . UIMM

Institut National de la Statistique et des Etudes Economiques Ministère/Ministre de l'Economie Nationale Mouvement Républicain Populaire Organisation Civile et Militaire Office Central de Répartition des Produits Industriels Organization for European Economie Cooperation Plan de Modernisation et d'Equipement (Monnet Plan) Poste-Télégraphe-Téléphone Service des Etudes Economiques et Financières Société Nationale des Chemins de Fer Français Turkish Petroleum Company Union des Intérêts Economiques Union des Industries Métallurgiques et Minières

Perhaps the chief task of economists at this hour is to distinguish afresh the agenda of government from the non-agenda; and the companion task of politics is to devise forms of government within a democracy which shall be capable of accomplishing the agenda. - ]ohn Maynard Keynes During the catastrophe, beneath the burden of defeat, a great change had occurred in men's minds. To many, the disaster of 1940 seemed like the failure of the ruling class and its system in every realm. - Charles de Gaulle

1

The liberal order of 1900

France in 1900 proudly embraced a liberal republic and a liberal econ­ omy. Both the political and the economic orders shared a common heritage that dated back to the French Revolution. That eighteenthcentury cataclysm had destroyed a society of privilege and hierarchy and launched a new order based on the freedom of the individual. Liberal economics paralleled republican politics; both celebrated the virtues of liberty. Under the Third Republic (1870-1940), a regime descended from the revolution, economic policy loosely conformed to the principles of liberalism. One way of approaching the liberal economy of France at the turn of the century is to look to its doctrine. As in all political economies theory and practice were not congruent, and what academics preached businessmen often ignored. Nevertheless, liberal theory announced the ideals of the republic's economy. In the 1890s liberals dominated the teaching of political economy and the editing of the major economic reviews.1 Their notion of eco­ nomic science was generally shared by the political class, the adminis­ trative elite, the business community, and bien pensant opinion. From the rostrum of the Palais Bourbon, that is, the national parliament, and the offices of ministries and private firms to the salons of the most prominent families liberalism was de rigueur. Léon Say, CourcelleSeneuil, Alfred Jourdan, Clément Colson, and Gustave de Molinari were but a few of the establishment's best-known economists. But the popularizer of liberal doctrine was Paul Leroy-Beaulieu. His steady stream of books, essays, and newspaper columns extolled the virtues of economic individualism; and as professor of political economy at the prestigious Collège de France he presided over liberal dogma as a kind of high priest.2 There had been little change in economic science, according to lib­ erals, since John Stuart Mill. British economists like Mill, in fact, furnished French political economy with its principles. In the Nouveau Dictionnaire d'économie politique, which appeared in 1891-2, CourcelleSeneuil wrote that there were, in the final analysis, only two ways of 1

Capitalism and the state in modem France producing and distributing wealth - either by authority or by liberty. The second was the modern way. Production should be directed and regulated by the law of supply and demand. And "any intervention by authorities that diminishes the scope of this mode of adjustment distorts it and harms the development of wealth as well as popula­ tion."3 At the most abstract level, liberal economics extolled the market and denigrated the state. The market - and by extension free trade was the ideal instrument for the creation of wealth. Private initiative and competition were the sources of dynamism. Consumer prefer­ ences ordered production, and self-adjusting mechanisms such as the price system kept order. A truly liberal government abstained from most economic activity, avoided regulations, and relied on private decisions and market forces. Nothing should curb the free activity of producers, investors, or consumers or obstruct the market from its primary function of allocating resources. The state needed only to preserve a competitive situation for private interests. Liberalism, in short, celebrated the free economic actor and the market and made a virtue out of government inaction. "Civilization rests on freedom and individual initiative," Leroy-Beaulieu wrote. "Anything that di­ minishes this cause of progress can only reduce general prosperity and the security and well-being of everyone."4 Liberals suspected any extension of the state's authority over the economy. Whereas almost the whole of human progress was due to exceptional individuals, the state bureaucracy stifled initiative. Leroy-Beaulieu viewed the state as a complicated hierarchy "in which spontaneous thought is, by the very nature of things, subjected to a prodigious number of controls. Such a machine can invent nothing. The state, as a matter of fact, invents nothing and never has invented anything."5 As an entrepreneur the state was incompetent.6 The state railroad was often cited as an example of costly, inefficient, undependable service. Public services like the FIT (post-telegraph-telephone) exhib­ ited numerous deficiencies: rigid hierarchies, political interference, operating deficits, lack of incentive, and indifference to new technol­ ogy. Liberals blamed the inferior performance of public enterprise on poor management. Public managers lacked both personal interest in the enterprise's success and the necessary technical or commercial training. State companies also suffered from inflexibility. Regu­ lations, needed, for example, to supervise the use of public funds, deadened responsiveness to the market. Furthermore, in a democ­ racy like the Third Republic state enterprises seemed unable to pro­ tect themselves from the pressures of either their personnel or their 2

The liberal order of içoo clientele. After the state repurchased the Western railroad, for exam­ ple, the railway workers obtained a large wage increase while railway users pressured their representatives in parliament to win reduced rates. Leroy-Beaulieu concluded that private enterprises, by virtue of the flexibility they enjoy, of the rapidity of their successive adap­ tations, of the greater play they allow to personal interest, and to innovation, of their better-defined responsibility toward their customers, and of the com­ petition they have to face, and which acts as a stimulus to them, ought to be preferred to the state for all services which admit of being fulfilled either by the one or the other.7

Despite the general acceptance of their hallowed canons, liberals felt increasingly threatened by socialism during the Belle Epoque. The emergence of militant socialist parties was ominous, but the more insidious form of socialism was the growth of the state. To LeroyBeaulieu "the great danger is state socialism, not socialism imposed by the zeal of a riotous mob, but socialism sneakily introduced and gradually developed by ignorant and presumptuous legislators."8 He identified encroachments of the state at all levels from the city to the nation and observed with some distress a similar trend in Europe as a whole including England, the bastion of laissez-faire practice.9 The Germans, in his opinion, idolized étatisme. Leroy-Beaulieu deplored the growing demand for social legislation, public services, and state monopolies. The Nouveau Dictionnaire called state intervention the antithesis of political economy and "the latest incarnation of socialist theory. The weak will not avoid being conquered by the strong with such theories."10 Politicians and politics, unwanted intruders, inevitably accom­ panied a growing state. With an eye on winning votes governments championed whatever seemed popular. Politicians rewarded their constituencies with favors of all sorts, such as public works, sub­ sidies, reductions in tariff duties. Their programs had political merit, according to the liberals, but seldom made economic sense. Interven­ tion was partial; it benefited particular interests but neglected the whole. Tariffs, for example, protected certain sectors like textiles but overlooked the stimulus that free trade could give the whole country. The Third Republic, so it seemed, was especially prone to this kind of blandishment. Defining a legitimate arena for the state became a central problem for economists of this era. Differences on this question abounded. Nevertheless, the essentials were clear. The "modem" state was re­ sponsible for security; it guaranteed the country's safety and inde­ pendence while it provided order at home. Administering justice was also its prerogative. Second, the liberal state maintained the nation's 3

Capitalism and the state in modem France collective assets, its infrastructure, and provided some public ser­ vices. Here even liberals could not agree on an agenda. Most included items like public health and the maintenance of roads and bridges. Whether or not the state should monopolize education was debata­ ble. Even more contentious was what responsibility the state had for the railway system. Leroy-Beaulieu was typical in pronouncing against direct state operation of the railroads. Liberals stood arrayed against the state as an entrepreneur and a direct producer of goods and services. However, they generally endorsed the traditional public sector, which included a few fiscal monopolies and artistic manufac­ turers. Less acceptable was the state's recent takeover of the PTT. In all other instances state monopolies and state competition with pri­ vate enterprise were reprehensible. The third dimension of legitimate activity was regulatory. The state defined and maintained the legal framework for the market economy and set limits to the freedom of private enterprise. Here again liberals disagreed on specifics, but their general position was that regulations should be minimal - just suffi­ cient to set the rules for the market. The commercial code, for exam­ ple, assured contracts, inheritance, and patent rights. But on these matters legislators, it was held, merely defined and sanctioned what custom had established. It was appropriate to reserve certain other functions for public authorities, such as authorizing mining conces­ sions or the establishment of sociétés anonymes (joint stock com­ panies). But price and wage controls were anathema. Alfred Jourdan argued that prices obeyed ineluctable laws rather than the will of the state.11 Tariffs were nearly as offensive to these free traders. Jourdan denounced those industrialists who claimed "an absolute, impre­ scriptible, inalienable right to the exploitation of the home market."12 With respect to social legislation, which took many forms at the turn of the century - for example, pensions, accident insurance, aid to the indigent - liberals offered many objections.13 They rejected, for example, any regulation of the work of adult males. Leroy-Beaulieu, who was particularly niggardly on this point, allowed protection only for child labor and pregnant women. The principle of obligatory in­ surance seemed most unpalatable. Liberals admitted that the state might have a moral obligation to help the disadvantaged but not a legal one. Compulsory schemes created privileged groups, whereas liberals insisted the individual must bear responsibility for his or her future. Leroy-Beaulieu observed that Western civilization owed all its impetus to the vigor of individuals, to the spirit of initiative and daring, to foresight and investment. These qualities, which distinguish Europeans and Americans of European descent from other races, tend first to be compromised and then destroyed by the so-called

4

The liberal order o f 1900 paternalistic or, as the English say, '■'grandmother/' legislation. The indi­ vidual no longer needs to take care of himself or his family: energetic or not, active or passive, able or inept, his future, within narrow limits, is predeter­ mined. An automatic mechanism, that of obligatory state assistance, guaran­ tees his future. We consider this system detestable because it can transform members of civilized countries into perpetual children or apathetic, inert human beings.14

The high priest had his doctrinal idiosyncrasies. To promote popu­ lation growth Leroy-Beaulieu deviated from orthodoxy by allowing the state to pay bonuses and distribute civil service jobs.15 It was in the national interest, he argued, to stem the country's "depopula­ tion/' And he spoke vaguely of lending public assistance to projects initiated by private enterprise. But in the end Leroy-Beaulieu was an individualist. He called Herbert Spencer "the greatest thinker" in England.16 Citing Spencer he argued that any society that prevents the superior from profiting from their advantages, or protects the in­ ferior from the evil they cause, or that tries to reduce differences between the two, brakes progress. The greatest good for the greatest number could best be achieved by a free economy, not by legislation. The highest social ideal of the state was justice, that is, to let each individual decide his or her destiny unencumbered. He admonished: "At the level of civilization which we have now reached, where we are more in danger of succumbing to a narrowing governmental con­ straint than of remaining behind through individual inertia, an exten­ sive abstention on the part of the state is attended by far less danger than an excessive intrusion and interference."17 Political economy, in the style of Leroy-Beaulieu, was taught to the elite of French society who were training for government service.18 A few institutions of higher education monopolized such instruction. The principal antechambers to top-level positions in the administra­ tion were the grandes écoles, especially the Ecole Libre des Sciences Politiques, the Ecole Polytechnique, the Ecole des Ponts et Chaus­ sées, and the law faculties. These institutions controlled entrance into what were called the grand corps of officials such as the inspectors of finance, the conseillers d'état, or the state engineers who filled the highest grades of the central administration. The Ecole Libre (or Sciences Po in common parlance) had been founded after the defeat of 1870 with the aim of training talented members of the bourgeoisie in how to operate a modem state. It was a private graduate school established by wealthy, public-spirited, Anglophile liberals. Léon Say, the grandson of the noted laissez-faire economist J. B. Say, was a frequent finance minister in the early years of the republic and a founder of the school. Leroy-Beaulieu taught 5

Capitalism and the state in modem France the course in public finance initially, and then René Stourm took over in the 1890s. Stourm lectured for thirty years on the dangers of budgetary extravagance.19 Senior civil servants from the Ministry of Finance habitually taught at the school. Located in the wealthy quar­ tier of Saint-Germain-des-Prés, the school attracted the upper ranks of the Parisian bourgeoisie and soon came to control access to careers of hauts fonctionnaires despite its private status. Virtually every finance inspector and member of the Conseil d'Etat from 1900 through the 1930s held a degree from the Ecole Libre or had at least enrolled there for some study after graduation from a law faculty.20 As part of its practical and "scientific" curriculum, the Ecole Libre stressed political economy. Léon Say introduced this course, and in the years immediately preceding and succeeding the First World War Clément Colson was the instructor. Colson was a polytechnidan who had been a member of the corps of the Ponts et Chaussées and the Conseil d'Etat and served as a top railway official in the Ministry of Public Works. As a professor he taught political economy to state engineers before coming to the Ecole Libre. His economics text was widely used through the 1920s. Colson was able to present a strong case against state intervention based on personal experience.21 He described the deplorable management of the Western railroad and reminded his students of how the state had subsidized sailing ships in the merchant marine long after they were outmoded. In general, Colson argued that state intervention served to protect special inter­ ests at the expense of taxpayers and consumers. It exposed politicians and officials to the corrupting pressures of favor-seeking interests and also tempted private producers to ask for aid rather than develop their enterprise. Public companies killed initiative and usually plod­ ded along under wasteful, routine-minded bureaucracies. Experi­ ence, he contended, proved that "socialization" of an enterprise would not improve output because there was no substitute for the incentive of personal gain. One of the paradoxes of this history is that massive socialization was to come about decades later for precisely the motive of raising production and productivity. Colson's succes­ sors at the Ecole Libre, men like Jacques Rueff and Charles Rist in the interwar years, continued to teach liberal economics. The situation at the Faculté de Droit in Paris resembled that of the Ecole Libre. Its faculty ran the influential Revue d'économie politique. Indeed it was not till the Second World War that the teaching of political economy changed in France.22 Once entered upon their careers, the students of these professors acted much as they were instructed. The Conseil d'Etat, for example, consistently obstructed the development of municipal socialism, curb6

The liberal order of igoo ing all efforts by local governments to operate public utilities. The finance inspectors, who dominated the Ministry of Finance, loyally adhered to liberalism long after the Great War. Drawn almost exclu­ sively from the Parisian grande bourgeoisie this corps of some 250 members was intensely conservative.23 In the 1930s candidates to the service still appeared in formal attire for their entrance examinations. Originally the inspectorate's primary duty had been the verification of public accounts, but it had come to assume responsibility for the management of the public sector of the economy. From 1890 on it formed the backbone of the finance ministry's principal bureaus, monopolized the major public financial institutions, represented France in international economic organizations, and helped formulate most important economic and financial legislation. Inspectors increas­ ingly resigned from public administration to make second careers in private banks and industry. The ubiquitous Treasury officials regu­ larly participated in political life as members of ministers' personal cabinets. They saw their duty as guarding the treasury and the franc against the spending urges of the ministries, reputedly even infiltrat­ ing them for this purpose. They were admired for their expertise, esprit de corps, and honest dedication to public service. Liberalism may have been the republic's orthodoxy, but it did not hold the field unchallenged. Its polemical antagonist was étatisme. This pejorative term described a centralized, state-controlled econ­ omy. That étatisme had no theorists and few advocates is hardly surprising. Historically it recalled the authoritarianism of the Bour­ bons or the Bonapartes. Frenchmen, moreover, tended to see the state as the great threat to individual freedom. By the turn of the century the term acquired new connotations in discourse about politi­ cal economy. Etatisme and socialism became synonymous. Socialism was a newer challenger to liberal orthodoxy than étatisme. Despite the rich speculations of such early French theorists as Fourier and Proudhon, socialist parties had emerged as a potent political force only in the 1890s. Socialism shared a revolutionary ori­ gin with liberalism, yet its emphasis on collective ownership of the means of production, an equal distribution of wealth, and a cooperativist ethic seemed the antithesis of an economy based on competition and private property. Socialism, to make matters worse for liberals, also seemed to combine collectivism with étatisme. Leroy-Beaulieu asserted: "The essence of socialism consists in de­ spoiling the individual of part of the functions which naturally belong to him in order to confer them upon the state."24 Another rival to republican doctrine and one that antedated the French Revolution was corporatism. Corporatists, many inspired by 7

Capitalism and the state in modem France Catholicism and paternalism, made associations of economic and oc­ cupational interests or the family, rather than the individual, the es­ sential actor in ordering the economy. Self-disciplined associations of interests rather than the market allocated resources. In principle the French Revolution had eliminated all privileged or intermediate corporatist bodies because they stood between the citizen and his gov­ ernment. Corporatism, for republicans, exhibited dangerous ties with the ancien régime, the church, and private monopolies. Assigning any official status to interest groups was in theory antirepublican. Thus it was not until 1884 that the Third Republic granted legal status to professional associations. Trade unions, employers' associations, and agricultural syndicates were all slow to develop in France. And liberals did their best to check the growth of corporatist institutions. In 1907, for example, a restrictive interpretation of the associations' law prevented agricultural syndicates from engaging in any commer­ cial activity such as the cooperative purchase of supplies. Protectionists were more formidable challengers to liberal econom­ ics. But these proponents of high tariffs confined their opposition to a single issue. Protectionists made rapid headway in their struggle against the free traders after 1880 but were never able to gain an unqualified triumph. More important, this challenge did not extend beyond commercial policy and left the core of liberalism intact. The limited role of the state in managing the economy

The reality of the liberal state was not far removed from the theory or the training. The nature and scope of public policy under the Third Republic corresponded roughly to what the economists taught. This is not to deny the persistence of a traditional interventionist style that dated in France from the time of Colbert. The precise limits of the government's economic reach are difficult to delineate given the intricacies of even a state as relatively compact as that of the Third Republic.25 Nevertheless, public regulatory, pro­ motional, and entrepreneurial functions were minimal. Only protec­ tionist activity was on a scale that deviated from doctrine. The public sector of 1900, except for the railroads, was largely inher­ ited from the ancien régime. It consisted mainly of artistic workshops, such as the manufacture of Sèvres porcelain, military arsenals, and the tobacco monopoly, which raised revenue for the treasury. Matches became another fiscal monopoly in 1889. In addition, the state supervised the transportation system, ran the PTT, and let con­ tracts for public works such as canals and ports mainly for the pur­ pose of developing backward or hard-pressed areas. But state enter8

The liberal order of 1900 prise did not possess an explicit industrial or commercial character. The exception was the railways, in which the state had been involved since the 1840s.26 The government had designed and laid out the trunk lines, built the roadbeds, insured dividends for investors, con­ trolled rates, and shared in overall management. Later, in order to get secondary lines constructed, promote efficient operation, and salvage bankrupt companies, the state became even more heavily involved with private railway companies. A few subsidiary lines that were in difficulty actually fell under public ownership. The state came to own and operate a sizable portion of the network, a section, however, that was inherently the least profitable. In 1908 the government repur­ chased the lease of the Western railroad, which had been a burden on the treasury for decades. Ostensibly this takeover was an experiment to see if public ownership could provide better service. This extension of state enterprise provoked cries of "socialism," especially from business, as did other proposals for similar state moves into the petro­ leum and alcohol industries.27 In addition to the public sector there were some scattered subsidies to industries of national importance like the merchant marine, and a few interests with heavy political influence like the winegrowers and the sugarbeet lobby received aid. The commercial and criminal codes guaranteed property and con­ tract rights and assured freedom of commerce. A section of the penal code, article 419, prohibited price-fixing agreements. A system of licensing and concessions existed for mines and utilities as did some elementary factory legislation and banking regulation. The state also incorporated businesses. Otherwise the republic's regulatory powers were slim. Prices, wages, and interest rates, for example, were be­ yond the government's purview. Indeed, the market economy was probably freer at the end of the century than it had been earlier or was to become later. One could go too far in emphasizing the finite attributes of the liberal state. France, after all, was not the home of classical laissezfaire tradition despite its Anglophile economists. As Jean Bouvier has observed, "the state was never léger, even at the time when it was supposedly only a gendarme."28 The state was the country's largest and most important enterprise because of the mass of its employees, the enormity of its financial transactions, and the services it rendered. And its functions grew even during the Belle Epoque. There was, indeed, a certain continuity between the ancien régime and the liberal order; the nineteenth century adapted much of what the monarchy had bequeathed. "Our economic administration," an astute analyst of the French state has written, "during the golden age of liberalism was not only Napoleonic, it was, properly speaking, Louis9

Capitalism and the state in modem France Quatorzienne." 29 And the interventionist reflex of the state was in some ways as old as Colbert and the monarchy. An analysis of public expenditures helps define the state as an economic agent. Between 1872 and 1912 public spending grew slowly, at a mean annual rate of 1.6 percent (at constant prices) despite liberal accusations of budgetary promiscuity.30 As a percentage of domestic national product expenditures hovered around 15 percent, far below the 40 percent they were to reach after the Second World War. Other than spending on debt service, the major outlays were for general administration, justice, police, and education. Adoption of social wel­ fare legislation also began to command a modest portion of govern­ ment revenues. The share of industry, commerce, agriculture, hous­ ing, and public works was negligible. Only transport was a significant ''economic" expenditure. Spending on the economy, much of which went to the railroads, as a percentage of total budget grew only from 6.2 to 8.6 percent between 1890 and 1912.31 Public contribution to capital formation in 1900, a typical year for the period, was only 5 percent of the budget.32 Even an accelerating arms race among the European powers in these years failed to widen defense appropria­ tions significantly; from the early years of the republic the rate rose slowly to reach a mere 4.5 percent of the budget between 1905 and 1913. Armaments, accordingly, had a minor part in spurring economic growth.33 From the perspective of public revenues the picture is also one of relative stability.34 The basic tax structure designed between 1791 and 1816 remained intact until the coming of the income tax during the First World War. Reference to the categories of direct taxes as the quatre vieilles indicates the hoary character of the republic's fiscal sys­ tem. A narrow tax base, moreover, served to restrain public spending. Turning from the scope and character of state action, one might inquire who formulated and carried out economic policy in this liberal regime? The government, officially known as the Council of Minis­ ters, and parliament nominally designated the main lines of policy. Yet political instability, the chronic ailment of this so-called inverte­ brate republic, undermined governmental authority. Cabinets seldom endured long enough or enjoyed adequate mandates to enable them to impose a new or radical program. Even as forceful and durable a ministry as Georges Clemenceau's (1906-9) recorded few achieve­ ments. Others, like that of René Waldeck-Rousseau (1898-1902), were preoccupied with other issues. Nor was the legislature a capable sub­ stitute. Parliament had the authority to deny a government its major­ ity on almost any question, and it could supervise policy through its annual approval of the state budget. Routine supervision of appropri10

The liberal order of igoo ations fell to the "queen" of parliamentary committees, the finance committee of the lower house of the legislature. Nevertheless, the diversity of factions and programs - which ranged from Catholic corporatists to Marxist socialists and all shades of opinion in between each of whom articulated their positions in strident, ideological terms, combined with a flabby party structure that reduced par­ liamentary majorities to floating congeries of deputies - hampered parliamentary leadership in economic policy. No single political party held a sufficiently strong position to control policy, and coalitions of parties were simply too fragile. Political fragmentation prevented even the finance committee from acting as more than a watchdog. It could.harass and obstruct but not generate or direct policy. Moreover, the Senate, the more conservative upper house, tended to block socialeconomic reforms sponsored by the more progressive lower house, the Chamber of Deputies.35 Certain issues such as state acquisition of the railways stirred intense lobbying and parliamentary debate. Yet liberal parties and views prevailed, and parliament acted more as a brake than a motor for economic change. An example drawn from the history of fiscal reform illustrates the situation.36 By the early 1900s the fiscal system creaked with age and supplied needed revenue only with difficulty. The obvious solution was an income tax. A left-wing majority led by Joseph Caillaux in the Chamber adopted income tax legislation in 1909. Caillaux, who was then finance minister, had impeccable liberal credentials; he was a student of Leroy-Beaulieu and a former Treasury official. But frustra­ tion with trying to make the antiquated tax system work had led him to propose a progressive income tax. Fiscal conservatives, entrenched in the Senate, held up its introduction for years. Invoking liberal ideals, the parliamentary opposition argued that Frenchmen, unlike Germans, had an innate love of liberty that precluded any obligatory declaration of income. Similarly, the business community refused a direct tax on profits, and the rentiers, or state bondholders, insisted on their immunity. The peasantry meanwhile secured exemptions from the proposed levy. Liberal politicians and bourgeois and rural interests combined to resist any extension of the state's taxing author­ ity. Only enormous wartime expenditures and a crisis in public fi­ nance in 1916 finally broke resistance to an income tax. Neither of the two major political groups that dominated parlia­ ment between 1900 and 1914 strayed far from liberal economics. The largest right-wing party, the Progressists, whose leaders were figures like Waldeck-Rousseau and Jules Méline, defended economic liberty and opposed socialism and étatisme. The protectionist wing of the party under Méline crowded out the free traders, but that did not 11

Capitalism and the state in modem France alter the Progressists' commitment to liberalism. Leroy-Beaulieu was closely identified with this political faction. To the left of center, the Radicals, who were the predominant party in these years, were as devoted to libertarian principles as the Progressists. But they dis­ played a deeper devotion to egalitarianism. This heterogeneous party, the professed champion of the income tax and a more active state, included such leaders as Clemenceau and Caillaux. The social ideal of the Radicals, and one that reflected their growing strength among rural and small-town voters, was a society of small, indepen­ dent, property holders. Concentrations of private power, they believed, threatened individual freedom, democracy, and national sov­ ereignty. Clemenceau asserted that "the lust for power of the indus­ trial barons equals that of the landed ones."37 Industrialism seemed a dubious gain; giant companies, sociétés anonymes, and cartels repre­ sented a "new feudalism." The Radicals' aversion to bigness led them to find ways to avert or penalize, rather than promote, the growth of large enterprise. In 1907 the party adopted a program calling for the nationalization of monopolies as a way of taking control of vital ser­ vices and stopping the exploitation of workers and consumers. Radi­ cals preferred to keep industrialization within bounds, to prevent concentration of economic power, and to keep Frenchmen on the land. When the Radicals attained governmental power they delivered little of their economic or social program except for nationalizing a bank­ rupt railroad and manipulating taxes to benefit the small producer. Surely one reason for their failure to do more was their intense indi­ vidualism and their abiding suspicion of all authority that con­ tradicted any extension of state powers. At heart neither Progressists nor Radicals desired a departure from noninterventionism. In the absence of strong direction from government, parliament, or political parties the administration occupied a strategic position under the Third Republic. The principal administrative agents responsible for economic affairs were the ministries of finance, commerce and industry, public works, agriculture, and labor along with a few other bodies like the Conseil d'Etat. The top staff of these public bureau­ cracies were hauts fonctionnaires, frequently members of the grands corps, who embraced the liberal orthodoxy. Towering over these bureaucracies in size and prestige was the Ministry of Finance. The "rue de Rivoli," as it was called because of the ministry's address in Paris, was known for its "imperialist" ten­ dencies, its eagerness to extend its authority and to "colonize" other ministries. Because the minister of finance himself, like other minis­ ters, was often a transient at the ministry who was subject to par­ liamentary recall, power gravitated toward the semipermanent heads 12

The liberal order of 1900 of directions (a ministry's principal bureaucratic divisions), such as the Treasury or the Budget. In spite of its rank and pretensions to admin­ istrative hegemony the Ministry of Finance entertained no aspirations to manage the economy. Officials at the rue de Rivoli conceived their duties narrowly: to guard the treasury and to make expenditures meet revenues. Their "imperialism" stemmed from what they con­ sidered their duty to scrutinize and restrain the spending impulses of other ministries. Critics complained that the state was a "business run by the cashier." Finance officials, including the minister himself, adhered to liberal doctrine. Even a Radical government like that of Clemenceau selected Caillaux, a staunch liberal (except for his views on the income tax), as its finance minister. Public finance, as conceived by the finance ministry, obeyed a few simple precepts.38 The aim of taxation was revenue. Taxes were not to serve some economic goal like promoting an activity or redistributing income. Taxes were also to be as equitable and impersonal as possi­ ble. Thus direct levies were assessed on external signs rather than on declarations of income. Receipts should equal expenditures. Both de­ ficits and surpluses were unhealthy. Public spending was a necessary evil because the state consumed wealth; it merely swallowed what private citizens created. Whatever expenditures were necessary, ac­ cording to this Treasury view, should be economically neutral; that is, they should not disturb or unbalance the ordinary circuit of economic activity. One argument voiced by Léon Say, a prominent finance minister, against taxing profits was that it would "upset the course of business."39 Treasury officials labored to keep the budget balanced. Their concern was the volume of spending rather than the particulars of how state funds were expended. There was no conception of public spending or taxation as an instrument for regulating or shaping the economy; that was to come much later. Outsiders were struck by the cramped outlook of the finance ministry. One American expert com­ mented that in the late 1920s "any one who makes many visits to the French Treasury bureaus begins to suspect that they are pervaded rather by a caste-like narrowness of outlook and an excessive fiscal conservatism than by inventiveness and far-sighted vision."40 The Bank of France acted as the country's central bank, but it dem­ onstrated no inclination toward managing money or credit.41 This privileged institution held its charter from the government, monopolized note issue, and functioned as the Treasury's banker, yet it was not a true "banker's bank." For example, it also discounted commercial paper in competition with other banks. The Bank of France could do little to manage money because its charter prevented it from intervening directly in the open market for securities. At most 13

Capitalism and the state in modem France the bank could vary its discount rules as a way of indirectly expand­ ing or restricting commercial credit. But since deposit banks made a point of not borrowing from the central bank, except in emergencies, it had slight influence over the money market. Government control over the central bank was tenuous. Ownership was completely in private hands, and the two hundred major shareholders elected financiers and businessmen as the bank's regents. The state named the bank's governor. As a rule the Bank of France guarded its au­ tonomy and behaved as the government's equal. That such an institu­ tional framework precluded state management of credit and invest­ ment is hardly surprising. In comparison to the rue de Rivoli, other ministries harbored even more modest aspirations about their place in ordering the national economy. These were the so-called technical ministries like the Minis­ try of Agriculture. Many of these were newcomers - for example, the agriculture department dated from 1881, in its modem form the com­ merce department dated from 1886, the labor department from 1906 and the authority and prestige of all of them dimmed before that of the finance ministry. These administrations tended to serve specialized clienteles rather than to act as agents of state control. Of these bureaucracies the most relevant for our subject is the Ministry of Commerce and Industry. That commerce preceded industry in the title is significant because the ministry confined itself generally to the promotion of exports and the setting of tariffs whereas its responsibilities for the domestic economy were routine and trivial.42 Industrial promotion, other than a rare subsidy, consisted largely of organizing exhibitions, looking after the Chambers of Commerce, gathering economic statistics, and distributing decorations to businessmen. Whatever supervision existed was the task of other departments like the Ministry of Public Works, which applied the mining code and regulated utilities. "It's an antiquated place," a former minister recalled, "whose equipment re­ sembles the old and melancholy hôtel that still houses its bureaus."43 The staff of the key direction at this time numbered only twenty-six, including four stenographers and two translators. It could barely keep abreast of interpreting foreign tariff legislation. Its statistical service was rudimentary. For information about foreign trade the department depended upon the foreign ministry's commercial at­ tachés. Several consultative bodies like the Comité Consultatif des Arts et Manufactures advised the minister. The commerce depart­ ment's functions were of so little importance that it operated with the smallest budget of any ministry. Other agencies also had a share in making policy for the republic. 14

The liberal order of igoo The new Ministry of Labor narrowly looked to the interests of the working class as did the agriculture department to the farmers' inter­ ests.44 The Conseil d'Etat both advised the government on drafting legislation and served as a court in cases that involved the administra­ tion. Its juridical decisions tended to protect the freedom of contract, for example, by overturning wage-and-hour regulations, and to keep concessions for services like tramlines in the hands of private enter­ prise.45 This multiplicity of decision-making centers meant that it was virtually impossible for the republic to pursue a harmonious policy. Each ministry went its own way mindful of serving its own clientele and guarding its prerogatives. The state's goal: protection of a balanced economy

If one were to take an Olympian view of the republic's machinery of economic administration, despite its incoherence, modest aspi­ rations, and petit scale, some overarching aims could be discerned. In the decades just before the Great War public policy sought, as we have seen, to maintain the integrity of a market economy while occa­ sionally patching up its weaknesses. A second general goal was pres­ ervation of the country's "balanced economy." France, it was widely held, was blessed with a nearly perfect mix of agriculture and indus­ try. The rich endownment of the soil brought the country wealth and economic independence. And the substantial rural populace sus­ tained hallowed institutions and traditional values such as indi­ vidualism, the family, common sense, and patriotism. The coun­ tryside, for most Frenchmen, served as a social ballast in a changing world. Few saw any need to hurry headlong after industrialization and urbanization as the British, Germans, and Americans had done. Speaking of Americans Méline said: "At the present moment it looks as though nothing could stop their progress. They are rushing through space like a cannonball. Their industrial ambitions are begin­ ning to arouse everywhere the same kind of alarm as was evoked formerly by their agriculture, and there seems little doubt that an era of difficulties will begin for them."46 In France a broad political and social consensus existed about maintaining what has been termed a "stalemate society."47 This consensus, which the program of the Rad­ ical Party embodied, dictated that public policy should try to maintain an equilibrium among industry, commerce, and agriculture and at­ tempt to insulate France from the distress and upheaval that had struck other nations bent upon rapid economic advance. In a sense this policy only rationalized economic development, because up to 15

Capitalism and the state in modem France the late 1890s industrialization had been relatively gradual in France. Growth was desirable as long as it was not unduly disruptive, but if forced to choose, the republic preferred stability to growth. Whenever the republic intervened in this era it was to protect the balanced economy or to meet some misfortune. Rarely, if ever, did it act to promote economic expansion, plan development, or advance economic democracy. Discriminatory taxes defended independent shopkeepers against the inroads of aggressive chain retailers and de­ partment stores; fiscal practice helped small farmers and small firms survive; other measures sheltered, subsidized, and salvaged hardpressed sectors. Private interests regularly came to the state to request protection for their situations acquises, but assistance was welcome only, when sought. Michel Debré, writing in the final days of the republic, tartly explained: The French make a facile distinction between the system they prefer, that is, the liberal order where individual freedom of action, within a national or international context, is supposed to bring about natural harmony - which the slightest intervention would seriously disturb; and the system that they fear, the étatiste order, where administrative direction of the economy leads to more or less absolute despotism. This hostile attitude toward public au­ thorities goes hand in hand with a willingness to request aid from the trea­ sury, on the condition that it would not bring overly strict controls, and with a desire for tariffs that protect only the petitioner's products and exclude all others.48

A certain measure of state intervention was essential to the Third Republic's style of economic liberalism. Protection and defense were its hallmarks, and few believed this practice violated the system's principles. Free traders, for example, by the turn of the century learned to accept a stiff dose of protection in commercial policy. What economic interests, one might ask, did republican policy serve? The region where public and private interests intersect is usu­ ally an obscure and controversial territory for historical analysis. It would be simplistic and inaccurate to argue that certain pressure groups "dominated" the Third Republic at the turn of the century. Historians, for example, debate whether the peasants were the mas­ ters or the victims of the republic. Any assumption about domination in this context ignores the diversity of interests, their rivalries, and the ebb and flow of their influence. It also neglects the dedication of administrators to their office and to public service. Officials served their agency, guarded their independence, arbitrated among conflict­ ing interests, and frequently had to rouse private interests to meet their responsibility to the community and enlighten them to their own self-interest. Furthermore, the historic pattern of weak associa16

The liberal order of igoo tional life in France had not yet changed; most private interests were either unorganized or only weakly mobilized. In parliament there were clusters of legislators who represented interests like commercial farmers, heavy industry, or the colonial trade. And on occasion lobbies pressed hard on their spokesmen. Legislators commonly seemed to declaim high principles while milk­ ing the state for lobbies and voters. Administrators also recognized certain constituencies. Some interests gained access through advisory conseils supérieurs that grew up within the public bureaucracy. These semiofficial bodies represented the beginnings of a more corporatist posture for the republic. Republican principles, however, condemned the representation of interests on the political level as antidemocratic, and republican officials kept such councils at bay. French producers, up to 1914, commonly requested protection, and a few industrialists even voiced a desire for an expansionist state policy. Yet by and large they wished to be left alone. Other than protection, it is fair to say they saw no need for the republic to devise a policy for agriculture, commerce, or industry. And the permissive republic obliged them. Farmers asked for little more than protection from cheap food im­ ports, exemption from income taxes, and relief from natural disaster. A particularly potent sector like the winegrowers might receive more attention in the form of a subsidy or a regulation against overproduc­ tion. But that was rare. Agricultural syndicates, despite their rivalries, shared the common objective of maintaining the existing structure of the countryside. They found a sympathetic majority in parliament and a compliant agriculture department that was the preserve of friendly Radicals. The small farmer was idealized as the bulwark against socialism, the source of a healthy and growing population, and the ballast against economic and social instability. Yet nothing much was done to improve the lot of some of the poorest people in the country. Gordon Wright writes of this era: No cabinet proposed a serious agricultural program. The nation's system of agricultural education remained meager and antiquated. The government's corps of agricultural experts was too thinly spread to provide much active leadership in modem farm techniques. The state's annual appropriations for rural equipment. . . were ridiculously low. Perhaps the politicians ought not to be blamed; their rural constituents asked only to be left alone, and might well have resisted any serious program of agricultural reform. All one can say is that France's political leaders failed to offer their constituents any alternative to stagnation.49

Tariff policy is of special importance for this analysis because it illustrates how the republic adapted liberalism in order to attend to a 17

Capitalism and the state in modem France multiplicity of interests and maintained balanced growth. The major issue of the day was the reform of 1892 known as the Méline tariff. Jules Méline, the Progressist legislator (and later a prime minister) who galvanized protectionist forces and lent his name to the legisla­ tion, preached the virtues of the static economy. He represented the Vosges, a department whose cotton industry was especially afflicted. His ideal was an economy of small, independent workshops and farmers. France, it seemed, was unsuited to the ways of mass produc­ tion traced by Britain and Germany. Méline denounced industrializa­ tion for draining the countryside of its inhabitants and for causing cyclical depressions and unemployment. Writing in 1907 he observed that the time had come for an agricultural renaissance and a reversal of thç trend toward industrialization: "the present condition of things economically is just the opposite to what it was thirty years ago. Manufacturing was then in the ascendancy, agriculture was in de­ cline. Now agriculture is rising visibly, while manufacturing has come to a standstill."50 Accordingly he encouraged marketing cooperatives, easier farm credit, rural industries, lower taxes, and, of course, tariffs. Because Méline turned his back on making French industry competi­ tive, his only alternative was high import duties. His conception of industrial protection was retrograde; it sought to preserve the pre­ sent, to forestall adaptation, rather than employ it as a selective mea­ sure to foster development. When it came to bargaining over tariff rates in 1891-2 Méline compromised his most extreme demands, yet he still succeeded in turning the republic toward his view of trade policy. The early 1890s saw the resolution of a thirty-year struggle over commercial policy.51 At this time the free trade bloc finally lost its hold on policy and reached a compromise with protectionists. The free traders, besides the academic economists, represented those interests tied to international commerce, for example, railway and shipping concerns, manufacturers and commercial farmers who ex­ ported their output, and wholesalers and bankers from Paris, Lyon, and port cities.52 The protectionists, in contrast, were led by industri­ alists who sold mainly in the domestic market and those most en­ dangered by foreign competition. These were, most notably, textile, mining, and metallurgical firms from the north and east and some from south-central France. A common plea from this quarter was that French industry was not competitive because it suffered from such handicaps as expensive fuel and transport. Protectionists also had one major theorist, Paul-Louis Cauwès, an economist and a friend of Méline.53 Each side in this debate had its parliamentary spokesman, and until the early 1880s free traders had dominated the key minis18

The liberal order of igoo tries of commerce and agriculture. But in face of mounting foreign competition, domestic depression, and rising tariff walls elsewhere the weight of interests shifted away from free trade in this decade; agriculture's move to protection gave Méline's bloc the upper hand. What the republic adopted in 1892 represented, however, not a clear victory of protection over free trade but an accommodation of interests. Industry, transport, commerce, finance, and agriculture ad­ justed to one another in order that all might survive. Retaining low duties for raw materials such as coal and coke benefited exportminded industry and commerce. In contrast higher rates on finished goods helped distressed industries like the cotton manufacturers of the Nord, the Vosges, and Rouen. Similarly, new duties helped ag­ riculture by blocking imports of grain, wine, and livestock. Yet the Méline tariff did not go so far as to raise duties on wool, flax, or oil seeds. Agricultural protection was not to come at the expense of industry. The republic in 1892 chose neither to turn inward and rely upon the domestic market nor to look outward toward greater exchange with the world economy. It chose rather a balanced policy that successfully accommodated all major interests. Interests that had formerly quar­ reled now bargained and adjusted while politicians gave their bless­ ing to the compromise. Such a consensus served to stabilize the re­ public, assuring both bourgeois and peasant support. As a form of economic management tariff policy assured the survival of most pro­ ducers and softened the impact of competition and growth. This vi­ sion of the French economy was neatly expressed by Jules Roche, the Progressist minister of commerce, who guided the new tariff through parliament: 'Trance is at once an agricultural, manufacturing, and commercial country and it is important for the development of its national genius as well as for its [national] strength to sacrifice none of the major elements of its life and prosperity."54 Commercial policy was framed to guarantee survival and a degree of prosperity for all major, viable economic interests without sacrificing anyone. Like commerce and agriculture, the republic had no policy for in­ dustry except tariffs and scattered subsidies. It had neither the means nor the ambition for a long-range, constructive, coordinated program of development. One minister of commerce, Jean Cruppi, complained that his department's role "too often consists of receiving complaints and suggestions that it cannot satisfy."55 The department's only weapon was manipulating import duties. Otherwise it was power­ less. And other ministries, especially the rue de Rivoli, checked any innovation. In fact the commerce department lacked even the prereq­ uisite for action - knowledge of the state of the economy and its 19

Capitalism and the state in modem France problems. What little data it received came from interests that were both reluctant to share information with the state and careful to shape their responses to benefit themselves. The department complained of the neglect of industry and commerce by governments, parliaments, and parties at a time when other countries were forging ahead. Cruppi observed that, in contrast to Germany and other nations that enjoyed "a modern and rational plan" of development. Here industrial and commercial energies are badly guided and supported; they organize in response to market opportunities and initiatives. Yet things run by chance without either boldness or discipline. We depend on our traditional resources - on our refined taste, our soil, our established wealth, and on the inventive genius of French brains, which are always young, fertile, and ready to hatch marvelous ideas that will benefit some neighbor.56

Industry, or at least its most advanced sectors, agreed with this nega­ tive appraisal of the republic's industrial policy. The rise of employers' associations

It was in the years after 1890 that French industry began to experience significant changes in its structure and in its attitudes toward the state. Industrialists simultaneously began to discipline themselves and to ask the republic for more positive policies. Behind the quickening movement for patronal associations lay a multiplicity of causes.57 Most were measures of self-defense. The desire to meet competitive pressures through some form of pooling arrangement was one motive. Foreign competition in industries like textiles, coal, and metals had become particularly intense, and cartels, as well as tariffs, were a common entrepreneurial response. Syn­ dicalism and socialism had also become more threatening. The latter became a formidable political force in parliament in the 1890s, and the trade union movement adopted the doctrine of revolutionary syn­ dicalism at the turn of the century. A growing number of serious strikes after 1900 prompted patronal retaliation.58 Industrywide strike funds were one way of coping with labor agitation. Equally ominous was the apparent receptivity of lawmakers to demands from Socialists and organized labor for assistance. One by one, work accidents, pensions, the workday, and industrial disputes came under some form of government regulation. Unless its position were more forcefully articulated, business believed, the supine regime would continue its perilous course. Employers' associations had been tolerated but not legally recog­ nized by regimes prior to the Third Republic. The 1884 associations law legitimated existing bodies and encouraged the formation of 20

The liberal order of igoo thousands of new ones. From about a hundred syndicates the number rose to over two thousand in 1900 and exceeded five thousand by 1913. Some 421 thousand companies had become syndi­ cated by this date.59 Such numbers are somewhat misleading, how­ ever, because most of these trade associations were empty facades. Their dues were paltry; they lacked a professional staff and offices; and given their diverse and secretive members the associations did not dare discuss serious manufacturing or marketing issues from fear of destroying their organization. This left only legal, social, and gen­ eral economic questions. Their major activity seemed to be an annual banquet at which a minister handed out decorations at dessert. Be­ hind the proliferation of associations the poussière patronale, or frag­ mentation and disarray of the business community, remained. The movement for industrial self-government bred associations of many types. There were a few unabashed pressure groups like the Association de l'Industrie Française, dating from 1878, which fought for high tariffs. Basically, however, there were two categories: the professional employers' syndicate and the commercial comptoir or car­ tel. In some cases these associations overlapped, and a trade associa­ tion doubled as a cover for a selling comptoir. The first type of patronal association, organized locally, or in regional or national federa­ tions and legalized by the 1884 law, served a range of professional functions. It studied pending labor legislation, tariff, and tax reform, with an eye to safeguarding its own interests. Heightened solidarity also helped employers bargain with trade unions and, if necessary, combat strikes. Some associations administered paternalistic pro­ grams like workers' housing, family allotments, and mutual insur­ ance. The most formidable national federation of this era was the Union des Industries Métallurgiques et Minières (UIMM), founded in 1901, which grouped together mining, metallurgy, and engineering interests. It possessed the authority "not only of imposing its views but also of making them respected."60 Chambers of Commerce, in contrast, were traditional, semiofficial bodies elected by local busi­ nessmen that, unlike most producers' syndicates, encompassed a wide spectrum of interests. TTiey too strengthened themselves at the turn of the century; they became assemblies of syndicate officials and then extended themselves nationally by forming an association of presidents of Chambers of Commerce.61 The second form of association functioned more narrowly as a mar­ keting device for producers. Comptoirs, ententes, and cartels were different labels attributed to business groups that performed similar tasks.62 Some were regional; others operated at the national or even the international level. A full-blown cartel classified products, fixed 21

Capitalism and the state in modem France prices, set production quotas, arranged transport, and operated a common selling office. Less fully developed bodies, like selling comp­ toirs, simply did less. Although some cartels were purely defensive others, such as those in the metals trade, appeared in order to open markets and promote new products. It is impossible to assess the precise dimensions of cartelization in France before 1914 because these organizations were for the most part covert and unstable. Dis­ agreements continually fractured their fragile unity. Nevertheless, by the early 1900s several major sectors had become more or less car­ telized. These included textiles, metallurgy, coal, petroleum, sugar refining, and chemicals. Article 419 of the penal code seemed to pro­ hibit such formations because these agreements fixed prices and re­ strained competition. But this legal restriction was easily avoided. Some of the major cartels like the Comptoir de Longwy, the associa­ tion of Lorraine ironmasters that controlled half the nation's steel production, were indicted, but none was convicted.63 Indeed some economists and politicians distinguished good from bad cartels, argu­ ing that the former deserved exemption from the code because they defended French industry against foreign competition and stabilized production and prices. Méline, for one, urged his countrymen to imitate Germany's vigorous cartel movement: "We would do well not to fall asleep and especially not to count on our rivals disarming themselves. Let us try, on the contrary, to imitate them and get to work organizing our industries systematically. We should substitute the spirit of union and solidarity for the particularism that has done us so much harm."64 A look at two cartels of this era is instructive. Under the cover of the Méline tariff the cotton spinners of Lille, Rouen, and the Vosges seized control of the domestic market.65 They expanded their plant, specialized in different branches of production, and formed cartels like the Comité Français de la Filature de Coton in 1899, which fixed both prices and production quotas. Competition all but disappeared among cotton spinners. Coal had a similar experi­ ence. After many earlier attempts had failed, coal companies of the Nord and Pas-de-Calais fields organized an effective regional cartel in 1901.66 The impetus came from competition from Belgian and Ruhr coal cartels. This rivalry forced a large number of middle-sized, and once fiercely competitive, French collieries to band together. The Nord-Pas-de-Calais cartel, under the unassuming title of the Office de Statistique, developed an elaborate and effective system for al­ locating markets and setting prices. The extent of cartelization casts doubt on the commitment of busi­ ness to liberal doctrine. Although celebrations of the market graced texts on political economy, employers worked hard to smother com22

The liberal order of 1900 petition. Self-interest, not theory, dictated entrepreneurial behavior, and competition was more feared than honored. For our subject an important aspect of this movement toward pa­ tronal self-discipline and market control was a corresponding effort at modifying relations between industry and state. Business attempted to strengthen its solidarity and also raised its voice. Not surprisingly. Chambers of Commerce, which already enjoyed a privileged status, made a bid to attract the republic's attention. They asked to become the business community's principal advisor on legis­ lation. In part their self-assertiveness grew out of a belief that the republic ignored and disdained the contribution of businessmen. Compared with those in other countries French entrepreneurs seemed unappreciated. "In foreign countries," one Chamber of Commerce ob­ served, "the government sustains, protects, encourages or even sub­ sidizes industry. In France, they bother with industry only in order to tax or castigate it."67 In part the self-consciousness of the Chambers of Commerce was also a response to the menace of socialism, syn­ dicalism, and social legislation. The chambers sought to bridge the gap in the liberal order between business and public authorities and to wake up the republic to what they considered economic realities. A very different approach to expressing the views of business was the behavior of a political pressure group like the Union des Intérêts Economiques. The UIE, founded in 1901, encompassed a wide variety of economic interests besides employers, for example, railway bond­ holders. Its task was the election of candidates who opposed the extension of "state socialism" in all its forms. The UIE sponsored many forms of political propaganda and distributed funds to candi­ dates in the name of small commerce and industry. Its political mili­ tancy had a limited appeal in business circles, however, and con­ trasted with the way the most dynamic sector of industry sought to advance its cause. Metallurgy in the years before the war represented the most ad­ vanced position on the issue of improving relations with the state. The Comité des Forges, which operated as an umbrella organization for the iron and steel industry, had been relatively ineffectual up to 1900. It had been torn by conflicting interests - for example, largeversus small-scale firms, modem versus retrograde technology, ex­ port versus domestic marketing, metal producers versus consum­ ers.68 In its place several more specialized syndicates appeared. Comptoirs developed to help market various products such as steel beams, springs, axles, and pig iron. The expansion of iron production in Lorraine during the 1890s necessitated a closer monitoring of out­ put and a coordinated search for new markets. Strikes and labor 23

Capitalism and the state in modem France legislation and the apparent indifference of the government to the problems of heavy industry also stimulated employer activity. The career of Robert Pinot illustrates the new posture of the indus­ try.69 Pinot was the archetype of the modern employers' official. His training was in law, social science, and government rather than in industry. He was an expert on social questions and a disciple of the corporatist-paternalist theoretician Frédéric Le Play. Thus he incor­ porated a belief in the progressive character of associations with his liberalism. To Pinot étatisme and socialism were both regressive. The latter's political ambitions only impeded finding real solutions to the social question. In 1899 the association of locomotive builders selected Pinot as its director. His skills promised to make him a gobetween for the manufacturers with politicians and administrators. The builders suffered from an irregular flow of orders and from rail­ way companies that freely purchased equipment outside the country. Recent labor legislation, moreover, restricted employers' control over the labor force and raised production costs. Pinot and the syndicate feared that the government was giving in to pressures from labor and was headed on a dangerous path that would further disrupt produc­ tion. The new director saw the syndicate as a counterweight to "an overloaded state, feeble or tyrannical, and a working class inflamed and misled by bad guides."70 Pinot infused the railway suppliers' association with a new, aggres­ sive approach toward representing its interests. Gone were oldfashioned shyness and slyness. Pinot campaigned openly in the press and in lectures and lobbied directly with bureaucrats, legislators, and ministers. He appeared before parliamentary committees, filed re­ ports, and worked the corridors of parliament. When foreign suppliers won a big order for railway equipment he went to the minis­ ter of public works escorted by a senator, two deputies, and several syndicate officials asking for the minister's intercession. Pinot argued that the state was a partner in operating the country's railroads and could not be indifferent to the fate of an industry that was vital to national defense. He won this case, but neither the government nor parliament stopped the railroads from continuing to purchase equip­ ment abroad.71 Within a few years Pinot was asked to direct three other syndicates in the metals-engineering industry, including the UIMM. He pursued legislative proposals that affected his interests from initial hearings in parliamentary committee to administrative application. Pinot found more support for employers' views in the Senate and in administrative agencies like the Conseil d'Etat than he did in the Chamber of Deputies. He succeeded in modifying bills and in some cases - for example, the decree creating regional labor coun24

The liberal order of igoo dis (1900) issued by the sodalist minister Alexandre Millerand - in obstructing legislation that was particularly offensive to heavy industry. In 1904 Pinot became secretary-general of the dormant Comité des Forges and quickly revived it as the peak assodation of heavy indus­ try. When tariff revision again became an issue in 1909-10 he em­ ployed his modus operandi to maintain protection. He stressed the importance of his industry for national defense and its poor competi­ tive position compared with foreign steel and engineering firms. Polit­ ical and administrative circles shared his conviction that French met­ als were comparatively disadvantaged by higher costs and inadequate skilled labor. Because the Comité des Forges induded engineering firms that consumed steel and were dubious about high duties. Pinot had difficulty keeping everyone in line. This he effected through ac­ commodation - by assuring that everyone benefited and by maintain­ ing the complex web of duties, cartels, and syndicates that charac­ terized the marketing of metals. Despite the apparent success of heavy industry in curbing labor legislation and securing protection, these entrepreneurs, paradoxi­ cally, did not feel that either the republic or public opinion was sym­ pathetic. They believed they were misunderstood, neglected, and even mistrusted.72 They thought, furthermore, that their counter­ parts in Germany and the United States fared much better. The Com­ ité des Forges's influence was sharply limited by the demands of other interests and by the state's defense of its authority. And So­ cialists and Radicals with their talk about nationalization were down­ right menacing. "While the Comité des Forges," according to one study, "enjoyed considerable success as a pressure group in protect­ ing its short- or medium-term interests, it was less successful in achieving the long-term commitment to the concerted pursuit of in­ dustrialization which it sought to obtain from the state and political elites."73 In the decade before 1914 the Comité des Forges articulated a program that asked the republic to undertake a policy of national industrial development.74 On the one hand, heavy industry asked the state to halt the flow of labor and fiscal legislation that threatened to drive French products off world markets. The state should restrain socialist demands and its own impulse to extend regulatory powers and end the threat of "sterilizing étatisation" that smothered entre­ preneurial initiative. On the other hand, the state, in a more construc­ tive manner, should give priority to national economic expansion. The model was Germany where the imperial regime had helped de­ velop the economy's infrastructure and supported industry with tariffs, favorable purchasing policies, and other forms of encourage­ ment. In place of parliamentary direction of industrial policy where 25

Capitalism and the state in modem France votes counted more than economic realities, the Comité des Forges recommended reliance on the administration and regular consulta­ tion with industry through advisory bodies. Like the Chambers of Commerce, the iron and steel industry was reaching out to broaden and deepen its rapport with the state and to ask it to embrace a positive policy toward industry - without much success. Weaknesses in the economy The buoyant performance of the economy at the turn of the century seemed to justify the liberal system that has just been surveyed. In fact, because this period was one of European-wide prosperity such success was undoubtedly due more to universal factors like growing international trade and emerging new industries like chemicals and electricity than to French political economy. In the mid-i890s, follow­ ing a decade or more of near stagnation, growth accelerated. Recent calculations on the period 1896-1913 estimate industrial output rose to 2.4 percent annually, productivity advanced to 1.9 percent, and the overall gross national product (GNP) grew at a rate of 1.8 percent. Industries like electricity, metallurgy, chemicals, and machine build­ ing enjoyed annual increases of between 4.5 and 8.9 percent.75 In structural terms, after 1900 industry detached itself from its former dependence on agricultural markets and received a "second wind" from urbanization. Over the longer period between 1870 and 1913 the growth of real product per head in France approximated that of Brit­ ain and Germany.76 Industrial concentration intensified, and a grow­ ing proportion of the work force became employed in large firms. France held its own in generating the new, high-technology indus­ tries of the twentieth century including automobiles, aluminum, elec­ tricity, and aviation. In 1914, for example, France led Europe in the manufacture of both automobiles and aircraft.77And harnessing hydro­ electric power in the Alps created a new electrometallurgy industry. Meanwhile agriculture reached a turning point in the 1880s and 1890s; land parcelization slowed, the total number of taxable farms declined, and middle-sized holdings grew at the expense of the small.78 The franc remained stable, the rate of savings and investment was high, and Frenchmen were becoming wealthier. On the basis of per capita income the French lagged behind only the British and the Americans in 1909-13.79 Only Britain surpassed France as a creditor in the world economy, and the per capita value of French exports kept up with other important commercial countries. That there was a connection between this prosperity and liberal policy few doubted. Nevertheless, 26

The liberal order of igoo in retrospect, there were serious weaknesses that did not justify com­ placency. Compared to other Western nations French population was nearly stationary. There were 38 million Frenchmen in 1880 and barely 40 million in 1914. Voices were raised about the negative consequences of this demographic pattern. For the economy it threatened to curtail aggregate demand, restrict labor supply, dampen producers' en­ thusiasm for expansion, and intensify the danger of gluts. Of the active population a large proportion remained on the land more than in Britain, Germany, or the United States.80 The propo­ nents of the "balanced economy" might celebrate the advantages of this situation, but it had its costs. Farmers were on the whole less productive and received lower incomes than workers. Many lived near the subsistence level even at this late date, producing small surpluses and lacking the income to purchase many manufactured goods. Marginal farms with dwarf plots and high production costs survived because of market isolation, tax evasion, and tariff protec­ tion. Much of French farming lagged behind other Western economies in crop yields, costs, and mechanization.81 Such an ag­ ricultural sector slowed the development of a market for industry, hampered the drift of population to the city, and reduced the overall growth of the economy. Commerce also suffered from a kind of parcelization despite the nation's early leadership in mass retailing. Even a fan of the small workshop like Méline complained of the peasants' flight to the cities to swell the ranks of petty tradesmen: We could cite districts in Paris in which twenty years ago there were only two fruit stands, and in which now there are six or eight - the same could be said of grocers, bakers, butchers, haberdashers, florists; while as to wine-sellers, their name is legion. All these small shops, groaning under heavy expenses and forced to make their profits out of a meagre clientele, are only just managing to exist in spite of high prices they ask.82

One effect of the excessive number of small retailers was to raise handling costs and prices. Industry also had its share of problems.83 France was the only major industrial power that imported a substantial amount of coal (a third in 1900). This made industry unusually dependent on foreign imports, boosted manufacturing costs in certain branches, and lim­ ited the development of coal-based industrial regions on a par with the Ruhr. The advent of oil as an energy source did not improve the situation because France lacked any major deposits of its own and refrained from entering the race for overseas resources. Iron ore 27

Capitalism and the state in modem France aside, the country lacked a good many industrial raw materials. With respect to plant size France ranked behind industrial leaders like Brit­ ain, America, or Germany. The French were dwarfed by the top layer of large firms in key industries elsewhere. In 1906-7 Germany had 47.6 percent of its factory labor in industry and mining working in large plants (employing over fifty) whereas France had only 29.3 per­ cent.84 Nor had French industry advanced as far on the path of con­ centration or cartelization.85 In part this situation reflected French adaptation to circumstances, that is, to a narrow and dispersed home market, a skilled labor force, and a continuation of traditional manu­ factures, for example, the quality, individualized products of the lux­ ury trade, such as the fine silks of Lyon, as opposed to massproduced goods. According to a recent study, small- or medium-scale scattered, semiartisanal enterprises were a rational economic strategy.86 But this kind of manufacturing tended to keep plant size small, necessitated a broad range of product types, and robbed France of the advantages of economies of scale and standardized output. Initial experiments in introducing American forms of plant manage­ ment, for example, F. W. Taylor's scientific management scheme, were not very successful.87 Chemicals did not keep pace with Ger­ man industry, and textiles grew slowly. As of 1900 a strategic industry like locomotive manufacture lagged far behind that of leading coun­ tries as well as Russia.88 The merchant fleet was both small and late in modernizing. France, moreover, lost part of its continental trade to Germany and had to turn increasingly after 1900 toward the less competitive colonial markets. Meanwhile German imports to France doubled between 1898 and 1913.89 If one were to believe the lamenta­ tions of industrialists, especially at the time of tariff revision, it would seem they suffered from exceptional disabilities: lack of raw materials, high taxes, poor transport, a small home market, onerous social legis­ lation, and more. Critics observed that in comparison to industrial leaders, especially the youthful economies of the Americans and the Germans, the French were falling behind. One journalist who had had experience working abroad for a French bank wrote: In Germany one sees colossal metallurgical, chemical, and electrical indus­ tries, immense factories built and run according to the latest laws of progress, an intensive cultivation of the soil directed scientifically, reaping the greatest returns per hectare in the world. In France there are middling plants, pro­ vided with old machinery which is only slowly improved and a backward agriculture obtaining with fertile soil a product 25 to 50 percent less than what Germany derives with poor soil.90

28

The liberal order of igoo Trade unions insisted that French entrepreneurship was inferior. One prominent spokesman for labor denigrated industrialists' complaints about their handicaps: Their difficulties are caused by their sterility, their sluggish markets are due to their timidity, their uncertainty to their lack of initiative. Do not let them fill our ears with warnings about impending danger. Let them apply themselves practically to expand their influence and trade, to change their way of operat­ ing, their marketing techniques, their method of paying their work force, and it will be possible to make the amazing progress made, for example (I cite this example because it is my trade), by shoe manufacturers in the United States.91

The stereotype of the cautious French entrepreneur had made its appearance. A vivid demonstration, to some, of French decline oc­ curred in 1900 at the lavish world's fair held in Paris. One spectator observed: "We have offered our rivals, the Germans, the English, the Americans, a unique occasion to display their crushing industrial and commercial superiority."92 Before the war, then, one can find indications that the liberal order and the economy's performance were not entirely satisfactory. So­ cialists, syndicalists, corporatists, as well as less politically inclined journalists, academics, and other observers, identified weaknesses. From the ranks of industry itself there were some who wanted an overhaul of public policy. Nevertheless, the consensus among those who governed and among those who produced and traded was that France was on the right course as it entered the twentieth century. In the early 1900s macroeconomic management was not on the repub­ lic's agenda. For that matter no other industrial nation of the era contemplated it. The French state was neither inclined toward nor capable of managing the economy. The will of decision makers and economic interests as well as the principles of political economy dic­ tated otherwise. The republic lacked the administrative machinery, the economic outlays, the public sector, and even the data necessary for supervision. Nor did the Third Republic, in contrast with other regimes, especially Imperial Germany, champion industrial expan­ sion. The republic exhibited no partiality for industry. It offered pro­ tection and noninterference to all rather than promotion and control of some. Rather than lead, the Third Republic preferred to accommo­ date or drift. Similarly, few Frenchmen at the turn of the century seemed tempted by the delights promised by full-scale industrializa­ tion. Gradual, balanced growth with all branches of the economy

29

Capitalism and the state in modem France steadily advancing together, without the big eclipsing the small or the city emptying the countryside, was the ideal of national prosperity. The easy ways of this liberal order seemed to have brought prosperity in the two decades before 1914; but they were to be found wanting before the awful demands of war.

2 The interruption of the Great War, 1914-1918: m inisterial plans for reconstruction Governments and generals alike everywhere in Europe anticipated a "lightning war" in the summer of 1914. It did not materialize. Instead of decisive battles and a quick victory for either the Entente Powers or the Central Powers there was trench warfare and military stalemate. By the autumn of 1914 a new war, a war of attrition, began to emerge that upset all previous calculations. With respect to economic policy a war of attrition demanded more than what the military planners had prepared, that is, merely turning masses of citizens into frontline soldiers and exploiting stockpiles of munitions. The war became a test of economic as well as military strength, and the effectiveness of a nation's mobilization became vital in determining the outcome of the struggle. France faced a particularly difficult predicament in such a test. The German offensive of 1914 had wheeled across the northeast corner of the country and deprived the French of many of their mines, fac­ tories, and richest farm lands. Enemy invasion cost France half its output of coal and coke, almost two-thirds of its capacity to make pig iron, steel, and finished metals, most of its textile mills, and much else. A relatively small loss of territory dealt a powerful blow to the nation's war-making ability. Prosecution of the war required channel­ ing resources to supply the army and essential civilian needs as well as acquiring extensive aid from abroad. The conflict plainly revealed what some prewar pundits had noted; on the economic terrain France could not meet Germany as an equal. Hostilities immediately interrupted normal operation of the market economy.1 The government requisitioned supplies, diverted labor to the front, took charge of the railroads, and imposed a banking moratorium. As the war of attrition deepened the state improvised. It had no scheme for economic mobilization and met each crisis as it arose. Expedients were found to meet scarcities of munitions, skilled labor, foreign exchange, credits, food, and raw materials. Slowly and reluctantly the liberal republic eased toward economic dirigisme. Pol­ icy makers preferred to rely on the market whenever possible and to 3*

Capitalism and the state in modem France enlist the aid of business and labor rather than create new bureau­ cracies. Government hesitation in discarding liberal ways is illustrated by its procrastination in introducing the rationing of bread and sugar until 1918. Nevertheless, the exigencies of total war compelled a widening of state intervention until war priorities, as defined by pub­ lic officials in consultation with private interests, rather than the mar­ ket allocated resources. The cost of the war quickly surpassed all expectations. Military expenditures swelled public outlays to the point that service on the national debt exceeded the entire prewar budget. And the horren­ dous cost of reconstruction lay in the future. When the minister of finance Alexandre Ribot, who had been a proponent of government economies before the war, was quizzed about his generous spending, he replied, "We have spent, we are spending liberally, too liberally perhaps, but it is difficult to take in sail when the boat is at top speed." Speaking in 1915 Ribot explained he delayed introducing an income tax to help defray war costs because "nothing is more difficult or deceptive than improvising taxes in the midst of a war."2 Rules of public finance such as maintaining a balanced budget and denying treasury funds to private industry were suspended. Finance officials saw their task as raising sufficient revenue to carry on the struggle. They believed that either the enemy would be forced to pay for the cost of the war or that future generations of taxpayers would be asked to share the burden. Nothing more could be asked of those who were already making heavy sacrifices, in many instances endangering their lives for the war. In any case taxes could not be raised to the point of paying for the war because expenditures soon exceeded prewar levels of private national income.3 Thus expenses were largely covered by advances from the Bank of France, which raised the volume of bank notes, and by borrowing, much of which was in the form of short­ term treasury bonds. France also had to contract heavy loans from its allies as a way of procuring foreign supplies. An income tax came into operation in 1916, but at first it yielded little revenue. Whatever tax increases the government enacted after 1914 covered only a small fraction of the mounting expenditures. Even the duress of war did not stir the liberal regime to adopt Draconian fiscal measures. Meanwhile inflationary pressures gathered. Currency in circulation grew as did bank accounts at a time when the supply of goods fell short of demand. Prices rose in spite of controls. Financial policy, in short, was designed to meet a crisis. It did not presume to solve the problems generated by the war beyond sustaining the war effort. Such a policy was to leave the nation with staggering debts, both internal and external, and the problem of serious inflation. 32

The Great War Economic mobilization, like war finance, was improvised to meet a series of emergencies. Controls and interventions multiplied as the war wore on until they affected most areas of economic life including war production, foreign trade, foreign exchange, the allocation of the work force, transport, consumption, and prices. Such expedients were tolerated by the private sector as a form of crisis management, but there was an implicit understanding that these regulations would end when hostilities stopped. For most Frenchmen, including most politicians, bureaucrats, and industrialists, the war was too enormous a catastrophe, too sharp a break with the past, to be instructive for "normal" times. A national crisis legitimated various kinds of étatiste, corpôratist, and even socialist experiments. But expedients by defini­ tion were temporary. The few who thought otherwise were mainly public officials who had taken charge of industrial mobilization and postwar planning. There were also some outspoken private citizens who saw the war as a new departure. My account of the war focuses on those who ran the war economy, grasped the nature of the econ­ omy's structural problems, and devised programs to reform the lib­ eral order. Three ministers dominated both wartime industrial policy and re­ construction planning in France. Albert Thomas and Louis Loucheur served as ministers of armaments, and the latter, after the armistice, continued as the minister for industrial recovery. The third figure, Etienne Clémentel, directed the Ministry of Commerce and Industry from almost the beginning of the war. Each minister formulated a design for reconstruction, and the outcome of their debate deter­ mined the shape of the postwar political economy. The ministries of armaments and commerce that these men ad­ ministered were largely wartime creations. The former came into exis­ tence once the government and the army recognized that they faced a long war. The armaments bureaucracy controlled access to certain strategic materials like metals, let contracts to munitions makers, and supervised state arsenals and private armaments plants working under contract. Endowed with an enormous budget, the armaments ministry became a mighty enterprise almost overnight. The wartime commerce department bore little resemblance to its puny peacetime predecessor. At first the government permitted the market system to operate without much interference, leaving the commerce depart­ ment with meager responsibilities. In 1917 the situation changed abruptly. A critical shortage of shipping and raw materials brought a blanket prohibition of imports, requisition of the merchant fleet, and centralized purchase and distribution of scarce supplies. In the last months of the war the commerce department assumed control over 33

Capitalism and the state in modem France trade and indirectly supervised civilian production. By 1918 industry and commerce functioned through the services of these government bureaucracies. The war freed ministers and bureaucrats from normal political supervision. At the outset parliament abdicated power to the gov­ ernment and the military because the battle was expected to be in­ tense but brief. Later, in the midst of the protracted fighting, how­ ever, partisan politics revived: Thomas, in fact, fell victim to party struggles. He lost his position just before Georges Clemenceau took charge and reasserted government control of policy at the end of 1917. But even at the height of its activity as government watchdog, parlia­ ment and its committees tended to submit to the demands of national defense and let ministers have their way. In the final year of the war, as the struggle entered its most dangerous phase and as attention turned toward postwar problems, the Clemenceau cabinet, which included Loucheur and Clémentel, functioned with a compliant par­ liament. Albert Thomas

Of the three principals in this wartime debate over economic policy Thomas began with the strongest position but ended up on the sidelines when the decisions about reconstruction were made. Thomas's design for postwar France had a distinctive socialist cast.4 He had met his tutors in socialism as a student at the prestigious Ecole Normale Supérieure. Thomas took special interest in industrial ques­ tions and in 1910 became a Socialist deputy in parliament. Misman­ agement of the railroads and the republic's harsh treatment of striking railway workers prompted him to propose nationalizing the railroads. Thomas's proposal was an early expression of a reform that will be­ come increasingly important in this history. To Thomas socialism advanced gradually through the daily efforts of the party, trade unions, and other collectivist institutions like cooperatives. Trade unions did more good by promoting industrial democracy in the factory or by bringing order to the anarchy of capitalist production than by engaging in strikes. "A labor contract agreed to by twenty masons and their three employers in a secluded village of France is more revolutionary than ten motions adopted at Stuttgart [a Socialist congress]," he asserted.5 His reformist brand of socialism displayed some syndicalist and Saint-Simonian elements. He classified workers more as producers than as a separate class and stressed that labor had a stake, along with management, in the de­ velopment of harmonious industrial relations and modem factory methods. 34

The Great War In October 1914 his friend Alexandre Millerand, the minister of war, who was a former Socialist, asked Thomas to join the ministry's mu­ nitions service. The union sacrée, or wartime political truce, brought Socialists into high places, and Thomas's appointment was thought to assure labor's cooperation in war plants. In May 1915 Thomas be­ came under secretary for artillery and munitions and finally in De­ cember 1916 a full-fledged minister of armaments independent of the war ministry. He surrounded himself with graduates of the Normale, like himself, who gave his administration a distinctly socialist and intellectual caste.6 The situation was rather bizarre: a Socialist turned munitions maker. Some of his left-wing colleagues jeered at photos of the minister standing amidst stacks of shells at the Schneider factory exhorting workers on the need to die on the job, if necessary, in order to supply the front. Thomas's policy was to raise the output of munitions by stimulat­ ing private initiative - knowing that the state could not perform the task itself. He adopted a simple contractual relationship with muni­ tions makers, retaining profit incentives and avoiding administrative interference.7 In the mad scramble to find munitions in 1914-16 the government turned to industrialists who had experience with largescale manufacturing problems for help. Rather than create a new administrative bureaucracy Millerand and Thomas chose to rely on private business organizations. Thus the government used Robert Pinot and his staff at the Comité des Forges to control the import and flow of metals to private firms and to distribute armament contracts. The Comité des Forges operated as a monopoly in the state's name. This arrangement made it difficult for the ministry at a later stage of the war to bend heavy industry to its will. Thomas proved to be an energetic but not always effective adminis­ trator. Under his direction industry accomplished a prodigious pro­ duction feat. Yet the army always seemed short of artillery and shells, and he often promised more than he could supply. And the way the armaments drive was achieved left a good deal to be desired.8 There were unfulfilled contracts, missed deliveries, defective products, huge profits, and in some cases outright fraud. Thomas and his offi­ cials tried to curb munitions makers, to reduce profit margins and raise penalties for faulty supplies, but without much success. Huge advances, for example, were extended to build new plants, but the ministry was unable to insert a repurchase clause. The ministry de­ pended too heavily on a steady and growing stream of munitions to risk any disruption of production. Despite his difficulties with war contractors, Thomas developed a certain respect for industrialists. For the most part he found them 35

Capitalism and the state in modem France capable, cooperative, and patriotic.9 He was well aware of the weak­ nesses of French industry, yet its ability to provide munitions in an emergency demonstrated its potential. Thomas spoke of the war itself as an "enormous industrial revolution" for France and gloried in the new large-scale factories equipped with the latest machinery that had sprung up suddenly all over the country.10 The war also demonstrated to him what capital and labor could achieve by working together. In his view class interests should be subordinate, in peace as well as war, not only to the needs of national defense but also to the desire for national prosperity. Thomas pleaded with management and labor to intensify production, practice class collaboration, and accept Taylorism. (The ideas of F. W. Taylor, an American engineer, often referred to as "scientific management," aimed at raising productivity through time and motion studies, pro­ ductivity bonuses, planned production processes, etc.) When the minister visited the Renault plant at Billancourt in 1917 he asked workers to view the installation not only as a product of capitalist self-interest but as a contribution to the interests of labor and the nation. He spoke of the "magnificent industrial production" capital and labor would achieve together in the future. Moreover, France, he asserted, needed to increase its output in order to complete its mili­ tary triumph with an "economic victory" over Germany.11 If Thomas sought the multiplication of large, modem manufactur­ ing enterprises he also wanted to make these new factories advance the cause of industrial democracy. Early in 1917 he introduced a sys­ tem of mixed arbitration commissions and shop delegates in all state plants; labor was to have a say in organizing production, setting wage rates, and determining working conditions.12 Shop delegates also served to ease the transition to Taylorism and mass production. It was by such small advances that the working class, in his view, became better organized, trained, and prepared for exercising its proper role in the state and society. The prewar theme of nationalization tended to disappear from the armament minister's speeches. But Thomas had not lost interest in the cause. In 1916 an imaginative engineer on his staff urged him to build a huge state arsenal at Roanne utilizing the latest production techniques and American machinery. Thomas backed the scheme be­ cause he needed, among other things, to raise shell production and overcome the reluctance of private industry to invest in new plant. He also wanted to create a model state enterprise: not only one that was fully mechanized but also one where workers participated in man­ agement and managers were not subject to the state bureaucracy. However, construction of the arsenal at Roanne, partly because of 36

The Great War poor planning, turned into an administrative and legal nightmare that aroused strong opposition from parliament, private industry, and the press. After large expenditures and little output, the arsenal was gradually abandoned, but only after badly damaging Thomas's repu­ tation and the cause of state enterprise.13 By 1917 Thomas had begun to elaborate his design for postwar France. Its essentials were industrial concentration and renovation, industrial democracy, class collaboration, and selective nationaliza­ tion. The latter measure reappeared explicitly in his program in 1919 only after he had left the government. At the very time Thomas was turning his attention to long-range domestic reform and postwar reconstruction he encountered political trouble. Thomas drew the fire of parliamentary committees and the press because armaments were directly connected with the progress of the war and because munitions contracts involved such huge ex­ penditures of public money. When deliveries fell short or scandals occurred, it was presumed to be the ministry's fault. And Thomas had made some embarrassing mistakes as an administrator. He also had the misfortune of choosing friends who became political liabilities and of acquiring powerful enemies. The Socialist minister absorbed attacks from all sides; to some he was a friend of the Bolsheviks, and to others he was a traitor to the working class. Most important, the breakup of the union sacrée undermined his position. As dissidence grew within the Socialist Party against the government's conduct of the war, especially with its apparent reluctance to take any steps toward negotiating a peace, support for continued Socialist participa­ tion in the cabinet faded. The government refused to conciliate its left-wing critics, and Thomas's position became untenable. In Sep­ tember 1917 the fall of the Ribot cabinet brought a reshuffling of minis­ ters. When the demands of Thomas and the Socialists were not met, he obeyed party discipline and resigned. At the very moment when Thomas could have exerted influence in shaping postwar policy, he left the government. He continued to monitor reconstruction policy from his position with the parliamentary opposition, but his replace­ ment at the Ministry of Armaments, Loucheur, was to pursue a rather different course. Etienne Clémentel

Clémentel, unlike Thomas, survived the disintegration of the union sacrée; in fact he gave the Ministry of Commerce sustained and force­ ful leadership from October 1915, when Briand, the premier, brought him into the government, until late 1919. At different times in this 37

Capitalism and the state in modem France period Clémentel simultaneously held the ministries of supply, ag­ riculture, labor, post and telegraph, and merchant marine; he came to direct a veritable ministry of national economy. He owed his invul­ nerability to his political alignment with the parliamentary majority, the less exposed position of his ministry, and his own administrative and political abilities. In contrast to Thomas and Loucheur, Clémenters prewar career gives the historian few indications of his wartime behavior. His father was a miller in Riom where Clémentel grew up. He liked to paint and had to be dissuaded by his family from going to the Beaux Arts. Instead he attended the law faculty at Clermont. Clémentel became a notary but displayed no special interest in economics or business. He wrote a play, painted, and preferred artists and poets for his friends.14 He drew heavily on the history and landscape of his native Auvergne for his artistic themes, reflecting his lifelong interest in regional affairs. The young notary admired Michelet and shared with the great republican historian the ideals of universal fraternity and human progress. Clémentel followed the typical career of a successful politician of his day. He began with election to office in Riom, built a base of local support, and then in 1900 was elected to the Chamber as a radical republican. The new deputy moved in both left- and right-center circles. As rapporteur for the budget in 1904 he advocated reducing expenditures by decentralizing the administration and increasing revenue by nationalizing monopolies like petroleum refining.15 His report as head of a parliamentary inquiry into a viticulture crisis gives some insight into his early views. At issue was the adulteration of wines and the fraudulent sale of inferior wines under reputable labels. Clémentel spoke out against these abuses committed under the guise of the free market and recommended state regulation of the production and sale of wine in the interest of consumer protection.16 He sat with the Independent Radicals in the Chamber, served as minister of agriculture in 1913, and for a few days in June 1914 was minister of finance. There is little in this prewar record to indicate why this rather conventional politician was to become the principal architect of the remodeling of the economy. In retrospect it seems a case of a creative and aggressive temperament living through an exceptional time. It was a matter of a leader learning in office, responding to an emer­ gency, and heeding the advice of a reform-minded staff. Under Clémentel the Ministry of Commerce became the center for postwar economic planning within the government. Whereas Thomas drew his principal assistants from the Normale and 38

The Great War Loucheur from the Polytechnique, Clémentel relied heavily on the Ecole Centrale des Arts et Manufactures. The technical character of his wartime staff, recruited from outside normal administrative chan­ nels, contrasted with the legal and commercial background of career officials in the ministry. Among his directeurs were academics like Henri Hauser and Daniel Serruys, engineers like Henry Blazeix and Léon Guillet, lawyers like Roger Fighiera and Rieul Paisant, and the former businessman Jean Monnet. None had been part of the prewar commerce department. At first the commerce department intervened in the civilian econ­ omy in piecemeal fashion to increase the imports of a few com­ modities like cereals and to prohibit others. But the major concern of the ministry was "economic warfare": seizing enemy markets, inter­ dicting commerce with the Central Powers, and freeing France from dependence on foreign suppliers.17 It was this struggle that generated anxiety at the ministry about French ability to compete in a commer­ cial free-for-all at the end of hostilities. In 1915 the ministry, in an effort to mobilize a wide range of business interests for capturing German markets, helped found the Association Nationale d'Expansion Economique (ANEE) - a kind of precursor to a national em­ ployers' federation. At the same time other ministries tried to relieve the duress caused by mobilization by creating networks of consulta­ tive bodies.18 In 1916 policy began to shift. The commerce department intensified conventional measures of control such as requisitioning scarce com­ modities and curbing luxury imports. Then the British government, to whom the French had turned for- shipping, supplies, and credits, complained about French buyers bidding up the price of metals and asked Paris to impose discipline. The British threatened to close their shores to French imports and to curtail assistance unless their ally tightened controls; they also insisted that the French participate in joint inter-Allied purchasing boards for products like wheat, sugar, and coal. Clémentel went to London to negotiate a modus vivendi. By the end of the year interministerial committees coordinated import requests for metals; the Comité des Forges centralized purchases of cast-iron and steel in Britain; and French delegates like Monnet sat on the powerful inter-Allied executive boards such as the one that allo­ cated shipping. In 1917 the government abandoned all its hesitations. The transport crisis deepened because of the German submarine offensive. Speculators, the champignons de guerre, who counted on rising prices for the duration of the war, imported whatever they could. Ports became jammed, sometimes with cargoes such as rhododendrons. 39

Capitalism and the state in modem France The overseas debt grew, and a shortage of foreign exchange de­ veloped. For all Frenchmen the cost of living rose sharply. And the Americans, like the British, insisted on the designation of single pur­ chasing agents for commodities like raw cotton. In March 1917 the government acted to prohibit all imports, except by authorization; it also requisitioned the merchant fleet and took control of foreign ex­ change. Clémentel defended the import decree before the ANEE in the spring of 1917, blaming the unpopular action on the shipping crisis. Allied pressure, the loss of foreign exchange, and the need to restrict unessential imports. He assured business that they would participate in administering import controls and argued that without regulations big firms would make fortunes and smaller ones might not survive. The minister also sketched his ideas about reform. "I have been convinced," he said, "that a new era is emerging, one in which our old and excessive love of individualism must bow before the necessity of organization and union."19 He stressed the difficul­ ties France would face after the war: diminished manpower, heavy debts, and physical destruction. But "raw materials will dominate every postwar production problem." And tariffs could not protect French manufacturers against foreigners who monopolized re­ sources. As a solution Clémentel recommended cartels and industrial mergers and promised state assistance. "Grouping together will make you invincible," he said. He also believed labor was willing to raise productivity and accept new technology in return for higher wages. He concluded his address with an appeal to overturn the watertight compartments that serve to separate the government, parliament, the administration, commerce, and industry. The war forced us to collaborate. We have lived side by side; we have lived together; we have learned to appreciate the reciprocal efforts that we can make for everyone's benefit. We must certainly continue this union sacrée bom from the war; we must multiply our efforts, which will lead, I am convinced, to success and the economic victory of France.

Prohibition of imports gave Clémentel the authority he needed to act. In the last eighteen months of the war the commerce department established a single purchasing agent, or consortium, for each major raw material.20 The consortium, usually a société anonyme, grouped together manufacturers and importers around a common raw mate­ rial. The consortium submitted a list of its needs to the technical services of the Ministry of Commerce; the ministry assessed the request and passed it upward to consultative committees, which in­ cluded business leaders, and to interministerial committees responsi­ ble for the overall import program. At the summit of this administra40

The Great War tive hierarchy were the inter-Allied boards. The state, acting as the intermediary, purchased and shipped the commodity. When it ar­ rived in port, the consortium paid for the shipment and the freight costs and distributed it to its members at a price fixed by the state. Consortium members could not receive profits beyond a 6 percent interest on their investment; excess profits were held for the future development of commerce and industry. The consortiums multiplied quickly and soon handled enormous volumes of material. By early 1918 consortiums existed or were planned for almost every major raw material and for many manufactured products. At first the commerce department was unprepared for the task of administering import controls, but gradually it gained mastery over the consortiums and even moved toward controlling retail prices. Officials pried into company affairs, forcing firms to divulge data about production, stocks, and sales. Inevitably some businesses felt discriminated against; importers saw their livelihood threatened; bureaucratic snafus occurred, and red tape multiplied. In some cases clever merchants exploited a consortium to enrich themselves while officials struggled to close loopholes. But in other instances, like the petroleum industry where a cartel already existed, controls were more effective. There is little evidence, despite Clémentel's intentions to do so, that the consortiums succeeded in advancing either the concentration or the modernization of industry.21 And prices, despite government efforts, went on rising. Opposition to the consortiums appeared immediately.22 Business feared, above all, that the government might maintain these bodies in peacetime. This anxiety was unwittingly aroused by a high ministry official who in early 1918 told a gathering of employers that, "While everyone must be free to exercise the profession most appro­ priate to his aptitude, it is incumbent upon the state to cooperate with collective and individual efforts after coordinating them. Prewar eco­ nomic individualism must disappear and give way to organized col­ lective powers."23 Several Chambers of Commerce and other business associations in April 1918 attacked the consortiums for their rigid­ ity and statist tendencies. The presidents of the Chambers of Com­ merce of France asked that consortiums be established only when absolutely necessary and that they not be continued beyond the dura­ tion of hostilities. Liberal law professors and economists joined the attack on the consortiums, arguing that both in law and in spirit they violated the system of free competition. These academics accused the consortiums of violating the state's own code against price fixing (article 419), of blocking economic development, and of aggravating shortages and inequalities. 41

Capitalism and the state in modem France Officials at the commerce department could barely contain their anger at these critics, especially at the reactionary Chambers of Com­ merce. In confidence they acknowledged that the consortiums were imperfect but insisted that they be maintained in peacetime for essen­ tial industries. The consortiums' critics, according to the ministry, were supported by "the naïve and the mediocrities who imagine that all of France is going to be cut up into consortiums and that it will no longer be possible to drink, eat, or get dressed without permission from this new divinity."24 Clémentel was compelled to defend the consortiums before the budget committee of the Chamber, arguing that the government could not tolerate speculators and gouging middlemen who took advantage of war-induced scarcities to profit at the expense of the working class and the national interest. He iden­ tified the critics as "certain importers who prefer the golden age of scandalous profits" and liberal theorists "who defend venerable doc­ trines jeopardized by the imperious necessities of war."25 He also asserted the need to maintain state-supervised producer groupings after the war. In May the commerce committee of the Chamber met to hear complaints from the Chambers of Commerce, which voiced fear that the state intended to force business into consortiums and to regulate prices after the war.26 Even the ANEE, the association Clémentel had helped form, attacked consortium "fanatics."27 The consortium issue finally reached the floor of parliament in June.28 The liberal deputy Emmanuel Brousse criticized them for their monopolistic status, regimentation, and bias toward big business. Clémentel argued that the import system was a response to Allied policies and to wartime necessities. He demonstrated that the rules of supply and demand no longer functioned when shippers could raise rates at will. The minister also pointed out that businessmen helped run the consortium machinery. The Chamber supported Clémentel and the government, and there were no further parliamentary attacks during the war. The business press, however, was not pacified. Le Temps charged that the consortiums would either revive the corpora­ tions of the ancien régime or lead to state socialism - either trend being destructive of the free economy born in the French Revolu­ tion.29 The consortiums' opponents waited to revive their offensive until the end of the war while ministry officials continued to declare their intention of extending these organs into peacetime.30 Clémentel's wartime controls were prompted by righteous outrage at profiteers and speculators and by a Saint-Simonian conviction that the way to help the poor was to create prosperity. He took pride in his struggle to hold down consumer prices and help the lower classes who suffered most through the war. He acknowledged, for example. 42

The Great War that the purpose of the consortiums was, as much as anything else, to limit profits.31 But it was precisely these controls on prices and profits that created intense dissatisfaction among businessmen. In the last eighteen months of the war Clémenters ministry drafted a number of schemes for reorganizing the liberal economy. The com­ merce department's reconstruction program was based on its percep­ tions of long-term capitalist trends, in particular the movements toward industrial concentration and rising productivity and the shar­ pened competition for world markets and resources. French capitalism by not keeping abreast of these developments faced a di­ minished place in the world economy and perhaps ultimately the loss of its economic independence. The ministry's staff recognized that France had been losing ground, for example, in world trade even before 1914.32 The Germans had grabbed a growing share of resources and markets before the war. Almost as ominous were the global resources of the Anglo-Americans and their enlarged wartime manufacturing capacities. Meanwhile the war, waged largely on French territory, had also victimized France more than other combatants. The fighting had destroyed a large part of the nation's industrial plant and was wearing down the rest. And to make matters worse the enormous foreign debt contracted during the war required a postwar export drive. Most threatening was the danger of postwar German "economic aggression." The Germans were certain to launch a concerted cam­ paign to recover their share of raw materials and lost markets. France might win the war in the trenches but lose the victory in the market­ place to German cartels. Clémentel warned of the enemy's "com­ pact economic masses" and its "will to dominate."33 The best way to keep the Germans at bay, according to the minister, was for the Allies to maintain control over their raw materials.34 Should the AngloAmericans refuse to share their resources equitably with them after the war, then the French would have to find these vital materials in their territories and organize their enterprises to compete for their share of the world's resources. Wartime bureaucrats also discerned the economic prerequisites for national defense. France must not be caught again, as it had been in 1914, lacking the industrial capacity and materials to defend itself. The discovery that the chemical industry could not supply the army's needs for explosives was only one of several panics that swept the government, The war effort depended on foreign suppliers for many strategic materials (e.g., metals, coal, cotton, wool, leather, oil), for certain manufactured products, and even for food. In some cases France had come to rely on German producers. Submarine warfare. 43

Capitalism and the state in modem France which disrupted sea transport, only heightened the sense of vulnera­ bility. Side by side with this anxiety about vulnerability and relative backwardness were expressions of pride in the nation's wartime mobilization. It was French industry, for example, that equipped the Americans with airplanes and artillery. The resolution of these two contradictory perceptions was that France was not inherently back­ ward: it had unwittingly slipped behind. The nation could compete in world markets if it made institutional reforms. France had to adapt to current economic trends and find ways to meet vital national needs. This meant rising productivity, expanding exports, and, above all, the capturing of vital resources. The strategy proposed by the commerce department was to renovate production processes, encourage producers' self-disdpline, and promote collab­ oration between organized business and the administration. The state was to provide guidance and assistance whenever private initiative flagged. Inter-Allied pooling of raw materials was the key inter­ national dimension. Class conciliation was also part of the design. Where the liberal regime isolated government, bureaucracy, busi­ ness, and the labor from one another, the new order would transform them into partners.35 This program amounted to an étatiste-corporatist realignment of liberal capitalism. Beginning in 1917 officials drafted numerous specific proposals to implement this grand strategy. As a first step in retooling the nation's manufacturing plant and making it more self-sufficient the commerce department undertook a comprehensive industrial inventory. Clémentel instructed the minis­ try's technical services and its principal advisory board, the Comité Consultatif des Arts et Manufactures, to ascertain with the help of business the capacity and needs of each sector and recommend ways to improve productivity.36 In addition, the ministry promoted Taylorism and created a new agency to advance the standardization of production models. It also appeared to Clémentel and his aides that war plants might help the cause if they were converted to man­ ufacturing standardized machinery such as railway equipment, tractors, or low-priced automobiles. They could even form the basis for new industries that would end French dependence on foreign suppliers.37 An export drive required more than overhauling production pro­ cesses and creating new plant capacity.38 Commerce officials envis­ aged converting the consortiums into state-regulated export comp­ toirs. An even more promising alternative was the formation of 44

The Great War inter-Allied combines to break German control over vital raw mate­ rials. Clémentel and his advisors blamed the atomized structure, the in­ dividualistic habits, and the pinched outlook of French industry and commerce for the nation's lagging performance. The liberal posture of the Third Republic was also at fault. One directeur observed: "Our wartime experience has shown that under the liberal regime French industry has not known how to meet the fundamental needs of the country or its defense."39 Imperial Germany was not a model, but its state-assisted commercial organization had much to teach. Selfdiscipline was the best cure for chronic individualism. As Clémentel stated the case: Freed from prejudice and taught by hard experience we can say: indi­ vidualism and collectivism are doctrinal quarrels. We must undertake a na­ tional policy which will not obstruct free and fruitful initiatives; it will result from the coordination of individual efforts and from collective effort. It will assure simultaneously the development of our national wealth and private wealth. This is the policy of groups, unions, and federations.40

Producer agreements were the way of the future. They would stabilize existing markets and win new ones. The ministry supported the growing pressure from business to revise article 419 of the penal code and remove the shadow of illegality that hung over industrial and commercial ententes. Yet what ministry officials sought was not just freedom for producer agreements but the continuation of state supervision over these combinations. On this issue business and the administration parted ways. Commerce officials feared that business, if left to itself, would exploit consumers and ignore the national inter­ est. Officials were also skeptical about the willingness of industrialists and merchants to organize themselves: Prewar economic individualism must disappear and make way for organized, collective powers. But today, like yesterday, private initiative remains power­ less to organize itself in the sense of subordination to the common goal of the nation's economic development. It is up to public authorities. . . to coordi­ nate all individual efforts toward the general interest. Organizing the war plants in the midst of the worst difficulties showed what private interests can do when they are guided toward a common goal.41

The reconstruction program of the commerce department required state promotion and supervision of the capitalist movement toward discipline and expansion. The vision of the commerce department, however, went far beyond adapting the consortiums to peacetime and promoting mergers and cartels. An overall corporatist network fabricated out of consortiums. 45

Capitalism and the state in modem France employers' associations, and regional economic bodies became the goal.42 One problem was overcoming la poussière syndicale; that is, the fact that only a small fraction of patrons were organized. The solution lay in grouping existing trade associations into federations and creat­ ing a national employers' federation that could function as the minis­ try's consultant. As a building block of this structure, Henri Hauser suggested to Clémentel the formation of a network of economic regions.43 The principle of tapping local energies for economic development had always appealed to the minister from the Auvergne. His hope was to create regional professional parliaments composed of local officials and delegates selected by associations of employers, farmers, and workers. But such a project, he realized, raised the controversial issue of restructuring the state administration along regional lines. Rather than see their reform become tangled in parliamentary committees, Clémentel and Hauser scaled down their project to a reorganization of the Chambers of Commerce because these bodies fell under the jurisdiction of the ministry. The existing Chambers of Commerce were too numerous, too poor, too narrowly representative of small commerce, and too hidebound. With their tiny incomes many cham­ bers could not even afford a secretariat, much less meet their obliga­ tions to undertake projects for local economic development. In Au­ gust 1917 Clémentel launched his scheme to group the existing 149 chambers into a score of regional units that could function as centers of regional activity. He envisaged regional bodies with large budgets and technical staffs that could mobilize local energies: each would function as an industrial "capital" for France - Lyon for silk, Grenoble for hydroelectric power, and so on. But the scheme encountered re­ sistance. Some chambers objected to the way regional boundaries were drawn; others feared a loss of autonomy and incipient adminis­ trative control. Despite these difficulties, when the war ended most of the regions had been formed, and soon after a government decree defined their organization and responsibilities.44 At the peak of the ministry's corporatist design was a powerful Ministry of National Economy. In December 1917 Clémentel ad­ dressed a formal proposal to the premier for the overhaul of the Ministry of Commerce.45 He complained that his ministry had the meanest budget of any administration - even less than that of the Beaux Arts. The nation needed strong direction to compensate for its relative backwardness: In France, where before the war large-scale industry had not grown to the extent it had in certain countries, where small patrons still form the majority of company heads, where syndical organization plays an indistinct role in or-

46

The Great War ganizing production, it will be necessary to have a Ministry of Commerce and Industry strongly constituted which would guide private initiatives, coordi­ nate their efforts, and actively stimulate production and trade.46

Remodeling the ministry included expanding its technical services; staff engineers and technicians could then act as expert advisors both to the ministry and to industry. The key organ in the renovated minis­ try was to be a new Production Office. Unlike the ministry's other services this direction was a conceptual rather than an administrative organ; it drafted the economy's plan d'action. In Clémentel's view the Production Office collected statistics on national and world produc­ tion; acted as the liaison with employers' syndicates. Chambers of Commerce, and the new economic regions; disseminated the latest manufacturing processes and machinery; and monitored the perfor­ mance of key industries. This incipient planning agency also con­ tained a Price Office. Its task was to curb postwar inflation through the publication of an index of "normal prices" for certain important raw materials and merchandise. In short, Clémentel's direction pos­ sessed some of the functions of a modern planning agency, and though the plan d'action lacked essential elements of an economic plan, for example, targets, coherence, incentives, it clearly anticipated one. As he wrote, "It is proper that, henceforth, our industries obey a plan d'action which will be traced by public authorities taking into account the higher interests of the country and its defense needs."47 The commerce department's reconstruction program assumed a degree of international cooperation. Clémentel came to view an ex­ tension of inter-Allied pooling of scarce materials into peacetime as the best means of assuring the rapid reconstruction of France and coercing Germany.48 In October 1916 he attempted to elicit a promise from the British to give the Allies priority over scarce raw materials, and a year later, after America's entry into the war, he made the same appeal to President Wilson.49 He told Wilson an Allied agreement on raw materials was what the Germans dreaded most - it would break their will to fight. Moreover, it would be the most effective sanction to enforce the peace and to secure respect for Wilson's favorite project, the League of Nations. Neither the British nor the Americans, how­ ever, gave him the commitment he desired. Although Clémentel's policy was mainly motivated by national interest, that is, by his desire to reconstruct and expand the French economy and make it more self sufficient, there was an inchoate form of economic internationalism present in his advocacy of Allied cooperation. The dream of Atlantic economic integration was shared by his delegate in London, Jean Monnet, who would champion the cause after another war.50 All these networks - export comptoirs, trade associations, and eco47

Capitalism and the state in modem France nomic regions - linked together and surmounted by a powerful ministry of national economy formed parts of a grand design that extended collaboration between the public and private sectors but also brought increased state supervision. For all his deference to free enterprise and producers' self-discipline, Clémentel accepted the need for state action when private initiative seemed deficient. He proclaimed, for example, his intention of manipulating tariff rates to reward those who had tried to improve their production methods. But the ostensible ideal remained partnership, not domination. As he told a trade association: "You should consider the government not as a remote, routine-minded, bureaucratic entity, the enemy of energy, initiative, and change, but as an active collaborator that you should associate with and which should associate itself with you."51 Busi­ ness, however, came to regard the commerce department's program as a covert attempt to impose dirigisme on the economy. Louis Loucheur The third minister and the one who played the principal role in de­ termining the outcome of postwar economic reorganization was Louis Loucheur.52 He graduated from the elite engineering school, the Polytechnique, and got his start with the Nord railroad. In 1900 Loucheur formed a partnership to build public utilities and soon made a fortune. His construction firm became worldwide; it built hydroelectric stations in France, highways in Turkey, and railroads in Russia. Loucheur had no interest in ideology, economic theory, or politics - at least initially. In contrast to Thomas's intellectual bent or Clémentel's artistic temperament, Loucheur was a self-styled prag­ matist who prided himself on getting the job done. His friends were Protestant business managers from the dynamic sector of industry. This tough-minded engineer represented the technocratic avantgarde of industry. When the munitions crisis first appeared after the Battle of the Marne Loucheur was ready with a proposal for the Ministry of War. He offered to construct a shell plant using the latest American machine tools on a scale far beyond what existed. He succeeded, amassed a second fortune, and made a reputation as an expert arma­ ments manufacturer. In 1916 the government sent him to Russia with Thomas to advise the Russians on industrial mobilization. In De­ cember of that year Briand, the premier, consulted Loucheur on ways \o raise the output of heavy artillery. The industrialist advised, "for that we must push people around, kick them in the pants; drag them 48

The Great War along, incite them, show them that without it [more production], we are finished."53 Briand and Loucheur agreed that the way to increase the flow of armaments was to place an industrialist on Thomas's staff who would control the technical side of production. Thomas did not welcome the intrusion but accepted Loucheur as under secretary for armaments and war manufactures. The latter took charge of relations with industry. The engineer and the socialist worked together in 1917, but Loucheur did not think highly of the minister's administrative ability or his firmness. In September 1917 when the Socialists refused to accept the composition of a new cabinet, Thomas resigned and Loucheur became minister of armaments. In contrast to Thomas, who staffed the ministry with socialists from the Ecole Normale, Loucheur named industrialists and engineers, especially fellow polytechnidans.54 And where Thomas's team had had no experience in administration or industry and looked to protect labor's interests, Loucheur's staff of managers and technicians con­ centrated on improving production. In response to labor agitation in war plants Loucheur was fair but firm. When strikes occurred in the aviation factories in late 1917, Loucheur ordered the conscript workers (ouvriers mobilisés) to go back to work or face military law.55 He endorsed Thomas's policy of using arbitration boards to resolve dif­ ferences over wage issues in war plants, but he would not counte­ nance anything that resembled comanagement. Toward industri­ alists, with whom he sympathized, Loucheur was demanding and prevented them, as best he could, from manipulating wartime con­ trols to their advantage. He also had a taste for power and won a place close to Clemenceau when the latter took over the government in November 1917. The technician became the Tiger's principal ad­ visor on industrial and economic questions. Loucheur preferred to deal with modem employers, that is, with those who accepted an aggressive industrial program and a wage policy tied to the cost of living.56 In some instances he encountered resistance. The power companies, for example, were reluctant to in­ vest in new plant and technology during the war from fear that this equipment might become a liability when peace returned. To over­ come their cautiousness the minister of armaments arranged for the state to loan them new machinery. Loucheur's policy was selective intervention; that is, in those instances where private enterprise fal­ tered he was willing to employ state action. He even considered after 1917 creating a régie intéressée for certain mining companies. This form of state intervention was less than the outright nationalization that Thomas championed. The régie, which mixed public and private 49

Capitalism and the state in modem France ownership and control, would compete with private mining firms at lower prices and thus stimulate the whole coal industry. Toward politicians Loucheur displayed the expert's disdain. By his definition ministers talked too much, rarely acted, or, when they did, were always late. He did not feel part of the world of politics and considered himself a ministre d'occasion who was indispensable for the war. His reputation was that of a bold, optimistic technician. On the left, however, Loucheur won notoriety as a war profiteer. This was due to his own insensitivity about the need to separate his business and political careers and to the fact that he was enriched by the war. Like Thomas and Clémentel, Loucheur believed that France faced an industrial imperative. All three ministers broke with the prewar liberal order and sought new ways to order production and raise output. Loucheur and Clémentel openly criticized the insular charac­ ter of French industrialists and their flimsy trade associations. Both showed the same interest in making France economically indepen­ dent and warned of German cartels preparing for a peacetime offen­ sive. Both believed France could learn from German self-disdpline, and Loucheur insisted French industry could excel: "I am convinced that we can create in every corner of France the same great factories as those in Germany; I know that we can do better than [Germany] in economic performance."57 One of the ironies of this history is that Clémentel inadvertently elevated Loucheur at his own expense. In 1918 the commerce depart­ ment proposed the formation of a production ministry to direct de­ mobilization and manage industrial development. The new ministry was to absorb the useful wartime services of both the Ministry of Armaments and the Ministry of Commerce. Controls, especially over the allocation of raw materials, would continue until economic equilibrium could be restored. The new department would also over­ see industrial reconstruction of the occupied zone and prepare and implement general production programs. This proposal left the inter-Allied economic network and foreign trade in the hands of a truncated Ministry of Commerce. Two weeks after the armistice the Clemenceau government fol­ lowed the ministry's advice and created a Ministry of Industrial Re­ construction.58 It differed only in name from the one proposed by commerce officials. The armaments ministry disappeared, and the commerce department was cannibalized; the latter's wartime regu­ latory agencies including the consortium system were transferred to the new ministry. Clemenceau chose Loucheur to be the minister of industrial reconstruction, a post he held till 1920, and Loucheur used his authority to frustrate Clémentel's programs. 50

The Great War Postwar transition With the end of the war, the minister of industrial reconstruction concentrated on rebuilding the devastated northeastern region. For the rest of industry he offered no clear alternative to simple decontrol. The way to recovery, in Loucheur's eyes, was to return to private initiative and competition as quickly as possible. Although he shared Clémentel's desire to stimulate industry and encourage selfdiscipline, he was more skeptical about the utility of consultative bodies, corporatist hierarchies, and state direction. Loucheur held a powerful position within the Clemenceau government, and his views ruled. After the armistice an avalanche of petitions swamped the govern­ ment demanding a quick end to wartime controls. The Chambers of Commerce orchestrated a campaign in the name of "commercial and industrial freedom" beginning in December and gaining momentum through the first half of 1919. Local governments, liberal par­ liamentarians and academics, and business associations of all types added their voices to the clamor. In the name of free trade, business insisted on an end to import-export controls and singled out the consortiums for special criticism. A typical petition from a Chamber of Commerce read: There is no longer any reason to make commerce and the populace bear the heavy constraints of prohibitions, restrictions, taxes, monopolies, and the economic dictatorship of public authorities and the consortiums. All these manifestations of étatisme must disappear by degrees. The bureaucrats who have become accustomed to running everything must not continue to impede the country's commercial activity under the pretext that they have been doing this for four years. Restoring freedom to commerce is urgent.59

The echo of such complaints was to resound for a decade after the war. Besides bureaucratic bungling, the list of grievances against con­ trols specified shortages of raw materials and transport, price infla­ tion, and speculation. Of course these were the very problems that had generated government action in the first place. What must have especially piqued Clémentel was a report spon­ sored by the ANEE and delivered by Lucien Romier in November 1918.60 Romier, an eminent historian, was to make a career between the wars as a spokesman for big business. In his report he attacked the consortiums for ineffectiveness in halting inflation and for closing entry to new producers. He recommended converting the consor­ tiums into comptoirs. Romier's critique revealed a basic fear. He asked rhetorically: "Are not these constraints and restrictions des­ tined to facilitate the development of an economic policy whose prin51

Capitalism and the state in modem France ciple is the permanent control of industry by the state or even, accord­ ing to a new formula, the participation of the state in industry?" Industrial concentration, according to Romier, could advance only through self-generated changes like mergers and not through admin­ istrative rules. He also voiced his suspicion that Clémentel's intention in relaxing restrictions against cartels was not to permit their free formation but to allow the commerce department to impose struc­ tures on producers. Romier was, of course, correct in his assessment of Clémentel's policy. The almost unanimous demand of business for decontrol of trade corresponded with Loucheur's inclinations; he began to relax wartime measures within weeks of the armistice. Loucheur believed his de­ mobilization policy belonged to no school of political economy; he thought of himself as a problem solver. As he put it, his hand was on the economy's "faucet," and he would turn it on and off as circum­ stances required.61 Loucheur reassured business and local officials that he too wanted a return to the free market, but the crippled transportation system, the lack of foreign exchange, and the need to protect industry from the competition of countries whose industry had escaped the war necessitated the temporary retention of some controls on imports.62 For the transition period Loucheur stated that he would maintain only those consortiums that business wanted preserved. The minister also announced in December 1918 his intention of sharply limiting the state's role in their operation and converting them into "real commer­ cial comptoirs" managed by business.63 The commerce department did not approve of dismantling the consortiums, but it had to follow the lead of the Ministry of Industrial Reconstruction.64 The fate of the consortiums was in Loucheur's hands. He took a major step toward freeing trade in December by opening the market for metals. At first Loucheur tried to force metal manufacturers into comptoirs, relying heavily on the commercial organization of the Comité des Forges. But a number of engineering firms balked at the prospect of such comp­ toirs and left-wing parliamentary opposition mounted an attack on the political and economic influence of the Comité des Forges and its wartime profits. The Chamber also moved toward tightening the law against price-fixing agreements. In February 1919 Loucheur gave in and left the formation of ententes in the metals industry to private choice.65 Clémentel, who after the armistice continued to press for adapting the consortium system to peacetime in spite of Loucheur, encoun­ tered external as well as internal resistance. His efforts to reorganize the domestic economy depended in part on securing Allied coopera52

The Great War tion in sharing raw materials. The consortiums had developed out of the need to centralize the purchase and distribution of imports in order to give Allied suppliers confidence that scarçe materials were not being wasted or siphoned off by speculators. Any hope of main­ taining the consortiums required an extension of the Allied bloc. If the inter-Allied boards disappeared, so in all likelihood would the con­ sortiums. In September 1918 Clémentel addressed a long memorandum to Premier Clemenceau that became the basis of French economic policy for peacemaking.66 The minister of commerce stressed the threat of Germany's building an economic bloc in Mitteleuropa and a postwar German economic offensive; and he warned of the Anglo-Americans' forming business combinations that ignored the French. To Clémen­ tel the solution lay in creating an "economic union of free peoples" that recognized the priority of reconstructing the damaged areas of France and Belgium; the nucleus of this economic union already existed in the inter-Allied boards. The crux of the union would be continued pooling of Allied raw materials at equitable prices; this arrangement would give France at least a temporary advantage in the postwar trade struggle and could be used to coerce Germany. To get the Americans to subscribe to the plan Clémentel described the union as a step toward realizing Wilson's League of Nations. But in the same month President Wilson condemned "any form of economic boycott" or "special, selfish economic combinations within the League." And Herbert Hoover, the president's principal economic advisor, stated that the American government "will not agree to any programme that even looks like inter-Allied control of our economic resources after peace."67 The United States was determined to return to free markets. The British also discouraged the minister's hopes for a continuation of joint purchasing but made their position dependent on the Americans. In December the American government, at the request of American export interests, asked for the suppression of the consortiums.68 Clémentel, in an effort to salvage his scheme, scaled it down but to no avail. At the Paris peace conference, where Clémentel chaired the economic commission, the Americans reaffirmed their opposition to any program that required controls over raw materials, shipping, or finance. At home Clémentel fared no better. He instructed industrialists that there must be no return to "business as usual," given the country's condition, and that there must be "organization within liberty." In December 1918 he told an unfriendly audience from the Paris Chamber of Commerce that he supported revising article 419 but that the state must supervise cartels and this relationship would form the 53

Capitalism and the state in modem France basis of "fruitful collaboration" between producers and the adminis­ tration.69 But Clémentel's influence with business was on the wane.70 At a meeting of some prominent political fund raisers his warnings against an immediate return to commercial liberty were coolly re­ ceived.71A spokesman for the ANEE observed that the reception given Clémentel indicated "the failure of ideas that were considered to be dogma at the Ministry of Commerce."72 Loucheur was the man of the hour. He declared himself to be "by nature... [a] free trader" and proceeded to dissolve the consortiums. His preference was for substituting voluntary ententes and interAllied cartels for products like metals.73 In a celebrated address to the Chamber in February 1919 Loucheur formally announced the end of the consortiums. Yet the minister of industrial reconstruction still held back from freeing all imports; total freedom would mean chaos. The closing lines of his speech were to mark Loucheur for the rest of his life. He urged a policy of "audacity" on industrialists, asked the deputies to have "confidence" in industry, and concluded by stating: "I tell you as I leave this rostrum there must be from now on only one hymn on the lips of every Frenchmen - the hymn to production."74 The dispute between Loucheur and Clémentel over trade policy came into the open in the spring of 1919 when parliament pressed the government to open commerce. At interministerial meetings the minister of commerce argued for a gradual transition because freeing imports precipitously would depreciate the franc and opening exports would drive up the price of raw materials. In a face-to-face confronta­ tion Clémentel accused Loucheur of advocating a "hazardous" pol­ icy. "The current system will not be prolonged indefinitely," Clémen­ tel said, "but we must modify it prudently or else meet with serious disappointments."75 Loucheur argued that the commerce minister exaggerated the danger of raw materials escaping and foreign manu­ factures arriving en masse and that "the only way to restore economic activity in France is to return industry to normal competitive condi­ tions." Loucheur prevailed, and in May-June the government took measures to reestablish free trade. One other issue, besides the consortiums and trade policy, that revealed the differences among Loucheur, Clémentel, and Thomas was the fate of the network of arsenals and state-owned munitions plants. Late in the war Loucheur and Clémentel had discussed ways of adapting war plants to manufacture machinery, especially for re­ tooling the industries in the devastated northeast.76 Only days after the armistice Loucheur told the Chamber's army commission of his plans for the war plants.77 The giant arsenal at Roanne was to be used for repairing locomotives and rolling stock. 54

The Great War and other state plants would undertake the manufacture of telephone equipment and standardized machinery for the gutted mines of the Nord and Pas-de-Calais. The state chemical plants were to produce cheap fertilizers in order to drive down prices. In subsequent hear­ ings before legislative committees, however, Loucheur vacillated on the issue of peacetime conversion. Under pressure from par­ liamentary liberals and from private industry he endorsed the princi­ ple that the plants would work only for public services, and he or­ dered the Roanne arsenal turned into a warehouse. In the end Loucheur let matters drift, and by early 1919 many war plants lay idle. Albert Thomas disapproved of his successor's handling of conver­ sion. He knew that the former industrialist was not inclined toward state operation of the plants. Thomas also smarted under continuing accusations that he had mismanaged the Roanne arsenal. In April Thomas proposed an imaginative piece of legislation to transform the war plants into autonomous établissements nationaux.78 The proposal failed, but it indicates where the former armaments minister wanted to take the postwar economy. In place of Loucheur's hesitancy about competing with private industry, the Socialist deputy urged creating state companies both to supply "national needs," for example, equipment for the liberated regions, and to control the price levels of private manufacturers. Although they would give priority to supply­ ing the state, the national firms would accept orders from private industry as well. But Thomas did not want to create more oldfashioned state bureaucracies; his project called for autonomous en­ terprises, free of paralyzing state regulations, which would act like dynamic private firms. They would, for example, pay salaries that were competitive with the private sector to keep expert personnel. "The goal is to achieve a reform which, while preserving the sover­ eign rights of the state over its établissements, approaches as closely as possible the operation of private firms."79 The national companies would be owned, all or in part, by the state and managed by boards of directors composed of representatives of workers, shareholders, and the state. The national companies, like nationalization in general, did not receive a serious hearing in 1919, but they were projects with a future. Meanwhile in Loucheur's hands the prospect of using war plants for new civilian purposes faded away. The tide of opinion was clearly running against Clémentel as well as Thomas. The inter-Allied pooling arrangement, the trade controls, the consortiums, and the war plants were all casualties. Clémentel, nevertheless, tried to salvage what he could of his program. In order to herd business into associations and expedite consulta­ tions with the state as part of his corporatist design, Clémentel 55

Capitalism and the state in modem France launched a national employers' union. In December 1918 he requested data from employers' associations to help his ministry group them into twenty categories. Clémentel justified his request by invoking the need for economic recovery. As bait he proposed to help syndi­ cates expand their activities and increase their authority by assuring them "an official, effective, and permanent representation" in his administration. He offered them a place on the ministry's consultative boards and promised "that, in the future, no official policy will be made without their advice."80 The formation of the twenty basic trade associations in the spring of 1919 was a preliminary step to creating the first national employers' federation. In July these associations met and created the Confédération Générale de la Production Française (CGPF). The business community greeted the inception of the CGPF with either indifference or hostility. Years later a president of the CGPF recalled the difficulty organizers faced in overcoming "Gallic indi­ vidualism."81 Indeed the resentment and suspicion that Clémentel's whole policy generated surfaced over the founding of the CGPF. A leading business paper accused Clémentel of duplicity; all his projects including the new federation, it claimed, surreptitiously aimed at ad­ ministering the economy.82 The paper reported the minister intended to transform employers' associations into "agents for executing his policy" rather than consultative organs. "Industrialists and mer­ chants have never asked," it added, "as far as we know for the 'parliamentarization' of professional syndicates and still less for their in­ corporation into the administration." Pinot, the head of the Comité des Forges, disliked the official status of the CGPF; he too ap­ prehended a covert effort at turning employers into docile instru­ ments of the state.83 He also objected to the birth of a "professional parliament." And he feared that the votes of small businesses would swamp the interests of iron and steel in such a broad federation. Pinot and the trade associations from heavy industry, however, set aside their reservations and turned their energies to dominating the new peak federation. Henri Darcy and René Duchemin, representing the coal and chemical associations respectively, became the first presi­ dents of the federation and asserted its independence from the ad­ ministration. They recast Clémentel's project. In the 1920s the CGPF became a loosely structured, rather ineffectual association serving mainly as a spokesman for heavy industry rather than forming the nucleus of employer unity or serving as a corporatist intermediary. When Clémentel reflected on his ministry some years after the war he reaffirmed his conviction that controls had been terminated pre­ maturely. Postwar inflation, the depreciation of the franc, and the 56

The Great War revival of economic nationalism among the Allies had proven the need for a "transitional economy."84 He expressed pride in what he had done to overhaul the commerce department and build regional centers. In fact, neither scheme had fulfilled his expectations. The ministry's remodeling amounted to little more than regrouping its central bureaus and expanding its export services.85 Three years after the war some of the regional groups could barely support one perma­ nent staff member. The CGPF, in Clémentel's estimation, was a dis­ appointment; instead of unifying the employers' movement it had merely become another trade association. In November 1919 voters went to the polls to choose a new parliament for the first time in five years. The Clemenceau government received the nation's mandate to continue in office. Loucheur entered electoral politics and rode the government's popularity to victory. Thomas was reelected but accepted the directorship of the International Labor Of­ fice and moved to Geneva. Clémentel, in a stunning upset, lost his seat and resigned his cabinet post.86 At this juncture the major issues of reconstruction had been settled. Loucheur's policy had been fol­ lowed rather than that of either Thomas or Clémentel. Furthermore, parliament and the political parties reasserted their control over eco­ nomic policy. The rule of the ministries was over. On the whole industry and commerce had shown little willingness to enter concerted action with the government during the war except to bow to necessities of national defense.87 Though they took advan­ tage of opportunities for profit and expansion created by mobiliza­ tion, their suspicions of the state were not allayed. From the perspec­ tive of business the war seemed to inflate the pretensions of the Napoleonic state. Mobilization also created grievances and heightened apprehension. Antagonisms developed because wartime ministries had to discriminate, for example, to sacrifice luxury manu­ factures, to trample on importers, to grant the lion's share of muni­ tions contracts to large companies. The inevitable inefficiencies of war production, the frustrations with administrative channels and regu­ lations, and the fouled operations were all blamed on the bureaucrats - even though businessmen had had a major role in administering wartime programs. Business emerged from the war less inclined to­ ward forming close ties with the administration. Although a few in­ dustrialists favored more collective forms of action, most busi­ nessmen believed that even self-discipline was an unnecessary and dangerous departure from individual initiative and economic free­ dom. The impetus for economic remodeling had come from an energetic 57

Capitalism and the state in modem France team at the Ministry of Commerce who tried to herd industry and commerce into new structures. But the business elite was unim­ pressed and antagonized by the commerce department's plans. The collapse or stunted growth of Clémentel's creations points up busi­ ness indifference, distrust, or hostility toward corporatist innovations that seemed tainted with étatisme. Clémentel overreached himself and failed. And Albert Thomas, with his schemes for nationalization, class conciliation, and industrial democracy, in even more striking fashion was out of touch with what was possible. All of the three wartime ministers, Thomas, Clémentel, and Loucheur, continued to work for their programs of economic over­ haul for another decade after the war. Thomas used Geneva as his headquarters to further the cause of reformist socialism and interna­ tional labor organization. His example and influence spurred the left, especially the syndicalists, to redefine their program. Clémentel served in the Senate but increasingly turned his energies to directing the International Chamber of Commerce. But it was Loucheur, the modernizing neo-liberal and the dominant policy maker in 1919, who best embodied the trends and tensions of the twenties.

3 The twenties: “normalcy" or modernity?

Victory in war tends to confirm the status quo whereas defeat seems to stimulate renovation. Or so history teaches. One does not have to go outside twentieth-century France to find an application of this rule. The Great War aggravated and exposed some old problems and also created new ones, yet the postwar republic took little note. If the existing order could survive almost five years of the worst bloodlet­ ting the French had ever experienced, then established ways, it was believed, could meet the problems of postwar recovery. Illusions like "Germany will pay" helped sustain confidence in the status quo. Certainly existing economic practices seemed in no need of funda­ mental overhaul. The French were entirely consistent when, two de­ cades later, they read an opposite lesson from defeat in another world war. If the main thrust of activity in postwar France was to recapture the past and return to "normalcy," there were dissidents who looked forward to a different future. With respect to the economic order the major dissident factions were syndicalists and a heterogeneous group known as neocapitalists. Measured by institutional policy change or by mass following this dissent must be judged a failure. But the critique of the 1920s would gain an audience and shape affairs after 1930 when the French time of troubles deepened. The CGT's bid to remodel the economy

The euphoria of the armistice period did not lull everyone into com­ placency. There was a spate of publications, some written in anticipa­ tion of victory, that purported to draw economic lessons from the course of hostilities.1 The major thrust of this early literature of eco­ nomic overhaul was that France must ready itself for a period of commercial struggle, especially against the German industrial colos­ sus, or risk losing its place in world affairs. Germans, as well as the Americans, reputedly had both natural advantages and a genius for organization. The message of books with titles like Tomorrow's Eco59

Capitalism and the state in modem France nomic Battle was that French producers must emulate their rivals; that is, they should discipline themselves, acquire technological know­ how, concentrate production, improve their marketing techniques, and in general become more audacious. And the state should encour­ age industry in taking this path. Some of these critics of prewar habits blamed party politics for the republic's indifference to the economy's inertia.2 To a considerable extent organized labor shared in the postarmis­ tice infatuation with production. Even before 1914 reformists, who encouraged capitalist concentration and class collaboration, had made inroads within the country's principal trade union federation, the CGT.3 It is no surprise then that in 1918 the federation responded positively to Loucheur's "hymn to production" speech though it added the condition that labor would not join the chorus unless workers benefited from increased production by receiving higher wages and some say in plant management.4 Léon Jouhaux, the secretary-general of the CGT, observed that "the reign of industrial individualism and economic Malthusianism" was over.5 A thorough discussion of labor's postwar doctrine and strategy is best deferred till later in this chapter. For the moment it is sufficient to look at the CGT's bid in 1918-19 to help shape the passage from war to peace and remodel the economy. Led by Jouhaux the CGT had be­ come a partner in the wartime regime and discarded its prewar stance of revolutionary syndicalism. The war had brought the hitherto rare sight of union officials sitting with employers on government com­ missions. Clemenceau's government seemed to share labor's com­ mitment to make optimal use of the country's economic resources. But a rational productive system, in labor's eyes, meant tapping the skills and energies of the work force and making trade unions full partners in directing recovery. In December 1918 the CGT leadership announced a new "minimum program," which opened with the statement: "We must turn our efforts toward constructive action and become capable not merely of rioting in the streets but of taking in hand the management of produc­ tion. Up to now we have been too busy repeating that workers must emancipate themselves to try and teach them, as the first step, how to handle the instruments that will free them."6 Although the program addressed itself mainly to peacemaking and labor grievances it also advocated economic reorganization on the basis of a continuous ex­ pansion of industry and the maximum utilization of the country's human and material resources. In order for the working class to share in this economic reorientation the CGT asked for the creation of a 60

The twenties National Economic Council and "the return to the nation" of its vital resources, for example, the railroads. The CGT leadership brought their program, of which economic reforms were a minor part, directly to Premier Clemenceau a month after the armistice.7 Nationalization was out of the question for this cabinet. A National Economic Council charged with setting policy for demobilization and reconstruction was scarcely more palatable. The proposed council, which included union delegates among the inter­ ests represented, was to be armed with wide powers to centralize governmental decision making, investigate problems like inflation and operation of the railroads, initiate and execute programs, and, in effect, control production. Without such authority, Jouhaux said, the council would be reduced to a "powerless academic assembly."8 Such a potent council, which displaced ministries and advanced the status of union officials, was too radical a step for Clemenceau; he accepted the principle of such a council and then had Loucheur emasculate the proposal. Thus the Clemenceau ministry rejected a syndicalistinspired reconstruction program, just as it had earlier discarded the statist-corporatist plans of the commerce department. A frustrated Jouhaux observed: There was no task more urgent at the end of hostilities than remaking the country and reestablishing the economy. Now what have they done except aggravate an unfortunate situation? They have tolerated the worst prewar methods and follies, the practices that made our industry puny and shabby and gave our country a mediocre rank in world competition. Our inferiority of five years ago has worsened.9

Deepening labor unrest, frustration with Clemenceau, and internal dissension soon terminated labor's partnership with government. After 1919 the CGT converted its armistice proposals into a design for a new syndicalist economy. In Britain, Germany, and the United States, as well as in France, those who tried to adapt the institutional innovations of the war to peacetime tasted defeat after 1918.10 The setbacks dealt the CGT, Thomas, and Clémentel resembled the experiences of other socialistsyndicalist and technocorporatist reformers. Nationalization, which was sought by trade unions and socialists in Britain and Germany, was no more successful there than in France. Economic planning, which had its most ardent champions in Germany among the circle of Wichard von Moellendorff at the economics ministry, made no more progress than Clémentel's team did. In the United States, where ad­ mittedly the need for economic reconversion was the least pressing, there were progressive businessmen and others associated with 61

Capitalism and the state in modem France mobilization who were eager to continue wartime boards and intro­ duce voluntary associations to correct the malfunctions of unbridled individualism. Like the others these American reformers were frus­ trated. In all these nations organized labor and state bureaucrats, whose appetites for reform had been whetted by the war, faced the hard fact that the weight of political forces and public opinion was against them. The working assumption of most politicians, officials, and especially businessmen was that decontrol should come as quickly as possible. Though the pace varied, all these countries moved to dismantle their machinery of wartime control in 1919. And in each case, as governments stepped aside and labor lost its voice, economic power was returned to those who had wielded it before the war. To'be sure, there was no full restoration of what had been, but the return to the free market was unmistakable. The Bloc National: decontrol and retrenchment Decontrol and retrenchment, not management and modernization, characterized the republic's postwar policy. Whatever energy the war had generated toward promoting and ordering economic growth and streamlining the apparatus of direction quickly dissipated. The hor­ rendous condition of public finances, which mingled with collecting reparations and paying foreign debts and the urgent problem of re­ constructing the devastated region in the northeast, commanded the attention of policy makers. Moreover, a certain yearning for "nor­ malcy" was to be expected after such a catastrophic interruption as the 1914-18 war. Renovation was set aside. At the end of 1919 a general election swept a coalition of moderate and right-wing parties to power under the banner of the Bloc Na­ tional. For the following four years politicians committed to the liberal orthodoxy dominated the republic. They hoped to hurry the restora­ tion of the market economy, making allowance for certain wartime lessons and legacies. They also reasserted parliamentary rule and retracted the authority lent to wartime ministries. Clémentel's successor at the commerce department set the tone for postwar industrial and commercial policy. At a banquet sponsored by the ANEE in December 1919, Louis Dubois expressed his agreement with businessmen who wanted the government to return to its "natural sphere" of activity.11 He told business that he depended on their support and promised to welcome them with "open arms." Overnight Clémentel's cajolery and coercion became passé. "Return to 'normalcy' " guided Bloc National policy, according to 62

The twenties Luden Dior, the minister of commerce in the early 1920s.12 Dior, a former chemical manufacturer, granted that during hostilities "militarization" of the economy had been necessary, "but just as we fight to prepare for peace, wartime étatisme can only be defended by returning after the war to a free system of trade, industry, and enter­ prise." The minister blamed the wartime regime for the drastic eco­ nomic fluctuations of the years 1919-21, which saw expansion fol­ lowed by an abrupt recession as well as price inflation and currency depreciation. Private initiative alone, Dior reasoned, could restore economic equilibrium, and it was the government's primary concern to free the market for industrialists and merchants. To this end he pointed with pride to the liquidation of the consortiums, to the resto­ ration of free trade in most commodities, and to other forms of dereg­ ulation. Industry was delighted with the end of wartime intervention though it kept a watchful eye for any indication of lingering con­ trols.13 An end to wartime controls did not mean, however, a turn to free trade. Protection was necessary for a weakened French economy that faced intense competition as well as a European market upset by monetary and trade instability. Parliament's unseemly haste to let freedom reign after the armistice had permitted a flood of imports that adversely affected an already heavily negative balance of pay­ ments. In July 1919 the government accordingly abrogated all its commercial treaties and superseded the prewar general tariff with some fifty bilateral trade agreements.14 These conventions, which were continually adjusted, tended to set tariff duties even higher than those of prewar days. Such flexible, reciprocal tariff conventions guided commercial policy until the signature of a Franco-German trade agreement in 1927. This convention led to similar accords with other countries, which stabilized and liberalized tariffs. Nevertheless, protection continued to characterize the republic's commercial policy. Dissatisfaction with the exactions and restraints of wartime fed the demand for a return to a free economy. Retrenchment and decontrol drew upon a pool of resentment left by the improvised, disorderly, and often unproductive expansion of the state during the war. War­ time ventures like the munitions plants documented for many critics their worst fears about state-run enterprise. In contrast to the fervor for an interventionist state and nationalization that crested after 1945, the prevailing sentiment after 1918 was to shrink state economic activi­ ties or at least bring them into line with the best practice of private enterprise. Retrenchment was, to be sure, more than an expression of repug63

Capitalism and the state in modem France nance for wartime bureaucracy. The precarious and worsening condi­ tion of the public treasury made economies in government the order of the day. Indeed, budgetary weakness lay behind the unwillingness of public authorities, especially under the Bloc National, to assume a more direct entrepreneurial role where the opportunity existed. Anti-étatiste vigilantes documented the ineptness of the wartime leviathan. One such writer declared that "in this war the country showed itself infinitely superior to its administrative and political cadres... It took this dreadful experience to convince everyone that all our administrators have failed to live up to what we expect of them."15 Such vigilantes, many of whom had served in the wartime bureaucracy, exposed errors, waste, and deficits in almost every ser­ vice: the railroads, the Roanne arsenal, the munitions plants, the food supply agency, the merchant marine, the consortiums, and the sale of surplus war materiel. Even traditional state monopolies became the object of complaints. "It is notorious," one expert said, "that French telephones are the worst in the world."16 The bureaucracy that sprouted overnight to administer reconstruction was another easy target. Criticism even reached the holy of holies in the wake of the war; incompetence and disorder were found in the Treasury where inexperienced officials tried to cope with the wreck of public finance. A former civil servant described the apparent gap between private enterprise and public administration: It is only a fifteen-minute walk between the large rooms of the Crédit Lyon­ nais and the gloomy, silent, and dilapidated labyrinth of the Ministry of Finance or the Navy. Only fifteen minutes, and yet they are worlds apart! Two centuries apart! Here one thinks, figures, writes, acts, and telephones under the eye of the boss and the public while utilizing all the latest mechani­ cal advantages. There they calculate, write, and think as they did before the French Revolution.17

The most prominent experts on administrative reform in the early 1920s, Henri Fayol and Henri Chardon, wrote in the mold of LeroyBeaulieu.18 They proposed either to disencumber the state of most of its economic functions or to "industrialize the state" by making public services conform more closely to private enterprise. State monopolies from this perspective would be freed from political interference, allowed more autonomy, and separated from the state budget. The Bloc National asked for Fayol's advice on administrative reform. In 1921 he prepared a classic indictment of the state in his report on the PTT in which he recommended these services be transferred to pri­ vate hands.19 Chardon took a somewhat less dim view of the state64

The twenties entrepreneur and was more prescient when he asked public bureau­ cracies to adopt the techniques of modem business organization. Business associations and the business press added their weight to the attacks on étatisme. The CGPF considered the Bloc National's economy drive timid because it stopped short of ceding the state railways and the arsenals. "The development of free enterprise over the last century," the peak employers' federation argued, "removes all reason for state industries, especially since their machinery and production costs are inferior to those of private firms."20 Continued budgetary deficits, in part caused by subsidies to public services, aroused the wrath of the economy-minded. It was galling that state enterprises simply dipped into the public till every time they ran into difficulty. The underlying anxiety seemed to be that public enterprise opened the door to collectivism. Business interests that funded the UIE were especially active in promoting the outcry against étatisme. They persuaded over two-thirds of the deputies elected in 1919 to sign a statement declaring their opposition to the creation of new state monopolies. The Bloc National, led by men like President Alexandre Millerand (1920-4) and Premier Raymond Poincaré (1922-4), that controlled the republic until 1924 was committed in principle to retrenchment, yet its achievements were meager.21 "Hatchet committees" tried to find ways to economize. Special commissions studied reorganization of the PTT and the tobacco monopoly. Parliament discussed countless projects for administrative reform. In 1921 the under secretary of state for the PTT proposed turning over this service to private control on the grounds that only industry had the technical know-how and per­ sonnel to renovate it. Despite the volume of books, projects, and discussion, little came from this economizing. There were layoffs in bureaucracies like the war department and the agency serving the liberated territories. But opposition from civil service unions and left-wing parties curtailed the retrenchment drive. No major state monopoly was transferred to private control, and reform followed the course of "industrializing" public enterprise. More financial au­ tonomy, for example, was granted to the PTT. When the state had the opportunity to add to its existing monopolies, as it did with the sequestered German properties, it chose to minimize its participation and rely on private capital and management. It was the empty trea­ sury as much as postwar politics that, in the end, restrained the government. Time after time in the 1920s the parsimonious finance ministry refused subsidies or capital outlays because the treasury could not afford them.22 When the Cartel des Gauches (a coalition of 65

Capitalism and the state in modem France left-wing parties) came to power in 1924 they dampened the economy campaign; Poincaré's reforms in 1926 were the last echo. Moves toward nationalization: the mixed companies

Neither retrenchment nor decontrol after 1918 went far enough to restore a pristine liberal order. What the war had wrought could not be altogether undone. Indeed, there were several new features to the institutional landscape of postwar France. The commerce department's wartime innovations survived but in a truncated and transmuted form. The scheme for creating economic regions had not overcome the cramped outlook of the Chambers of Commerce. The CGPF, despite its formidable appearance never be­ came a representative, cohesive, semiofficial body that interlocked state and industry. In place of the consortiums a congeries of unregu­ lated cartels or ententes emerged. As a kind of symbolic vestige of these efforts, Clémentel himself continued as head of a standardiza­ tion commission that he had established in 1918 to reduce manufactur­ ing costs by standardizing production models, machinery, and mate­ rials. After an initial spurt of activity the commission had to suspend work in 1924 because of a dearth of government appropriations. Pri­ vate industry assumed the task, but the size of its budget and staff was pitiful compared with similar agencies elsewhere.23 The com­ merce department itself instead of becoming a Ministry of National Economy returned to its prewar routine. In certain sectors of industry the state contradicted its search for "normalcy" and cautiously extended its prewar controls and even its direct participation. In almost all cases it was the need for rapid re­ construction or promotion of industries vital to national defense coupled with the opportunity provided by German booty that promp­ ted a kind of disguised étatisme. What emerged was what contem­ poraries called "mixed companies" (sociétés d'économie mixte) or, somewhat prematurely, a "mixed economy."24 Where a franchise system already existed postwar legislation tended to stiffen state regulations and extend participation. In 1919, for example, mines became part of the public domain, and the state took a share of profits. In order to facilitate the rational development of hydroelectric sites and high-tension networks the state was em­ powered to withhold franchises and become a shareholder. As a rule economy-minded governments, however, prevented the state from becoming part owners of these companies. Reconstruction of a uni­ fied power grid in the northeast was an exception; here there were jointly owned and operated electric utilities. The Compagnie 66

The twenties Nationale du Rhône was another true mixed company created in 1921 for the development of navigation, irrigation, and hydroelectric power on the Rhône River. The mixed company was a formula most frequently employed by the republic to operate commercial properties confiscated from the Germans. In all such instances the state limited its financial liability as much as possible without relinquishing its rights altogether. National defense precluded outright alienation of German oil rights in the Middle East or the German patent for the manufacture of synthetic ammonia. In the case of the sequestered potash mines in Alsace, the need to supply desperate farmers with fertilizers and to compete with German producers led the state toward the mixed-company ar­ rangement. In these affairs the state assumed financial and manage­ rial roles. By far the most important of the mixed companies was the Compagnie Française des Pétroles (CFP). The confiscated German shares in the Turkish Petroleum Company (TPC) offered France the opportunity of constructing an independent petroleum industry.25 A critical shortage of supplies in the last winter of the war had nearly halted military operations; the danger of con­ tinuing to depend on Anglo-American oil companies was clear. The prewar oil industry had merely imported finished products and left the country without oil resources or refineries, and the tanker fleet and storage facilities were inadequate. After 1918 the government introduced a licensing system, but when that failed to curb the domi­ nation of the foreign oil companies and develop a native industry the republic adopted a strict quota system for imports. But the keystone of a successful national petroleum policy was exploitation of the former German holdings. Once the British, who controlled the TPC concession, stipulated that the French designate a private or mixed company to purchase the German shares, a state monopoly was ruled out. In any case Bloc National governments were opposed in princi­ ple to new state enterprises. But Premier Poincaré went further. He refused even to have the state invest directly because he feared put­ ting further strain on an already overloaded treasury. The state had neither the capital nor the technical personnel to develop this ven­ ture. Initially the ministries of finance and commerce wanted simply to cede the shares to a French subsidiary of Royal Dutch Shell. But Poincaré insisted on making the company truly French.26 The gov­ ernment's only interest in the project was in liberating the country from dependence on the Anglo-American giants and acquiring preemptive rights on oil for wartime. In place of a true mixed com­ pany Poincaré asked that all French oil companies, including foreign subsidiaries and major investment banks, form a single "national" 67

Capitalism and the state in modem France syndicate to buy the shares. Ernest Mercier, the organizer and presi­ dent of this syndicate, which came to be called the Compagnie Fran­ çaise des Pétroles, had to coerce balky businessmen into investing capital. Oil had not yet been discovered; there were major unsettled questions within the TPC about the concession; and oilmen feared the creation of a privileged company. In fact bankers and oil executives in the name of competition tried their best to limit state controls and, above all, to keep the CFP from marketing and refining operations.27 The 1924 agreement that created the CFP reserved for the state only the right to appoint two commissioners to the board of directors and an option, poorly defined at that, for purchasing the company's oil. Once oil was struck in Iraq in 1927 the oilmen, including those managing Anglo-American subsidiaries, again tried to prevent the CFP from engaging in retailing or refining. To overcome this opposi­ tion Merder and the government revised their agreement so that the state assumed a 25 percent interest in the company and acquired an equivalent number of seats on the board. This 1929 convention also created a partly state-owned refining affiliate, the Compagnie Fran­ çaise de Raffinage (CFR). Private importers were obliged to market the CFR's products. At this point parliament stepped in and de­ manded the right to ratify all the CFP-state agreements. Under pres­ sure from the left the state in 1930-1 extended its shareholding, con­ trol, and benefits in both the CFP and the CFR though the structure of the companies remained intact. In the next decade, thanks to these mixed companies and to import quotas, France made headway in freeing itself from dependence on Anglo-American exporters. By 1939 almost half the nation's crude oil imports came through the CFP; refineries in France produced 88 percent of the country's needs; and a modern tanker fleet was under construction. Here then was an exam­ ple of a commercially successful mixed company. But the French state had been a most reluctant partner, and relations between the state and industry were never easy; they resembled a continuous tug-ofwar rather than a mutually supportive partnership. Petroleum aside, the industry perched most precariously on the verge of outright state takeover was the railroads. The state had be­ come even more entangled in this sector because of the war. From 1914 to 1918 the private railroad companies had worked under and for the government and incurred heavy operating deficits, capital expen­ ditures, and physical damage.28 Besides liquidating this debt there was an obvious need for placing the railroads on a more selfsustaining basis and for coordinating the entire network. The railway workers' unions, moreover, launched a series of strikes culminating in the general strike of 1920 in which marchers paraded under the 68

The twenties banner of "railroads to the railroad workers." The CGT, as we have seen, had targeted rail transport for nationalization. In parliament Albert Thomas, the socialist, and Loucheur, then a centrist deputy, proposed repurchase of the franchises and consolidation of the net­ work under state supervision. The Bloc National rejected such radical projects and chose merely to revise the state's contractual agreements with the franchise holders. The railway reorganization bill of 1921 called for the treasury to absorb the companies' awesome debts; created a new fund to distribute profits and losses among the rail­ roads; introduced committees incorporating all interested parties in­ cluding trade unions to centralize management of the system; and confirmed the state as guarantor of railway securities. Such measures had little effect on the operation of the railroads, which continued to amass deficits while bondholders received handsome dividends throughout most of the decade.29 Continuing financial deterioration made nationalization inevitable. Rebuilding the northeast: renewal versus restoration

We have seen how the war generated conflicting impulses toward modernity and stability, toward extension and retraction of the state. Whereas some were obsessed with preparing France to fight an eco­ nomic war once the guns were silent, others longed to restore the past. Nowhere was the opportunity greater for those who sought renewal than in the wasteland left by the armies in the northeast. Yet the urge to restore what had been and to do it quickly proved more compelling to the French. Reconstruction of the so-called devastated regions had been a sub­ ject of parliamentary debate during the war.30 Everyone agreed that it was the nation's duty to help the victims (sinistrés) restore their lives. Justice under the republic required that all citizens bear the costs of the war equally. And when the Germans accepted the obligation of paying for damages to civilians, even the Treasury believed indem­ nities could be generous. What was debatable, however, and what in retrospect revealed the direction reconstruction was to take was the question of how indemnities were to be employed. Would the sinistrés be coerced into rebuilding on the original site and in an analogous form what had existed before the war, or would they be permitted some freedom in employing their indemnities? A few liber­ als in the Senate argued for liberty in the use of funds. But most parliamentarians, and the Socialists in particular, insisted on compul­ sory reemployment. There was a fear that many sinistrés would take their money and run, leaving behind economic and social disorder, 69

Capitalism and the state in modern France for example, laborers without jobs. The majority believed economic stability took precedence over industrialists' freedom to relocate at will. Events overtook parliament, and it was not till the war was over that it passed enabling legislation. The republic committed itself to funding an integral and rapid restoration of the northeast and to penalizing those who chose not to rebuild. Industrial reconstruction received priority of funds, manpower, and materials to the dismay of homeowners, farmers, and others.31 This was due in part to the assumption that other forms of reconstruc­ tion depended on the output of industry. It was also abetted by the ability of industrialists to organize themselves and promote their interests with the government. The performance of indemnified in­ dustrialists was reminiscent of the way the Comité des Forges and the consortiums functioned as intermediaries during the war. Loucheur, as the first minister of industrial reconstruction, was responsible for defining policy. Though the state would provide assistance he wanted to rely on private initiative. Loucheur proposed a partnership between state and industry where he provided what was needed in the way of funds, manpower, materials, and transport, and industri­ alists reported damages and needs accurately and organized them­ selves for collective action.32 What was lacking from a modernizer's perspective was an overall long-range plan for reconstruction and the will or means to enforce it. During the war British, German, and French officials had all made preparations to regroup producers in order to compete better in the postwar struggle for trade. But the French alone faced the monumental task of rebuilding a large part of their industrial plant from the ground up, and they did rather little to manage it. French officials had both a greater burden and a greater opportunity. Rapid repair of damages along the lines of what had existed in 1913 was uppermost for policy makers. It seems unlikely that the ministry in charge compelled industry to use resources in any particular way. Loucheur merely attempted to group together local firms making metal products and construction materials in order to expedite the flow of materials from reannexed Alsace-Lorraine and the Saar. He inspired comptoirs, modeled after the wartime consortiums, to help steer a troubled metals industry through a period of transition. But these comptoirs failed in face of a disorderly market, inflation, strikes, coal and transport shortages, and recalcitrant German suppliers. Pri­ vate firms circumvented the comptoirs, preferring to protect them­ selves rather than accept state-inspired collective discipline. Whatever industrial renovation, as opposed to restoration, was af­ fected in these departments, and there was some, was due to free 70

The twenties enterprise, not state supervision. The task was monumental; for example, 100,000 wagonloads were required to clear the debris from the city of Armentières, and the bureaucracy had its hands full merely processing forms. By 1921 almost three million claims had been submitted. Ten years later the Ministry of Liberated Regions esti­ mated that some 7,700 factories out of 9,332 that had existed in 1913 had been restored.33 Almost 300 mines and 61,000 kilometers of roads had been rebuilt as well as a half-million homes and 250,000 farm buildings. Amidst this rebuilding program that absorbed so much of the nation's capital in the 1920s there were advances for industry but surely less than were possible had the repub­ lic élected different priorities. Metals firms both expanded and integrated their productive facilities despite the surplus capacity in Europe left by the war. Coal mines installed a large stock of the latest machinery, produced and utilized electric power, and introduced other technological changes that reduced costs. The Third Republic did not mark out any path toward renovation in the northeast or promote it; it chose instead to provide generously the means for re­ construction and left the decision about how rebuilding would occur to the individual owner. The franc crisis of 1924-1928

The crisis of postwar public finance must be briefly explained here despite its peripheral status for the developments we are tracing. Given the magnitude of the crisis it had surprisingly little lasting effect on the emergence of economic management. With respect to production its impact was slight but probably felicitous.34 The issue at hand was how to find a way to avoid the total collapse of the franc. Once a solution had been found, and it turned out to be a rather conventional one, orthodox ways of public finance resumed. The near collapse of the currency in 1926, however, heightened criticism of the republic's economic administration, fueled anxiety about a balanced budget, and nourished the left's phobia about the power of the "fi­ nancial oligarchy." The problem of the franc arose out of the need to pay for the war.35 As the previous chapter explained, the wartime governments pre­ ferred not to insist, at least as much as they might have, on a pay-asyou-go policy. They relied more on borrowing what was needed. Credits came from both domestic lenders and the Allied states. By 1918 the public debt was about 175 billion francs or over five times what it had been in 1913 (not at constant prices). Most of this debt had been contracted through national defense bonds, treasury paper, and 71

Capitalism and the state in modem France advances from the Bank of France. Much of this indebtedness was in the form of short-term issues, the so-called floating debt, which con­ tinually fell due and precipitated a series of payments crises. War debts, which by 1921 reached a total of almost 50 billion francs, were owed mainly to the United States and Britain. In addition to these debts the republic in the early 1920s proceeded to extract yet another 100 billion francs from the treasury in order to pay for reconstruction. In theory these loans were only advances made in behalf of the Ger­ mans who were to pay for reconstruction through reparations. French governments thus continued wartime levels of spending. Besides un­ certainty over the health of public finance the franc was further jeopardized by inflationary pressures generated by the war, that is, enlargèd purchasing power and expanded note circulation. Specula­ tion on international exchange also helped undermine the franc ger­ minal. After the war both the exchange value of the franc and its internal purchasing power depreciated almost in tandem. Though the franc had been one of the most stable currencies in the world up to 1914, at roughly twenty cents to the dollar, it fell to fourteen cents in 1919 and soon became one of the most unstable currencies. By 1920 the exchange rate had slipped to seven cents, and worse was to come. For years the French nursed the belief that the Germans could be forced to foot the bill for war damages. Finance minister FrançoisMarsal stated in 1920 that taxpayers had already been sorely tested and further taxes would only weaken economic recovery by hamper­ ing investment.36 He preferred to borrow for the moment till the Germans paid up. Two years later another finance minister rejected new taxation and demanded that the Treaty of Versailles be executed. Up to 1923 governments tried to raise the yield of existing taxes by reducing evasion and then, grudgingly, accepted the necessity of raising tax rates to reduce the deficit. Nevertheless, parliament post­ poned any significant new tax burden. So governments continued to run large budgetary deficits and to borrow for reconstruction through bond drives undertaken by the Crédit National. (The latter institution had been founded in 1919 as a semipublic bank to facilitate reconstruc­ tion loans.) These bond issues, however, proved less and less bounti­ ful; by early 1924 domestic investors were no longer willing to sub­ scribe. Foreign lending had dried up long before. The failure of the occupation of the Ruhr (1923) had made the French skeptical about a quick and full recovery of the sums owed by the Germans. In early 1924 the Poincaré ministry was thus able to make a reluctant parlia­ ment accept a heavy dose of new taxation in the form of an acrossthe-board 20 percent hike. But this double décime was too little, too 72

The twenties late. In the spring massive speculation against the franc in interna­ tional money markets required the government to secure a large loan from the Morgan bank to stave off a panic.37 The republic gained a short respite but failed to use it. Elections in May 1924 brought the Cartel des Gauches and Edouard Herriot, the Radical leader, to power with the promise of lightening indirect taxes, spending more on social reform, and introducing sound finance. Herriot as premier proved less than an astute financial manager, and a legislative logjam prevented any movement. The left wing of the cartel led by Herriot favored some form of a tax on wealth, which they called a "capital levy," or they wanted a "consolidation" of the debt, which would mean delaying or depriving bondholders of part of their future income. The more moderate wing of the par­ liamentary majority, as well as the right, however, insisted on an opposite course. They championed increases in indirect taxes and higher charges for services like the FIT; and they were adamant against a capital levy, consolidation, or any other charge on securities that might shake the confidence of capital. Both sides also quarreled over increasing the rates of the income tax and the new turnover tax (form of sales tax introduced in 1920 that the cartel had promised to end). In the name of "fiscal equality" each interest group asked some other interest to bear its share. Businessmen, for example, asked for heavier taxes on farmers. Some industrialists and merchants threatened a tax strike if they were forced to carry the brunt of new taxes.38 In trying to meet the debt payments the cartel was hamstrung by a ceiling placed on note circulation. The Bank of France, backed by the moderate wing of the cartel itself as well as most bondholders, refused to countenance lifting the ceiling from fear of risking further inflation. Without the option of raising the volume of currency the government debated taxes and borrowed. The republic's inefficacy was seldom more patent than during 19246. Parliament refused to grant decree powers, and yet it could find no way to liquidate the problem itself. The Bank of France, mean­ while, lacking confidence in the cartel, precipitated the fall of Herriot's government by revealing the latter's transgressions against the currency ceiling. In fact, finance ministers (there were eight between June 1924 and July 1926) and cabinets came and went at a pace that was remarkable for even the Third Republic. The decentralized character of the republic's economic decision making also hampered a coherent policy as Treasury officials battled with other ministries, pressure groups, and the Bank of France. One experienced official complained of "ministers acting without knowledge of their depart73

Capitalism and the state in modem France merits, departments repudiating their ministers, varying systems adopted and then rejected by turns, no dearly defined line of con­ duct, in short absolute incoherence."39 Then the dam burst. In 1926 speculation against the franc resumed, capital sought safe havens abroad, and inflation mounted rapidly as storekeepers synchronized prices with the depredation of the ex­ change rate. In panic people rushed to convert savings and bonds into real estate, jewelry, and other forms of inflation-proof invest­ ment. France seemed on the verge of complete monetary collapse. By summer the franc plummeted to two cents. The central bank rejected desperate pleas by the government for help in dampening specula­ tion. Out of frustration, the finance minister resigned.40 Outside ex­ perts, mainly bankers and offidals, were summoned to devise a "nonpartisan" program of finandal recovery.41 Under duress the hapless Cartel des Gauches finally stepped aside and turned power over to Poincaré in July 1926. Parliament sus­ pended its obstruction and entrusted him with decree power to solve the crisis. The mere presence of this finandal conservative helped stem the hysteria. Poincaré's program contained nothing new and followed closely what the experts had advised. What was different was that unlike his predecessors Poincaré had the authority to act. He raised indirect taxes, espedally on consumption, and certain direct tax schedules while redudng the income tax for the wealthy as well as taxes on inheritance and securities. Poincaré introduced "economies" in government and established an independent "sinking fund," which possessed its own revenues to manage the floating debt. The Bank of France, meanwhile, was authorized to enter the exchange market freely in order to restrain fluctuations in the franc's parity; thus the government embarked on de facto stabilization. Poincaré succeeded where others had failed; he restored confidence among holders of capital and by general acclaim "saved" the franc. Its value began to appreciate, and soon the budget began to show a surplus. In late 1926 the issue became whether or not the government should let the franc float above four cents. Though Poincaré favored this policy, partly in the name of equity and the state's credit, as did certain ministers, many bankers, including the regent Edouard de Rothschild, and almost all small creditors, he was opposed by more powerful forces.42 Most of the Radicals and all of the far left of the Chamber, the majority of the regents and the governor of the Bank of France, Treasury officials, industry, and even Poincaré's own advisors wanted immediate stabilization.43 They argued that allowing market forces to reflate the franc would induce systematic deflation that 74

The twenties would be ruinous to producers and merchants because of the need to lower prices indefinitely. Exports had already begun to suffer, accord­ ing to automobile manufacturers. Those who had entered contracts with a depreciated currency would be hard-pressed to meet their obligations. So would taxpayers. Jouhaux warned Poincaré that un­ employment might follow. That the British economy had gone through a relapse after just such an experience in 1925 was a warning to all. The Bank of France argued, in addition, that stabilization was the best way to preserve the equilibrium of public finances and pro­ tect the central bank's gold. Signs of renewed speculation helped opponents carry the day, and in June 1928 Poincaré officially pegged the franc at four cents and France returned to full convertibility in gold.44 The premier testified to the power of the bank of issue by saying: "The Bank of France's directors would not accept any other policy but stabilization. If these directors were to resign, the entire world would say the government was wrong because the prestige of the bank abroad is enormous, greater than that of the state."45 Monetary stability finally came but at the price of accepting an 80 percent depreciation of the currency's value. Price levels, moreover, had climbed at a corresponding rate to 400 percent over 1913. Bond­ holders and savers in general had to accept severe losses; the mass of small investors ended up paying for the war. Rather than face hard choices, the republic had let inflation solve the problem. It is clear the French did not tax themselves to meet these costs. Despite their wishes the French could not recapture the past and restore the franc germinal. In retrospect that was a wise decision. Under the franc Poincaré, which was undervalued, the economy pros­ pered - at least till 1930. According to Alfred Sauvy the decision to stabilize in 1928 was the only major decision on economic and finan­ cial affairs in the interwar years that was correct: "an isle of reason in an ocean of errors."46 Thereafter the French were to be extremely protective about any further loss in the value of their currency. Main­ taining the franc Poincaré assumed immense political and psychologi­ cal importance. Otherwise the franc crisis of 1924-8 had little permanent effect on public policy or its machinery. Whatever monetary management had been necessary to liquidate the war ended in 1928. Controls on foreign exchange were lifted; the experiment with the gold exchange stan­ dard was terminated; and the gold standard was restored.47 In in­ stitutional terms little had changed. The central bank remained a privileged anachronism devoted to protecting its treasury of gold and monetary stability, defying, even overturning governments at will. 75

Capitalism and the state in modem France The economic administration remained as it was. Whatever modifications had been made in the fiscal system were due to the war.48 The left, however, was more convinced than ever that the mur d'argent had defeated them. They blamed the puissances d'argent who allegedly controlled the banks and much of industry for the cartel's dismal performance and attacked the Bank of France in particular for its "antidemocratic" actions. This critique was to gather momentum in the next decade. Before investigating the end of the decade and the phenomenon of industrial overhaul, a knotty question of terminology needs to be addressed. This is the matter of "technocrats." Though commonly used 6y French historians to describe modernizers, it is anachronistic when applied to the interwar years. It also carries a pejorative mean­ ing. "Technocracy" appeared first in scholarly discourse and then in common parlance only after 1945 when a series of emerging issues stirred public debate in France.49 In addition technocratie has deroga­ tory connotations in French; it suggests heartless productivity maniacs and rule by experts. Despite these drawbacks it seems legitimate to employ the term, if used sparingly, to a certain category of interwar modernizers. Technocracy, as I shall use it here, refers first to an approach to decision making. The assumption is that there is "one best way" or that human problems, like technical ones, have a solution that ex­ perts, given sufficient data and authority, can discover and execute. Applied to politics this reasoning finds interference from vested interests, ideologies, and party politics intolerable. Its antithesis is decision making through the weighing of forces and compromise. Technocrats thus tend to suspect parliamentary democracy and prefer the "rule of the fittest" and a managed polity. Second, technocracy affirms the value of efficiency much as liberalism celebrates individual freedom. Efficiency, however, is both an intrinsic value and an in­ strumentality; it is a means of achieving economic abundance, social peace, and strong government. Finally, technology is a paradigm for the technocrat. Technology's productive potential holds the promise of a society of abundance. Its link with science and its inherent dynamism have the allure of modernity. Its efficiency, the perfect mating of men and machine, is a model for society. Abstract definitional questions aside, technocracy between the wars in France had an institutional focus. Its enthusiasts were mainly graduates of elite engineering schools, especially the Polytechnique, where a Cartesian type of education blended with a self-conscious, public-spirited elitism. 76

The twenties Syndicalism and rationalization

Nineteen twenty-six, twenty-seven, twenty-eight, twenty-nine - the end of the decade was quite different from the immediate postwar years. De facto stabilization marked an end to preoccupation with the economic-financial legacy of the Great War. The franc and the trea­ sury had been rescued; reconstruction of the northeast was largely complete. The earlier quest for "normalcy" gave way to a measure of experimentation as the French economy surged forward. Rationalisation was the word most commonly employed to describe the modernizing industrial trends and the aspirations they stimulated during the first postwar decade. The term referred to a hodgepodge of ideas and techniques.50 Industrial concentration, the assembly line, product standardization, mass marketing, "scientific management," producers' ententes, organizational reform, a "technical state," and a managerial approach to labor relations were only some of the items that it encompassed. What the partisans of rationalization all sought was the optimal development and management of the nation's human and material resources. They extolled the value of efficiency, the benefits of an ordered economic environment, and the goal of abundance. In addition, labor would receive fair shares; class conflict would be attenuated; and France would improve its competitive posi­ tion. Proponents of rationalization were self-consciously "modern." They were the "neos" who proclaimed a break with past practice. Economic individualism, for example, was to submit to some form of collective discipline. Inspiration for rationalization was complex. It came partly from America and Germany where the process was most advanced, where F. W. Taylor, Henry Ford, and Walter Rathenau had pioneered. America's prosperity and the consolidation of Germany's industrial might sharpened a Gallic sense of relative backwardness. There were also fears of global "overproduction" (surproduction), which recovery of the productive capacity of Alsace-Lorraine aggravated. French manufacturers searched for new ways to remain competitive, to cut production costs, and to stabilize sales in tight market conditions. In addition, wartime experiments, inflation, scarce capital, labor prob­ lems, and frustration with the fumbling of the republic stimulated the movement. For all these reasons there was a palpable development of French industrial enterprise, technology, and production technique, and these changes invited speculation about their significance for capitalism, syndicalism, and socialism. My treatment of industrial rationalizers will not survey all the par­ ticipants. Rather we shall look to those who tried to shape economic 77

Capitalism and the state in modern France management and industrial progress at the national scale and omit others with more finite goals, like the Taylorites who confined them­ selves to reorganizing the workshop. Here the major divide lay be­ tween syndicalists and capitalists. Among the partisans of rationalization were those whose in­ tellectual and political orientation was syndicalism. On the left the CGT, far more than any other trade union federation or either Marxist political party, generated the new industrial philosophy. The overarching strategy of Jouhaux, Georges Dumoulin, Al­ phonse Merrheim, and other CGT leaders, once the republic had turned aside their offer to collaborate on reconstruction, was to pre­ pare Jthe working class to take control of the economy. Syndicalist doctrine held that the means of production rightfully belonged to the "producers," that is, to the working man, rather than to capitalists. Traditional syndicalist formulas called for a general strike, workers' seizure of the firm, and the replacement of the state with the work­ shop and the syndicat. This strategy reflected the anarchist's aversion for the state and the mutualist's goal of a federated network of auton­ omous cooperatives producing for the needs of the community. After the war the trade union movement redirected its former revolutionary strategy toward gradually penetrating and conquering the capitalist citadel from within. To those militants who continued to place their hope in the general strike, Jouhaux asked, What will the syndicats do once work has been halted? Workers were not prepared to take pro­ duction in hand. From this perspective the working class needed a constructive program - one that both trained workers for economic management and simultaneously eroded capitalist domination. Such a stance did not reduce the need to collaborate for the time being with progressive managers. Among the various reforms advocated by the postwar CGT the two that figure most prominently in our story are its schemes for nationalization and a national economic council. Both ideas, in cur­ sory fashion, had appeared in the minimum program of 1918. Discussion of nationalization, or a "return to the nation" of its collective wealth, antedated 1914 among socialists. But after the war it was the syndicalists who framed the project and launched it.51 Jouhaux, who was under attack from within his federation for having rallied to the war effort, sought to build support with a new program, one that reached out beyond manual labor. There was also strong pressure from railway workers who were demanding nationalization of the rail network. Albert Thomas, it seems, was yet another influ­ ence on Jouhaux's turn to nationalization. At the trade union con78

The twenties gress in 1919, over the opposition of a minority of communists, anarchists, and revolutionary syndicalists, he won endorsement of the principle of nationalisation industrialisée and the establishment of a Labor Economic Council that would chart a new program. The latter council, which replaced the scheme for a national economic council that the Clemenceau government had killed, included technicians, fonctionnaires, and members of the cooperative movement. The way the CGT chose to define nationalization in 1920 affected ail debate on the measure for the next quarter-century.52 Its project charted a path between étatisme and the anarchists' simplistic for­ mula of "mines to the miners." "Economic individualism," the CGT asserted, "had sufficiently proven its fundamental inability to realize a rational organization of production and exchange of goods."53 The war had exposed the system's weaknesses, and now was the time for labor to promote a new order that assured the manufacture of what society needed and its just and logical distribution. Because the bourgeois masters would never invite workers to share in managing the economy, labor must see that all land and water transportation, mines and hydroelectric sites, and major credit institutions were nationalized. Each sector was to be turned over to an autonomous association (a régie'coopérative autonome) run by tripartite boards com­ posed of "producers" (labor and technicians), consumers, and repre­ sentatives of the state - none of whom were owners. The CGT insisted vehemently on the distinction between étatisation and its pro­ posed nationalisation industrialisée. In the former the state owned and managed the enterprise. In the latter version, which sought to combine collective ownership with effective management, the public firm was to be completely independent, financially and adminis­ tratively. Organized labor shared in the anti-étatiste current of the times and pointed to state monopolies as proof that the state was incapable of operating an enterprise. Labor's project sketched policies for prices, profits, and indemnification and set forth, as a goal of nationalization, production for the community's needs, that is, pro­ viding consumers with maximum utility and economy. To left-wing critics who saw this scheme as merely "replastering existing society," Jouhaux said: "if for the moment it is only an adap­ tation to social reality, it nonetheless contains all the elements of a definitive transformation. We should value nationalization not only because it brings immediate gains but also because it carries the po­ tentiality of an ultimate transformation."54 Real change, he insisted, came gradually. The revolutionary left, including the Communist Party and the minority of the CGT that broke with reformist leader79

Capitalism and the state in modem France ship in 1921, was not enthusiastic about nationalisation industrialisée from the outset. The Socialists in their 1919 program refrained from using the term itself though the party called for the nation to retake and operate a host of industrial and financial activities.55 If most Socialists accepted nationalization in principle they did so for tactical reasons, and the party made little effort at formulating its own in­ terpretation.56 The Labor Economic Council, grandly inaugurated in 1919, which had defined nationalization for the CGT, also designed a new political economy to replace individualism and revolutionary syndicalism.57 The council and its program heralded the beginning of a new syn­ dicalist order. The council's broad definition of a "producer," which included intellectual workers like engineers, office staff, and civil ser­ vants, broke with the rigid capitalist-worker dichotomy. Maxime Leroy, a syndicalist theorist who spoke for the council, anticipated the coming of the "professional state," which corresponded to the latest stage of industrialization. Leroy spoke of an economy struc­ tured around industries that were either nationalized or organized into obligatory syndicates and foresaw economic policy set by a fed­ eration of autonomous producer syndicates sitting as an economic council. The labor council of 1919 was itself this new, noncoercive, state in the making: "it is an invention that, in the near future, will appear as original as that of parliaments."58 The idea of a syndicaliststyle planned economy had made its appearance. Though the labor council expired in 1921 the idea of a national economic council and speculation about a syndicalist economy intensified. Such speculation in the 1920s was not confined to the CGT. The projects of Sammy Beracha, Charles Albert, Maxime Leroy, Georges Valois, and other neosyndicalist theorists all envisaged a republic of producers.59 Industrial concentration and mass production, it seemed, had rendered the liberal parliamentary regime obsolescent. A rationalized economy required a "modem state" fortified with technical expertise. From this perspective the Third Republic was sadly deficient. Beracha asserted: "political democracy should be re­ placed by syndicalist and economic democracy which alone can shat­ ter economic liberalism and intervene effectively in behalf of rationalization."60 Furthermore, the republic had allegedly been vul­ nerable to manipulation by big business. To those raised with a Proudhonist aversion for big capital, industrial concentration seemed to intensify the dangers of plutocratic rule. French democracy stood accused of both incompetence and class bias. And the French bourgeoisie, with few exceptions, according to these syndicalists, had 80

The twenties lost its vitality and become a parasitical class. Only a new political economy based on producers' syndicates could both stimulate and order production. Such speculation about a republic of producers not only inspired postwar syndicalists but appealed to many others and even shaded into fascism. In this vein the most interesting of the neosyndicalists was Georges Valois. Valois, a disciple of Georges Sorel, had been the labor expert for the Action Française. The latter, a royalist political league, represented the most strident nationalist and antidemocratic elements in French politics. Valois fused these political sentiments with his productivist syndicalism and ended by founding a fascist movement. He believed technology was the prime mover of human progress but that the bourgeoisie had neglected its responsibility to lead the way toward technological advance. Valois expressed admiration for the dynamic captains of industry while castigating the bourgeoisie as a tired class resolute only in protecting its privileges.61 The upper ranks of this class, moreover, the plutocracy, bent the republic to its will. Valois proposed "integral syndicalism" to counter this stagnant and corrupt order. This required a hierarchy of syndicates embracing workers, technicians, and employers that culminated in an economic parlia­ ment. He spoke of a syndicalist system of "mutual constraint" that would replace economic freedom and the market. Following the war Valois made several futile attempts to organize syndicalist movements for the Action Française. Then in 1925 he plunged into fascism. Mussolini's success in Italy in part inspired Valois. Valois' founding of the Faisceau, officially the Fasces of Veterans and Producers, was also a response to the crisis in public finance and the political paralysis that followed the election of the Cartel des Gauches. According to Valois the moment had come for action. In doctrinal terms his Fais­ ceau was a logical outgrowth of "integral syndicalism." As he said: "fascism wants the state to be the real defender of the working class and to extract the greatest industrial and technological effort from the captains of industry."62 A blend of syndicalism and nationalism along with a technological obsession and an authoritarian temperament yielded the first important fascist movement in interwar France. Cou­ pling nationalist and modernizing energies is a common leitmotif in this history; in Valois's hands, however, the combination crossed over to fascism. To the earlier notion of mutual constraint Valois added an authoritarian leader. Despite Valois's bullying of capitalists the Faisceau attracted some supporters from industry, especially en­ gineers, as well as a large following of veterans.63 At its peak the 81

Capitalism and the state in modem France Faisceau, which had broken with the Action Française, numbered some 25,000 members. Once Poincaré stemmed the panic in public finance the Faisceau rapidly disintegrated. Shortly thereafter Valois renounced fascism and embraced a pure syndicalist version of technocracy.64 The technical state is the central organ of a republic based on the needs of labor and a fraternal society in which there is no hierarchy of money or birth. There is only a hierarchy of functions needed for production and certain social responsibilities. Politics is essentially the organization of prosperity according to science, technology, and syndicalist justice.65

The Third Republic had unwittingly begun its metamorphosis toward the technical state, but a true producers' republic for Valois needed an assembly elected by syndicates and a national planning agency. Al­ though the technical state controlled aggregate production and credit, the manufacturing process was to be assigned to technicians who worked within constraints imposed by syndicates. Plutocrats and parasites perished. The technological imperative overrode class dif­ ferences, transformed society into "a single class of producers," and called forth a technical elite who will be "the great organizing class for the world of tomorrow."66 Technocracy had found its voice. The same impulses that motivated syndicalist speculation about a technical state also stirred some Radicals. A few younger members of the premier party of the interwar years took a small step away from liberalism.67 The most explicit statement by such Radicals before 1930 came from Bertrand de Jouvenel. In his essay, L'Economie dirigée, de Jouvenel viewed the trend toward the concentration of production as a mixed blessing.68 Though he acknowledged the benefits of mass production, he, like most Radicals, dreaded the concentration of wealth and power.69 To him the modem corporation was a form of collectivism that destroyed the foundations of capitalism - private property, the owner-manager, and small-scale enterprise. Unwilling to relinquish a France of small producers, de Jouvenel suggested ways to slow the advance of the integrated corporation. What he proposed was an économie dirigée or a take-charge republic that would hold special interests in check and govern in the name of the common good. This conception of management was tame and conservative when compared to that of Valois. As ways of nurturing economic growth and security the young Radical suggested using fiscal and monetary policy, opening the home market to competition, selec­ tively promoting "viable industries," and establishing a syndicalist assembly. Yet loyalty to small enterprise and the market restrained de Jouvenel from asking for measures like planning. Acting under the influence of young militants like de Jouvenel the Radical Party nomi82

The twenties nally adopted dirigisme once the depression struck. Nevertheless, the party's program was a heap of rhetorical contradictions that did not guide policy. The drive mounted by syndicalists and other reformers in the 1920s for some kind of economic council finally brought results under the Cartel des Gauches.70 In 1925 Premier Herriot, urged on by his labor minister and by Jouhaux who now disclaimed an economic parliament because fascists had taken up the cause, established a National Eco­ nomic Council. The council gathered some fifty delegates from labor, capital, and consumers for the purpose of advising the government on economic problems. Herriot justified the new body on the grounds that given the growing importance of economic issues politicians and administrators needed to open communication with economic inter­ ests. He also invoked the perennial goal of coordinating policy mak­ ing among ministries. But the government emphasized that the coun­ cil was a consultative body attached to the premier. It was not an economic parliament and had no legislative authority.71 Despite its limited powers the council attracted prominent figures like Jouhaux, Pinot, and the economist Charles Gide, and it turned out a series of probing reports on problems like housing and rationalization. Be­ cause delegates were selected on the basis of "the most representative organization," the council also introduced the corporatist principle of professional representation into the administrative system. This prin­ ciple gave rise to challenges from groups like the Chambers of Com­ merce and the Catholic trade unions, who felt slighted. Employers' associations, the business press, and right-wing parties raised a host of objections about the utility, the representativeness, and especially the labor bias of Herriot's creation. Only the technical ministries who were eager to exchange random contact for regular consultation with business and labor came to value the council's advice. Legislators viewed it as a threat. In the end the council adopted a passive stance while parliament ignored it and subsequent right-wing governments tried to inter it. When the time came in the late 1920s for syndicalist spokesmen to take a stand on rationalization, the CGT, as should be expected, endorsed it.72 The trade union federation accepted "scientific" pro­ duction methods if workers controlled their application and if they were accompanied by higher wages and a shorter workday. Opposi­ tion to such progress, it was argued, would be ruinous to French industry. In contrast, the communist trade union federation, the CGTU, condemned rationalization as long as it occurred under capitalism.73 The Socialist Party took no official position on rationali­ zation, but its leaders debated the issue. Léon Blum and his young 83

Capitalism and the state in modem France disciple, the polytechnician Jules Moch, agreed that the process accel­ erated capitalism's evolution toward socialism - for example, the capitalist could no longer do as he pleased but had to follow the technical dictates of productivity and the rational rules of an ordered economy - but they disagreed on whether the captains of industry or the working class would be the immediate beneficiaries.74 Neocapitalism, industrial trends, and rationalization

Neocapitalism paralleled neosyndicalism. Among the mass of em­ ployers a ginger group preached rationalization. My interest is in those who exhibited a macroeconomic perspective rather than in rationalizers who looked more narrowly to problems of plant man­ agement. Before examining neocapitalism, a few observations about indus­ trial developments in the 1920s are in order. The resurgence of SaintSimonianism among capitalists as well as syndicalists corresponded to certain economic trends. The late 1920s were buoyant years for French capitalism. Midway in the decade the rhythm of production quickened. Between 1924 and 1929 industrial output grew at 5 percent annually in comparison to a creditable 2.4 percent for the decade and a half before the war.75 Between 1913 and 1928 the extraction of iron ore doubled as did steel output, so that France challenged Britain for second place among European steel producers. Similarly, the power of hydroelectric plants tripled. The boom industries of the day were chemicals, au­ tomobiles, rubber, petroleum, metals, mines, construction, electric­ ity, and machinery.76 Other branches, however, like cotton textiles, failed to recover prewar levels. In certain sectors like steel and coal most of the spurt was due, of course, to the reannexation of the industrial capacity of Alsace-Lorraine. France also kept its share of Europe's foreign trade, and French manufactured exports began to shift away from an earlier emphasis on textiles and luxury products toward metals, tools, machinery, and automobiles. The index of in­ dustrial production reached a peak in 1929 that was not to be regained until 1950-1.77 The need to sustain growth and stabilize sales amidst an abiding Gallic fear of "overproduction" called for rationalization. Even more closely related to the rationalization vogue than output was the deepening concentration of industry. The substitution of large-scale enterprise for small and the adoption of new forms of business structure progressed, but slowly and weakly compared to the most advanced industrial nations. Industrial concentration be84

The twenties tween 1901 and 1931 reduced the number of small établissements (1-5 employees) by 25 percent, whereas over the same period the quantity of large plants (over 500 employees) doubled.78 Still only 1,100 firms in 1931 belonged to the latter group, whereas almost 400,000 com­ panies remained in the small category. If one looks to the largest companies, those with over 5,000 on their payroll, they remained exceptional in France. There were only thirteen such enterprises in 1896 and forty-four in 1931. Or, if one measures firm size by total assets, the two largest French corporations in the 1920s, Alsthom and Saint-Gobain, were only 5 to 7 percent the size of foreign rivals like Imperial Chemical Industries or I. G. Farben.79 Meanwhile, various kinds of producers' agreements, vaguely referred to as ententes, flourished in certain industries; they largely continued the prewar cartel movement under a new label.80 At what pace, one might ask, did the "modem business enter­ prise," as defined by Alfred Chandler, develop in France? "Slowly" is the answer. Chandler has charted the rise of this corporate entity in the United States and identified its essence: standardized and diver­ sified products; high-volume production; backward and forward in­ tegration that combines control over materials with mass marketing; multidivisional structure; and middle-management coordination of flows.81 Maurice Lévy-Leboyer, utilizing Chandler's model, has found that the modem business enterprise arrived late in France.82 The multiunit structure that provided closer managerial scrutiny over operations had appeared early, but the pioneers found few imitators between the wars. Backward and forward integration and diversifica­ tion of product lines were also rare. The Renault company was an exception. And even Renault did not fully meet the ideal type.83 Instead of Chandler's corporate model Lévy-Leboyer found an im­ pressive growth, especially during the merger boom of 1928-32, of more loosely articulated holding companies in interwar France. Where the American-style enterprise allocated resources and con­ trolled company performance, the French version raised capital for groups of industrial companies. Such holding companies achieved financial integration without effectively controlling production and marketing. Saint-Gobain, with its 150 subsidiaries, operated in part as a holding company but also as a manufacturer; it was representative of the way French industry merged in the 1920s. Holding companies were most common in chemicals, electricity, metals, and heavy in­ dustry, and they appeared mainly as a response to financial needs at a time of scarce capital resources and as a way of emulating American economies of scale. The holding company, however, did not repre85

Capitalism and the state in modem France sent best management practice, and the system of interlocking direc­ torates only fed apprehension that a financial oligarchy controlled French industry. In addition to capitalist concentration, rationalization meant the introduction of "scientific management." The leading student of the subject concluded that France was "one of the most advanced Euro­ pean countries in the practical application of scientific management methods" as of 1927.84 The workshop techniques propagated by F. W. Taylor found fervent French disciples and application in many enter­ prises. Industry also adopted some two hundred codes to standardize products, but again these were much less common than in Germany or the United States. A final new ingredient was the influx of engineers into the capitalist elite. From the turn of the century on, the older '"bourgeois dynas­ ties" absorbed large numbers of the graduates of engineering schools.85 These technicians helped give French management a pecu­ liarly strong engineering outlook - one that stressed high technology and production. Capitalist spokesmen for rationalization represented those indus­ tries experiencing rapid growth and structural overhaul. Corporate managers with engineering backgrounds and officials of employers' associations were typical. Their advocacy of American-style renova­ tion reflected a modernizing and organizing temperament, but their program fell well within the bounds of liberalism. For the most part these neo-liberal businessmen failed to sell their product either to their colleagues or to labor just as most French intellectuals in the 1920s seemed to agree that American culture was more a menace than a model.86 What distinguished neocapitalists was an enthusiasm for a society of abundance. Continually rising production benefited everyone: consumers, manufacturers, labor, and the nation as a whole. Work­ ers, it was emphasized, might gain most because a high-consumption society required a high-wage policy. American business had shown the way, and the French rationalizers borrowed freely. The assembly line, "scientific management," advertising, credit buying, and technology were only some of the techniques that crossed the Atlan­ tic. Because rationalization applied mostly to large-scale enterprise these partisans saw the liquidation of marginal firms as a desirable outcome. Though competition and individual initiative remained es­ sential for economic vitality, an "excessive" or "anarchic" indi­ vidualism had to give way to self-discipline. Supposedly, the "modem entente" stabilized the economic environment and intro­ duced economies of scale without tampering with the market.87 Henri 86

The twenties de Peyerimhoff, head of the Comité des Houillères, contrasted en­ tentes with the massive German combines like I. G. Farben; the former retained the identity of each member firm and did not entirely suppress competition.88 He seemed to be speaking for the holding company approach to mergers that French industrialists clearly pre­ ferred. Some rationalizers, however, like the combative Louis Re­ nault, disapproved of industrial combinations and continued to speak for a pure market economy.89 Etatisme remained the enemy, even for the neocapitalists. Yet pro­ gressive businessmen in the 1920s exhibited a less implacable front toward interventionism than other employers. Louis Loucheur, the manager-deputy, still saw himself as "profoundly anti-étatiste," yet he endorsed selective state intervention in order to "brake excess individualism."90 Renault accepted a measure of interventionism when it helped dynamic companies. What the Third Republic needed, and here the neocapitalists and the neosyndicalists agreed, was to be fortified with technical and economic expertise. Peyerimhoff observed: "The state of 1850 was a legal and military entity. The state of 1930 is, above all, an economic apparatus," and he suggested transforming the Senate into an assembly of economic interests or experts.91 André François-Poncet, who had worked for the Comité des Forges before becoming a deputy, believed neocapitalism represented technocracy on the march: "It will teach us, as Saint-Simon proclaimed, that tomorrow's politics will be the science of production."92 Capitalist rationalizers also encouraged more enlightened social policy. Employer officials like Alfred Lambert-Ribot of the Comité des Forges and Peyerimhoff accepted trade unions and invited their par­ ticipation in implementing rationalization as long as managerial au­ thority remained intact.93 Such cordiality toward unions did not, however, alter their distaste for Marxism or compulsory collective bargaining. In contrast there were modernizers like the automakers André Citroën and Renault who continued to brook no interference from labor. A recent interpretation of the rationalization movement in Europe has argued that it was a means of stabilizing capitalism.94 According to this thesis business rationalizers calmed class antagonism by con­ verting labor to the productivist ethic, subjecting workers to the rules of "scientific management," and relegitimating the capitalist hierar­ chy. Such a view has some merit for explaining the phenomenon in France where neocapitalists recognized the need to replace a hidebound bourgeoisie with a dynamic and more socially conscious business elite. Nevertheless, social peace was not the principal goal of 87

Capitalism and the state in modem France these capitalist reformers. They were motivated more by desires to reap the benefits of an expansive capitalism, to control the economic environment, and to emulate best entrepreneurial practice in order to remain competitive. Organized business in general equivocated on rationalization. René Duchemin, manager of the Kuhlmann chemical works and president of the CGPF, presented the "official" employers' position. He noted that in the birthplace of "the great rationalizer Descartes" industri­ alists had always known how to cut waste.95 Though he believed manufacturers must participate in the latest effort at organizing pro­ duction, he warned about the "mystique of rationalization" and re­ jected, any "servile imitation" of American or German tactics. Duchemin, who had to speak for a broad range of businessmen, reiterated the standard objections; luxury-type manufactures did not lend themselves to mass production, and "our individualism yields grudgingly to the rigorous discipline that permits the enormous con­ centrations on the other side of the Atlantic or across the Rhine." He preferred "limited mergers" that did not obliterate the autonomy of member firms. Neocapitalist reform converged in a movement led by the manager Ernest Mercier.96 Its fate mirrored the history of rationalization. Cor­ porate managers, mostly engineers, from the electrical, petroleum, engineering, and chemical industries as well as directors of invest­ ment banks and a scattering of high civil servants and academics, rallied to Mercier. He had won prominence as manager of a holding company that had overhauled the electric power industry in subur­ ban Paris. It should be recalled that he also presided over the consor­ tium that created the Compagnie Française des Pétroles. Mercier's interest in renovation began during the war when, as part of Loucheur's staff, he had confronted the infirmities of the country's industrial plant. Mercier's aggressive temperament and his postwar entrepreneurial success also made him impatient with the behavior of most other industrialists. They seemed unaware of the need to shed their small-minded, secretive, and paternalistic habits. As a guest of General Electric in 1925 he visited the United States where the poten­ tiality of American techniques and the elevated status of businessmen excited him. The republic's paralysis in meeting the crisis in public finance prompted him to launch his movement late the same year. The Redressement Français, as it was called, aimed at rallying the French elite to the banner of national regeneration; they, in turn, would educate the masses. A wounded Gaul rising from his knees to rejoin the battle decorated the cover of the Redressements bulletin. The trappings of Mercier's organization were patriotic. Its members. 88

The twenties like so many other reformers in this history, linked economic over­ haul with national prowess. In the intensely competitive modem world a nation's status and independence, according to the Redresse­ ment, depended upon quickening the pace of its industrial effort, and on this score France was a "backward nation" faced with the prospect of falling to the rank of "a second-rate people."97 "Technocracy" best describes the Redressements program. Effi­ ciency was a moral imperative to Mercier, the poly technician. He gathered some two hundred experts who jointly composed a compre­ hensive list of reforms.98 To streamline the republic they recommended expanding the power of the government and the administration at the expense of the legislature and political parties and intro­ ducing technicians into policy making. These neo-liberals also urged new social welfare programs, and they asked the state to promote industrial concentration. Rationalization, or more broadly a mass consumption economy, was the heart of their program. The Ameri­ cans had demonstrated the obsolescence of a capitalism that postu­ lated scarcity. Neocapitalism substituted expanding markets created by high wages, lower prices, and rising consumption. Workers, in return for their participation in "scientifically organized production," received higher incomes, job security, less onerous work, and more leisure. Ford had found the answer to Marx. Prosperity would elimi­ nate "the evil shepherds who live off the misery of workers."99 Em­ ployers also had to adjust. "Individualism is very pleasant. But it is obsolete," the movement declared.100 Large, integrated firms or, fail­ ing that, producer groups operating in a competitive market would force marginal manufacturers and merchants to adapt or disappear. Such industrial combines, modeled on those in the electric power industry, superseded atomized enterprise. They also did not impede competition because, it was argued, mass consumption required pro­ ducers to find ways constantly to improve products and lower prices. At its peak in 1926-8 the Redressement attracted some ten thousand members, accumulated an ample treasury, mounted publicity and educational campaigns, and tried to influence national politics. But Poincaré's success in stabilizing both the franc and the government undercut the Redressement just as it had Valois's Faisceau. Politicians saw no reason to heed the unsolicited advice of experts who com­ manded no voters. Labor leaders, even the neosyndicalists, sus­ pected the intentions of Mercier's managers; and the business com­ munity balked. Outside the growth industries of the twenties the Redressement attracted little support. Progress to most French capitalists was not to be found in America. Mercier did not help his cause by anticipating the demise of small enterprise or demeaning the 89

Capitalism and the state in modem France merits of employers' associations. And to many businessmen he seemed to steer them too close to the shoals of politics. By 1929 Merder's movement was on the wane. His last hope was the formation of a new cabinet in that year by a dose friend and sympathizer, André Tardieu. The Tardieu government epitomized the neocapitalist movement for renovation.101 Like so many other modernizers Tardieu had helped mobilize the economy during the war. As high commissioner in the United States he had channeled American credits and supplies to France. America's economic performance had awakened him to his country's deficiendes, and after the war his enthusiasm for America and his hard-driving, businesslike approach to politics made him a champion of industrialists like Mercier. Tardieu, who had made his reputation as a journalist and diplomat, became an independent, right-wing deputy and then minister in the 1920s. The left disliked his intransigence toward Germany, his ties with big business, his con­ tempt for political parties and parliamentary routine, his arrogant demeanor, and his vaulting ambition. Tardieu was not to be trusted. From 1926 to 1928 as Poincaré's minister of public works he sponsored highway construction and rationalization of quasipublic sectors like shipbuilding. In November 1929 Tardieu formed his own govern­ ment, which except for a brief interlude survived for a year. The Radicals refused to join him, and Tardieu had to rely on Poincaré's majority. The new premier appointed some new names, deputies like Paul Reynaud, to run economic affairs in his cabinet. And he named François-Poncet as under secretary for the national economy. This newly created cabinet post was to open communication among the "fortresses that constitute the administration."102 Tardieu charged François-Poncet with the task of charting a new economic policy, one that was neither socialist nor liberal and that featured an interven­ tionist state.103 Tardieu labeled his program a "prosperity policy"; the government would assist the French in acquiring the living standards of Ameri­ cans. France, the premier said, had liquidated the effects of the war but neglected the future. His government's goal was to help France "move ahead."104 Speaking to industrialists Tardieu invoked SaintSimon, the "modern spirit," and rationalization.105 In Washington a press release of the French embassy described Tardieu as the embod­ iment of the "practical spirit" that accounted for America's well­ being.106 It is paradoxical that the debut of an American-inspired program came at the very moment when the first signs of depression appeared in the United States. In some ways Tardieu's ministry ostentatiously broke with 90

The twenties liberalism. He claimed his policy of "systematic aid to the vital forces of the country" was, except for the war, unprecedented. "The old and noble liberal doctrine of laissez-faire and laissez-passer" had been superseded by the mammoth size and international scope of enter­ prise.107 "We believe," François-Poncet declared, "that in a modern economy, the state has a duty to intervene, not so as to hamper private enterprise or to compete with it but so as to guide it, enliven it, and support it for the benefit of the general level of activity; to clear the way for it and assure it of regular and steady operation."108 Tar­ dieu vehemently criticized the republic for propping up faltering ac­ tivities irrespective of their economic viability. Similarly, he chastised certain businessmen for proclaiming their anti-étatisme while asking for handouts when they were in trouble.109 The premier acknowl­ edged their right to assistance but insisted on a strong state and a more disciplined and public-spirited employers' movement as pre­ conditions. Ideally, he wanted to replace parliamentary lobbying with systematic consultation between the state and organized interests. François-Poncet further recommended industrial ententes as a means of regulating the business cycle and meeting the incipient world eco­ nomic crisis. The crux of Tardieu's "prosperity policy" was a five-year program of "national retooling" (plan d'outillage national). The treasury was to launch the plan with a 5 billion franc expenditure from its surplus.110 Approximately equal amounts were to be spent on agriculture, public welfare, and public works. Industry was, at most, an indirect benefi­ ciary. The retooling scheme was a conventional public works pro­ gram, not a modern economic plan, inspired by Tardieu's experience at the public works ministry and by reports of the National Economic Council. The biggest outlay went to agriculture for rural electrifica­ tion, water purification, telephone service, reforestation, research, the marketing of farm commodities, and farm insurance. Tardieu gave priority to agriculture and reiterated platitudes about how the peasantry was "the source of our national virtues."111 The rapporteur of the program argued that it would stem the rural exodus and thus preserve "the economic and moral equilibrium of the nation."112 Tar­ dieu extended protection to commodities like wheat and wine that were threatened by the fall in global prices. But he also expected agriculture to modernize, that is, to specialize, mechanize, improve the quality and marketing of products, and develop exports. Spend­ ing on public welfare, the second target of the scheme, was for schools, laboratories, hospitals, and technical and physical education programs. The remaining expenditures, the public works aspect, went for roads, ports, canals, the merchant marine, the PTT, aviation. 91

Capitalism and the state in modem France and advances to hydroelectric companies. The magnitude of spend­ ing was modest, and funds came solely from a treasury surplus, not from borrowing. In fact, Tardieu held an orthodox conception of state finances and insisted, as his mentor Poincaré had, on a balanced budget. Politics also motivated the retooling program of 1930. Tardieu genuinely wanted to compensate for postwar neglect of the economic infrastructure and make France more competitive in the global mar­ ket. Yet he also wanted to win votes in rural and small-town France, the constituency of the Radical Party. By offering both credits for local self-improvement and tax cuts he wanted to lure away Radical voters and disarm the party.113 The obstreperous Radicals, he hoped, would be forced to join the moderate majority. Tardieu's economic program encountered stiff opposition in parliament. The left read his motives. Though couching their differences in financial terms, they basically objected for political reasons. Radicals and Socialists questioned the existence of a surplus, yet outbid the government in calling for even greater spending. The Radicals' counterproposal, as might be ex­ pected, appropriated even more for the countryside whereas the So­ cialists gave priority to public works. In principle they agreed with Tardieu's program, but they distrusted him and feared that his suc­ cess would come at their expense. The opposition used every par­ liamentary ruse to obstruct the plan's passage. A year after it had been introduced parliament was still debating the government bill. Then a provincial bank failed, an ominous sign itself, and the scandal surrounding the bankruptcy seemed to touch some ministers. Be­ cause of this scandal Tardieu's ministry fell at the end of 1930. Suc­ ceeding governments during 1931, relying on the same majority, won legislative approval for most of the appropriations Tardieu had sought. Yet by this time curbing unemployment rather than spurring renovation had become the purpose of the program. The 1930s had arrived, and with them the modernizers' movement receded before the need for economic management.

92

4 The thirties: experim ents and alternatives to liberal econom ics

Self-congratulation seemed in order when, at first, France eluded the suffocating grip of depression. For almost two years following the New York stock market crash the nation seemed safe from the widen­ ing spread of economic trouble. This immunity, as might be expected, provoked an antimodemist reaction. The head of the national em­ ployers' federation, for example, applauded the nation's reluctance to chase after the Americans and the Germans. "Does not the relative equilibrium of our country," René Duchemin asked rhetorically, "prove that French methods, often middling but always prudent, are best and reflect the people's genius?"1 The crisis, nevertheless, arrived and then persisted far longer in France than in other Western nations. Self-congratulation had been premature. Nearly a decade of grinding stagnation followed, which coupled with the devastation of a second world war, severely re­ tarded economic development. The expansionist prospects of the twenties gave way to concern for slumping output, uncompetitive prices, shrinking exports, budgetary deficits, lagging investment, and unemployment. When the republic failed to arrest the economy's deterioration the search for alternatives began in earnest. In the fer­ ment of the 1930s the consensus supporting liberal policy disinte­ grated, and with the approach of war the country moved rapidly to­ ward economic management. It was the persistence of the depression that wreaked havoc in France. Once deceleration began, starting with a collapse in exports and agricultural prices in 1931 and spreading throughout the econ­ omy, it could not be stopped. Other economies exhibited indications of recovery by 1933, but French indexes slumped lower and lower to bottom in 1935. Even then there was little improvement until the end of 1938. The dimensions of this economic calamity are comprehen­ sively treated in other recent histories.2This is not the place to explore the plight of farmers or estimate the number of unemployed or catalog bank failures. Our concern must be with the deterioration of industry and market forces. 93

Capitalism and the state in modem France The crisis did not affect industry uniformly. A few branches, like petroleum, raised output significantly, and electric power and chemi­ cals slightly improved their positions.3 These were the exceptions. Total production fell in 1932 and, despite a temporary reprieve here and there, stagnated until 1938. Dynamic industries that had ac­ counted for the boom of the 1920s were especially hard hit. Manufac­ turers of machinery, automobiles, and electrical equipment as well as shipbuilding and construction materials suffered most severely. At the same time postwar laggards like textiles and other branches specializing in small handicraft production such as leather goods ut­ terly collapsed. As production and prices declined profits fell. Large manufacturers of intermediate and capital goods who faced the most competitive market situations experienced the biggest losses. Net profits here fell some 80 percent between 1930 and 1935.4 Where in­ dustry enjoyed the shelter of monopoly, as with utilities, or the mutual protection afforded by cartels, as with chemicals and coal, profits held up far better.5 As profits and markets contracted invest­ ment dried up. After a sharp fall in 1930--2 investment in capital equipment stagnated for the next five years at a level a third below 1913.6 As investment dwindled and imports of new equipment and technology slowed, French industry lost its competitive position. The war was to aggravate industry's predicament. By 1946 the United States and Britain were to raise both production and labor pro­ ductivity far above the levels of 1929 whereas in France these indexes were to remain significantly below their earlier interwar peak.7 In similar fashion the depression emasculated competitive forces, and the war destroyed them. A combination of widening government intervention and resurgent cartelization all but obliterated competi­ tion in an economy not known for its vigorous market. Operative cartels numbered in the thousands by 1939, and import quotas, among other restrictions, protected the home market for hundreds of industrial and agricultural products. One recent study concludes that "the genuine degree of competition within the system varied at dif­ ferent times and reached zero in the 1940s."8 The magnitude of the crisis unnerved even some of the most liberal and progressive industrialists. As we shall see, one group of business managers lost faith in market mechanisms and began exploring eco­ nomic planning. Some professed doubts that France had an industrial vocation. Auguste Detoeuf, a former proponent of rationalization, advocated a pause in industrial growth.9 Claude-J. Gignoux, the di­ rector of the daily Journée industrielle, expressed a more conventional liberal reaction: "What they call capitalist chaos is only the bad prod­ uct of a system deformed over the last twenty years by incoherent 94

The thirties state intervention." To date, he argued, government controls, repre­ senting the "slow infiltration of socialism," had only sheltered falter­ ing producers from competition and saved special interests.10 The most typical response among industrial leaders was to reaffirm confi­ dence in the market and natural economic laws while simultaneously advocating producers' ententes.11 Organized business in the 1930s tempered its market philosophy with appeals for self-regulation. Em­ ployers' associations saw no incompatibility between competition and cartels; the latter, in their language, only "regularized" the market. Where some employers tolerated voluntary producers' agreements as temporary expedients, others saw interlocking networks of ententes as the wave of the future. During the crisis industrialists resumed entente building in order to control production and prices.12 The most common and most effec­ tive type of such agreement restricted output. Steel, pig iron, coal, chemicals, and other traditionally heavily cartelized industries framed such combines in the early thirties to curb production. A less common and more controversial type of entente appeared in sectors where production was more dispersed and competition more lively. Here "Malthusian" ententes reduced productive capacity by such tech­ niques as prohibiting plant expansion, preventing bankrupt firms from resuming operations, and even destroying unused machinery. But these agreements were rare and even more short-lived than con­ ventional cartels. Only a handful of industries, mostly textile firms, attempted such extreme self-regulation. The republic meanwhile modified its policy and now actively encouraged the formation of cartels. In a few instances, like sugar refining, the government, using its decree power, coerced recalcitrant companies to join an entente sought by other firms. And in a rare case, such as shoe manufacturing where large enterprises threatened to take over an artisanal industry, the state imposed an entente that froze the status quo. However, a legislative attempt, the Flandin-Marchandeau project of 1935, which was promoted by desperate silk manufacturers and which would have enabled the government to render ententes obligatory if a major­ ity of producers so willed, failed to overcome the opposition of indus­ trialists, labor, farmers, and parliamentarians. The liberal republic refused to bend market principles any further. The pessimism that underlay these ententes afflicted politicians and economists as well as industrialists. Alfred Sauvy has tagged this psychology, which sought to limit production and destroy wealth, with the label "economic Malthusianism."13 Such pessimism, accord­ ing to Sauvy, was due to the "secular aging of the population, which atrophies the creative spirit and substitutes fear and anxiety for pro95

Capitalism and the state in modem France tection."14 It is easy to place too much weight on this thesis, to exag­ gerate what little destructive action was taken, and to condemn what was, after all, a near-universal defensive reflex. The republic's conduct of economic affairs between 1931 and 1935 was ill conceived and haphazard. French governments imitated neither the massive interventionism of Nazi Germany nor the vigor­ ous pragmatism of the American New Deal; their behavior was closer to the British "muddling through," but showed less success.15 Political moderates and Radicals dominated governments in the early depression years. The latter, in particular, occupied the center of gravity from 1932 on. Though the Radicals had the habit of quarreling about most things, they agreed oh the virtues of a balanced budget, deflation, and protection for hard-pressed constituents. Thus they generously dispensed aid to farmers.16 And the party that conjured up a "new feudalism" when it spoke of big business used fiscal policy to handicap integrated industrial enterprises and department stores and to subsidize small shops. Other than halfhearted attempts at deflation as a way of stimulating recovery, public policy before 1936 was entirely defensive.17 It aimed at insulating the economy, dampening competition, compressing output, and helping favored interests. Market mechanisms, it was assumed, would in time be self-adjusting, and no departure from orthodoxy other than widening protection and assisting the desperate was necessary. Industrial ententes, as we have seen, received a nod of encouragement. Failures of major banks and the near bankruptcy of the Compagnie Générale Transatlantique necessitated salvage op­ erations.18 The republic could not watch idly while savers lost confi­ dence in the banking system or while the steamship line that carried the French flag fell into receivership. In the latter's case and in several others the republic employed the mixed-company formula where the state became a shareholder and comanager as the price for bailing out the firm. But such rescues had no ideological character, nor did they significantly extend the public sector. Subsidies were freely extended to an assortment of petitioners ranging from civil servants seeking reduced railway fares to shipbuilders. Given the rural sympathies of most politicians agriculture probably received the most help. There were measures to stockpile surplus crops, shore up prices, and regu­ late farm yields. Import quotas, which reserved the home market, replaced tariff duties as the first line of defense for both industry and agriculture. Reverence for a balanced budget and fear of inflation dictated fiscal policy. The republic's response to falling tax revenues and growing budget deficits was to compress expenses. Deficit spending as a way 96

The thirties of stimulating the economy through raising aggregate demand was unthinkable. Nor would governments of the early thirties desert or­ thodoxy and take charge of the money supply or credit. The republic's only true countercyclical policy was deflation. Its aim was to spur recovery by forcing down French costs and prices in order to match lower world price levels and constricted domestic purchas­ ing power. The alternative to deflation, devaluation, was not at­ tempted. Whereas many nations including the United States and Brit­ ain benefited from devaluations in the early depression years, France refused to modify the exchange rate in order to bring internal prices in line with world prices. Opponents argued that devaluation would undermine an entire social order founded on savings and monetary stability. Devaluation and inflation were often confused, a conse­ quence no doubt of the nation's nervousness over the franc after its close escape from disaster during the 1920s. Liberals believed that no simple monetary adjustment could correct price levels; the economy needed time to purge marginal producers. To some, upholding the franc Poincaré was a patriotic act. "Who touches the franc, touches France," one newspaper announced.19 Others held that honest men did not devalue; only Anglophiles and unscrupulous types wanted to manipulate the exchange rate. The business community almost unan­ imously condemned devaluation as did every political party. Devalu­ ation, before 1936, was political suicide. In the end the French sac­ rificed the economy to the franc. Hoping to avoid devaluation the republic in 1935 attempted strenuous deflation. The state set an example with a 10 percent cut in all expenditures, including civil servants' salaries, utility rates, subsidies, and interest on state securi­ ties. Such ill-advised action probably only aggravated the depression by discouraging investment and further contracting demand. And its impact was negated by contrary measures that bolstered farm prices and sheltered producers. Consistency was not a characteristic of the republic's countercyclical program. At the level of economic doctrine, liberal theory continued to pre­ vail. Staunch liberals like Louis German-Martin and Georges Bonnet were typical finance ministers of the early thirties, and Treasury offi­ cials in general were reputed to be uncompromising conservatives.20 The advice from most economists supported the republic's policies aside from its slide into protectionism. Clément Colson and others from the prewar generation continued to teach economics at the facultés de droit and the grandes écoles while younger liberals, men like Charles Rist and Jacques Rueff, gained prominence as government advisors, officials, and teachers.21 The basic liberal prescription for recession was to wait for the natural purge of unhealthy producers. 97

Capitalism and the state in modem France reduce state spending, and deflate prices and wages while guarding the franc. Noting the cyclical nature of the crisis, the Revue d'économie politique, which expressed the views of the academic establishment, blamed state interference, cartels, and trade unions for obstructing the process of self-adjustment.22 Keynes had yet to find an audience in France.23 Whatever the wisdom of liberal countercyclical theory it was not fully applied between 1931 and 1935. The republic chose to mix liberal therapy with ample doses of protection. What is certain is that this prescription utterly failed to promote recovery. Dissatisfaction with these policies, particularly among those who felt slighted, prompted a search for alternatives. The proliferation of economic plans

Economic planning, among the alternatives to republican policy, cap­ tured the public's fancy momentarily in the mid thirties. A plan of some type was adopted by the CGT, the CFTC, the Radicals, and a good many socialists, and numerous reviews, study groups, and con­ ferences, some international in scope, espoused the cause.24 Not till 1945 when the nation faced massive reconstruction did planning again enjoy such popular appeal. In many cases these so-called plans merely repackaged stale ideas or disguised the grievances of interest groups. But the fad had historical substance. In retrospect the planistes of the 1930s marked an early, speculative stage in the de­ velopment of the nation's economic consciousness. Moreover, a united left nearly adopted planning, and planistes gained high-level positions in government after 1935. A peculiar conjuncture of economic and political crises prompted the proliferation of paper plans. Planners denounced the acute eco­ nomic disorder that deprived people of necessities and forced count­ less others who wanted to work into idleness. Market capitalism and its liberal dogma had failed. The system required more than counter­ cyclical remedies; "structural reform," in the jargon of the times, was in order. Some form of permanent, rational, economic management was needed to supplement market forces and bring production and consumption into balance. In addition to its appalling economic im­ pact the downward course of the business cycle had stirred political discontent. Hitler's accession to power in Germany in 1933 seemed attributable to the depression, especially to the distress that drove the middle class into the Nazi camp. And the collapse of the powerful Marxist parties and the labor movement in Germany stunned the French left. Coupled with earlier successes in Italy and Austria, dic98

The thirties tatorship appeared to be on the march in Europe, and after the riots of February 6, 1934, when right-wing demonstrators tried to storm the Palais Bourbon the fascist threat became palpable in France. The menace of fascism and the deepening polarization within the French body politic prompted the design of broad, interclass programs of reconstruction and reconciliation that appealed to the middle class as well as the masses. Besides a common inspiration in the economic-political crisis of the 1930s planistes shared some other defining characteristics. Without exception the plans of the thirties expressed primarily countercyclical, rather than developmental, aims. Plans proposed ways to eliminate the economic malfunctions that caused recurring crises. In this sense they were more radical than mere programs of economic relief. In essence planistes sought to ground an economic order in a rational, man-made economic budget and an institutional system of direction that was at odds with a market economy. Whatever the complemen­ tary qualities of planning and the market this fundamental difference should not be slighted. There is a tension between institutionalized rational management and free operation of the price system. Reason, controls, and forecasting were to replace, or at least modify, natural or automatic mechanisms that, according to a market philosophy, should remain beyond human intervention. At an equally basic level planistes challenged the dynamic of the individualistic capitalist or­ der. They criticized the efficacy and morality of a system based on the search for personal profit. And they substituted some form of altruis­ tic ideal such as public service, productivity, or even human better­ ment as a motive for economic activity. The institutional designs of planners usually specified a forecasting agency, a supervisory economic council, and a plan, that is, a docu­ ment that functioned as a kind of budget for the economy and marked out the lines of activity. But the plan was less important than the institutional apparatus of dirigisme. Planners also agreed on creating a ''mixed economy," consisting of two sectors, one planned, the other free. More radical versions would also socialize or nationalize the first sector and indirectly control the second where private ownership remained. Whether or not planning would ultimately save or destroy capitalism was uncertain and controversial even to its advocates. That it was to profoundly overhaul its functioning, however, was beyond debate. Except for the communists, Soviet planning had no French parti­ sans. No one wanted an étatiste, centralized, integral, administrative type of planning that completely replaced the market. Even the French Communist Party reserved the Soviet model to the future 99

Capitalism and the state in modem France after the proletarian revolution occurred. Only the socialists looked to the state bureaucracy for direction. Unlike the Soviet Five-Year Plan, French conceptions invariably retained an extensive private sector that was, at most, indirectly controlled. French planners also em­ phasized democratic participation in the formulation and execution of planning. In part this rejection of Soviet central planning may be attributed to a reaction against Bolshevism and the harrowing experi­ ence of the Russians under Lenin and Stalin. But it was due even more to a long-standing French aversion to étatisme and an attach­ ment to democratic and libertarian values. At this early stage in the development of planning in France most projects were abstract manifestos charged with altruism and high hope. They articulated principles of dirigisme but neglected economic analysis or facts and figures. Statistical economic data, of course, were largely unavailable. Except for those that adopted a certain Marx­ ist revisionism, the plans also lacked any theory. Planners faced many issues for the first time. How, for example, could one control economic behavior democratically? Or what did it mean to "nationalize" an enterprise? Other than the CGT, little thought had been given such problems. The only extant model, that of the Soviet Five-Year Plan, offered little instruction on how a mixed, democratic system should function. In place of hard analysis planistes prepared rough sketches of new institutions and sounded moralistic and humanistic appeals to replace the profit motive with more highminded goals. A final common feature of the planistes was their esprit. They considered themselves realists and activists who offered a feasible alternative to the status quo. They were an impatient lot who meant to take charge of the situation and not wait on market mechanisms, parliamentarians, or the proletarian revolution. Before investigating the two most important clusters of planners the variety of projects deserves to be sampled - sampled because there were so many schemes and because most contributed so little. The Plan of July 9 received attention out of proportion to its content or impact. In the wake of the riots of February 6 young political militants from across almost the entire political spectrum, including right-wing leaguers and left-wing syndicalists as well as a few top managers and civil servants, collaborated fleetingly in formulating a common program of reconciliation and renovation. In the end dif­ ferences could not be resolved, and rightist appeals to authority and order merged with leftist calls for justice and equality. Economic re100

The thirties form was only one element in the grandiose manifesto of July 9,1934, that covered most current national problems. It called for replacing liberal capitalism with a "self-conscious economy" where the state functioned as the arbiter. More profoundly, "our goal is the gradual substitution of the notion of social service and the joy of creating for the profit motive."25 A proper reorganization of the economy would assure this transformation of mores. By way of structural reforms the manifesto of July 9 recommended regional, social, and corporatist cadres of producers that would restore hierarchy and morality and bring about "freedom with order." A strong "de facto government" brought to power by an outpouring of popular support would fix the lacunae in this new order. Such a "plan" reflects the panicky mood of 1934, but it did little to advance planning and nothing to reorder the economy. A kind of philosophical planisme appeared among young, noncon­ formist intellectuals. Reviews like L'Ordre nouveau, L'Homme nouveau, Esprit, and one appropriately titled Plans, published a host of young writers in the early thirties. Here again economics was of lesser im­ port than broad political, social, aesthetic, and, above all, philosophi­ cal issues. Plans, for example, had much to say about urban planning and architecture but little of note about economics except for express­ ing admiration for a planned or "logical" economy. Writers like Robert Aron, Arnaud Dandieu, Georges Roditi, and Emmanuel Mounier registered their moral outrage against a system that reduced men to producers and consumers, made heroes out of millionaires, depersonalized property, rewarded speculators, degraded work, and exploited workers. Esprit, a Catholic review, revived a medieval sin to define the existing order: Capitalism became "usury erected into gen­ eral law."26 To all these high-minded nonconformists modem capitalism employed liberalism to conceal the rule of the strongest. Theirs was a philosophical revolt against a materialistic world that neglected morality and spirituality. Yet when they tried to convert anticapitalist moralizing into proposals for change these intellectuals had little to offer. They suggested ways to restore the dignity of labor, preserve personal (as opposed to anonymous) property, check specu­ lation, and curb the profit motive. But other than proclamations of support for "planning" there was little effort made to define what was to be done.27 Only L'Ordre nouveau elaborated a mixed economy, and this project was the work of manager-engineers who belonged to a group of planistes best discussed separately. What commonly paraded as "plans" in the midthirties and made the cause so nebulous were old-fashioned party platforms and inter101

Capitalism and the state in modem France est group grievances. For example, the "plan" adopted by the Radical Party in 1934 was an impostor.28 Its inspiration was purely electoral, that is, to attract the dissatisfied in the wake of February 6, without offering anything that could be construed as structural change. There was only a list of tired formulas like cheap credit to help the victims of the crisis. Otherwise the party retained its old program, including deflation, under the guise of a plan and declared its support for di­ rigisme and nationalization without meaning it. The Catholic trade union federation, the CFTC, announced its "plan" in 1936 to remake the economy along Christian principles.29 Traditional goals of Catholic syndicalism like strengthening the family and profit sharing were iperely dressed up in the current fashion of professional associa­ tions. The CFTC recognized that certain concentrated industries, by virtue of the nature and scope of their activities, had become public services, but they refused to countenance nationalization. A gentler form of collective management seemed in order. The CFTC's plan thus contained only the slightest hint of a mixed economy, a forecast­ ing apparatus, or an extension of state regulatory authority. The his­ torian must look elsewhere to find serious attempts at designing and introducing a system of economic management in the thirties. At this point in our discussion, a brief detour into corporatist theory is necessary. Corporatism was an alternative mode of ordering society, yet it also informed the speculation of certain planistes. Both cor­ poratism and planning flourished in the 1930s, and their approaches to rebuilding liberal society overlapped. Corporatist theorists began with a different concern than planners. They looked to reconstituting the natural cells of the social organism as a way of overcoming the anarchy of individualism whereas plan­ ners sought to manage the economy. To the extent that rebuilding a hierarchy of intermediate associations, such as professional or re­ gional bodies, to stand between the individual and the state brought collective discipline, corporatism abetted economic management. Some planners accordingly introduced corporatist bodies in their de­ signs. Yet at heart corporatists regarded balancing production and consumption and similar economic problems as secondary. They were social conservatives who wanted to revive such cherished val­ ues as hierarchy, family, discipline, class conciliation, religion, and work. Their agent was the mixed professional association that grouped together those engaged in a common economic activity. This, along with the family and the region, was the basic cell of a corporatist society. Interlocking hierarchies of such communities 102

The thirties culminating in an economic assembly constituted the corporatist or­ der. State officials, businessmen, and trade unions were to cede many of their functions to professional associations. These bodies would assume the task of arbitrating industrial disputes, fixing work condi­ tions, controlling prices, and determining the quality and even the quantity of output. And in a corporatist state a system of professional representation elected an economic assembly that bypassed party politics and strengthened the republic's competence in economic af­ fairs. Corporatists made extravagant claims for the potency of their medicine. Social solidarity would be recovered within corporatist as­ sociations, and traditional values like the "just price" would be hon­ ored. Economic equilibrium would be regained, competition curbed, private property protected, and the state relieved of its regulatory burden. Corporatist theorizing was a reaction to competing interwar social theories. Individualism, Marxism, and étatisme were equally rep­ rehensible from this perspective. Economic liberalism bred disorder, selfishness, and materialism. It inevitably led to a crisis such as France was experiencing. It also made a "moral economy" impossible. Much of corporatism was rooted in Catholic social theory and a religious critique of materialism and individualism. The corporatist association was also an antidote to the Marxist poison of class hatred that de­ stroyed social solidarity. Grouped around a common or related métier, as medieval producers had been in their guilds, employers and workers would value what bound them together and surmount what divided them. Syndicalism, to the degree it expressed class struggle, was no better than Marxism. Etatisme, for the corporatist, offered no attraction. The state was an incompetent economic manager, and the dead hand of its central bureaucracy drained the life out of corporatist organs. For a time in the 1930s corporatism may have been as popular as planning. The profession organisée was as frequently invoked as le plan among economic reformers. The regimes of Dollfuss in Austria, Salazar in Portugal, Mussolini in Italy, and the Nazis, to an extent, had all adopted corporatist trappings. Within France certain de­ velopments such as the move toward obligatory industrial ententes whetted corporatist speculation. Corporatism found its voice in France among academics, employers, social Catholics, and royalists. In addition, the Croix de Feu, which was the most powerful political league, the national taxpayers' federation, as well as the influential 103

Capitalism and the state in modem France royalist league, the Action Française, entertained vaguely corporatist aspirations.30 Yet corporatism in the thirties failed to attract a mass following or capture a major political party. It remained the doctrine of a few academics and even fewer employers. Others, like the leaders of the Croix de Feu, borrowed pieces of the theory without subscribing to the whole. Neither the patronat nor organized labor gave the doctrine much credence. Employers feared the restrictions corporatist bodies would place on their prerogatives and worried about indirectly en­ couraging syndicalism and étatisme. Organized labor objected to pro­ fessional associations that deprived the syndicate of its autonomy, especially its right to strike, supplanted existing syndicalist struc­ tures, and elevated employers' authority. Indeed, the issue of whether or not the syndicate would coexist with the profession or­ ganisée sharply divided corporatist from syndicalist. And those syn­ dicalists who wanted nothing to do with any system that fostered class conciliation regarded corporatism as akin to fascism. As a social theory corporatism presented serious problems that also weakened its appeal. How to classify economic activities, which de­ fined professional associations, was perplexing. Theorists disagreed on whether to group these associations around similar manufacturing techniques, raw materials, end products, or the stage of production. Whether or not these bodies were to be obligatory for all members of the profession raised further disagreement. Liberals, meanwhile, echoing their attack on the wartime consortiums, warned that profes­ sional corporations would stifle initiative and restrict output. Given the Malthusian emphasis of most corporatists this charge seems war­ ranted. But relations with the state caused the most serious difficul­ ties. Although the distinguishing feature of corporatism was "the character of public law attributed to the activity of the organized profession," some theorists wanted autonomous corporatist bodies that "producers" themselves generated and on whom the state be­ stowed legal authority.31 Others looked to the state to create these organs and then gradually relinquish its control as a corporatist esprit replaced class hatred. Producers' self-government or administrative control was the issue. Finally there was the danger that the cor­ poratist state would exacerbate strife among interest groups and sub­ ordinate political democracy and the general welfare to the will of economic interests. Such doctrinal issues were all too visible in the thirties, and many of these were to become live political problems during the Second World War when an attempt was made to build a corporatist regime in France. 104

The thirties Neo-liberal planners

With the corporatist variant in mind we can return to the planistes. For our purposes there were two principal clusters in the thirties who anticipated the future and, after 1935, gained a role in making policy. One was neo-liberal, the other socialist-syndicalist. Where the first embraced planning to perfect capitalism, the second did so to build socialism. One sought to save what was viable of the market system and the other to shrink its dimensions. Neo-liberal planning grew out of theorizing about capitalist pro­ gress. Planning emerged naturally and logically as capitalism evolved toward a stage of higher industrial concentration, collective organiza­ tion, and interdependence. This conception of a planned economy owed much to the rationalization movement of the 1920s. The socialist version of planning also theorized about these developments but sub­ jected them to a syndicalist or Marxist interpretation that assumed the self-destruction of capitalism. With respect to defining structural re­ form, neo-liberal planners stressed a forecasting apparatus, produc­ ers' self-discipline, corporatist networks, and indirect controls. Socialist-syndicalist planners, in contrast, emphasized nationaliza­ tion, expulsion of the capitalist hierarchy, syndicalist or democratic organs, and a strenuous form of economic dirigisme. As a rule of thumb, nationalization distinguished the two schools. Neo-liberal planning attracted mainly business managers, engineers, and ranking civil servants whereas the leftist variety appealed to socialist militants and organized labor. Business planistes also struck a nonpartisan political pose whereas syndicalists and socialists cast planning as an antifascist, electoral strategy. Neo-liberal planners were far fewer in number and less visible than their more radical colleagues, yet they either held or were to gain important positions in the country's economic administration after 1935. For example, Jacques Branger and Jean Coutrot, two progressive industrialists, Alfred Sauvy, the demographer-statistician, and Jean Ullmo, the economist-mathematician, were all to become government advisors in the late thirties. And Robert Gibrat, Robert Loustau, Gérard Bardet, and Auguste Detoeuf were engineers and industri­ alists who after 1940 were to serve at Vichy. These reformers had no institutional focus except for a common educational background at the Ecole Polytechnique, a few avant-garde reviews like the Nouveaux Cahiers or L'Ordre nouveau, and a study group (X-Crise).32 These civic-minded polytechnicians had lost faith in the stabilizing mechanisms of the market or at least in the market's ability to emit 105

Capitalism and the state in modem France signals early enough so that policy could be modified in time to be effective. Some form of long-term planning was in order. Some made serious efforts to learn how the Gosplan worked and even visited the Soviet Union. A few of these polytechnicians held more socialist con­ ceptions of planisme. Jules Moch, whose career weaves in and out of this history, was one. It would serve little purpose to examine the ideas of all these neo­ liberal planistes. In fact, only a few had a highly developed sense of a planned economy at this early date. The views of the most outspoken advocates, like Branger, Coutrot, Detoeuf, and Gibrat, can be dealt with as a unit. "Liberalism is dead," Detoeuf solemnly announced; "it was killed not by human design or by willful governments, but through an irresistible internal evolution."33 Although self-adjusting economic mechanisms continued to function tolerably well in the traditional sectors of the economy - among small businesses, artisans, and pro­ fessionals - they malfunctioned in the modern, corporate sector. Here, for example, according to Detoeuf, producers facing narrowing profit margins refused to shut down and found ways, often helped by their creditors and the government, to continue operations. Detoeuf's analysis identified a crucial element in the evolution of capitalism - its increasingly collective nature. Planistes recognized that economic individualism had given way to concentration, associa­ tion, and interdependence. The individual entrepreneur of classical theory had disappeared in corporate management, employers' as­ sociations, and cartels. The price system had succumbed to giant enterprise and government intervention. Failure to create institutions and policies adapted to this burgeoning collective character of indus­ try had brought disorder and distress. Detoeuf for one could not bear mass unemployment as the cost of modem economic adjustment. And Coutrot unmasked the callousness of liberals: "There is a kind of deep-seated ferocity among these economic anarchists... typical of the recluse who washes his hands of human suffering and accepts and even applauds the operation of impersonal mechanisms that crush others."34 Neo-liberal planistes recognized a new economic duality. For the manufacture of consumer goods the capriciousness of demand made private initiative and the price mechanism indispensable. But for the corporate sector, which produced most vital necessities and where market forces were weakest, planning seemed equally indispensable. When neo-liberals addressed the question of how to manage the corporate sector they recommended a plan prévisionnel, that is, a kind 106

The thirties of budget for the economy and an accompanying statistical agency to gather economic data. The goal was a "transparent economy" that could be managed.35 Manipulation of credit and taxes, obligatory corporatist associations, and long-term, industrywide contracts or codes were the means of management. Some of these methods also seemed applicable to the production of consumer goods. Critics doubted such measures were potent enough to regulate corporate behavior. Jacques Rueff, a known anti-planiste, warned that imple­ menting a plan required Soviet-style secret police. What inspired these neo-liberal planistes was the productivist energy of the late 1920s. The rationalization movement was recast, in this instance, in the guise of planning. Rationalization had identified the problem of overproduction and glutted markets and pointed to­ ward economic management. Planning became a way to extend rationalization from manufacturing processes to the whole economy. To Branger planning, with its engineering esprit, added a "balancing factor" to the economy while the motive of personal gain remained its "motor,"36 Branger believed an "elite of producers" had already dis­ carded a speculative esprit for the newer outlook of calculation and forecasting. The novelty of a planned economy, from this perspective, was the coexistence of two sectors and two outlooks. Branger argued that it was impossible to know whether the mixed economy would destroy capitalism. The question really did not matter. A rationalizing outlook and the profit motive could coexist and overlap; so could a planned and a free sector, controls and automatic laws, reflection and reflex. There was a new equilibrium in the offing, one that was neither market capitalism nor socialism. Industrialists and engineers of this neo-liberal persuasion exhibited a combative disposition. They refused to submit to events, forces, or laws. Planning implies belief in the possibility of forcing history. It requires quick and accurate intervention in the indeterminacy of events motivated solely by the necessity of getting out of difficulty. In short, it is an attitude that no longer believes in laissez-faire or that history makes itself but holds that history can be led.37

Planning required Frenchmen to abandon their passivity before eco­ nomic phenomena. To Branger planning, above all, was a mystique. It would take another decade, however, before neo-liberal planners found a receptive audience and transformed a mystique into an effec­ tive instrument of economic management. 107

Capitalism and the state in modem France Syndicalist-socialist planners

Turning to the syndicalist-socialist cluster of planners, who were the most formidable force for planning in the 1930s, one is struck by their common ancestry. Henri de Man, the Belgian socialist who had wit­ nessed the collapse of the social democratic movement in Germany at the hands of the Nazis, inspired a major rethinking of Marxist strategy. Because of him and his analysis of the German experience the Belgian Labor Party adopted a plan in December 1933, a step that captured the attention of the French left. Contrary, then, to what might be expected, the major outside influence on left-wing planning in France came not from the Soviets, whose Five-Year Plan seemed more* a travesty than a model, but from Marxist revisionists in Bel­ gium and Germany. De Man supplied the principal distinctions for the radical planistes.38 First, he read a political lesson from Hitler's success; all classes struck by the depression needed immediate help to defend them against economic insecurity and a falling standard of living. Unless the middle class received such help it would become a ready clientele for fascism. Only a broad, democratic rally that joined the bulk of the middle class to the working class could halt the advance of fascism. Second, de Man identified finance capital as the common enemy. An oligarchy of bankers held farmers and small businessmen as well as larger manufacturers in tutelage. Third, de Man argued that capitalism was in a regressive stage characterized by the predomi­ nance of finance capital, monopolies, and economic nationalism. He explained that capitalism in this period was incapable of any further distributive reforms without structural change. That is, no more bene­ fits were forthcoming, be they higher wages or cheaper credit, unless the levers of economic power were democratically controlled. What was needed was a mixed economy that stood between capitalism and socialism. For the moment nationalization was to be confined to a few sectors beginning with the credit system. Yet the entire economy was to be subject to "general directives," that is, a plan, and the private sector was to submit to indirect fiscal, monetary, and commercial controls. Fourth, the Belgian Marxist emphasized economic control rather than ownership, power rather than property. In his celebrated formula: "The essence of nationalization is less the transfer of owner­ ship than the transfer of authority; or more exactly the problem of administration takes precedence over that of possession, and changes in the property system are functions of changes in the system of authority required by the managed economy."39 Fifth, a plan, unlike a program, grouped interrelated, sequential measures that formed a 108

The thirties kind of contract between the party and the people; given power. Socialists would quickly implement the plan, stage by stage. By implication de Man's theses rejected eschatological Marxism that waited on the proletarian revolution and seemed powerless be­ fore fascism. He outlined a course of action that progressively created socialism within the framework of capitalism and the nation. De Man's ideas reached France through the Belgian plan and the efforts of several French syndicalist and socialist theorists. De Man's greatest following in France came from the CGT. Only months after the adoption of a plan in Belgium the noncommunist trade unions in France sketched their own version.40 Recall that the "fascist scare" of February 6 made labor receptive to a new antifascist strategy. Initiative came from the powerful union of fonctionnaires, especially from its spokesman Robert Lacoste, and from the CGT's educational institute. To elaborate their scheme Jouhaux established a study committee that included Lacoste, Georges Lefranc, Lucien Laurat, Jean Duret, Achille Dauphin-Meunier, and Francis Delaisi. Lefranc, a Socialist militant and director of the CGT's educational institute, was at the center of left-wing planisme. Delaisi, Duret, and Laurat all taught economics at the institute. Laurat was a former communist who had had firsthand experience with the New Eco­ nomic Policy in the Soviet Union and had earlier devised his own analysis of the coming of the mixed economy.41 Dauphin-Meunier, a bank official, advised on nationalizing credit. One other prominent figure among these planistes was René Belin. Belin was a fonction­ naire whose rising star marked him as Jouhaux's heir apparent. The CGT in September 1935 formally adopted the scheme designed by these planistes and proceeded to launch a major publicity campaign in its behalf.42 This "plan of economic and social renovation" first urged measures to bring immediate relief to the victims of the crisis and then sketched what it called the "means of economic direction."43 Its approach to recovery derived from a theoretical assumption that the crisis was due to underconsumption. That is, lagging purchasing power on the part of the masses was the cause of the economy's troubles. Industry, spurred by the banks, had first heedlessly overextended productive capacity without raising incomes proportionately. Then, when the collapse began, manufacturers compressed wages. The government meanwhile inflicted further cuts through deflation. Recovery de­ pended on "reflation" or expanding internal demand. To this end the plan proposed several remedies, including a forty-hour week without reducing wages in order to distribute available work; a program of rural relief and new agencies to control markets for vital commodities 109

Capitalism and the state in modem France like wheat; and a large public works program that would absorb the unemployed and stimulate recovery. CGT economists, however, did not advance devaluation as a reflationary remedy (because it did not increase the people's purchasing power). Jouhaux, nevertheless, pre­ sented devaluation as inevitable. Besides reflation the crux of the CGT's plan was structural reform that would usher in a mixed and managed economy. Such measures were needed, according to labor's economists, because the crisis was one of structure as well as conjoncture. That is, capitalism was incapa­ ble of reestablishing equilibrium through the price system. Cartels and monopolies jammed the mechanism, and industrialization out­ side Europe coupled with trade barriers blocked access to new mar­ kets. To make matters worse, nervous savers immobilized capital and deepened the crisis. Such paralysis required drastic measures. Only new institutions of management could fix the levels of production, prices, and credit and restore equilibrium to the economy. Manage­ ment also assured the implementation of other reforms. For example, the nationalized sector would supply goods, credit, and services to medium and small business at low enough prices so that they in turn could raise wages and introduce mandated social reforms. "Nationalization of credit" commanded priority. De Man's insis­ tence on this measure found a responsive audience in France where political resentment against the "financial oligarchy," which had al­ legedly forced its will on the republic, had been growing for a decade. The CGT's political strategy was to exploit the antipathy of debtors, especially small business and farmers toward the banks. According to labor economists a centralized, but unregulated, banking system headed by the privately controlled Bank of France had abused its power. Financial institutions had first channeled capital to big pro­ ducers and stimulated the construction of excess capacity; then, once the crisis struck, bankers had extended loans to the state but con­ tinued to neglect the mass of credit-starved private borrowers. Now the multiplication of bank failures and the absence of controls bred massive hoarding. Control over credit, for the CGT, was the key to managing the economy. "Nationalizing credit" meant expelling pri­ vate interests from the regents of the Bank of France and using the central bank to control credit and investment. It also meant setting regulations for private banks, nationalizing those credit institutions whose statutes were already semipublic, and expanding their activi­ ties. Credit would now serve to develop economic activity and to aid the common man rather than to enrich bankers. Converting credit into a public service necessitated parallel nationalizations of key industries. Otherwise, it was held, industri110

The thirties alists might escape control and manipulate the new credit system to their advantage. Political grievances also fueled the critique. The CGT sought substantial nationalization in order to "liberate the state" from the plutocracy and break its resistance to a new economic order. Tripartite councils and indemnification as outlined in the nationalisa­ tion industrialisée scheme of 1919-20 were to be applied to war manu­ factures, mines, energy, and transportation. Given existing "indivi­ dualistic" attitudes, Jouhaux reasoned, more extensive nationalization was impossible. Following de Man's prescription, structural reform transformed economic authority more than it did property relations, As the central organ of economic management, the trade unions proposed an eco­ nomic council constituted much like the existing CNE. This council, by virtue of an annual plan and its general supervision of credit, the public sector, and tariffs, would also indirectly regulate production and prices in the private sector. Rather immodestly the CGT claimed its plan would, besides blunt­ ing fascism and ending the depression, renovate the economy. Reno­ vation meant an economy geared to satisfying human needs rather than human greed. The vision of abundance that seemed so bright to organized labor in 1919 had not dimmed altogether. The undercon­ sumption interpretation of the crisis and the notion of an economy starved of credit suggested that prosperity was within reach as long as structural reform and management were introduced. SaintSimonian optimism survived: The marvelous progress of technology makes a world possible where all of us can live well. But the selfishness of some and the laziness of others have built a wall that bars us access. Let us not wait any longer. Let us not be diverted. The plan should open the breach through which we can pass and move toward the emancipation of labor.44

Nevertheless, it is a distortion to argue, as one historian of planning has, that "the greatest originality of the plan" was a "search to or­ ganize growth."45 In fact fostering expansion was a minor aim of the 1935 plan compared with its countercyclical and antifascist features. Furthermore, the productivist message was not new; it had been clearly articulated by the CGT in 1919-20. Indeed, CGT plans in the 1930s merely elaborated a program designed immediately after the war. Nationalisation industrialisée and a peak economic council had been labor's program for fifteen years. Now, in addition to fulfilling their original function of democratic central management, these proj­ ects were dressed up as "structural reforms," infused with counter­ cyclical goals, and completed by an annual plan and a detailed scheme for nationalizing credit. 111

Capitalism and the state in modem France In some ultimate sense the purpose of planning was not altogether clear to the CGT. One of the plan's architects, Jean Duret, regarded it as syndicalism's new mystique, replacing the general strike, which would serve to gather society's healthy, democratic elements together in a constructive effort.46 Whether or not planning led to socialism in the eyes of labor was uncertain. Jouhaux recognized this ambiguity. "For some the plan appears to be a step toward even grander trans­ formations; for others it represents the maximum changes even given the exceptional seriousness of the times."47 On the left in France planning appealed beyond the ranks of labor to the Socialist Party. A core of young enthusiasts and some older theorists generated a planiste movement within the party. Another circle of reformists who broke with the party in 1933 afterward also adopted planning. In the first instance a handful of young teachers who had known each other in student days formed a study group called Revolution Constructive in 1932.48 Among its founders were Lefranc, Pierre Boivin, and Robert Marjolin. Boivin, an agrégé from the Ecole Normale, was to become a ministerial official under the Popular Front. Marjolin, a young economist, after 1945 was to be a member of Jean Monnet's team. Outside, yet aligned with, the Revo­ lution Constructive circle were several militants who in the 1920s had argued for the compatibility of rationalization and social democracy. Jules Moch, a polytechnidan turned deputy, had debated the virtues of rationalization with Léon Blum and in 1931 prepared a scheme to nationalize the railroads.49 André Philip, a professor of economics, had investigated American production techniques and published a study of de Man in 1928.50 Moch and Philip are central figures in this history. Charles Spinasse, Blum's minister of the economy in 1936, also belongs to this group of planistes. The second Socialist faction, the one that became party dissidents, clustered around the person of Marcel Déat. In their eagerness to push the Socialists toward exercis­ ing governmental power they ended up outside the party and formed the "Neosocialist" movement. All these Socialists shared an impa­ tience with the fatalistic and messianic strategy of the party; all wanted it to assume a more "realistic" stance toward reform.51 Revolution Constructive deserves the most serious treatment be­ cause it held the most fully developed conception of planning and its views corresponded with those of socialist modernizers like Moch and Philip as well. De Man exercised a powerful influence here, espe­ cially through Georges Lefranc. In 1934 Lefranc's circle publicized de Man's theses and invited the Socialist Party to adopt them. The plan of Revolution Constructive was almost identical to that of the CGT; this is hardly surprising because the inspiration was the same, and 112

The thirties Lefranc and others participated in designing both schemes. There was the same analysis of the crisis and the fascist danger; the same demand for rational economic management and nationalization by stages. The latter was likened to harvesting ripe fruit while leaving others to ripen on the branch. Yet, unlike the CGT, which officially remained outside the political arena, these Socialists sought political power and disputed the party's strategy. To them the former élan of socialism had become "a passive or dying religion"; tending the fires of the proletarian revolution was an ineffectual and, in the circum­ stances, a dangerous posture.52 The depression had not benefited socialism: "Capitalism in disarray and decline seems to drag socialism down with it."S3 Witness the failure of social democracy in Germany and Austria. The answer? Assemble the proletariat and the middle classes around a plan. "We shall take power with the plan," they asserted, and "we shall carry out the plan with power."54 Other differences from the CGT's plan were minor. Revolution Constructive said less about the form of nationalization and more about how the free sector could be planned. And the incompetence of the par­ liamentary system in economic affairs came under heavy attack from the young Socialists; They recommended a dose of direct democracy and professional representation as therapy. For the Neosocialists political strategy was also paramount.55 Un­ able to relax the Socialists' stand on nonparticipation in a coalition government, some thirty deputies left the party at the end of 1933 and formed a faction commonly known as the Neosocialists. But the new faction quickly disintegrated, and Déat turned to planning as a way of reviving the staggering movement. The Neosodalists indiscrimi­ nately endorsed existing plans, advanced their own exegesis, and became linked in the public's mind with planning, even though among Socialist partisans they were the least committed. Their schemes were limp reminders of de Man's theses, and at times their recommendations approached quackery.56 Déat himself added corporatist bodies to run the economy. For our purposes neosocialism is important because it handicapped the true Socialist planistes who in 1934”5 were trying to convince the party to adopt their ideas. The nationalist, corporatist, and authoritarian tendencies of the schisma­ tics tainted planning and offended the sensibilities of the party's majority. What was at stake at this juncture, we know in retrospect, was the fate of the interwar planning movement. The left came to power in 1936 with the opportunity of enacting what the planistes sought. But before the electoral coalition known as the Popular Front, which joined the Communist, Socialist, and Radical parties and the M3

Capitalism and the state in modem France reunified labor movement, gained its victory at the polls, it had dis­ carded planning and the substantial nationalizations it required. Why? the historian must ask. Left-wing politics and planning, 1934-1936

In principle, nationalization but not planning had been a plank in the Socialist Party's platform since 1919.57 Yet the center or orthodox ten­ dance of the party, including Blum, had always had serious reser­ vations about this reform. It smacked of the reformism of Millerand and Thomas. Even before 1914 Jules Guesde, the caretaker of Marxist orthodoxy, had condemned it on the grounds that combining the force of the "gendarme state" with that of the "employer state" would be suicidal for the working class. Early in 1934, facing a surge of interest within the French party, Blum drew the line of battle with the planistes. De Man's plan, in the French leader's eyes, failed to create socialism in the nationalized sector and consolidated capitalism in the private sector. Nationalization was not socialization, he noted; merely substituting state control for private ownership did not elimi­ nate wage labor or surplus value. The worker remained subject to "capitalist law," for example, indemnification of expropriated own­ ers. And what de Man proposed for the private sector might even slow the process of socializing the rest of the economy. 'The impor­ tant point for me," Blum wrote, "is that the survival of a substantial private sector... is conceived, not as a passage, or transition, or ad­ vance, but as a relatively stable and durable condition."58 Instead of prescribing for "the gradual shrinkage and ultimate elimination" of the free sector, the plan "removes it from the process of capitalist evolution which, through steady concentration, readies it for so­ cialization." What lay behind Blum's reasoning can only be conjec­ tured. There was a certain loyalty to Marxist economics that did not anticipate an intermediate stage between capitalism and socialism and made collectivization of the means of production rather than economic direction its goal. The schism with the Neosocialists months earlier must also have stiffened his resolve against planning. The need to uphold a revolutionary line with respect to the orthodox Guesdists like Paul Faure and the Communists may also have con­ tributed. Whatever the case, the Socialist leadership rejected planisme. A few months later, in May 1934, a Socialist Party congress debated the issue. By then the February riots had initiated a polarization that led to a rally of the left. Speaking for the planistes were Moch, Philip, and Boivin; Blum and Faure opposed them. Debate centered on plan114

The thirties ning as a tactic, as a way for the left to gain and use power, and ignored the substance of the theory. Was a plan the best way to galvanize public support? Was it wise to criticize the parliamentary system when the fascists were attacking it? Should the party commit itself in advance to specific reforms, or should it act according to circumstances in exercising the dictatorship of the proletariat? Except for the reservations previously expressed by Blum and echoed by Faure, no one took issue with the content of a plan. Rather, Blum pointed out that nationalization of key industries and credit was al­ ready part of the party's program and nothing could be gained from further elucidation. (In fact, the 1933 program contained only a few general phrases about ''eliminating big capitalist monopolies" and placing their management in the hands of workers and consumers under state control.) The heaviest attack leveled against the planistes was tactical; they would wrongly commit the party in advance, for example, by giving priority to nationalizing credit. Faure argued: "Be­ fore any plan we must, in my humble opinion, first conquer power, that is, socialism must completely seize power... I am convinced that when socialists possess power they will not bother with what you have settled on in advance. Socialism at that time will be achieved by any means."59 In the end the congress decided that "socialization" had no chance of success until "socialism held power"; and once in power the party "dominated by the sentiment of its revolutionary mission could not allow itself to be restrained or limited by any plan or program."60 Thus the Socialist Party in 1934, afraid of further divisiveness and eager to reassert its traditional doctrine in simple, direct formulas, set down the young generation of planners. Pleas that the party needed to prepare for power and to combat fascism with a new appeal went unheeded. Despite the negative outcome of the congress the Socialist Party did not take an unequivocal stand against planning. Though Blum had expressed his misgivings about a mixed economy, at least nationalization was still official doctrine. The party intended merely to make no commitment about the scope or substance of this measure in advance. What the party did was to reject de Man's broader con­ ception of nationalization, the plan, as an electoral tactic. As Blum warned, "the public is faced with such a variety and sample of plans that when you present yours you will find the boutique full and the shopper already a bit discouraged."61 A year later, with negotiations under way to frame a Popular Front program, Blum endorsed nationalization and economic management more openly without, however, accepting the intermediate stage of a mixed economy or mentioning planning per se.62 Socialist doctrine «5

Capitalism and the state in modem France was supple. Blum made two related distinctions, separating the "conquest" from the "exercise" of power and socialization from nationalization. Socialization, which transformed the means of pro­ duction and exchange into "social property," presupposed the revo­ lutionary conquest or total possession of power. It involved no indem­ nification of owners. Nationalization, which merely removed an industry from the control of the market and made it a public service, presupposed only a parliamentary majority for a Socialist govern­ ment and the support of public opinion. It necessarily provided some indemnification because the capitalist framework remained intact. Blum set aside socialization for the time being and cited the advan­ tages of nationalization. It was first of all a measure of republican defense; that is, nationalization figured in the struggle against fascism because it assisted countercyclical measures and "emptied the war chest of fascism" (the oligarchy's political fund).63 Nationalization also improved the condition of labor; work in a collective enterprise was more secure, better paid, and more dignified. There was no notion of autonomy or workers' control, however, as Blum made no distinction between nationalization and étatisation. He also took a step toward endorsing a managed economy: Management of nationalized industries and credit in order to guide produc­ tion and develop consumption is commonly called an économie dirigée . . . I do not believe that the capitalist economy, even managed and directed by public authorities could balance production and consumption. . . [or] eliminate crises. . . Neither management nor direction will bring about a socialist trans­ formation of the economy, that is, the revolution. But I believe that by taking in hand the control of key industries and credit the national collectivity can govern the capitalist economy in such a way as to relieve misery, attenuate injustice, and establish within chaos a modicum of order and clarity.64

What Blum accomplished in making such distinctions was to detach nationalization from its ties with de Man's revisionism, that is, plan­ ning, and also to disconnect it from its more sectarian and radical form of socialization. It became more palatable to a wider audience of potential voters, including the middle class and farmers. Nationaliza­ tion, now doctrinally wholesome and cloaked in antifascism, became an important element of the party's program as the rassemblement populaire gained cohesion in 1935-6. As the promise of a broad left-wing coalition grew so did working class unity. In March 1936 the major trade union federations, the CGT and the CGTU, after a decade and a half of division assembled for a special "unity congress." Debate focused on the plan as a basis for solidarity. The Communists, who controlled the CGTU, had gone on record as anti-planistes. Maurice Thorez, the party's leader, had ac116

The thirties cused the CGT of wanting to prattle about economic renovation in­ stead of pressing for satisfaction of immediate grievances.65 At the congress Jouhaux's team hoped to get the combined trade union fed­ erations to endorse the CGT's plan even though the Popular Front coalition, the previous January, had not made it part of their program. Jouhaux, Lacoste, Belin, and other planistes argued that the Popular Front program was too timid; the causes of the crisis had to be ad­ dressed. Take power away from the capitalists, and democratically control at least part of the economy, they urged. Nationalizing credit would have more impact on everyone's lives than merely removing private interests from the Bank of France as the Popular Front wanted. While stressing the need for "profound reforms," Lacoste also insisted that the plan and the Popular Front's program were compatible.66 Without structural reform there was no assurance that other demands of the workingman would be met. Adroitly, the ex-CGTU spokesmen tried to make the issue appear a matter of choosing between the plan and the program of the Popular Front.67 With an electoral victory in the offing, it would be unlikely that labor could reject the latter agreement. Priority, the Communist delegates argued, must go to meeting workers' grievances as specified in the program, such as reducing the workweek and raising wages. Unity had been built around the program, it was argued, but not the plan. Although the Communists found certain flaws in the content of the plan, such as drawing labor into unseemly class collab­ oration and indemnifying owners, like the Socialists they did not dwell on the merits or demerits of the scheme. Their objections were basically that the plan was a less effective rallying point for the ras­ semblement and that it was "unrealizable." Planning and nationaliza­ tion must follow, not precede, the revolution. They would work as they did in the Soviet Union, Communist labor insisted, only when the proletariat held power - not while the state was still in the hands of capitalists. Attempting nationalization within the capitalist cadre would only mislead and disappoint workers. The Communists did not relax their opposition to this measure until 1938.68 Revolutionary syndicalists, both inside and outside the CGT, joined the Com­ munists in opposing planning on the grounds that it delayed the end of capitalism and fouled syndical purity by making unions part of the state apparatus.69 In the end the joint trade union congress of 1936 avoided choosing between the Popular Front and the plan. The delegates resolved first to endorse the demands specified in the electoral coalition's program and then to "associate themselves closely" with the structural reforms of the plan.70 But the ex-CGTU federations had firmly registered their 11 7

Capitalism and the state in modem France reservations about the CGT's plan and secured priority for the coali­ tion's program. Afterward a Communist spokesman interpreted the resolution to mean that the plan required, as a precondition, the dictatorship of the proletariat.71 During 1935 and early 1936 the major left-wing parties and the trade unions formulated an electoral program. Only the CGT, however, stood firmly behind planning. The Socialists supported these non­ communist syndicalists only with respect to asking for the nationali­ zation of key industries and credit.72 But both the Communists and the Radicals objected to such proposals. Despite their ritualistic en­ dorsement of nationalization and dirigisme the Radicals pulled back when faced with action. They had entered the coalition for their polit­ ical health and not out of any enthusiasm for the economic program of the CGT or the Socialists.73 In the name of economic freedom and the security of the franc the Radicals joined the Communists in oppo­ sition. Behind the Communists' resistance lay the conviction that fas­ cism was the principal enemy; they held that the mass of potential antifascist voters did not see the utility of nationalization and con­ fused such takeovers with the socialist revolution that most did not want. Rather paradoxically, then, the formation of what became a victorious left-wing alliance buried planisme. What survived of struc­ tured reform in the Popular Front platform was only a catchy slogan that promised to make the Banque de France the "Banque de la France" and commitments to establish a national wheat office and to nationalize war industries - for pacifist, not economic, reasons.74 The parties' joint economic program focused on terminating deflation and combating the crisis with reflation, but both devaluation and eco­ nomic controls were abandoned. The French voters gave the rassemblement populaire a solid par­ liamentary majority in the spring of 1936. Blum, as leader of the largest coalition party, became premier. He interpreted the victory as a vote for the coalition's program, and he adhered (except for devalu­ ation) to his mandate. Despite some dramatic changes in the repub­ lic's economic policy under Blum's ministry, the key elements of planning were not to appear. In retrospect, the planners of the 1930s, like the corporatists, lacked a political or social base. Only certain noncommunist trade unions, in particular the fonctionnaires, were ardent advocates. No major politi­ cal party adopted their cause. Moderate parties, including the Radi­ cals, found systematic economic management too perilous a course. On the left the Communists refused to jeopardize the antifascist rally and could conceive of planning only on the Soviet model. The So­ cialists, led by Blum, clouded planning with complex doctrinal de118

The thirties bate, emphasized the deficiencies of the mixed economy, and ended by defending only the principle of nationalization. They too believed planning was bad politics for the left. Outside the left the planiste movement remained at the level of neo-liberal study groups largely composed of industrialists and engineers. In such bourgeois circles structural overhaul was the preference only of a small avant-garde. Planning, in short, failed to become a substantial political movement despite, or perhaps because of, its fadlike quality. The Popular Front and economic reform

Our concern with the Popular Front government must lie with struc­ tural reform rather than with an analysis of its countercyclical policies. Given the rebuffs dealt the planistes, it should be no surprise that the left's achievements in introducing such reforms were meager. The new Socialist premier intended to adhere to his electoral man­ date, but events forced more intervention into economic affairs than he had promised. In anticipation of victory a massive wave of strikes greeted the Popular Front in the spring of 1936. Settlement of labor's grievances - for example, wage increases - required Blum's arbitra­ tion and hurried parliament into passing a flurry of social legislation including paid vacations and collective bargaining. Then Hitler's ex­ tension of military service forced the Socialist leader to sponsor a rearmament program. And in spite of campaign promises Blum could not avoid devaluation. He waited till September 1936, then carried out the dreaded "monetary manipulation," though he did not impose controls over foreign exchange. Still, Blum's interventions were rela­ tively mild, and when it came to structural reform there was little more. Only the Bank of France, some armaments manufactures, the state's economic administration, and some farm commodities were affected. Revision of the statutes governing the central bank had become genuinely popular by 1936.75 The bank had infuriated the left when it refused to help the Cartel des Gauches defend the franc in 1925-6. Left-wing writers had charted the family alliances of the bank's re­ gents and propagated the myth of the 200 families (the largest shareholders who chose the regents). After 1930 the bank had done little to attenuate hardship. It extended privileged credit to big firms but disdained small business and farmers and refused to help trou­ bled local banks. It competed directly with private banks, which led to involvement in at least one major bank failure. As a champion of deflation the central bank pursued a tight money policy and used its secret fund to influence the press. Above all, for a central bank to be 119

Capitalism and the state in modem France in the hands of a hereditary oligarchy that shut out other interests and on occasion forced its will on the government seemed anachronistic and antidemocratic. Yet beyond removing the regents and the 200 families from control there was no consensus about what should be done about the bank's operations or policies. Blum and his Socialist finance minister Vincent Auriol justified reorganization on the grounds that credit policy should serve the national economy; there should be an end to the bank's unrepresenta­ tive management and its discriminatory practices. But Blum and Auriol judged it impolitic to nationalize the bank given the opposition of the Radicals, who feared allowing the government to dictate mone­ tary policy, and the Communists.76 Instead the two Socialist leaders confined themselves to overhauling the bank's administration. They sponsored legislation that replaced the regents with a new council and an executive heavily weighted in the state's favor and democ­ ratized the shareholders' assembly. The government now controlled the bank; the appointed governors enjoyed considerable indepen­ dence; and a range of interests gained a voice. Yet the Blum-Auriol team tabled further action on bringing the private banking commu­ nity under tighter regulation or modifying the central bank's oper­ ations, for example, allowing "open market" buying and selling of securities; proscribing competition with private banks; or establishing an agency to monitor the money and credit markets. In the end the Socialists took no further steps, and the reorganized bank changed its policies very little; for example, in 1936-8 discount policy was not liberalized. The Popular Front missed an opportunity to rejuvenate monetary policy. Nonetheless, within the next decade almost all the reforms recommended in 1936, including nationalization, were adopted. The only nationalization of the time touched the manufacture of armaments.77 Edouard Daladier, the Radical defense minister, pre­ sented the government's bill aimed at eliminating "profiteering" among private arms monopolies. Regulation of the international traf­ fic in weapons also demonstrated the left's traditional commitment to disarmament. And nationalization strengthened national defense by centralizing arms production and improving government control over mobilization. Daladier wanted, nevertheless, to limit the scope and character of nationalization as much as possible. In the end only a part of the industry fell under state control. Still, this measure angered and panicked the business community. The Schneider firm at Creusot, for example, out of spite walled off the nationalized arms works from the rest of the plant. Another long-standing antagonist of the left besides the "mer120

The thirties chants of death" and the 200 families was the top rank of the state administration, especially officials at the Ministry of Finance like the inspectors of finance. The inspectors, like the other administrative grands corps, were attacked as a closed preserve of the Parisian upper class and a bulwark of economic conservatism.78 The finance ministry reputedly used its tutelle over other departments to enforce hidebound policies. The left also shared, along with many others, misgivings about the lack of coherence and expertise in the making of public economic policy. Blum's cabinet made a timid effort at opening recruitment to the grands corps and proposed the creation of an Ecole Nationale d'Administration as a replacement for the private Ecole Libre. The latter's defenders in parliament and the administration, however, insisted the "private monopoly" was a bastion of the liberal republic and managed to stall the bill in committee.79 But a stronger challenge was leveled at the rue de Rivoli. An undersecretary of state for the economy had existed since 1930, but he did little more than conciliate departmental rivalries for the premier. In 1936 Blum created a minister of national economy (MEN) in order to unify and revitalize policy.80 The new minister had the authority to countersign all de­ crees bearing on the economy and presided over a new interministerial economic committee. Blum also wanted the MEN to monitor eco­ nomic indexes such as prices and help protect labor's gains. The Socialist Charles Spinasse, a planiste, headed the new department. He appointed two neo-liberal planners, Branger and Coutrot, to his staff, and Alfred Sauvy joined Spinasse when the administration's statistical agency was attached to the MEN. Spinasse and his fellow planistes, however, achieved virtually nothing in the way of regulat­ ing or stimulating the economy. Sauvy later referred to Spinasse as "a minister without a ministry."81 He had neither the personnel nor the power to overcome the independence of other ministries. And his countersigning authority, according to insiders, only brought Spinasse into "pointless conflicts" with the Ministry of Finance, which already exercised this power in practice.82 Blum's successor, the Chautemps government, virtually destroyed the new ministry in 1937. The left's hope for a vigorous, autonomous, supervisory minis­ try vanished when Chautemps reduced it to a secretariat and placed it under the wing of the rue de Rivoli. Blum's creation ended up collect­ ing economic data and monitoring price levels. The crucial question for this analysis is why the Blum government was so prudent in undertaking structural reform. The answer com­ prises a half-dozen factors. First, Blum scrupulously confined his ac­ tions to his coalition's electoral program. He explained that his cabinet's charge was to extract as much order, security, welfare, and 121

Capitalism and the state in modem France justice as possible from the capitalist system for the mass of workers and producers.83 Blum disclaimed any mandate to introduce so­ cialism or the CGT's plan. That issue, as we have seen, had been settled among the left before he became premier. Second, whatever will existed to interpret the mandate broadly encountered resistance from within the coalition as well as from without. The Radicals, well entrenched in the Senate, insisted on restraint whereas the Com­ munists wanted no economic experiments that might disconnect the antifascist majority. Third, Blum's political strategy hamstrung re­ form. Although the government gave priority to satisfying workingclass grievances, it also wanted to retain its middle-class allies and win the confidence of industrialists and investors. Recovery de­ pended on the cooperation of those who distrusted the Popular Front. Fourth, the Socialist premier inherited liabilities. Budgetary deficits, a troubled treasury, and a negative trade balance constrained more aggressive measures. Fifth, Blum desired to be "democratic," to avoid controls - the "fascist way." He would do nothing to prepare the way for a nationalist or authoritarian regime in France. Controls on the domestic economy or on foreign trade seemed a treacherous route in 1936. A democratic government had to guard freedom, eco­ nomic and political, and preserve an internationalist posture at a time when dictatorship and autarchy threatened Europe. Blum disap­ proved of controls that might cut France off from the economies of democratic Western nations.84 A final constraint came from unfore­ seen events. First the outbreak of serious labor disorder and then international danger, in the form of German rearmament and the beginning of the Spanish Civil War (July 1936), distracted and divided Blum's coalition. Structural reform, never a high priority of the left, was overtaken and overwhelmed by events. How did the planners respond to Blum's prudence? As we have seen, there were several partisans within the government. At first the planistes scuttled any reference to the plan and withheld criticism despite misgiving about the direction of policy. The bold public works program the CGT desired, for example, turned out to be no different in size or composition from those of preceding conservative gov­ ernments.85 Once the Blum ministry faltered, however, Jouhaux res­ urrected the planiste strategy. He denounced the trusts for sabotag­ ing recovery, insisted that distributive reforms were insufficient, and criticized the absence of price and exchange controls. For his part André Philip traced the troubles of the government back to the faults of the Popular Front program.86 After Blum's resignation the CGT pressed the plan on his successor in order to save labor's earlier gains. But Chautemps and his fellow Radical finance minister, Georges 122

The thirties Bonnet, were not about to undertake in 1937 what Blum had been reluctant to attempt. By this time the CGT-CGTU rivalry had reap­ peared; the patronat had reorganized its national federation and launched a counterattack against labor; and disillusionment with the performance of the Popular Front had set in. Planistes, now that further structural reform was unlikely, began arguing among them­ selves about alternative policies.87 In effect the Popular Front had halted innovation in the late sum­ mer of 1936 and assumed a defensive strategy. This turnabout was due to continued budgetary deficits; the flight of private capital and gold; renewed labor unrest; the resistance of industry to social legisla­ tion; and a sluggish economy. By February 1937 Blum called for a "pause" in order to consolidate the coalition's gains. He announced his intention of holding the line on further social expenditures, shor­ ing up public credit, and winning the confidence of investors and savers. Blum canceled public works projects and created a committee of experts to supervise an exchange stabilization fund. Despite such retrenchment capital remained scarce for the treasury and the econ­ omy; tax revenues fell short; and the trade deficit mounted. In des­ peration Blum requested decree powers from parliament to deal with the financial crisis in a more strenuous manner. When the Senate reneged, Blum resigned (June 1937). There is no place in this history to settle the ongoing and lively controversy over the failure of Blum's economic policy. Even now the basic data, much less their interpretation, are uncertain. In essence there was no real recovery, whether one looks to production levels, unemployment, trade, or prices.88 The Popular Front's therapy was useless. Debate centers on three issues. There is the question of why the forty-hour week inadvertently curbed production. Were there miscalculations about the length of the existing workweek, about the nature of the unemployed, and about the reform's impact on costs? Was the measure introduced too abruptly and too rigidly? A second question focuses on the devaluation. Was it too little, too late, and should it have included exchange controls? Then there is debate over the viability of reflation and the purchasing power theory. Was it simplistic to think that wage increases, rising employment, and pub­ lic works would expand demand and launch recovery? Did not these measures serve rather to raise costs, blunt the stimulus of devalua­ tion, and fuel inflation? Critics contend that Blum's team lacked eco­ nomic expertise and the relevant economic data.89 They supposedly also misunderstood the capitalist system; it was naive to believe busi­ ness would make an act of faith and construe higher wages as a promise of rising consumer demand rather than an affliction of higher 123

Capitalism and the state in modem France costs. Though these charges have merit, on balance the apologists make a stronger case. They argue that considering the circumstances of 1936 and the state of economic theory the government did as well as could be expected and certainly better than its predecessors.90 Given the mood of the working class, the forty-hour week could not be avoided just as Hitler forced an expensive armament program on the government. Nor did Blum have the time to adjust policy as, for example. President Roosevelt did. Reflation has been defended as a feasible way to stimulate immediate recovery. There is also reason to doubt that better theory or more accurate data would have mattered given the government's basic antifascist political strategy. One critique that requires a judgment here is whether structural reform, as advocated by the planistes, would have made any dif­ ference. Probably it would have. Surely nationalization and controls would have facilitated measures like changing monetary policy, ap­ plying social reforms, and expediting plant modernization as they did after 1945. Blum's error, as Joel Colton has pointed out, was to have assumed that the country's economic machinery was up to date and could be restarted easily by correcting the distribution of income.91 But productive and credit facilities and business attitudes were, as we know, short of the mark. Whatever the case, by the end of Blum's tenure the economy was not on the way to recovery. Camille Chautemps, a Radical, followed Blum as premier in a pair of governments during 1937 and early 1938 based on the Popular Front legislative majority. Chautemps reversed Blum's policy of refla­ tion, frustrated any hope for structural reform, and sank the republic in inertia. The only exception was the railway act of 1937, which, following interwar practice, created a mixed company, the Société Nationale des Chemins de Fer Français (SNCF).92 Léon Blum formed a second cabinet in the spring of 1938, which failed to survive a month. Nonetheless, this ministry was noteworthy for its intentions. On his return to power Blum was more expansionist and more resolutely dirigiste than in 1936. By this time the economy was approaching a war footing. Blum also took advice from unor­ thodox experts in formulating his program. Georges Boris, a socialist journalist and financial expert who knew Keynesian theory, and Pierre Mendès-France, a dissident Radical, applied the Keynesian notions of spending one's way out of a depression and closing the monetary circuit.93 In this case spending was for rearmament. The entire economy, moreover, was to be "irrigated" with an expansion of credit and money. To those who charged him with courting infla­ tion, Blum argued that any policy had drawbacks and, given the situation, it would be worse not to spend. To insure that the mone124

The thirties tary circuit was closed and that new monetary and credit instruments would not escape abroad, he urged steps to control imports and for­ eign exchange. Boris spoke of everyone's accepting a measure of "discipline." The wealthy were to pay a special tax for national de­ fense, and labor was to work longer than the forty-hour week in defense plants. The conservative press called the program "pure fi­ nancial Hitlerism," and the center and right of parliament objected to its dirigiste and inflationary character. Once again the Senate refused Blum full powers and rejected his novel strategy. As of May 1938 there was little indication that recovery was yet underway. Edouard Daladier, then leader of the anti-Popular Front faction within the Radical Party, took office, and the rassemblement populaire of the midthirties became irrelevant as international dangers overshadowed domestic economics. The economy on the eve of war

Daladier's ministry proved to be the last in peacetime. The premier made national defense, that is, a strong military establishment backed by a sound currency and a vigorous economy, his primary assign­ ment. With Hitler stepping up the pace of German expansion, first in Austria, then in Czechoslovakia, the French republic had to give priority to rearmament. Parliament conferred temporary decree­ making authority on Daladier, who already enjoyed the reputation of a strong man. Daladier wanted to get the French "back to work," but now economic recovery was less an end in itself than a means of national survival. Politically the center of gravity shifted away from the Popular Front toward the center and right; the Socialists and Communists stayed outside his cabinet. Indeed, Daladier became ar­ dently anticommunist as war neared. For the final year of the ministry's prewar tenure (November 1938September 1939) Paul Reynaud, a moderate, ran economic policy from the finance ministry. The Daladier-Reynaud team discarded the purchasing-power strategy of 1936 and ended by provoking or­ ganized labor into a general strike. In a radio broadcast of November 1938 Reynaud stated that government in a capitalist economy had to respect the laws of profit, free enterprise, and competition.94 Liberalism was back in style. Reynaud's problem was to find a way to revive production, spend billions on arms, and yet stabilize the cur­ rency. His strategy was to stimulate investment and production and attract capital back to France through market incentives. The lure of profits would "repatriate" capital, spur investment, restore confi­ dence in the franc, and raise tax receipts. The government would do 125

Capitalism and the state in modem France its part by cutting nonmilitary spending and freeing the "shackles" on enterprise, in particular removing the constraint placed on produc­ tion by the forty-hour week. It was a blatant appeal to win the confi­ dence of the business and financial community. Reynaud followed his broadcast with a swarm of decrees; more followed in the spring of 1939. They offered incentives, rather than controls, for investment in new plant, higher output, and the return of capital and offered ways to circumvent the forty-hour week. There was also retrenchment. Little, however, occurred in the way of struc­ tural reform.95 Parliament adopted stand-by legislation in case of war, and once hostilities began the government added an armaments ministry. The* left criticized the Daladier-Reynaud government for making the arms buildup come at the expense of everyone except big busi­ ness. CGT planistes scored the government's "liberal plan," which encouraged speculation, diminished consumption, and sabotaged the forty-hour week. Labor planners urged controls on foreign exchange and prices and affirmed the timeliness of extensive nationalization and planning.96 In desperation labor organized what proved to be an abortive general strike in defense of the forty-hour week. Reynaud's policies pleased business as much as they offended labor. Employers in industries old and new as well as the nationalized sector displayed a more vigorous entrepreneurial behavior in 1938-9 and in general were more assertive.97 The patronat coupled this re­ vival in many cases, as, for example, at the Renault plant, with a guerrilla war against the CGT, collective bargaining, and other gains made by labor during the Popular Front era. Whatever the cost to labor, Reynaud's neo-liberal experiment worked. The eight-year slump finally ended. Whether one measures industrial output, prices, employment, trade, monetary stability, or the return of gold and capital, the indexes were all favorable in the last year of peacetime.98Just how policy might have affected economic activity is, as usual, not easy to know. But the evidence for recovery is overwhelming. Somehow a combination of spending on armaments, entrepreneurial vigor, relaxation of the forty-hour week, market in­ centives, and a favorable international economic conjuncture brought results. Despite Reynaud's appeals to the free enterprise system the repub­ lic in its last days did not restore an earlier liberal mode of relations between the state and capitalism. A mixed economy had taken root since 1918, and there was no going back. Neo-liberalism, which was to come into its own after 1945, already aptly describes public-private economic relations on the eve of the war. There was a mélange of 126

The thirties market forces and state interventionism, especially state promotion of economic expansion. Reynaud's team at the finance ministry reflected what was happening. Alongside Jacques Rueff, an orthodox liberal at the Treasury, there were dirigiste officials like Michel Debré and Yves Bouthillier as well as economists associated with planning like Jean Ullmo, Alfred Sauvy, and Claude Gruson. Debré, who has an impor­ tant part in our history, at the ripe age of twenty-four wrote: The state must take account of circumstances that require it to assume general direction of the nation's economic life. The state must be alive to its new mission and conceive its activity scientifically rather than acting purely ac­ cording to politics. . . The problem is no longer to decide whether or not the French economy will be managed; the only choice is between shilly-shallying, letting numerous pilots each follow their own course, and firm direction provided by one, good pilot."

Debré recommended creating a powerful MEN to take charge of pub­ lic policy. Similarly, the government's minister of commerce, a Radi­ cal, addressed his party on the virtues of an économie orientée and state promotion of new economic activities.100 Even Reynaud himself an­ nounced that "the state is responsible for the general orientation of the economy."101 Later he denied that his policies could be described as laissez-faire; they were more "a guided economy within the framework of liberty."102 "Guided" to Reynaud, unlike Debré, meant promotion more than it did control. The motive for this departure lay, of course, with the need to put the economy on a war footing. A kind of peacetime mobilization in 1938-9 brought the neo-liberal practice of stimulating production and coordinating government intervention. On the eve of the Second World War many Frenchmen including certain government officials had come to accept the neo-liberal hybrid as the shape of the nation's future political economy.

127

5 The N ational R evolution at Vichy, 1940-1944: survival and renovation

Vichy and the resistance can be treated as parallel, yet antagonistic, historical forces. In their common rejection of the Third Republic both led France toward a new economic configuration. The two faces of France during the Second World War represent two congeries of prewar dissenters. The first supported the wartime regime at Vichy, the other, unwilling to accept German hegemony, chose to continue the fight after the armistice of June 1940. Even though the two rival camps were literally to murder one another before the war ended, they worked independently to set their nation on a new course. Stan­ ley Hoffmann first suggested this analysis of the war, but he de­ scribed a much broader scale of national overhaul than political econ­ omy.1 He pictured two groups of dissenters exasperated with the political, social, economic, and moral state of their country. The flabby republic, the class hatreds, and the palpable aura of decadence of the 1930s had turned them to dissidence. Liberal capitalism also stood condemned for its disorganization and wastefulness, its partial­ ity for les gros, the bitter character of industrial relations, its celebra­ tion of selfishness, and its flaccid performance. Vichy and the resis­ tance articulated reforms that, despite obvious differences, had much in common. Both sought a nationalist revival, social reconciliation, moral rehabilitation, a planned and more just economy, and a dynamic state. The way the men of Vichy and the resistance com­ bined to uproot old habits and attitudes and design a new economic order is the subject of this and the following chapter. The quick and total defeat of French armed forces by Germany in the spring of 1940 seemed to confirm the worst fears about the Third Republic. Defeat functioned as a psychological avalanche that buried prewar certainties and created a new landscape on which reformers could build anew. Pierre Laval captured the magnitude of the loss by repeating over and over in 1940, "We are not beaten... we are over­ whelmed."2 That is, for the foreseeable future the European conti­ nent was going to be dominated by Nazi Germany. The British could not hold out long by themselves, the United States was neutral, and 128

The National Revolution at Vichy the Soviet Union was Hitler's ally. While Hitler completed his annihi­ lation of Great Britain he preferred to allow the French a certain measure of self-rule rather than assume the task of directly adminis­ tering the country. German troops occupied somewhat more than the northern half of the country, the occupied zone, and the invaders proceeded to disarm the vanquished and seize their military equip­ ment. Meanwhile, at Vichy in the unoccupied zone the National As­ sembly of the republic in July voted to give Marshal Pétain full pow­ ers. He gathered about him an assortment of officers, officials, ex­ perts, politicians, journalists, clerics, and others to create the Etat Français or the Vichy regime. Pétain, a military hero of another war whose reputation impressed even Hitler, appeared to be a refuge for a stunned and helpless nation. When Pétain announced the armistice he also declared his inten­ tion of launching a national redressement or, as it came to be called, a National Revolution.3 The armistice period could be a time of transi­ tion. The assumption was that the Germans would rule the continent and Hitler would allow the French enough independence to trans­ form their institutions. Collaboration with the victor was necessary for survival. Within the framework of collaboration Vichy statesmen decided on a double strategy of defending France from the con­ queror's will and remaking domestic institutions. In a sense the twin aims were complementary because internal overhaul enabled the na­ tion to win a more advantageous position in Hitler's Europe. In theory the armistice granted the Etat Français many of the attributes of sovereignty including authority over an unoccupied zone and the colonies. Except for a few issues like the Jews, the occupiers were indifferent to whatever internal programs the government might undertake. The Nazi model had little impact on the character of the National Revolution. In practice Vichy had only the authority the Germans permitted, and reform was tolerable only if it did not inter­ fere with Nazi war aims. The victors commanded; they demanded whatever they wanted, and as the war continued they became in­ creasingly imperious. The war itself also imposed constraints, espe­ cially on economic reform. The Etat Français had more the appear­ ance than the substance of sovereignty, and its autonomy shrank with time. Still, in 1940 the French people welcomed Pétain's promise of protection and reform. Even those who spoke out against the ar­ mistice and chose the path of resistance at first withheld judgment on the National Revolution. The opportunity for reform, however, proved fleeting. One Vichyite best described the dilemma by recalling the fact that '^ o u can't rebuild a house when it's on fire."4 Innovation in economic affairs was a prominent feature of the Na129

Capitalism and the state in modem France tional Revolution. It reflected the strategy of protection and overhaul. If the French productive plant were to remain intact, it would have to meet the exigencies of a long period of severe shortages and German exactions. Economic survival thus became the dominant motive of Vichy's political economy. A secondary aim was launching structural change. My analysis of Vichy economics will explore first those pro­ grams introduced to save the economy from total collapse and Ger­ man domination. Here the industrial control system was paramount. Second, I shall treat those projects that promised long-range renova­ tion. In this context the most relevant programs were the Labor Char­ ter and economic planning. This distinction should not conceal the fact that most Vichy economic reforms contained elements of both self-defense and overhaul. Our attention will be directed to industrial and commercial affairs, and only passing reference will be made to the rest of the regime's program. Agriculture, given the wartime gov­ ernment's interest in reestablishing the preeminence of the family farm and rural virtues, is important but it has been closely studied by others.5 Before we examine the political economy of the National Revolu­ tion, a word is necessary about the heterogeneity of the men at Vichy. Economic policy, like almost everything else among the pétainistes, was the source of acrimonious debate. This was due in part to the life-and-death quality of certain issues such as rationing. It was, how­ ever, mostly because of the fact that the hotels at Vichy, the "offices" of the wartime rulers, housed a wide range of prewar dissidents, each harboring his own scheme for redrawing the country's institutional map. This variety may be reduced to a few broad categories. There were the doctrinaire corporatists like Colonel Cèbe and Jules Verger, a small electrical manufacturer, who were close to the marshal. Then there were traditionalists or conservatives, many inspired by Catholic teachings, who sought a return to a moral economy, to a more humane community free of the pecuniary selfishness of capitalism. Charles Maurras was an extreme example of both traditionalism and corporatism. The whole economic outlook at Vichy was infused with right-wing themes such as the land, discipline, tradition, the profes­ sion, virility, morality, and, above all, order. The modernizers also emerged within the Etat Français and soon occupied the principal ministries for economic affairs. Interwar modernizing groups like the Redressement Français, X-Crise, the Nouveaux Cahiers, and the planistes placed leaders in Vichy's ranks.6 Former business managers and ranking civil servants were prominent, men like Yves Bouthillier, Pierre Pucheu, and François Lehideux. The lure of power also at­ tracted a few anticommunist syndicalists like René Belin and the 130

The National Revolution at Vichy former neosocialist Marcel Déat. One could even identify an unrepen­ tant liberal like Louis Baudin. Small wonder Vichy presented no co­ herent economic program. The economist Charles Rist parodied Maurrasian integral nationalism when he labeled Vichy policy "inte­ gral confusionism."7 The head of state was a conservative with corporatist tendencies whose economic views were simplistic and eclectic. In his addresses to the nation in the fall of 1940 Pétain explained how for the last twenty years the trusts and syndicalist demagogues had waged a civil war, wrecked the state, and brought on the defeat.8 A phobia about trusts and sociétés anonymes permeated the National Revolution as it did the resistance.9 To Pétain liberal capitalism and socialism were foreign imports. It was "illogical" for socialists to contend that a disin­ tegrative force like the class struggle was progressive. Nor could lib­ erals contend any longer that a free market brought freedom. The trusts had broken the mainspring and regulator of the liberal mechanism, competition, and installed "the spirit of lucre and specu­ lation." The depression bore witness to the "degradation of economic liberalism." Pétain concluded: Faced with the universal failure of the liberal economy, almost every nation has embarked on a new economy. We must follow suit and through our energy and faith make up for lost time. Two basic principles will guide us: the economy must be organized and controlled; and the state's coordination of private activity must break the power of the trusts and their capacity for corruption. Far from destroying individual initiative the economy should be liberated from its shackles and subordinated to the national interest.10

The National Revolution, in his view, celebrated a strong state, com­ munity, métier, a return to the soil, and work, "the ultimate resource of la patrie." Pétain was never sure how to juggle corporatist and statist alternatives and in the end willingly left economic matters to those more expert than himself. Of all the pétainiste factions the most important for our purpose is the group of modernizers. They were among the many "outsiders" who found the collapse of the Third Republic an unexpected oppor­ tunity. Pétain wanted to bar the old guard of business, labor, and parliament from the National Revolution and preferred to let new­ comers take charge of the ministries for economic affairs. Most were young, in their early forties, and though they had been excluded from the highest ranks under the republic they were experienced in busi­ ness or public administration. Aggressive and elitist by temperament, dirigiste and modernizing by conviction, they soon ran the administra­ tion of the economy. Among the first arrivals was Yves Bouthillier as minister of finance. A former inspector of finance, only Bouthillier 131

Capitalism and the state in modem France had held high office before the armistice. He helped others earn ap­ pointments at Vichy. René Belin, the former CGT planiste, was ap­ pointed minister of production and labor; Jacques Bamaud, director of a major merchant banking enterprise, became one of Belin's staff, as did Jean Bichelonne who had served at the armaments ministry. Bichelonne, the model technocrat, was a brilliant graduate of the Polytechnique who had a mania for organization and an extraordi­ nary memory for facts. One story tells of an anguished Pierre Laval telling Bichelonne that the Germans wanted to tear down the Eiffel Tower and use it for scrap iron. "Tell them it doesn't weigh much," Bichelonne advised. "Oh, how much?" Laval asked. "7,175,000 kilo­ grams," he was informed.11 These experts were soon joined by other businessmen, administrators, and engineers, especially when Admi­ ral Darlan formed a government early in 1941. By then the ambitious Pierre Pucheu, one-time head of a steel comptoir, had succeeded Belin as production minister. A new planning agency was in the hands of François Lehideux, the former director of the Renault automobile company. Jean Berthelot, the railroad engineer who harbored grandiose schemes for remaking the transportation network, was minister for communications.12 What tied this faction together was a common conviction that France must adapt itself to Hitler's New Order. They hoped to use their new power and the temporary submissiveness of their stunned coun­ trymen to reinvigorate France and make it a respected partner in Hitler's Europe. The French economy had to be renovated for its own sake and to impress the conquerors. Collaboration was a matter of circumstances and cold calculation. As Bichelonne allegedly re­ marked: "It is more serious for a country to lose all its sources of strength than to choose the wrong side."13 When Darlan was accused by a conservative member of Pétain's staff of putting a clique of busi­ nessmen in power, the admiral snapped: "That's better than the beardless altar boys who form your entourage! We don't want any generals or seminarians but sharp young fellows who will come to terms with the Fritz and cook up a good soup for us."14 For the first two years following the armistice the modernizers managed to keep their rivals at bay and dominate industrial policy making and longrange planning. After 1942, however, as Vichy's autonomy di­ minished and hope for a National Revolution all but disappeared, their influence waned. Economic survival: the industrial control system

The experts occupied the citadels of the country's economic adminis­ tration. Bouthillier, authoritarian and resourceful, ran the rue de 132

The National Revolution at Vichy Rivoli as a superministry supervising other services. He also tight­ ened state control over the banks in the name of making credit serve the national economy and shaped the banking community into a professional corporation. The Ministry of Commerce and Industry, which Clémentel had tried to renovate twenty years earlier, was scrapped. In its place the Etat Français installed an omnivorous Minis­ try of Industrial Production.15 The new administration seized services from other ministries, especially from the defunct Ministry of Arma­ ments, adopted an entirely new "vertical" structure where services corresponded to branches of industry, and acquired a large staff of demobilized engineers. In addition, the ministry assumed responsi­ bility for a vast system of controls and for industrial reorganization. This new structure and most of its personnel survived the war almost intact to become a major tool of postwar expansion.16 First Belin, then Pucheu, Lehideux, and finally from 1942 to 1944 Bichelonne headed this formidable ministry. Less potent than the Ministry of Industrial Production yet in some ways equally important for this history of public policy was Vichy's reform of the collection of economic statistics. Alfred Sauvy had made some progress after 1938, but in 1941 a new Service National des Statistiques replaced the republic's statistical agency. Sauvy served as its assistant director and as an advisor to Bouthillier. Although the French found it difficult to produce goods and services during the war, they excelled at paper work. One advantage of industrial con­ trols was to expand the collection and circulation of economic infor­ mation. The statisticians seized the opportunity to undertake new studies and learn new techniques. Sauvy's office published a pioneer­ ing historical and theoretical study of French productivity.17 Staff members began to catch up on Anglo-American methods of national accounting, which were to help postwar planning. Others addressed more immediate and politically sensitive issues like calculating the costs of occupation or disseminating a confidential bulletin to inform the administration of economic news. This bulletin found its way into the hands of the resistance and aided their study groups. Vichy's statistical office, with a new name but the same staff, was incorpo­ rated, as was the production ministry, into the postwar administra­ tion. It did not take long for Vichy officials to perceive that they would have to act quickly and energetically.18 In the late summer of 1940 the economy was in chaos, and a long period of deprivation and German exploitation seemed inevitable.19 War plants and other factories had closed, putting almost a million people out of work. Another 2 million men were in prisoner-of-war camps. The Germans had for all intents *33

Capitalism and the state in modem France and purposes annexed the Nord and Pas-de-Calais departments as well as Alsace-Lorraine, and they had further disrupted economic activity by inserting a demarcation line between the occupied and unoccupied zones, which obstructed the flow of everything including commerce. The British blockade cut off trade and denied France ac­ cess to essential industrial imports. Ninety percent of its textile raw materials and a third of its coal, for example, had been imported before 1939. Gasoline was already in short supply, and meager stocks of other raw materials could disappear rapidly. Some factories had closed because they lacked materials or contracts. Others, mean­ while, hoarded their supplies. Mounting inflation seemed certain, especially as the exchange rate of the mark had been set at an exorbi­ tant figure. Heavy use of the transport network for German military purposes aggravated the disorder as did German requisitioning, under the guise of winning the war against Britain, of industrial stocks and products. In a more insidious way it appeared that the Germans intended to exploit the disorder to their advantage, perhaps even to incorporate the economy of the occupied zone into their own. They eagerly hired away the unemployed and pressed war contracts on French manufac­ turers. In the departments north and east, which Hitler seemed bent on separating from France, there was ominous activity. Germans re­ placed French managers in certain plants in Lorraine. In the Nord, as they had in Belgium, the occupiers set up supervisory organs for textiles and metallurgy and selected their personnel. It was up to Belin and his staff at the Ministry of Industrial Produc­ tion to stop the headlong deterioration of the economy. There was the further danger of social disorder. Mass unemployment, demobilized troops, and what seemed to be renewed communist agitation shar­ pened their perception of crisis. Belin, Bamaud, Bichelonne, Henri Lafond, and Pierre Laroque improvised a basis for Vichy's industrial organization.20 Within forty-eight hours this small team drafted legis­ lation creating the Comités d'Organisation (CO), and a few days later Pétain enacted their proposal. The law of August 16, 1940, swept away existing institutions and built anew.21 It called for the dissolution of national employers' as­ sociations and labor federations like the CGPF and the CGT, which had allegedly become more political than professional, and for the elimination of any other associations that might stand in the way of creating an "energetic and effective authority" in each branch of in­ dustry and commerce. In their place were to be new CO for each sector charged with the tasks of making an industrial census, that is, plant, manpower, stocks; proposing price schedules; and in general 134

The National Revolution at Vichy regulating business operations including competition. The CO were empowered to impose a levy on firms to cover administrative ex­ penses. With the ministry's approval they could also requisition whatever they needed and impose sanctions on the recalcitrant. Exist­ ing trade associations fell under the tutelage of the new organs. Al­ though private businessmen were to operate the CO, the Ministry of Industrial Production (or other appropriate ministry) selected per­ sonnel, appointed a government commissioner, and exercised sur­ veillance. What were the motives of the officials who drafted the CO scheme? Above all, there was the urgent need for the state to step in and assure that the French economy would survive the war and occupa­ tion. Dirigisme was a necessity rather than an ideological choice. The country faced a prolonged shortage of industrial materials, fuel, and food. The market could not function without adequate supply; infla­ tion, profiteering, and a ferocious scramble for remaining stocks loomed ahead. It was up to the state to make optimal use of available manpower, stocks, and plant. A second, more covert, motive was to check German efforts to manipulate French industry. After the war Belin insisted that a major purpose of the CO had been to create an official screen between the occupation authorities and French busi­ nessmen.22 It seems clear that Vichy did try to act before the Germans in order to assure French control over production. At the same time the CO scheme was an act of collaboration. It aimed at normalizing economic contact with the occupiers and built a basis from which French authorities could negotiate. Contracts with German buyers, including war contracts, were acceptable, even desirable, in order to stimulate production, as long as they went through official French channels.23 Beyond such immediate goals the August law looked to the country's "material and moral redressement." The CO, according to the law, were provisional bodies that were to be incorporated into a comprehensive corporatist reform in the near future. The goal was not to administer the economy but to organize it with the active participation of private employers. Even so, Belin and his aides ac­ knowledged that their project was more statist and less corporatist than some would have liked. This was due, they said, to the urgent need for discipline and authority. Such priorities reflected the au­ thoritarian spirit of the National Revolution and its mixed statistcorporatist approach to reform. Finally, a modernizing motive was also explicit in the August law. Product standardization, industrial research, and optimal use of raw materials expressed the moderniz­ ing desires of Belin's experts. The precedent for this plunge into economic management dates 135

Capitalism and the state in modem France from before the war. In 1938, at a time of deepening international conflict, the Third Republic had adopted legislation defining the au­ thority of a wartime government and the method of economic mobilization.24 This law and the authority transferred to Pétain in 1940 formed the legal basis for Vichy's intervention. The legislators had borrowed heavily from the experience of the First World War. The 1938 law specified that the economic administration of the coun­ try was to be organized according to resources; each resource - for example, transport, food, labor - fell under the control of a ministry. As in 1914-18 consultative committees advised the ministry's services. The latter were furnished with vast regulatory powers including the right, in extremis, to take over and operate private enterprise. This mobilization law came into operation at the outbreak of war in Sep­ tember 1939, and subsequent decrees strictly controlled foreign trade and exchange and required administrative authorization for the ex­ tension or creation of new firms. Soon prices and wages were blocked. When German and Polish coal deliveries ended, France, as the number one importer of coal in the world, introduced rationing. The consortiums of the First World War reappeared in the guise of official groups composed of industrialists and importers charged with organizing the importation and distribution of industrial products and food supplies.25 These groups survived the defeat but lost all importance as imports dried up. The contrasting fate of import con­ sortiums in the two wars was due entirely to French access to Allied supplies in 1914-18 and to the Allied blockade of the continent in 1940-5. After 1940 it was the CO that supplanted import consortiums as the vital organs of economic dirigisme. The hastily improvised CO law was not well conceived and re­ quired an immediate revision.26 Its most serious oversight was quickly detected by the Germans. Occupation officials in Paris pointed out that no provision had been made for the primary alloca­ tion of raw materials. The CO would soon be competing among themselves for resources. Bichelonne, Lafond, and Bamaud re­ sponded by designing the second, and what proved to be the most powerful, element of Vichy's control apparatus, the Office Central de Répartition des Produits Industriels (OCRPI).27 The law of September 10, 1940, created an administration under the production ministry to take charge of allocating industrial products. In theory it was to con­ trol all levels of rationing from primary distribution among producers down to the product's consumption. In practice the CO occupied a middle position and suballocated products for the OCRPI. By the end of the war the allocation office had almost 6,500 employees. Some dozen sections, one for each major category such as coal or castings 136

The National Revolution at Vichy and steel, regulated the acquisition, storage, distribution, sale, and use of rationed products. State répartiteurs for these sections had the power to force suppliers to sell to buyers, prescribe the use of prod­ ucts, oblige owners to disclose inventories, levy taxes to equalize prices, and request ministerial sanctions. As with the CO, a govern­ ment commissioner armed with veto power supervised the sections. The OCRPI sections and the CO overlapped; they often shared the same offices and the same directors. By the end of 1940 not only industrial products like rubber tires, coal, textiles, and gasoline were rationed for consumers but also a long list of food products. There was more rationing in the first six months following the armistice than there had ever been during the First World War. It became a daily chore for most citizens to hunt for food and stay warm. In the wake of official prices and rationing came the inevitable black market. German authorities, like the French, sought benefits from the con­ trol network. The High Command in Paris said of the OCRPI in September 1940: "By this step a foundation has been laid on which French industrial production and distribution can be directed in a unified way under German control throughout the whole of France from the point of view of a war economy."28 Occupation authorities exercised final say over the system. They approved the selection of personnel for the CO, and for certain critical products like coal Ger­ man officials fixed monthly quotas and delivery priorities.29 They held up recognition of the CO for the aircraft industry and then de­ manded special supervisory rights. Even a change in food rations required German authorization. The first step in erecting the machinery of control was the choice of staff for the CO. Here the managerial bias of Vichy officials was clear. Belin explained after the war that he could not find sufficient compe­ tent personnel within his administration; officials lacked, among other things, the necessary daring. Nor could he rely on the trade associations themselves. They were not built for such tasks, and they were hardly impartial. He wanted tough, successful, politically un­ tainted businessmen who could create these new organs and negotiate with the Germans. "I couldn't find them," he explained, "in the comer garage."30 As a result small business and labor were largely excluded from the selection of CO directors. Heads of large companies, many of whom had records as modernizing managers, took charge.31 Auguste Detoeuf, for example, directed the CO for electrical equipment while Raoul de Vitry, a manager of Péchiney, and the mining engineer Aimé Lepercq did likewise for aluminum and coal. In most instances - Detoeuf was an exception - they saw no need to resign private managerial posts. 137

Capitalism and the state in modem France In some cases, especially in heavily concentrated industries, the CO merely reconstituted existing employers' associations and cartels. Thus the property of the Comité des Forges, a trade association dis­ solved by the August decree, devolved on the CO for sidérurgie. Man­ agers of the Schneider steelworks and heads of other big steel com­ panies completed the staff of this CO. Trade associations and CO tended, though not in all cases, to align themselves with one another. Trade associations acted as liaisons for the CO, communicating ad­ vice, information, and grievances upward from individual firms at the same time that they implemented programs. Each CO developed its own style of management. Some were col­ legial, ranging up to thirty-seven chefs d'entreprise, and utilized the consultative bodies attached to them. Others exhibited one-man rule. The CO doubled as representatives of business and delegates of pub­ lic authority. "The committees," Bichelonne said, "are intermediaries between private enterprise and the government. The committee serves enterprise as an inspiration and guide. It serves the govern­ ment by transmitting and applying its directives and by exercising regulatory power over the whole of production."32 In practice neither a definite statist nor a corporatist pattern emerged. The virtual au­ tonomy of the CO in suballocating materials, setting production pro­ grams, and financing themselves pointed up their corporatist charac­ ter. On matters such as price fixing, imposing sanctions, and selecting members their authority was more advisory. The veto power of the government commissioner testified to their étatiste character. He de­ fended the state and arbitrated between private firms and the corpo­ rate interests of the CO. The actual degree of state surveillance depended heavily on the rank and personal qualities of the commis­ sioner. A minor official, without experience and burdened with sev­ eral duties, could be unequal to the task of checking the will of an authoritarian CO president. And outside the formal structure were the Germans who, in the cautious words of a well-informed contem­ porary analyst, exercised "tight control."33 The operation of the CO was a bureaucratic nightmare. This was due in part to deficiencies in their conception. A dozen or more criteria were used to classify CO, for example, the raw material con­ sumed, the manufacturing process employed. Belin's staff planned 26 committees for industry. By 1944 there were 129; the agriculture ministry counted 60 more, and the total number for all ministries reached 231.34 Banks fell under CO control as well.35 Over 16,000 employees ran the system. The CO offices, all centralized in Paris, seemed overstaffed, overequipped, and overheated. To their busi­ ness clientele they appeared to be old-fashioned state bureaucracies. 138

The National Revolution at Vichy The staff seemed tactless, fussy, inquisitorial, or just downright tyrannical. They behaved toward businessmen much as "Ivan the Terrible treated his muzhiks,', it was said.36 Because the CO could only advise the central administration on matters like price increases, its ponderous procedures frustrated anxious businessmen. As one trade journal wryly commented, these days if "sugar is not available for our children's cereal, at least it feeds an import group, an alloca­ tion office, a CO."37 The government encumbered the bureaucracy even further by continually assigning it new tasks such as helping with the reconstruction of war damage or providing credit and insur­ ance facilities. Controls overlapped. The services of the OCRPI, CO, and the technical ministries tended to duplicate and interfere with one another. Efforts at coordinating the machinery of controls were largely unsuccessful. The Centre d'information Interprofessionnelle, which was a kind of corporatist successor to the prewar peak em­ ployers' federation, lacked adequate authority to take the CO in hand. Nor could the freewheeling allocation sections be brought in line. And like all bureaucracies this one produced mountains of pa­ per. The CO administered an industrial survey using investigators and sanctions when necessary to extract information. After the initial census the CO distributed monthly, quarterly, and annual question­ naires. So did the OCRPI, the ministries, and the trade associations. One CO sent out a form containing 800 questions, 120 on labor alone. There was resentment among businessmen who had to answer these long and often repetitious inquiries. Given their habitual antipathy for sharing such information with the government and the temptation to inflate needs and diminish inventories business often falsified these reports.38 The possibility that such data also assisted the occu­ pation authorities gave prevarication a patriotic justification. The control system developed numerous other problems. There were, as might be expected, cases of incompetent directors and abuses of authority. There were questionable policies. The OCRPI sections, for example, adopted 1938 as the base year for determining allocation. Such a practice struck some industrialists as anachronistic and abstract. The task of closing firms, necessitated by shrinking supplies, was simply thankless. By late 1942 the CO for foundries reported that 190 out of 1,305 factories had been ordered dosed.39 Some CO tried to shift this unwanted responsibility back to the minis­ try. Assessments on private enterprise to cover operating expenses of the CO-OCRPI were substantial but not uniform, and state surveil­ lance of the rate and mode of this levy was minimal. Furthermore, the répartiteurs could not exerdse effective control over the use of prod­ ucts. Mediterranean fishermen, for example, sold their gasoline ra139

Capitalism and the state in modem France tion on the black market. The coal distribution system malfunctioned for reasons not entirely under the control of officials. There were transport bottlenecks, sharp seasonal variations in demand, zonal barriers, and continuous German interference.40 The exigencies of war distorted the modernizing aim of the CO network. Production fell victim to shortages, and thus the OCRPI sections became the decisive elements in the wartime bureaucracy. In practice the CO became little more than mechanisms for gearing down rationing and administering regulations. They largely jet­ tisoned the task of economic renovation.41 There were, to be sure, some minor advances such as research into artificial fibers and the introduction of "quality brands" for a few products. And the com­ bined effect of trying to make the best use of stocks, which tended to feed the efficient, and German war contracts being awarded to big producers in war industries heightened concentration. But this was more an unintended consequence of the war than a deliberate policy of industrial concentration. The war prohibited new plant construc­ tion and the installation of new machinery and even curtailed proper maintenance of equipment. It also brought, more obviously, destruc­ tion and German looting. The job of rehabilitating production pro­ cesses had barely begun. Even Bichelonne writing in 1943 had to admit that the public was more inclined to notice "the police functions" of the system than they were "the leaven of technical progress" that allocation had introduced.42 Nevertheless, the experi­ ment with controls helped expose the backwardness of industry. A statistical survey on the condition of the nation's stock of industrial equipment discovered that the average age of French machinery was twenty-five years in 1939 and for the modern sectors it was twelve years.43 In comparison, officials calculated, the average for the British was seven years and for Americans five years. The issue of economic collaboration is knotty from a political-moral perspective and impossible to assess until the mass of documentation from the control system has been made available to scholars.44 Pétain declared that one aim of the CO was to give "responsible men the necessary authority to negotiate with Germany."45 The chief of Ger­ man economic services in Paris later observed: "It was in this field of organizing the rationing of raw materials that a collaboration de­ veloped which was based on a very special case of mutual confi­ dence."46 In an objective sense, men's intentions aside, the Etat Fran­ çais by virtue of its very existence had to collaborate with Germany. There is also no doubt that much of French wartime production bene­ fited Germany. In 1941 the OCRPI estimated that 50 percent of the total output of manufacturing industries in the occupied zone was 140

The National Revolution at Vichy delivered to the Germans with the construction and aircraft industries producing almost entirely for the occupiers.47 The. total slipped to 30 percent if the unoccupied zone were included. Coal mined in areas annexed by Germany, amounting to 15 percent of total output, was diverted away. Transport of German military personnel and goods monopolized some two-thirds of rail traffic. And one out of three French laborers worked for the Germans during the war. The head of the German delegation to the armistice commission reported in 1942 that 'Trench workers in industry, railroads, internal shipping, and most overseas shipping are working almost exclusively for Germany. No other country contributes nearly as high a balance [as France] for German armaments and even good imports. .. German orders in France are the dominant factor in the French economy."48 It was difficult to refuse German contracts. "The French industrialist knew," according to a ministry directeur, "that if he worked for Germany he would have orders, receive full payment quickly, and have priority in supplies. Now he perceives that if he refuses to work for Ger­ many he has every chance of not operating at all."49 At the extreme among those who sought collaboration was Bichelonne. In 1943 he bargained with Hitler's armaments chief, Albert Speer, to expand French output for Germany as long as production were carried out on French soil and French workers were exempt from the labor draft.50 Among the CO there was apparently a wide range of behavior with respect to collaboration.51 Some committees, especially those warconnected or propagandist«:, such as automotive manufacture or cinematography, fell completely under German control. And the CO directors in the Nord and Pas-de-Calais were appointees of the Oberfeldkommandteur. A few, like the CO for leather, furs, and diamonds where Jewish firms predominated before the war, took the initiative in enforcing anti-Semitic measures. Yet others claimed to have screened private firms from German demands. It surely would be unfair to represent the CO as mere cogs in the German machinery of economic exploitation. Despite dirigisme French industrial production dropped sharply during the war. The general index fell to 65 in 1941 from a base of 100 in 1938, then hovered at about this level for the next two years before another precipitous drop in 1944 when the country again became a battleground.52 Imports of coal, petroleum, and cotton virtually dis­ appeared. Instead of compensating for the loss of coal imports the output of mines declined from prewar levels. Industry operated with about 60 percent of its coal supply, and domestic users' share dropped to 35 percent by 1944. At that date coal supplies were so low that French industry was on the verge of expiration. The Germans, of 141

Capitalism and the state in modem France course, skimmed off what they wanted. Thus the aluminum industry actually produced far more between 1941 and 1943 than it had in 1938 because half its output went to German uses. The black market flourished, and official prices for basic food items doubled between 1938 and 1943. Wages, in contrast, for manual workers increased less than 50 percent over the same period. Shortages and German exac­ tions were asphyxiating industry and spreading hunger, cold, and want throughout the country. One journalist wrote that the true voice of France during the war was its growling stomach.53 Without question Vichy's experiment with dirigisme was unpopu­ lar. At first industrialists accepted the CO as a necessity to keep their plants operating. But when the network seemed merely to dispense misery it lost its raison d'être.54 Questionnaires seemed a waste of time, or, worse still, a form of state espionage. Bureaucrats behaved like incompetent meddlers. Assessments were heavy. There was jealousy and rivalry; inevitably one's competitors seemed favored. Falsification of reports and use of the black market were forms of passive resistance to controls. Even the Centre des Jeunes Patrons, which strongly supported a managed economy, criticized the CO for their cancerous proliferation and inquisitorial ways.55 Small busi­ nessmen were perplexed and angry. They were so far removed from decision making that losing clients because supplies ran out seemed discriminatory. There also seemed good reason to doubt the impar­ tiality of the system and even to suspect that it served the interests of les gros. Labor, which had also been largely excluded, viewed the CO as instruments of the patronat. Corporatists also reproached the CO. The committees distorted their ideal; they lacked true corporatist au­ tonomy and ignored the social aspect of the profession. Frequently the CO merely reproduced existing cartels or trade associations. Worst of all, to the corporatists who hovered about Pétain, the CO were run by the plutocracy. They believed the young expert?, Bouthillier, Pucheu, and the others, had hoodwinked the chief of state, in­ stalled the trusts, and sabotaged the true National Revolution.56 "The wolves have become the shepherds," the Journal de la Bourse declared.57 The accusation that the control network served big busi­ ness and that their agents, the "technocrats," directed economic af­ fairs spread throughout the hotels at Vichy in 1940-1. Pétain's chef de cabinet warned him against the vaulting ambitions of the experts.58 The lobbyist for small business railed against the statist regime di­ rected by "inspectors of finance for the benefit of the moneyed pow­ ers... These mandarins are on the verge of leading us into a new and definitive collapse."59 Among the shrillest critics were the archcol­ laborators in Paris. Marcel Déat, then head of a fascist-style political 142

The National Revolution at Vichy party, denounced Belin, Bouthillier, and the others for trying to turn collaboration into a profitable business deal.60 Criticism of the economic experts and their programs took a bizarre turn in the summer of 1941. A lurid and melodramatic rumor of a conspiracy surfaced.61 It was alleged that a secret society of cos­ mopolitan business magnates known as the Synarchy had surrepti­ tiously gained control of the economy and was bent on seizing the government as well. The experts were identified as the Synarchy's henchmen and the CO as their instruments of manipulation. The rumor became richly embroidered with a suicide (that of the planner Jean Coutrot) and a gilded Masonic pact. The clamor over the Synar­ chy reached the head of state, who later commented: "When some­ thing was going badly at Vichy... they whispered to me, it's the work of the Synarchy!"62 Pétain probably never believed that the Synarchy was a nefarious plot, but the rumor heightened his natural suspicions of the experts. On August 12 he made a dramatic radio broadcast and without ever mentioning the Synarchy affair by name complained about the "atmosphere of false rumors and intrigues" and discussed the general controversy that the affair pointed up.63 Pétain confessed that, despite his intentions, the "servants of the trusts" had in certain instances used the CO for their own ends. He promised to reorganize these bodies to make them less overbearing and more representative of small business interests. The experts gave in to Pétain's request, and François Lehideux, the production minis­ ter, announced plans to decentralize and simplify the structure of the CO and to prosecute those officials who had abused their authority in the "trusts' interests."64 Yet Lehideux also promised that once the system was reformed he would not "hesitate to reinforce their control over their members and to perfect the system of sanctions." In the end the CO changed little.65 Nevertheless, the false rumor of the Synarchy disclosed the nature and strength of opposition to the whole control system. The control apparatus was poorly conceived and operated. Liaison between the services was weakly articulated, as were procedures for vital matters like sanctions. And the continual vacillation between a cörporatist and a statist approach to economic management confused everyone. Vichy hailed the CO as precorporatist bodies, yet also de­ clared the state's intention of making them serve its policies and weighted them with numerous tasks. In practice the regime proved unable to control the controllers. Right up to the end the government acknowledged its weakness. In 1944 Bichelonne tried to take the sys­ tem in hand. "The CO are intermediaries between public authorities and private enterprises," he declared. "Their authority is limited by 143

Capitalism and the state in modem France both the state's prerogatives and the basic rights of private firms that only the legislature can define."66 He reminded the CO that they did not have the power to deny access to whomever they pleased or to authorize opening new enterprises. Not all the attacks on economic controls were justified. The CO should not have been faulted for the general deterioration of the economy during the war. Hardships like parsimonious rations are more accurately attributable to such causes as the policies of the occu­ pation authorities and the Allied blockade. The charge by doctrinaire corporatists that the CO had let them down is also unfair. Social policy was never their charge. Any effort at building the profession was also hindered by the passive resistance of members and the weight of administrative tasks. Furthermore, the seeds of corporatism barely had time to germinate before the hot blast of war and German depradations withered the new growth. The experiment was too brief. The control system was too much an improvisation to serve as a test for corporatism. The CO-OCRPI system represents the most far-reaching attempt at managing French industry in modern times. It was true dirigisme. Controls at least helped equalize misery, curb profiteers and inflation, and distribute resources so that essential needs were fulfilled and more firms could survive. It is unlikely the system did anything to obstruct the Germans from plundering the economy and may have facilitated it. The way controls functioned and their association with the worst years the French experienced in the twentieth century pro­ voked a strong anti-dirigiste reaction. Yet history is replete with paradox. Thus, at the same time Vichy turned the French people against controls, the resistance was mounting a campaign in favor of a socialist form of dirigisme. Indeed the resistance was to find much of the apparatus of the Etat Français adaptable to its purposes. Design for a corporatist society: the Labor Charter The National Revolution's long-range design, at least in its social dimension, appeared in its Labor Charter.67 This legislation, adopted in October 1941, much more than the improvised industrial control system, indicated how the men at Vichy intended to restructure in­ dustrial relations and build a full-fledged corporatist society. The impetus for the Labor Charter stemmed from a desire to miti­ gate or even end social and economic strife. The solution lay, in the vocabulary of the time, with the "organized profession" or the corpo­ ration. In the abstract the notion was simple: Group interests around their common occupational activity in order to magnify what bound 144

The National Revolution at Vichy them together; replace class and interest group affiliations with loy­ alty to métier. Vichy's corporatism grew out of speculation that dated back to the 1930s or before, which has been treated in earlier chapters. Most important were the interwar corporatist theoreticians, mostly rightists and Catholics, who had elaborated the idea of reviving self-governing intermediaries between the individual and the state. Social Catholics had formulated similar ideas, adding a Christian sense of social jus­ tice that transcended the market. There were also paternalistic em­ ployers like Jules Verger who saw mixed, employer-employee syn­ dicats at the plant level as the way to social peace. Auguste Detoeuf's proposal of "double syndicalism" featuring unique and obligatory syndicats was a variant of this approach. And the economist François Perroux contributed the notion of a "community of work" resting, like Detoeuf's suggestion, on a parity of obligatory employeremployee syndicats. In addition to these various types of corporatists who helped draw up the Labor Charter there were syndicalist planistes. Men like Belin and Georges Dumoulin believed the way to a more constructive form of syndicalsim lay in direct contact between labor and management. Pétain himself contributed to corporatist theorizing. His aversion to unbridled individualism and the doctrine of class struggle led him to propose rebuilding society on the basis of a hierarchy of talent, work, and the "organized profession."68 In Pétain's scheme, as with most other corporatists, there was a tension between an associational and a étatiste approach to corporatism. Whereas Vichy officials had called upon industrialists to help them manage production, they had forsaken organized labor. The CGT had been left disorganized, demoralized, and divided after the events of the years 1936-40 and was accused of being culpable for the defeat. The CGT itself and departmental union federations had been dis­ solved because of their combative political activities. Léon Jouhaux and the CGT leadership at first expressed a willingness to cooperate with the armistice regime and submitted a proposal to Pétain suggest­ ing the integration of trade unions into a professional structure based on parity between employers and employees. Despite this submissive posture of organized labor and the free hand Pétain enjoyed in inter­ nal reform, the government turned the drafting of the Labor Charter into a fiasco. Corporatists insisted on dissolving existing trade unions and employers' associations at all levels and creating new, mixed bodies. Syndicalists resisted. The first two drafts of the charter were buried by Pétain, and the third, which satisfied neither side, was not ready till the fall of 1941. In the end Belin had to watch over the printing of the document to be sure the correct version appeared in M5

Capitalism and the state in modem France the Journal officiel.69 By then Jouhaux and other trade union leaders were openly critical of Vichy's reforms and moving toward opposi­ tion. Employers were indifferent to labor's charter, and those syn­ dicalists who had supported the National Revolution, like Belin, at­ tacked the reform for its paternalism, statism, and disregard of trade union rights. What the Labor Charter proposed was the creation of exclusive and obligatory syndicats for five categories of occupations - employers, cadres and technicians, foremen, employees, and workers - thus dis­ persing the opposition between management and labor. Each occupa­ tional syndicate belonged to one of some twenty-nine professional families and furnished delegates to social committees that ranged from the local to the national level. These committees took charge of all professional and social matters such as wages and training pro­ grams. Strikes and lockouts were prohibited, and in case of disputes arbitration was mandatory. In addition, every large firm had to create a company social committee composed of employers and employees to run the plant's social services. Thus the charter hoped to dilute the traditional rivalry between labor and management and substitute loyalties to profession and enterprise. Without the strike, however, labor was helpless. As an attempt at designing a comprehensive corporatist system the Labor Charter should have incorporated the pro­ visional CO. But it reneged. The charter stated that "circumstances" required reserving all economic questions for the CO. Vichy never advanced, as the charter itself acknowledged, beyond "a first, useful sketch of building corporatism."70 The implementation of the charter did not begin until 1942 and then progressed only slowly as syndicalists and corporatists continued to quarrel over the way the new organs were to be formed. By the end of the year the Allies had landed in North Africa, and the opportunity for the National Revolution had passed. Except for a few diehards like Bichelonne the Labor Charter no longer held anyone's interest. Labor was preoccupied with food shortages, prices, wages, and the labor draft. In the end only one professional family was completely or­ ganized. The only institution the charter did inspire was the estab­ lishment of some eight thousand company social committees in large firms. Even these, however, were often paper organizations. By 1944 the CFTC had withdrawn its cooperation, and the CGT had ordered its unions to sabotage the charter. Designs for a planned economy

The Labor Charter represents a transition in our analysis from Vichy's response to the armistice situation to the regime's long-range eco146

The National Revolution at Vichy nomic design. These goals are embodied in the wartime gov­ ernment's formal economic plans. Wartime administrators were de­ termined to introduce a planned economy after the hostilities. They drafted two equipment plans: the Plan d'Equipement National or ten-year plan appeared in 1942; a version of this document adapted for the immediate postwar period and entitled the Tranche de Démar­ rage was completed in 1944.71 Though these projects for postwar reconstruction were never directly implemented, they were utilized by the provisional government after the war to frame its own recovery program. Historically these projects also stand as the country's first true economic plans. Both documents were the work of Vichy's planning agency, the Délégation Générale à l'Equipement National (DGEN). It grew out of the government's efforts to reduce or camouflage unemployment. François Lehideux had directed this relief program, and in early 1941 he joined the government as délégué général for national equipment.72 Lehideux's assignment was to expand the campaign against unem­ ployment, take charge of urban development, review existing equip­ ment projects and elicit new ones, and prepare a ten-year equipment plan for France and its colonies. Growing shortages made optimal use of resources for new construction imperative. His agency, the DGEN, was to supervise the execution of the plan, but credits, materials, and labor remained under the control of the ministries responsible for specific projects. This proved to be a serious flaw in Vichy's approach to planning. Lehideux conceived of the DGEN as a small staff of experts who marshaled the programs of the numerous bureaus of the central ad­ ministration into a coherent plan. It was not to supplant other minis­ tries in formulating or executing equipment programs; rather, it evaluated and coordinated their work. The DGEN discovered that other ministries refused to accept it as a full-fledged ministry. Some considered it a rival, others merely as an unemployment relief agency. The Ministry of Finance, to whom Lehideux was answerable, treated the planners as subordinates and disapproved their spending propensities. In theory Pétain was their protector. After the armistice he had declared the need for "a state organ charged with orienting national production according to the capacity of the domestic market and the possibilities of foreign markets."73 At the outset the new planning agency lacked everything from personnel to office space. The hastily assembled staff consisted largely of hauts fonctionnaires borrowed from other administrations, especially the Ministry of Industrial Production. To his staff Lehideux added a small consultative committee drawn from the CO and indusM

7

Capitalism and the state in modem France try but including scientists and farm leaders. Typical of these advisors were Guillaume de Tarde, a founder of the Nouveaux Cahiers; Marcel Champin, past president of the Redressement Français; Roger Boutteville, associate of Mercier and director of the electric power CO; Fanton d'Andon, directeur des mines; Lepercq, head of the coal CO; and the ubiquitous Detoeuf.74 To prepare its plan the DGEN can­ vassed government agencies as well as the CO-OCRPI for proposals. The DGEN also reviewed previous French planning schemes, such as the retooling program of the Tardieu government and the reports of the interwar National Economic Council (but not the CGT's plans), as well as foreign examples. After sifting proposals the DGEN incorpo­ rated them into a ten-year plan! This Plan d'Equipement National was a governmental plan, the work of the state bureaucracy and not merely the creation of the planners. Planning appealed to many war­ time officials, especially those in the ministries of industrial produc­ tion, communications, agriculture, and supply. But Vichy's design was strictly administrative; unlike postwar planning it did not seek broad consultation outside official circles, reflecting the elitist and bureaucratic tendencies of the regime. It was May 1942 before the DGEN was ready to present its equipment plan to the government. The agency acknowledged the plan was crude and tentative because it was virtually impossible to plan for the next decade in the midst of a war whose outcome was undecided. Still, the government, the DGEN insisted, should adopt its 600-page proposal as a "base de travail" to guide its postwar policy.75 The basic problem that faced those who drafted the equipment plan was the nation's economic, demographic, and technological back­ wardness. An overriding wartime anxiety, and one shared by the resistance as well, was that unless France corrected its relative retar­ dation the nation might be deprived of its former rank and indepen­ dence. Before the war industrial leadership had been lost, according to the planners. There were trade deficits and technological depen­ dence; much of the rural populace suffered from a low standard of living; and the population as a whole grew older without increase. With the war came shortages of all kinds - even mass hunger. "The France of 1938 was impoverished. The France of 1940 is completely ruined."76 The planners looked ahead, not to reconstituting prewar conditions but to overhauling the structure of the economy within a decade. They sought an industry competitive in world markets, a modernized rural sector, a high standard of living, and a people who embraced technology. The aims of the equipment plan were not confined to economic renovation: Vichy planning was suffused with broad social, cultural. 148

The National Revolution at Vichy and even moral goals that expressed the traditionalism of the regime. It celebrated the family, social solidarity, rural virtues, the Spartan ethic, and physical fitness. It attacked '■'demographic Malthusianism" and called for improved housing, sanitation, medical care, and sports facilities, both to encourage population growth and to lift the people's vitality. Above all, the plan echoed the desire of social conservatives to preserve the rural economy. It was dangerous to deplete "the peasant reserves" who stabilized the population. The planners voiced peasantist doctrine when they attributed the physical and mental health of the factory hand or office worker to his peasant ancestors. A country that preserved its "peasant energies" was readying itself for "a truer and more permanent supremacy than that which a military success provides."77 Yet Vichy's planners did not affirm the rural status quo; they recommended a program of rural equipment to raise agricultural productivity and advocated changes in marketing and land tenure. Preoccupation with social and political stability led the planners to seek remedies for the discontent created by urbanization and industrialization. If a "return to the soil" was impractical, a "re­ turn toward rural living" was not. Construction of "satellite cities" would provide workers with a "rural climate" and avoid urban crowding and "promiscuity."78 But for those who could not escape the city and its unhealthy political atmosphere the equipment plan would make living conditions more humane. The ten-year plan tried to sustain two contrasting visions of France's future. The impulse toward economic and technological rat­ trapage struggled against the social conservatism of Vichy's official ideology. Urban development, for example, and the preservation of rural ways were not readily compatible. Conservatives yearned for social stability whereas the planners wanted to ease the change to­ ward an industrial and urban order. Renovation, in the planners' view, should be accelerated, though it was hoped it would occur without social strife. At the end of the war, when the planners could express themselves more freely, they shed the conservatives' nostal­ gia for an earlier social order. Vichy's 1942 plan reserved a large place for the free market and private initiative. Unlike the schemes advanced by prewar syndicalist or socialist planistes it did not call for the nationalization of large sectors of capitalist enterprise. The self-image of these planners was that of neo-liberals who wished to avoid both extreme dirigisme and the liberalism of the Third Republic. They wanted the state only to stimulate and supplement private enterprise; the market was superior for a prosperous economy whereas dirigisme was suitable for acute crises like war. Similarly, the planners wanted to reduce tariff bar149

Capitalism and the state in modem France riers, end protection of situations acquises, and open the French econ­ omy to competition. They endorsed a measure of state intervention, however, not just to meet the current emergency but as a structural change in the economy. With respect to equipment the state should intervene whenever "private initiative has need of being directed, coordinated, aided, contained, or stimulated."79 An equipment plan also functioned as a means of countercyclical control of all economic activity. It regulated the business cycle by alternately expanding and contracting equipment projects. As a scheme to absorb the unem­ ployed through public works and as a permanent instrument of coun­ tercyclical policy the equipment plan resembled the schemes pro­ posed by the left during the 1930s. An equipment plan, it was hoped, raised state intervention from the prewar level of improvisation to the heights of coherent, prudent, clear-sighted economic coordination and supervision. Vichy's ten-year plan estimated amounts of credit, raw materials, and labor necessary to build, refurbish, maintain, or import capital equipment. It did not, however, set production targets as the Monnet Plan would do in the postwar era. And where the later plan concen­ trated on raising output in a few key sectors, the Plan d'Equipement scattered its investment over a wide range of economic and social activity. There were broad sectoral programs for agriculture, indus­ try, overseas territories, communications-transportation, urban af­ fairs, and scientific and technical equipment. Priority with respect to urgency and amount of expenditure went to agriculture, communica­ tions, and urban development. These three sectors together received over two-thirds the investments. The precedence of agricultural equipment, such as farm machinery, fertilizers, electrification, water supply, was due to the pressing need for France to feed itself after the war. Damage to the transport network, especially to the railroads, necessitated large sums. An emphasis on civil aviation and the mer­ chant fleet indicated the planners' desire to rejuvenate foreign com­ merce. Investment in industry was distributed rather evenly over all branches except for the priority assigned to raising coal output and expanding hydroelectric capacity.80 Vichy's planners did not expect much outside help in the form of credits, equipment, or raw materials after the war. The United States, they believed, was not likely to be as generous as it had been after 1918. France must rely as much as possible on its own resources. By restricting consumption, finding import substitutes, developing syn­ thetics, utilizing colonial resources, and raising productivity the na­ tion could attain self-sufficiency in food and reduce its dependence on industrial imports. A grim tone of scarcity and frugality enveloped 150

The National Revolution at Vichy the plan. Suggestions for using wood-burning gasogenes to power farm tractors evoke the desperate situation of 1942. Autarchy, in con­ trast, was neither possible given the country's need for certain imports nor desirable given the dynamism of international trade. Finan­ cial resources, like materials, appeared adequate. If a special equip­ ment fund were created; if overall investment increased; and if inter­ est rates, wages, and prices held steady, there would be no problem in funding the equipment plan. On this score the planners begged the question. What is noteworthy is the disappearance of the prewar obsession with monetary stability and balanced budgets. The plan­ ners did not intend to sacrifice economic development to financial critéria and devised several ways to insulate equipment funds from passing political and financial pressures.81 Manpower shortages threatened to become a constraint, but the planners had several rem­ edies for this problem including schemes to raise productivity and repeal the forty-hour week. "In a word, lacking capital, we must live on our work."82 In return for a longer workweek labor would benefit from higher real wages and improved working conditions, housing, and public services. Psychological factors seemed almost as important as other resources in implementing the plan. The press, radio, and cinema would develop a mystique for the plan, and Pétain was to lend it his prestige. At the close of their voluminous report the planners requested the government to adopt the equipment plan and to strengthen their authority over it with respect to other ministries. They wanted control over allocating materials and labor and to share with the finance ministry in granting credits. But the Etat Français failed either to endorse the plan or to expand the powers of the planners. By 1942 Lehideux and most of the other prominent experts at Vichy had resigned as ministers, and Pierre Laval headed the cabinet. Laval was unsympathetic to the pretensions of the planners, and he prob­ ably saw little need to act on a controversial measure for the postwar period when the end of the war was not even in sight. Pétain decided against lending his assistance, and the ten-year plan was tabled. The ineffectiveness of the DGEN disappointed the most ardent planners at Vichy like Bichelonne and his staff at the Ministry of Industrial Production. In 1942 Bichelonne created a Conseil Supérieur de l'Economie Industrielle et Commerciale as an adjunct to his min­ istry. Among the council's tasks was to study how economic planning might be best introduced after the war. The minister worried that the hostility provoked by wartime controls might jeopardize his am­ bitions for a planned economy.83 Gérard Bardet, a prewar member of X-Crise, presided over the council. It was composed of adminis151

Capitalism and the state in modem France trators, CO directors (Detoeuf, Lepercq, Boutteville), industrialists, trade union officials, and other economic leaders such as C.-J. Gignoux, former head of the CGPF. The council's report was not itself a plan.84 It identified general goals, which were identical to those of the DGEN, but avoided any discussion of priorities, magnitudes, resources, or specific programs. The report's premise was that planning was the product of a mature economy rather than the instrument of a political regime. Industrial concentration, monopolies, interest groups, and state intervention had intensified the interdependence of the economic and political orders. The essential tasks of planning were to coordinate state inter­ vention, regulate the business cycle, assure that production met con­ sumers' needs, and during the immediate postwar period see that investment in capital equipment was not sacrificed to consumption. Bardet's council, like Lehideux's team, also infused planning with broad social and philosophical goals. A planned economy fostered social order by defining the social-economic roles to be played by the firm, the profession, and the state. It also guaranteed basic human rights: the right to work, private property (with the qualification that savings be productively invested), and individual freedom. Freedom in the liberal economy, it was argued, was a mockery because indi­ viduals were subject to blind economic forces and the power of un­ regulated vested interests. Because the state intervened in a planned economy only when private initiative was deficient or inimical to the national interest, freedom was preserved. When the council inventoried the economy they perceived, as had the DGEN, the sad condition of the nation's capital stock. Energy and transportation were the most deficient branches of industry. Yet the council could not wholeheartedly recommend industrial develop­ ment; France could not compete with countries better endowed with raw materials and should not sacrifice the skills of its peasants and artisans. Vichy's traditionalism once again restrained the wouldbe industrial enthusiasts. So did the Germans, who entertained thoughts of reducing France to an agricultural existence. Bardet's ad­ visors were not sure how best to execute a plan. For basic industries they recommended a command style of direction, and for consumer products they thought indirect state management of prices and in­ comes would suffice. Powerful corporatist bodies would mediate planning and thus avoid centralized bureaucratic management. Fi­ nally, to correct the DGEN's institutional weakness, the council rec­ ommended creating a Ministry of National Economy that would champion the cause of planning. This superministry subordinated even the Ministry of Finance. It was a reform equally attractive to the 152

The National Resolution at Vichy resisitance. In the end the proposals of Bardet's council never went beyond the minister's desk. Like the ten-year plan the BichelonneBardet scheme failed to win Pétain's endorsement. In 1943-4 the DGEN suffered a loss in autonomy and status when it fell under the authority of an indifferent minister of finance.85 It was unable to acquire control over allocating manpower, materials, or credits for planning, and other government departments continued to be uncooperative. Nevertheless, the agency persisted in its attempts to institutionalize planning. It drafted a short-term version of the ten-year plan for the immediate postwar period labeled a Tranche de Démarrage. The tranche, like the equipment plan, expressed the aims of Vichy's economic administration including the CO-OCRPI and not just the aspirations of the planners. Another committee of experts prepared a detailed industrial import program as a complement to the tranche.86 This new plan was composed in the summer of 1944 during the liberation. Despite its antipathy to the Vichy regime the incoming government of General de Gaulle made an exception for planning and had the DGEN's project printed and distributed after Pétain and his ministers had fled France. The Tranche de Démarrage, which covered the first two postwar years, launched reconstruction within the framework of the ten-year plan. Its primary tasks were to supply food, shelter, and public ser­ vices, to clear mines and debris, and to resume essential economic activities. Yet the tranche was also an equipment plan and a guide for the entire economy. Planning, the DGEN contended, was not merely therapy for war and misery. It was necessary to maintain economic equilibrium once prosperity returned and production and technology resumed their dynamic course. A plan reflected a nation's determina­ tion to "model economic reality" rather than submit to its vicissitudes.87 The new plan also had social and political goals. Its travaux functioned as a prophylactic against social disorder by absorb­ ing returning prisoners of war, deportees, laborers, and demobilized troops. To overcome the current "moral disarray" and render the nation less susceptible to internal political and social fragmentation, the French people needed a national project. Rebuilding the country on the basis of a "mystique of everybody working for everybody" was an ideal that would awaken their latent constructive energies.88 In 1944 the planners were more attentive to economic equality and social security than they had been earlier, partly, it would seem, in response to the rising tide of egalitarianism in the resistance. Such aspirations, the DGEN pointed out, were to a great extent equipment problems a fact, they argued, socialist reformers failed to recognize in their neglect of housing and urban problems. 153

Capitalism and the state in modem France After reviewing the magnitude of the disaster that the war had inflicted the planners concluded, 'Trance, already backward in many sectors before the war, is today more gravely tested than it was in 1918. It has been struck in its vital organs."89 Yet by overturning many traditional attitudes and practices the war provided an opportunity for innovation. The planners proclaimed, more aggressively than they had in 1942, that they intended to remake "our country anew." They attacked the "general Malthusianism" of the prewar era, espe­ cially the "anemic" quality of entrepreneurship. There was to be no repetition of the post-1918 experience when a preference for "the easy way and consumption" led to economic disaster.90 Now was the time to give a coup de barre to economic development. By 1944 modernizing fervor overshadowed social conservatism in Vichy's postwar plan­ ning. The key assumption of those who framed the two-year plan was that the quality and quantity of a nation's capital equipment deter­ mined the production and circulation of goods, the standard of living, and even the character of health care and scientific research. And if France were to recover its rank as a great nation and a military power it would have to restore its economic prowess. French capital stock was on the whole old, outmoded, and worn out. Prewar disdain for foreign technology vanished as the DGEN insisted on importing the latest machinery and techniques. Economic reconstruction required doubling prewar investment levels. Whereas the country invested 13 percent of its GNP in 1938 of which 5 percent went for armaments, the tranche called for a rate of 25-30 percent over two years. In 1944 the planners ceased assigning agriculture precedence over industry. Agriculture had "a legitimate place," but France's pros­ perity and security depended on its industrial capacity. Simple rural, artisanal peoples were "the prey" of industrial nations. The planners now attacked Vichy conservatives as "dreamers" who believed hap­ piness lay in reviving agrarian society. In the planners' view the de­ feat of 1940 was due in part to industrial weakness. Given its mineral and hydroelectric resources and its central geographic location France could become "a manufacturing plant for the rest of the world."91 Both agriculture and industry should be readied for reentry into the world economy. What the planners sought in 1944 was a more pro­ ductive, and thus a smaller, rural community. When the planners assessed the ways and means of executing the two-year plan they foresaw few difficulties with either material or financial resources. They assumed prewar import levels including access to modern equipment. In a striking pronouncement on finan­ cial policy they asserted: "The events of recent years have given cre154

The National Revolution at Vichy dence to the belief that putting a policy into operation should not be stopped by a lack of funds. Indeed, the goal and raison d'être of public finance is to promote the full employment of the country's working capacities."92 Such a statement was unheard of in govern­ ment circles during the 1930s and marked a rupture with prewar orthodoxy. Execution of the tranche required extending wartime dis­ cipline, including the CO-OCRPI, into peacetime. In time voluntary cooperation and looser government supervision would replace coer­ cion. The two-year plan was conceived for whoever might rule the coun­ try during reconstruction. We know that it did help planners in 1945-6 to design postwar programs and that by placing orders with industries in 1944 it accelerated economic recovery.93 Looking ahead to the postwar period one is struck by similarities between what Vichy planners envisaged and what Jean Monnet's experts formulated and achieved after 1946. Both teams of planners identified the same major obstacles to recovery and offered similar solutions. They all recognized the obsolescence of French capital equipment, the danger of sacrificing investment to consumption, and the need to borrow advanced technology and raise investment levels. Both teams condemned prewar political economy: the underlying aver­ sion to state intervention and the haphazard way it was done; the preoccupation with financial stability; and the penchant for protec­ tionism. Vichy's planners, as well as Monnet's, found in indicative planning the way to steer between the extremes of prewar liberalism and wartime dirigisme. They also believed that an effective planning agency had to be free from political interference and ministerial con­ trol. Such parallels should not obscure differences between wartime and postwar planning. Whereas Vichy's conception of planning was narrowly administrative and hierarchical, Monnet would prefer a consultative or concertée approach. Where wartime officials pro­ claimed broad social and even moral aims of a distinctly conservative character, postwar planners confined themselves to setting a few production targets. Finally, Vichy planners intended to be more selfreliant than their successors who looked to the United States for aid. Still, both groups of planners repudiated old ways and embraced the causes of a planned economy and radical overhaul. The Vichy regime, even more than the resistance, failed to enunci­ ate a coherent program of economic reform. Those who sought a National Revolution were just too disparate. The distance, for exam­ ple, between modernizers and social conservatives was enormous. Both Vichy and the resistance are convenient historical categories imposed on diverse reformers. To the extent both movements re155

Capitalism and the state in modem France fleeted interwar dissidence they voiced common themes. Among the most salient were renovation, industrialization, planning, and state intervention. They also shared a phobia about trusts and a desire for a more humane economy. Yet there was a fundamental difference. Whereas the drive of Vichy was toward a technocorporatist economy and social peace the resistance generated a socializing and democ­ ratizing thrust. The latter's appeal for extensive nationalization, for example, was entirely absent at Vichy. This topic, however, is best examined in the following chapter. The summer of 1944 marked a sharp political discontinuity when de Gaulle and the resistance replaced the pétainistes; yet there was con­ siderable continuity at the level of the country's economic administra­ tion. Vichy officials expected the new regime to adopt their adminis­ trative apparatus and their design for reconstruction. They believed that what they had achieved and proposed transcended politics. The DGEN, for example, expected to survive the war and anticipated that the incoming government would adopt its two equipment plans. In­ deed, Vichy planners expressed hope that de Gaulle's government would be more committed to their cause than Pétain's regime had been.94 In similar fashion architects of industrial controls like Bichelonne assumed that the CO-OCRPI system would be retained during reconstruction and beyond. To a considerable extent the resis­ tance fulfilled Vichy's expectations. At the institutional level the planning office, the statistical agency, and the production ministry all blended into the postwar administration. The CO-OCRPI and the company social committees also survived, but only temporarily. And the personnel of the economic administration did not experience a major purge. More important, Vichy officials were correct in believing there was not going to be a return to "normalcy" as there had been after 1918. This time the momentum for change generated by war and the programs formulated by Vichy were to merge with the powerful impetus mounted by the resistance to carry France to a new political economy.

156

6 The resistance and structural reform, 1940-1944

Resistance characterized all those who chose to fight on after the armistice of 1940. This choice inevitably made not only the Germans, who occupied France, but also Vichy, who administered the country and collaborated with the invaders, enemies of the resistance. Charles de Gaulle first raised the standard of opposition at the time of the armistice and fought a lonely struggle at the beginning of the war. But the cause he championed gained adherents as the war deepened and grew into a mass movement by 1944. The Allied victory over the Axis decided the world war as well as the outcome of the civil war between Vichy and the resistance. Consequently it was de Gaulle and his colleagues who guided and inspired the remaking of the nation after the conflict. It is impossible in a few pages to present the views of all those in the resistance who speculated about economic reconstruction. The multitude of clandestine groups precludes any comprehensive treat­ ment. Nevertheless, one can discern the main contours of thought, the principal issues and debates. Much of what the National Revolu­ tion introduced became a point of departure for anti-Vichy planners. Thus the articulation of economic programs emerged through a kind of double dialectic between the resistance and Vichy and among resis­ tance groups. Before beginning my discussion of how the resistance developed its ideas about economic renovation, it is necessary to grasp the problem in its broadest terms. In a word there was division within consensus. Resistance leaders agreed that the political economy of the Third Republic was dead and unworthy of resuscitation. Liberation, in their minds, included freeing the economy and the state from the domination of a capitalist oligarchy. The "money powers," the "monopolies," the "trusts," the "new feudalism" - whatever label is assigned them - the nefarious prewar rulers had to be excised. A second target was "Malthusianism," the prewar attitudes and be­ havior allegedly responsible for the country's demographic and eco­ nomic stagnation. Everyone called for a more vigorous population 157

Capitalism and the state in modem France and more dynamic producers. Looking to the economy's structure, instead of Vichy's campaign to "return to the soil," France was to become an industrial power committed to open trade among nations. To assure order, dynamism, and economic justice there would be heightened state management. Perhaps most striking, the new econ­ omy would display an enlarged nationalized sector and planning. There would also be a Ministry of National Economy (MEN) to set public policy and an economic and social parliament modeled on the prewar National Economic Council (CNE). Finally, all agreed on the need to create an economic and social democracy. This involved shift­ ing responsibility from a flabby bourgeoisie to a virile working class; rebuilding a free trade union movement; securing full employment, worker participation in plant decisions, and a redistribution of wealth. This set of broad goals concealed fundamental differences among those who spoke for the resistance. This is hardly surprising, given the fact that those who chose to fight after 1940 ranged across the entire political spectrum from communists to right-wing nationalists.1 De Gaulle, it might be recalled, was a political conservative who had once been a protégé of Pétain. The issues that were to divide the provisional government, a government that emanated directly from the resistance, were discernible in the fraternal debates of 1942-4 about the nature of the postwar order and the immediate measures to enact upon liberation. Debate centered on what priority one assigned to goals and how they were to be achieved. What was the scope and urgency of nationalization, for example, and how was it to be accom­ plished? Or, how could the working class be raised to positions of economic responsibility? These and many other questions were not resolved. Without any claim to democratic legitimacy and with dubi­ ous legal credentials the resistance chose to postpone final decisions and leave most reforms to a freely elected political assembly. Those who labored on the design of a new economy formulated broad statements of principle likely to appeal to everyone, or they devised policies to meet the most pressing problems the country would face at the time of liberation. They also drafted several long-range projects for reconstruction. These designs defined positions and alternatives and stimulated debate but did not in the end determine what was to happen after 1944. One neat way to classify those who debated these issues comes from one of the participants. Daniel Villey, writing in 1943, distin­ guished two temperaments, the "architects" and the "doctors."2 The first were abstract thinkers who wanted to impose a priori schemes on the economy. They were the proponents of structural reform. In con158

The resistance and structural reform trast, the doctors, whom Villey favored, believed a structure was not built but evolved. They were less concerned with form and more interested in the content of economic activity. The two categories Villey distinguished might be better classified as socialist and neo­ liberal. Advocates of structural reform tended to be resistance fighters from socialist or syndicalist backgrounds. Many came from the dissi­ dent planiste wing of the Socialist Party. André Philip, Georges Boris, Jules Moch, and Pierre Mendès-France are representative. They in­ tended to overhaul capitalism by building new socialist structures and infusing a mixed economy with socialist values. They were wary about close dependence upon the great capitalist powers, Britain and the United States. Neo-liberals, in contrast, wanted to retain the mar­ ket and private initiative as the heart of the postwar economy though they accepted certain reforms. Some measure of state direction and heightened self-regulation were necessary. They looked to close cooperation with their Anglo-American allies. Hervé Alphand, Etienne Hirsch, René Courtin, Maxime Blocq-Mascart, and René Ple­ ven represent this school. Their background was in business, public administration, and academia. Socialists and neo-liberals dominated the wartime discussions about the postwar economy. Yet there were two other elements in the resistance who remained aloof from the debate and when the war was over exercised great influence over the outcome of reform. One was General de Gaulle; the other was the Communist Party. Both pursued political power and viewed discussion of economic reform as prema­ ture and divisive. They preferred to avoid such questions until they could test the political temper of a liberated country. With these dis­ tinctions in mind we can turn to the history of the resistance. De Gaulle's economic study commission, London

From London General de Gaulle directed and inspired the resistance in exile early in the war. Fighting France, as his movement came to be called, was committed to returning France to the war and driving out the invader. As active partners in the Allies' military reconquest of Europe, de Gaulle believed, France and the French state would re­ cover most rapidly from the defeat. Other issues, including economic reconstruction, were secondary. His aspiration of making Fighting France a political rival to the Etat Français, however, led him to make preparations for the transition to a new political, economic, and social order. Word also reached London of certain resistance groups in France that had begun to speculate about the country's future. De Gaulle, as head of the French National Committee, which was the 159

Capitalism and the state in modem France executive for Fighting France, accordingly created four study com­ missions in December 1941.3 He designated one commission for postwar economic and social questions. De Gaulle relied on the small pool of exiles who had rallied to his banner to staff these commissions. Of the fifty participants on the commission for economic and social problems, most members had little to contribute. They were Frenchmen living in England, like the manager of a glue company who had been pressed into service. A few figures dominated the proceedings. Hervé Alphand, the chief of eco­ nomic affairs in the Commissariat for Economics and Colonies, headed the commission. His superior in the commissariat was the formei; businessman René Pleven who, at the armistice, had been part of a purchasing mission in London. The commissariats were the inci­ pient ministries of the French National Committee. Within the study commission neo-liberals like Alphand and Pleven could rely on Etienne Hirsch to voice their views. Hirsch was a former manager of a major chemical company who was helping Fighting France acquire armaments from the Allies. The socialist wing of the commission included André Philip, Georges Boris, and Robert Marjolin. Philip, head of the Commissariat of the Interier and Labor, was the moving force behind the commission. He operated the political intelligence and propaganda network from London and thus acted as a conduit for the exchange of information with the internal resistance. Boris we encountered earlier as an aide to Léon Blum, and Marjolin had been a socialist planner in the 1930s. All these commission members were to have distinguished postwar careers.4 Alphand's commission labored under severe handicaps. De Gaulle and the national committee did not take its labors seriously. The selection of a new economic structure for France, it was assumed, would rest with a political assembly elected after the country was liberated. When Christian Pineau quizzed de Gaulle in 1942 about his attitude toward economic planning the general said the question was premature because a liberated French community would make the decision.5 The National Committee gave the commissions little en­ couragement or assistance. News from France was scant, making it difficult to interpret the will of the resistance across the channel. The presence of the Allies was also strongly felt by those living in wartime London. The prospect of Anglo-American postwar economic hegemony channeled discussion. The commission's deliberations were also marked by disagreement on basic issues. Debate was intricate because there were two sets of fractures. Neo­ liberals like Alphand sparred with socialists like Philip over such is­ sues as the role of private and socialized sectors in the economy of the 160

The resistance and structural reform future. Socialists then divided between those who wanted state direc­ tion like Philip, Boris, and Marjolin and syndicalists like Henry Hauck who sought economic democracy through the elevation of the work­ ing class and trade unions. But neo-liberals like Hirsch exhibited a strong technocorporatist inclination modeled after Vichy. Thus, on occasion the mutual interest of syndicalists and neo-liberals in reor­ ganization along professional lines brought them together against socialists who looked to the state for management. During the most intense period of discussion in the summer and fall of 1942 Alphand's commission debated three key issues. To what extent was the economy to be directed? That is, what would be the boundaries of the directed and free sectors; and would there be, in addition, a third nationalized sector, or would nationalized firms simply be incorporated in the first two sectors and allowed to com­ pete with private companies? A related issue was whether the free sector would be returned to the market, controlled by professional organs reminiscent of the CO, or fall under a general state plan. And what of wartime controls on prices, production, investment, and con­ sumption? Were they to be continued as permanent features of a planned economy or dismantled after the period of reconstruction? The second major issue was how the economy was to be directed. There was the choice between a statist and a syndicalist-corporatist method. Should authority lay with the state fonctionnaires or with self-regulating corporatist bodies, which included labor, and an eco­ nomic and social parliament? The third general question that faced the commission was relations with the British and Americans. It was obvious that the Anglo-Americans rather than the Russians were going to liberate France. The commission expected the Americans to insist on opening the French economy at least for trade. Thus Ameri­ can policy ran counter to the French desire for domestic economic management. How far and how quickly, the commission asked itself, should France move toward free trade in order to please their Allies and win assistance? There were limits to such appeasement because the internal resistance harbored misgivings about the Allies. They deplored the American policy of maintaining diplomatic relations with Vichy, and left-wing fighters feared Anglo-American capitalist hegemony. By 1942 Fighting France had participated in several inter-Allied con­ ferences and subscribed to the principles of the Atlantic Charter. The need for a French response to the latter declaration, which included a pledge of equal access to raw materials and free trade, prompted the economic commission to draft what turned out to be its only general statement on postwar problems. Under Alphand's guidance a sub161

Capitalism and the state in modem France committee that included Hirsch and Boris completed a report for the commission.6 Its purpose was to conciliate the Allies and define the position of Fighting France for the metropolitan resistance. Alphand explained that the "master idea" of the project was that "the state, acting on certain nerve centers of the economy, could reach fixed goals without being obliged to intervene at every level or in every sector, which is the end of a healthy economy."7 John Maynard Keynes, William Beveridge, and the example of wartime economic and social policy in Britain informed Alphand's report.8 The state intervened largely through fiscal, monetary, and credit measures to assure steady economic activity and full employment. Outside the nationalized sector government regulation of production and prices was negligible. A large part of the economy was left to the market and the report pointedly praised free enterprise. Even nationalized firms should operate according to "industrial methods." Economic plan­ ning would prevent a return to the disorder of the 1930s and yet not bring "economic regimentation."9 Although rationing and other war­ time controls would be necessary at first, they were to be abandoned quickly. Alphand's subcommittee asked for the creation of numerous new institutions of public management including a ministry of eco­ nomics, an economic parliament, and agencies for the control of such matters as investment and monopoly. In deference to their Allies the subcommittee recommended that Fighting France declare its al­ legiance to the principles of free trade and a world economic organiza­ tion of free peoples.10 After the war France would relax its trade barriers and ask rich nations like the United States for credits, a share of raw materials, and an open market for French goods. The attempt by Alphand's subcommittee to appease the Allies as well as socialists and neo-liberals on the commission failed. Hauck winced at the deference paid to the liberal proclivities of the Ameri­ cans. He suggested France should lead Europe and not be afraid of displeasing its capitalist Allies.11 Boris explained that it was in Ameri­ ca's interest to help rebuild Europe but that Americans were likely to favor countries whose economies were not planned or socialized.12 A circle of trade union officials in London registered a minority report. They complained that Alphand's text unduly praised the profit mo­ tive, slighted the working class, and exhibited "technocratic" tenden­ cies.13 Philip voiced his own objections and interpreted those of the internal resistance as well.14 The commissioner of the interior pointed out that the projects drafted in France were more dirigiste than the text prepared by Alphand, and he preferred direct state control over the "directed sector." In hearings Hirsch, a neo-liberal, urged stronger technocorporatist 162

The resistance and structural reform measures. He composed a minority report that described the function of planning as merely creating a "general ambiance, a climate."15 The former businessman preferred managing the economy by corporatist bodies, similar to the CO, composed of employers and workers, and by a powerful CNE. Hirsch argued that the important problem was not structural; it was managerial. Fonctionnaires were incompetent business executives. Such views, in Philip's opinion, smacked of Vichy practices or of America's tendency to let employers control public administrators. Boris thought Hirsch's project would lead to corporatism. In the end the London commission could not resolve differences over such basic issues as how the economy was to be managed. Alphand decided to send the subcommittee text to the resistance in France as an indication of the majority view, but he also sent along the minority reports and an explanation of why the commission had to placate the Allies. British and American officials, however, re­ ceived Alphand's text without any qualifications. De Gaulle broke his silence about reconstruction in June 1942 only because a delegation of socialist resistance leaders from France in­ duced him to make a statement. The leader of Fighting France stressed first making France master of its own destiny and afterward electing an assembly to decide its future institutions. On economic policy he spoke of reversing the system of special interests that had betrayed the nation. "A dirigiste technique," he stated, would be needed to renew the nation's resources.16 Meanwhile, his study commissions in London withered from inattention. In March 1943 the head of the commissions' secretariat complained that enthusiasm had ebbed to the point that certain commissions had stopped working altogether.17 In others discussions had degenerated into gossip. Without more support from the National Committee, more compe­ tent members, better liaison with France, and improved organization, he warned, the commissions would die. Philip tried to maintain communication with the internal resistance in 1943, but by then seri­ ous discussion had shifted to France itself. Neo-liberal planning in France: the Courtin report

Initially the underground in France, like the exiles in London, defined their cause negatively. They were fighters. Their enemies were the Germans. When Vichy failed to act as a shield against the occupier, it too became an enemy. Resistance began as a revolt against foreign subjugation and not as a domestic political or doctrinal movement. It was striking in its high sense of moral purpose. As René Courtin 163

Capitalism and the state in modem France recalled, "in the beginning we were engaged in order to save the country's soul without knowing whether its body would ever be res­ cued."18 Any orchestration of resistance programs was immensely difficult in wartime France. Resistance groups proliferated and frequently fought in isolation. They were also politically and socially heterogeneous. Some movements concentrated exclusively on paramilitary operations or confined their programmatic statements to perfunctory circulars. Other groups were founded around a clandes­ tine newspaper or chose to specialize in lengthy reflections about the nation's past, present, and future. Such declarations, however, did not necessarily represent the views of the rank and file because mem­ bers often were unaware or unconcerned about programs. The Ger­ mans, furthermore, made communication dangerous, and the de­ marcation line split the resistance into northern and southern zones. One effect of the defeat and the National Revolution was to smash prewar political, ideological, confessional, and economic groups. Political parties and trade unions were among those left in disarray by 1940. As a reform movement the resistance developed outside the institutional remnants of the past. The postarmistice rebels followed the precedent of the intellectual study groups of the 1930s that had assembled the formerly non-engagés in their search for an idea of renewal.19 Not till the later stages of the war did political parties intrude. Socialists at first did not act as a party. Militants scattered their energies throughout the resistance. Some, as we have seen, rallied to de Gaulle in London, and others formed powerful units like Libération Nord. The communists committed themselves totally to the war against nazism after Hitler's attack on the Soviet Union. Unlike the socialists they quietly reconstituted their party, but at the same time launched a movement, the Front National, open to all. The communists ostensibly renounced domestic politics, and whatever postwar projects they prepared were kept secret.20 Like de Gaulle the communists acted the part of superpatriots who considered postwar planning a distraction from combat against nazism. One major exception aside, resistance groups who faced the Ger­ mans directly in the occupied zone did not produce much in the way of postwar projects. In the south where the Germans were largely absent until the end of 1942 the atmosphere was different. Here the occupation was less visible, freedom of speech was greater, and Vichy was the legal authority. In fact the National Revolution stimulated the resistance in the south to reflect about the future. By 1942 there were anti-Vichy study groups at several faculties in southern cities. Among 164

The resistance arid structural reform these academics were André Philip (before he left for London), Fran­ çois de Menthon, René Courtin, and Pierre-Henri Teitgen. The clan­ destine press in the south issued some brief statements about economic overhaul. Combat, one of the largest underground news­ papers, declared that after winning the war alongside Fighting France, "we will remake France."21 Combat called for a "socialist revolu­ tion" that would root out the oligarchy that controlled the economy and return its important sectors either "to the nation or to com­ munities of producers and consumers." Franc-Tireur, another promi­ nent organ, proclaimed that the prewar economic system had been dying before Hitler gave it the coup de grace.22 Yet the journal offered no clue as to what might succeed the liberal regime. Leaders of the disbanded CGT in the summer of 1943 sketched a program that be­ sides asserting syndical freedom merely demanded the confiscation of collaborators' property, reform of the CO-OCRPI network, and immediate nationalizations.23 Among the major projects generated by the underground, as op­ posed to the preceding manifestos, only one came from the occupied zone. This was the work of what was perhaps the most important movement in the north, the Organisation Civile et Militaire (OCM). The OCM combined civilian and military elements. Jacques Arthuys recruited the military wing. He was an officer who had been a collaborator of Georges Valois and Colonel de la Rocque between the wars and commanded a unit in 1940. Of Bichelonne he said, "Nothing to hope for from that head. .. it is everything we are fighting stuffed in one skull."24 At its peak, thanks to Arthuys and other demobilized officers, the OCM could field some sixty thousand volunteers for the underground army. The civilian wing of this Paris-based organization recruited industrialists and civil servants, many of whom came from the ministries of industry and public works. Maxime Blocq-Mascart, the dominant personality, directed a consulting office for business. Aimé Lepercq managed the coal CO; Pierre Lefaucheux, an engineer from private industry, served on another CO; and Jacques Piette, a socialist-syndicalist, worked at the Ministry of Industrial Production. These men drafted the OCM's cahier that concerns us.25 In fact the OCM published several lengthy cahiers, which mark it as one of the most significant intellectual movements of the resistance in addition to its military and intelligence operations. The cahiers were never openly discussed within the OCM, but they at least represent the mind of its leadership. The cahier on economic and social reform appeared in May 1943. To some it exhibited dangerous "technocratic tendencies."26 The OCM 165

Capitalism and the state in modem France condemned liberalism for breeding economic combat. "Competition, this war in peacetime/' Blocq-Mascart's circle contended, "after hav­ ing been a cause of progress perhaps for the last century has now become a factor of ruin and injustice."27 State direction was no substi­ tute for the market because its regulations bridled economic progress. "We must choose a method of dirigisme, as they say, which is neither meddling nor bureaucratic. It should create an ordered economy without guiding it at every turn. The economy should direct itself, but in a path laid out in advance. We shall choose the method of a planned economy."28 Planning was perceived as a set of instructions for the whole economy. The essence of economic planning for Blocq.-Mascart, Lepercq, Lefaucheux, and Piette was the contract. All firms were to be more or less subject to planning because they oper­ ated according to contracts that fixed the quantity, quality, and price of products. The intermediary between the firm and the state in this contractual system was a professional group. The latter possessed almost all the powers then exercised by the CO. Certain alterations, however, were in order to prevent these groups from behaving as closed, self-serving institutions. Obligatory syndicates of employers, cadres, and workers formed the basis of these refurbished CO. Lepercq and Lefaucheux, who were managing CO seemed convinced Vichy's industrial control system had merit. The OCM, perhaps more than any resistance movement, wanted to rebuild with the ma­ terials of Vichy's corporatist construction: "the stones of the ruined home generally serve to erect the new dwelling."29 The OCM meant to create professional groups within days following the liberation, employing untainted CO officials. Vichy's administrative services were also to be retained: "in every revolution it is the administrative authority that knows how to maintain order."30 Direction of this new "contractual planned economy" required a mighty economic minis­ try, a true superministry that reduced other administrations to the status of secretaries of state and featured a planning office. The goal of the ministry of economics, unlike prewar ministries, was to promote economic development rather than administer the status quo. Despite the technocorporatist direction of this project the OCM considered socialism both desirable and inevitable. Here the categories of economic reform mingled. The authors of the cahier asked themselves how they could combine the attractions of collec­ tivism with efficient, autonomous production units. Nationalization was no answer because it bred "nonsocialist statism." The solution, according to these businessmen and civil servants, was for "the col­ lectivity" to own all businesses and appoint their managers. Once 166

The resistance and structural reform appointed, managers would enjoy a nearly free hand in operations. Most big firms, the cahier noted approvingly, were already tended by managers rather than owners or stockholders. Here a managerial vi­ sion blended with socialism.31 A far more significant effort by the underground at framing a post­ war economic program than that made by the OCM was due to the Comité Général d'Etudes (CGE).32 This committee had its origin in the university circles that Philip, de Menthon, and others had estab­ lished in the unoccupied zone. De Menthon suggested creating a high-level study group to Jean Moulin in June 1942. Moulin had been parachuted into France to act as de Gaulle's delegate to the internal resistance. Moulin's mission was to unify the resistance around a National Resistance Council and attach it to the French National Committee. Acting on de Menthon's advice Moulin proposed, and London approved, the creation of a "committee of experts" to pre­ pare for the liberation. Its tasks were to draft measures to facilitate the transfer of power including replacement of administrative personnel; sketch the structure of the new regime; and act as the government's advisor at the moment of liberation. The original four experts who gathered in Lyon were de Menthon, Paul Bastid, Robert Lacoste, and Alexandre Parodi. De Menthon taught political economy, and Bastid was a law professor. We have Lacoste encountered as a fonctionnaire at a state bank and as a planiste for the CGT. Parodi served on the Conseil d'Etat. René Courtin and Pierre-Henri Teitgen soon joined them. Both were professors at Montpellier, the first of political econ­ omy, the second of law. Judicial, constitutional, and administrative matters occupied their attention. AU the members of this brain trust had law degrees. Courtin, whose code name was "Economicus," took charge of formulating an economic program. Although the CGE developed out of the resistance in France it performed official functions for de GauUe's National Committee and tried to mediate between the two. But mediation was not easy. Henri Frenay, the editor at Combat, reproached the experts for failing to maintain adequate contact with the movements. Groups in the oc­ cupied zone criticized the CGE for making decisions that should have been left to the National Committee. Others disapproved the compo­ sition of the study group, namely, the heavy proportion of jurists and hauts fonctionnaires and the poor representation of socialists. Behind the criticism was a fear on the part of the resistance that the experts might steal their victory. Broadening the membership helped im­ prove relations.33 Communication with London was difficult, and the experts complained of working without much knowledge of either 167

Capitalism and the state in modem France the National Committee's plans or the views of the Anglo-Americans. As of April 1943 Philip's commission in London and the CGE were barely acquainted with each other.34 Early in 1943 Courtin sent out questionnaires to learn the state of mind of the resistance on economic and financial issues.35 He elicited responses from groups throughout the country as well as from syn­ dicalists, professors, politicians, and friendly Vichy administrators. His questionnaires both expressed his inclinations and requested opinions. Unless France made a sharp about-face and adopted a "progressive economy," Courtin argued, it would continue its pre­ war stagnation and end up like Spain. The questionnaire asked how monppolies should be treated and whether or not the free sector was to be subject to any controls. Courtin made no effort to conceal his neo-liberal preferences about these issues and observed that the Anglo-Americans might force a liberal commercial policy on France. In the spring of 1943 Courtin sent his tentative recommendations for immediate measures to the National Committee.36 Controls would be necessary for the time being. Despite their unpopularity, the CO-OCRPI should be continued not only because they were needed but, as his survey showed, because "industrialists are even more opposed to a purely statist solution" than to a corporatist framework. Courtin also recommended abolishing the Labor Charter and permit­ ting an immediate wage increase. The Allies could supply aid at the outset, and once prosperity returned it would be up to the nation to determine the shape of a new economic order. In July Philip dis­ patched the engineer Emile Laffon to France to work with the CGE and expedite preparations. When Laffon reported on his mission to the National Committee two months later Courtin's study was not yet finished.37 Laffon's talks convinced him that the Vichy control net­ work would be needed temporarily. He reported agreement within the resistance on the need for establishing a MEN and a planning office.38 The CGE finally produced a clandestine edition of its "Report on Postwar Economic Policy" in November 1943, and Combat published it openly in Algiers once the liberation was underway.39 It represents the most sensible and technically proficient project the resistance formulated on this subject. René Courtin with the help of Teitgen and de Menthon composed it. The report attempted to blend neo-liberal economics with the idealism of the resistance. Or, in Courtin's words, it tried to combine "the demands of science and reality" with the revolutionary aspirations of the resistance.40 If the project could not claim to be the official program of the resistance, it at least received 168

The resistance and structural reform the endorsement of the CGE and represented the views of the faction, the neo-liberals, who eventually dominated postwar policy. The CGE report acknowledged that resistance opinion wanted a profound transformation of the nation's economic and social struc­ ture and even its moral fiber. The liberal economy stood condemned by the depression. So did the capitalists who had monopolized wealth and subjugated the state. Since the armistice this "ruling class" had further demonstrated its unworthiness by supporting col­ laboration. The time had come for the bourgeoisie to share its power and wealth with the working class. Dirigisme and planning seemed the solution. But Courtin, the hardheaded economist, warned against easy answers and blanket accusations. A minority of the bourgeoisie, he pointed out, had inspired the resistance. Structural reform and moral rehabilitation would not in themselves either liberate the econ­ omy from the capitalist oligarchy or restore prosperity. Economic problems were too complex to yield to abstract solutions. The CGE believed it was premature to settle the type of economy France should have after the war. The experts preferred to reserve judgment on the choice between a planned or a liberal economy. Public opinion, the CGE reported, did not unanimously prefer a leap into a directed economy. On this issue the experts' inquiry showed support for dirigisme among the staff of the CO; from officials in the ministries of industrial production, supply, and agriculture; from en­ gineers; and among a majority of labor leaders. But most small busi­ nessmen, artisans, and farmers wanted a prompt return to a market economy. Furthermore, there were doubts that direct management would work in a prosperous, peacetime economy. The report also pointed out that one could not anticipate the postwar configuration of world politics where France might have to choose between the Anglo-Americans and the Russians. For these reasons the CGE con­ fined itself to offering a short-term reconstruction program and set aside consideration of a final determination of the country's political economy until after recovery. A circumscribed set of immediate structural reforms, however, was appropriate. Like everyone in the resistance Courtin wanted to evict capitalist monopolies. His criterion for nationalization was, unlike the socialists', the condition of the market. If a monopolistic situation prevailed in a particular branch of activity, he accepted gradual nationalization. A nationalized firm, however, operated according to normal commercial practices. He disliked corporatist institutions be­ cause they impeded competition. Thus the CGE report advised using delegates selected by the ministry of industry temporarily to run the 169

Capitalism and the state in modem France CO. With respect to labor Courtin was hesitant about the participa­ tion of workers in company management. He endorsed adding repre­ sentatives of workers and technicians to boards of directors but enumerated the dangers of such a reform. The Labor Charter was to be abrogated, trade unions reconstituted, and social security pro­ grams enacted. Finding a solution to the problem of coordinating public policy was knotty. The CGE, after considering various alterna­ tives, recommended creating a MEN and an interministerial commit­ tee. The MEN did not subordinate other ministries. It did, however, possess countersigning power over government directives on eco­ nomic policy. The experts shied away from creating a superministry or a .powerful planning office from fear of installing "a technocratic government" at the expense of parliament and the council of minis­ ters.41 What kinds of policies were to accompany these modest institu­ tional reforms during reconstruction? The CGE report urged the French National Committee to inform the people that it would be necessary to prolong rationing and controls at least temporarily. There was no other way to assure food, heat, and lodging for everyone and to see that consumption did not curtail investment. State direction of reconstruction would be more effective after this war than it had been after 1918 when the government had abandoned the task to the market: This failure of public authorities was due not only to the strength of liberal prejudices that existed then and to a lack of imagination but also to the inadequacies of the instruments of management at the disposal of authorities. Yet the frightful ignorance of the leadership of this period makes one think that more energetic interventions would have been disastrous. . . Today the situation is very different: public opinion, on the whole, is determined to assure economic reconstruction through firm direction. Besides, the disorders we need to overcome are more numerous and grave than those the country faced in 1918. At the same time the operation of these mechanisms is better known, and public authorities possess the principal instruments for an inter­ ventionist policy.42

Courtin's approach to reconstruction was empirical and flexible. In essence he looked to relaxing controls and returning to the market as soon as conditions permitted. But the situation was different for ag­ riculture, industry, and investment. After emphasizing the ways ra­ tioning hindered farm output, he concluded food rationing should be terminated rapidly, product by product, as supply revived. Industry, in contrast, faced more formidable impediments, such as empty in­ ventories, ravaged plant, world shortages of raw materials. Without controls investment would flow into manufacturing items like clothes 170

The resistance and structural reform rather than toward capital equipment in basic sectors. For the time being Courtin foresaw keeping rationing and other existing controls. A new investment council would draft an equipment plan that would be imposed on the public sector and used to guide investment in private industry. Once reconstruction was complete, however, the CGE wanted the investment council to relinquish its power over the private sector. Courtin also presented a monetary policy aimed at halting price inflation. This issue is best dealt with later in the context of the program of the provisional government. Suffice to say here that the CGE experts preferred floating a loan to more rigorous methods of absorbing purchasing power. Substantial wage hikes were also in order. Courtin envisaged constructing what he called a "progressive economy" for France. A return to the market, economic freedom, and free trade were the means. This was the crux of the report. The neo-liberal economist roundly attacked the restrictive policies of the 1930s, which had stopped the advance of the 1920s. He lamented that, in contrast with America, France had lost its ambition: "The French­ man tended to build a commonplace country house where after his retirement, cultivating his garden and fishing, he awaited death. This mediocrity could not even be excused by resignation: a mindless and immodest plaque on the door usually read 'My Dream' or 'My Hap­ piness.'"43 The military defeat of 1940 held an economic lesson for those Malthusians who chose defense over offense: "In neither eco­ nomics nor war is it possible to shut oneself up in a purely defensive posture. As strong as they are, all Maginot lines end up being overrun or bypassed if the shock troops are not ready to attack."44 Vichy was economically reactionary. It had tried to revive "medieval cor­ poratism" and, following Germany's demands, return to the land and crafts. The symbol was a toy locomotive that had been presented to Marshal Pétain consisting of 3,000 hand-forged pieces made by an artisan using only a file. The eighty-five-year-old chief of state and his handcrafted toy represented an aging nation sinking into lassitude. A progressive economy, in contrast, encouraged competition, ex­ panded output, and supported an ambitious social policy. It would help the poor more than the rich, Courtin asserted, by reducing the inequalities of wealth. Wages will increase faster than wealth, and French workers would soon enjoy a standard of living equal to the most advanced nations. Taking aim at the socialists, he argued that "any improvement in distribution is dependent on the development of production."45 Similarly, the war proved that a people's military strength depended on the possession of a powerful industrial plant. How could France restore economic dynamism? The CGE 171

Capitalism and the state in modem France suggested programs to encourage demographic growth and educa­ tional reforms to promote technical training. Full employment could be attained through appropriate monetary and fiscal policies. Wage levels had to be linked with productivity. And productivity could be raised by a variety of measures such as those introduced by the CO.46 Perhaps the most striking assertion of the entire report was its predic­ tion that France was bound to shift its economic base away from agriculture: "In every modern society reduction of the relative impor­ tance of agriculture in relation to other activity should be considered a consequence of an improvement in the standard of living and an increase in productivity."47 Courtin argued that demand for food was relatively inelastic and pointed out that agriculture's role had been artificially swollen by the economy's regression following 1940. Simi­ larly, a bloated commercial sector should be deflated through heightened competition and the extension of mass retailers like prix unique stores. In the final analysis Courtin's prescription for building a progress­ ive economy turned upon investment. "Still more than an abundance of natural resources and raw materials the wealth of a nation derives from the importance of its equipment."48 The development of the stock of capital equipment depended on savings and investment. Do not look to the state, however, the neo-liberal economist ad­ monished: "the state has always been a wretched investor." Taxes tend to go to unproductive expenditures. "The budgetary deficit," he declared, "thus bears the greatest responsibility for the underde­ velopment of the French economy up to the depression." In his view the burden of investment rested on private savings. Courtin em­ ployed an explicit Keynesian analysis of the relationship among sav­ ings, investment, and unemployment to conclude that the key to development was a favorable investment climate. Rising income levels, maintained through adjustments in wages and prices, gener­ ated enormous demand, which in turn stimulated investment. Cour­ tin's conception of economic management was Keynesian, that is, indirect adjustment of the market through manipulation of taxes, wages, prices, and money supply. Accompanying all these internal policies was the need to reestablish France's place in world trade. Courtin looked to a favorable stabilization of the exchange rate of the franc and to the creation of an international monetary organization. France was to adopt a free trade posture aligned with the AngloAmericans. There is evidence that the CGE's report did not please everyone in the French National Committee. As of June 1943 the committee re­ sided in Algiers following the Allied victory in North Africa. After 172

The resistance and structural reform much wrangling de Gaulle emerged as the head of the French Com­ mittee of National Liberation (CFLN), the successor to the National Committee, which combined representatives of the internal and ex­ ternal resistance. It directed the French war effort and aspired to preside over the liberation of France.49 The Courtin report, which was published in Algiers in July 1944, failed to win the endorsement of the CFLN and even aroused pointed criticism. One socialist critic at­ tacked it as "a timid effort at replastering the past."50 The report, in this critic's view, smacked of "the classic liberalism of Sciences Po." It was too personal and reflected the aspirations of neither the CFLN nor the internal resistance. Courtin had slighted the role of the work­ ing class, and his assumption that France must align itself with the Anglo-American bloc was unwarranted. "For our part we shall con­ sider the report that was submitted to us for our evaluation appro­ priate only in case our country submits to an American economic and financial takeover and if we want to maintain liberalism to its utmost and direct the economy only by financial means."51 The socialist went on to claim that the arid, technical text would dampen the enthusiasm of the resistance like "a cold shower." He suggested that the experts' project be incorporated into a broader study that synthesized eco­ nomics and politics, one that captured the élan of the resistance. The dispute between Courtin and his socialist critic deftly expresses the two basic approaches to reconstruction. If the CGE's report on economics failed to gain recognition from the CFLN, its other proposals fared far better.52 Moreover, its members were to fill key positions in the administration during the liberation. Half the secretaries-general who acted as provisional ministers in August 1944 were experts, including Courtin at finance, Lacoste at industrial production, Teitgen at information, and de Menthon at justice. And another colleague, Emmanuel Monick, who had been the financial attaché in Washington and London, became secretary for national economy. The CGE merged with the CFLN during the libera­ tion, and its neo-liberal orientation was to stamp subsequent deci­ sions. Socialist plans: the Philip report

The CGE stands as the most authoritative expression of the neo­ liberal approach to reform. A comparable report, written by André Philip, best represents the thinking of the socialists. Before discussing the latter text, however, we should review its antecedents. The Socialist Party did not reconstitute itself quickly after the armi­ stice because its militants did not want to separate themselves from the 173

Capitalism and the state in modem France rest of the resistance. A few, as we have seen, rallied to de Gaulle. At first some members like Charles Dumas and Jules and François Moch drafted and circulated projects on their own. By mid-1943, however, political parties began to revive, largely because de Gaulle allowed them de facto recognition within the National Resistance Council and the CFLN. Socialists established an executive in France with Daniel Mayer as secretary-general, which gave a framework to party activity. Mayer, with the advice of Georges Boris, presented a programme com­ mun late in 1943 hoping to rally the internal resistance to a socialist project. In Algiers socialists also regrouped themselves. Leaders like Philip, Félix Gouin, Jules Moch, and Adrien Tixier held prominent positions in the CFLN or the Consultative Assembly. The latter body, formed in 1943, gathered delegates from resistance groups and politi­ cal parties. The basic similarity of the various socialist proposals allows them to be discussed together.53 They tend to begin with an indictment of a flaccid bourgeoisie and to look to structural reform as the means of socializing and renovating the economy. Bourgeois liberty before 1940 had degenerated into economic anarchy and stagnation while the "money powers" had corrupted the republic. Bourgeois dirigisme after 1940 had turned into oppression and collaboration. Albert Gazier, a socialist-syndicalist spokesman, commented, "the French economy is presently directed by the trusts for Germany's profit. Tomorrow it will be directed by the nation for the benefit of the collectivity."54 Socialist management would discipline the economy, invigorate it, and turn it toward everyone's benefit. Just how so­ cialists directed an economy was more problematic. Equally perplex­ ing was whether or not a provisional government had the right to introduce structural reform before an election. Socialists sought some form of economic management other than bureaucratic state control. Daniel Mayer's program, which carried the endorsement of the Socialist executive committee, declared that "the economy should be organized under the state's direction" but with the "active participation" of everyone affected - workers, industri­ alists, consumers - in setting policy.55 Mayer's programme commun called for planning and for nationalizing public services, insurance, mines, and the large firms in key industries. Credit was to be con­ trolled. But Mayer's project was a kind of minimal program designed to inspire doctrinal unity within the resistance rather than to express the grand hopes of the socialists. On the subject of nationalization Gazier and Moch were bolder. Gazier refused to countenance merely monitoring credit: 174

The resistance and structural reform Supervision would be acceptable if it were exercised over men dedicated to the public welfare, animated by a will to serve the nation, rather than over those motivated by a frantic desire to conserve their power. One does not watch over one's adversaries. One subdues them, chases them, puts them out of commission so that they cannot sabotage a policy they detest.56

Socialists seemed preoccupied with nationalizing away the possibility of a capitalist counterattack. Every project enumerated a different list of branches for public takeover. The more official the project, the more general the list. But the issue was less which branches, or firms within branches, to nationalize than how to make the change a so­ cialist measure. The question was how to manage these enterprises democratically, inspire them with socialist policies, allow them au­ tonomy, and yet operate them efficiently. Mayer's program offered no guidance. Others sketched ways to gradually extend workers' par­ ticipation in management while accepting the fact that for the time being workers could not operate firms by themselves. Jules Moch, polytechnician and socialist, advanced the most radical answer to these questions. His ideas gained considerable backing within socialist ranks. His project, first drafted in 1942, as part of a constitutional measure, surfaced again at the Consultative Assembly in 1944.57 Moch proposed creating some twenty autonomous sectors, autonomous because they were free of both capitalism and the state. Only the largest firms in each sector need be expropriated to render an entire branch autonomous. A general council composed of man­ agers, workers, and representatives of the general interest managed each sector. Each plant had a work council composed of employees' delegates and a plant manager appointed by the general council. The manager and the work council ran the enterprise. In Moch's view this was a democratic and socialist form of production.58 Planning was a second element in socialist economic management. Yet aside from Moch's project socialists were even more abstract about this reform than they were about nationalization. Officially the party never went beyond the following statement: "A new economic and social order that disciplines the forces of production by general plans must succeed the capitalist regime, which has made liberty a synonym for disorder."59 Neither the content of planning nor its method was seriously examined. Mayer spoke of "the formulation of production programs in which everyone interested will partici­ pate."60 Socialists in Algiers wanted "a national reconstruction and production plan" drawn up with the help of trade unions. Still others mentioned a "first equipment plan" for industry and agriculture. Planning was a secondary concern compared with nationalization. It 175

Capitalism and the state in modem France was also difficult to develop a proposal without information about the state of the economy. A critical question was how to plan demo­ cratically. The alternatives were lodging responsibility with one or a combination of the following: a planning commission, a MEN, a syn­ dicalist council (CNE), the government, or a political assembly. Once again Moch alone faced these questions squarely and articu­ lated a serious project for socialist planning.61 He suggested the French plan from the bottom up. In the autonomous sectors plant managers and work councils formulated projects that would be transmitted upward. Analogous methods could be used in the other sectors where the only concern was investment programs. A plan­ ning .office, attached to a MEN, combined this data with information from other ministries and the statistical service into a four- or fiveyear plan. In Moch's version parliament approved the plan at the beginning of its legislative tenure. The state budget merged with the economic plan; the plan became the "economic budget of the nation." Annual budgets allowed successive approximations of long-range forecasts and targets. The "kingpin of the new organization" was the planning office attached to a powerful MEN. Yet execution of the plan was decentralized, falling, for example, into the hands of the general councils for the autonomous sectors. Socialists could not even sell their programme commun, much less Moch's scheme, to the rest of the resistance. Nevertheless, the Na­ tional Resistance Council in France adopted an official program in March 1944.62 This programme d'action explained how the resistance was going to help the Allies liberate France and then presented "mea­ sures to apply" once the country was free. In fact, these measures were general principles. They included installing "a real economic and social democracy" accompanied by the removal of capitalist "feudalisms." In place of Vichy's supposedly fascist-inspired "pro­ fessional dictatorship" there was to be a rationally organized econ­ omy serving the general interest. Production would be intensified according to a plan formulated by the state after broad consultation. Monopolies, energy, underground resources, the insurance com­ panies, and the banks were, in a vague phrase, to be returned to the nation. Liberals and communists on the resistance council blocked Mayer's attempt to employ the term "socialization" in their action program. The council also encouraged workers' participation in the operation of both the firm and the economy. There were promises of "an important wage adjustment," monetary stability, job security, and the reconstitution of free trade unions. Later, when the National Resistance Council's program was commonly invoked during post­ war elections, an editorialist for Combat recalled that the text had 176

The resistance arid structural reform given the resistance "distant goals" rather than solutions, especially with respect to economic change. "As judicious as the resistance council's program may be," he concluded, "it still leaves us every­ thing to do, everything to conceive."63 The socialist equivalent to Courtin's neo-liberal report was the work of André Philip. First in Lyon, then in London, and later in Algiers he persisted in his effort to elaborate a socialist project. Fol­ lowing the creation of the Consultative Assembly, de Gaulle ap­ pointed Philip the CFLN's commissaire in charge of relations with the assembly and the study of postwar problems. De Gaulle described Philip grappling "with the flood of ideas that gushed from his own brain and with the assembly's successive 'malaises.'"64 In January 1944 Philip created several study commissions that brought together representatives of the external and internal resistance. He packed the commission on economic problems with structural reformers includ­ ing Mendès-France, the commissaire for finance, Albert Gazier, and Louis Vallon. The latter was a polytechnidan and a socialist planiste. Keynesian ideas had spokesmen in Mendès-France and Rioust de Largentaye, the translator of Keynes's General Theory.65 General de Gaulle received the commission's report, aptly entitled Structural Economic Reforms, that Philip had written in July 1944 as the pro­ visional government completed its preparations for its return to France.66 Philip described the country's mood as liberation approached. If some, suffering from years of privation, wanted tranquillity and a return to prewar ways, others, especially workers, exasperated by the experience and the treason of the ruling class, sought punishment of the guilty and structural reform. "A real renovation of France will be not only possible but necessary."67 It must be accomplished, he con­ tended, within six months of the landings, when the fervor for change peaked, or it might never occur. This sense of urgency distin­ guished the Philip report from Courtin's. During the reconstruction period overall state direction of the economy, including rationing, was inevitable not merely to assure provisioning the populace but because "our gravest problem immediately after the war will be the reconstruction of our industrial equipment."68 The commissioner, who had lived in England after 1942, lamented the decrepit state of French industry and its backwardness when compared to the scien­ tific and technical progress made by other nations during the war. In order to channel resources toward "basic investments" during recon­ struction he recommended imitating the Soviets and imposing a gen­ eral plan. The state had to take industrial renovation in hand, or France risked losing its position as a great power: 177

Capitalism and the state in modem France We should not imagine that France could remain essentially an artisanal and agricultural country as a reactionary romantic like Pétain dreamed. The war has demonstrated that only great industrial states count in the modem world. An agricultural country incapable of forging the arms needed to defend its independence is destined to be the slave of either a powerful adversary or a protective friend.69

Note the caution about America. Philip, like Courtin but in bolder political language, declared that France should not remain predomi­ nantly an agricultural country. Stop grieving over the rural exodus, he exhorted; abandon subsidized crops and reorganize agriculture in order to extract the most output with the least manpower.70 Looking beyond reconstruction Philip proposed comprehensive planning and Keynesian countercyclical policies to sustain full em­ ployment and economic development. He contrasted this mode of state management with the style of intervention practiced under the Third Republic. The prewar parliament had turned economic man­ agement over to experts schooled in economic liberalism who "inter­ vened only reluctantly in order to cure illnesses rather than prevent them, to salvage enterprises rather than organize them."71 Because it did not consciously accept the économie dirigée, the weak republic ended up under the thumb of the trusts. The new republic could secure democracy only if the state were strong enough to assert its authority over all economic and social forces. No unit of production lay outside state management. From the moment one admits the necessity of planning, private sectors are no longer possible because no element of the economy should escape the plan. Direction could be achieved by more or less flexible methods. Certain sectors could be socialized, others directed, and still others simply supervised. Noth­ ing, however, would escape the impetus of governmental authority, which is responsible for the survival and grandeur of the nation.72

Unlike others who treated the topic, Philip connected planning and nationalization. In a planned economy, he argued, certain producers were so important that they had to be nationalized so that the state could effectively control investment. Philip's "socialized" sector en­ compassed air, sea, and ground transport, banks and insurance, mines and electricity. Not only did he utilize a different criterion for nationalization than Courtin, but he insisted that "a certain number of socializations should be accomplished immediately from the day of liberation."73 De Gaulle's socialist commissioner believed such mea­ sures could be easily accomplished. The state could simply confiscate what the Germans had taken as well as the property of collaborators. He warned that these expropriations were also politically necessary to appease public opinion, which was outraged by the collaborationist 178

The resistance and structural reform attitude of the majority of employers. Nationalization was clothed in more than principle in this project. Philip spelled out in detail the criteria for selecting specific enterprises for socialization, the extent to which assets were to be expropriated, and the bases for indemnifica­ tion. But he was less certain about defining the autonomy of the new enterprises or how they were to be managed. The private sector submitted to state management in Philip's report whereas Courtin had looked to freeing it as quickly as possible. Major investment decisions were reserved for the planners. Tight controls over products like iron and steel, fertilizers, dyes, solid and liquid fuels, and cement were permanent. When it came to devising a means for directing the private sector Philip fell back on rejuvenating the CO, which he renamed "industrial groups." The corporatist di­ rigisme of Vichy kept reappearing in new guises. A thoroughly planned economy for Philip required reforms in pub­ lic administration. He proposed a MEN as "a coordinating organ" rather than a superministry placed above all other services.74 The latter option risked creating a ponderous administration, one that might challenge the authority of the premier. He rejected the possibil­ ity of turning over the task to the Ministry of Finance; its traditions and concerns left it "badly prepared" to manage industry. The fun­ damental task of the new ministry was planning, and as a ministry of planning the socialist version of the MEN contrasted with Courtin's. Philip's conception of planning came directly from his fellow socialist Jules Moch. The provisional governm ents short-term policy

General de Gaulle did not endorse his commission's report any more than he had that of the CGE. It did not correspond with his views or his political instincts. While the socialists and neo-liberals formulated projects and debated, both de Gaulle and the Communists bided their time. Here were the two political forces that eventually contributed heavily to the making of postwar reform, yet both remained mute until the liberation. The Communists had assumed a powerful position within the re­ sistance by 1944. They had tried to submerge their identity and had confined their declarations to appeals for unity in the common strug­ gle against fascism. However, the debate over Mayer's program in the National Resistance Council and, to a lesser extent, Courtin's report prompted a response in the spring of 1944.75 The party's central committee identified the mistakes and omissions of the socialists and the experts without advancing much in its own right. Though 179

Capitalism and the state in modem France Mayer's text expressed good intentions, according to the central committee, it was more propaganda than a program. On issue after issue the socialists had failed to provide guidelines. For example, how were workers to participate in formulating production programs? The socialists and the CGE, in Communist eyes, overlooked nationalizing the banks, which was critical given the fusion of financial and indus­ trial capitalism.76 The main lines of the Communists' postliberation political strategy were visible in their critique. They wished to avoid any reform that might divide the resistance coalition that they ex­ pected to dominate. Thus they gave precedence to the battle against the trusts, which offended none of their partners. There was also rising Communist concern about America's threat to French inde­ pendence. The party urged production programs that would develop such industries as machine tools that insured economic indepen­ dence. France, according to the Communists, should not try, as it had after the first war, to impose its will on other nations: "But it must not succumb to the contrary weakness, that of expecting too much from the good will of someone else or from universal cooperation. It is a question of states that defaulted after 1918 in spite of the confidence placed in them and that this time promise only limited assistance."77 On this point the Communists clashed with the neo-liberals who looked to the Anglo-Americans for help in reconstruction. De Gaulle, up to the last minute, avoided making any clear com­ mitments on economic policy. He wanted to rally as wide a range of Frenchmen as possible to a patriotic struggle that would drive out the enemy, restore the place of France in world affairs, and revive the people's faith in themselves and the nation. In part he had also not yet made up his mind on how he wanted to proceed at a time when diplomatic, political, and military matters demanded action. The head of the resistance thus procrastinated and practiced purposeful am­ biguity on economic issues in order to focus attention on the war effort and to avoid dissension. Up to 1944 his brief, but lofty, procla­ mations expressed only such general principles as freeing the state and society from the grip of "coalitions of interest or privilege," full employment, and workers' association in the operation of enter­ prise.78 The nation, moreover, was to control the principal sources of economic wealth. De Gaulle sensed the need for reform; later he commented that the war had fallen upon an "economy desperately out of date." Vichy's reforms had a certain appeal to the Vichy hater: In short, to renew the economy so that it served the collectivity before fur­ nishing profits to private interests and, at the same time, to raise the condi­ tion of the laboring classes - that is what was on the nation's mind. The Vichy regime had attempted to accomplish these goals. If, in the financial and 180

The resistance and structural reform economic realm, its technocrats had despite all setbacks shown incontestable skill, it was also true that the social doctrines of "national revolution" corporate organization, a labor charter, family allowances - embodied ideas that were not without their attractions. But the fact that this enterprise was identified with the capitulation could only influence the masses toward an entirely different mystique.79

As the Allied invasion approached, de Gaulle's concern over prepa­ rations intensified. In early 1944 he instructed the Consultative As­ sembly to review the "admirable work" of the resistance study groups. He wisely counseled, "what will not have been prepared will not be done or will be done badly."80 During the spring of 1944 the CFLN declared itself the French Pro­ visional Government under General de Gaulle's presidency. It was to take charge of administering the country until general elections could be held. The Consultative Assembly gave the government a republi­ can allure. In de Gaulle's cabinet, however, it was the general's deci­ sion that ended debate. Neither economic policy for the liberation nor structural reform had been settled by early 1944. De Gaulle's inclina­ tion, which was shared by most of his cabinet, was to postpone dis­ cussion of reform until after elections. Only the most pressing policy issues such as wage and price measures needed decisions. His com­ missioners for colonies and public works, René Pleven and René Mayer, expressed these views. Others were more eager to embark on reform. Pierre Mendès-France, who de Gaulle said possessed "a dear mind and a strong will," was one.81 He was responsible for finance. Another was Paul Giacobbi, a former Radical senator who served as commissioner for supply and production. And there was André Philip whom de Gaulle later called "impetuous."82 To resolve grow­ ing differences within the government over economic policy an interministerial economic committee was established.83 Giacobbi wanted the Consultative Assembly to engage in a general debate about economic policy.84 His agenda identified the outstand­ ing questions. What was to be the fate of Vichy's institutions? Giacobbi urged retaining the OCRPI but liquidating the "tyrannical and unpopular" CO and the Peasant Corporation. What was to be the scope and method of nationalization? He thought this dedsion could await an election. What policies were to be adopted with respect to rationing, raw materials, prices, wages, and the black market? These questions had to be faced, he argued. What was the assembly's advice on creating hew organs of economic management? The question was open with respect to establishing a MEN, a CNE, or some other means of economic planning. It would be helpful, Giacobbi con­ tended, to know the assembly's views on these questions and on the 181

Capitalism and the state in modem France general direction of policy. Should Vichy's "return to the soil" be scrapped, he asked, and industrialization accelerated? De Gaulle's counselor on economic affairs was Raymond Offroy. He expressed the general's objections to Giacobbi's proposal. Offroy admitted the government had not taken a position on these issues, but a debate in the assembly might prove embarrassing. If Giacobbi, representing the government to the assembly, should be vague in answering questions. He will give the impression that the [economic] committee still has no policy on important and urgent matters. If he takes a stand, he risks assuming, in the government's name, obligations that could be held against it at the libera­ tion. And commitments will often have been made without the proper ad­ ministrative services, since they lack personnel and information, furnishing the government what it needs for decision making.85

It would be difficult, Offroy recognized, for the government to take a position on liquidating the CO. It was easy to abolish them, but experience in North Africa had shown that one needs to know what will take their place. Nationalization raised complex questions. Offroy thought it was unwise to speak out on the proposed nationalizations because the tense political climate inhibited "an impartial examina­ tion of concrete problems."86 The same situation held for price and wage questions. Offroy expressed doubts, which de Gaulle shared, that the assembly could provide constructive answers. Mendès-France, like Giacobbi and Philip, pressed for action. He insisted that top priority go to combating inflation.87 Labor was clamoring for an immediate wage increase, and price inflation loomed ahead. Mendès-France asked the government for broad powers for himself to control the economy. He wished to use every means possi­ ble to hold existing price levels. The finance commissioner recom­ mended simply announcing a wage raise and then spreading it out over a year. Mendès-France, however, encountered the opposition of those in the cabinet who preferred the psychological benefit of a sudden wage hike. Most striking of all, Mendès-France urged an immediate ponction of the money supply as an anti-inflation measure. Bank accounts were to be frozen and "gradually released according to justifiable need." Currency was to be called in with owners receiving in exchange "an equal sum for everyone corresponding to their im­ mediate needs."88 With respect to institutional change MendèsFrance wanted to begin immediately. The commissioner proposed strengthening the services of the interministerial economic committee as a first step toward introducing planning and constructing a MEN. He suggested attaching Vichy's planning agency, which "prefigures the future planning office," to the committee.89 Mendès-France urged 182

The resistance and structural reform a provisional plan as a means of allocating scarce resources and ra­ tioning products. As for the CO-OCRPI network and the Peasant Corporation, he stated: The CFLN has discussed this question, and the majority of its members seem decided, like myself, on maintaining these various organizations at the time of the landings provided that they revise their goals, purge their staffs, and submit to the control of the resistance. It appears very dangerous to me to dissolve these economic groups at the very moment when the économie dirigée will need effective operational organs.90

Opposition to a mendèsiste monetary policy extended beyond the cabinet to the resistance in Paris. Such a drastic austerity measure divided a subgroup of the CGE composed of financial experts.91 René Courtin proved a determined opponent. He feared the prospect of Mendès-France's taking charge of the economy and viewed his mone­ tary program as "catastrophic."92 Another expert Emmanuel Monick shared his apprehensions. Courtin and Monick were to serve as pro­ visional ministers of finance and economy in August 1944. After the liberation a succession of like-minded neo-liberals, all of whom pre­ ferred a massive loan to soak up purchasing power, became finance ministers and hemmed in the mendèsistes.93 Courtin in his report for the CGE had recorded his objections to what he called a "permanent amputation" of money in circulation. Withdrawing part of the stock of currency and reducing banks accounts seemed unpopular, unfair, arbitrary, and ineffective to Courtin. A temporary blockage of the means of payment was only slightly more desirable. Courtin reported that bankers were hostile to this approach; some called it "totali­ tarianism" and //brutally anticapitalist." The Bank of France viewed it as technically unfeasible. The CGE concluded that the choice of a mone­ tary policy would depend on the political situation. "In any case," the CGE admonished, "the government should immediately face its re­ sponsibilities and, once it has decided, follow through to the end. A tardy reform taken after long evasions is bound to provoke monetary, financial, and, possibly, political disorders."94 Unfortunately the pro­ visional government did not follow this sage advice. De Gaulle first alluded to these questions in an address to the Algiers assembly in March. It was painful, he said, to tell people who had suffered so much that the arrival of French and Allied forces would not suddenly improve material conditions. "But the govern­ ment has the duty to proclaim it forthwith as it will have the duty to take the strict measures that are forced on it with respect to rationing, prices, money, and credit in order that everyone, I say everyone, can receive his share of what is essential for consumption."95 The situa­ tion would improve, but slowly. At the same time, under cover of 183

Capitalism and the state in modem France these controls, the government, he promised, would stimulate food supply and industrial reconstruction in every way possible. And it would not tolerate any private monopolies or trusts that might com­ promise the reforms that the French people want and that a future assembly would decide. Such a declaration left everything open.96 In the end a compromise on policy was reached that, without giv­ ing Mendès-France satisfaction, kept alternatives open. De Gaulle later described the provisional government as choosing a "middle solution" between allowing inflation free play and the "crushing con­ straints" of an anti-inflation policy that would "provoke social up­ heavals," disrupt production, and "empty the markets."97 In late June, with the cross-channel invasion underway, the government decided to divide the responsibility for economic policy between the commissioners for supply and finance.98 Mendès-France, it was ar­ gued, could not try his monetary experiment until the entire country was liberated. In the interim Giacobbi was to assume overall control, including wage-price policy. The government was to determine the ceiling of the wage increase in advance. Prices for agricultural and industrial products were to be blocked. All existing (i.e., Vichy's) economic controls and institutions were to be maintained except those whose existence represented gross violations of freedom and democracy. After this urgent phase of recovery, Mendès-France was to take over and introduce "more long-range views." "Policy would be clearly defined only after a complete inventory of the situation in France has been made and only in light of political and psychological facts that we still do not fully possess."99 Without committing itself, the government left open the possibility that once the liberation was complete Mendès-France could be given exceptional powers for a limited time to carry out his "monetary cleanup," including blocking accounts. By that time the country could be psychologically prepared for a period of "equality in misery."100 At the outset of this second phase of recovery, the government would also be ready to launch an equipment and investment plan. Giacobbi presented the provisional government's program, and clarified it as best he could, before the assembly in Algiers in July.101 The supply commissioner explained the government's intention of retaining controls rather than immediately restoring economic liberty. The CO-OCRPI network was to be purged, reformed, and temporar­ ily retained. The "justifiably detested" Labor Charter and Peasant Corporation, however, were to be dissolved. A new MEN would hold the line on prices and draft a separately budgeted reconstruction plan. Nothing was said, however, of a monetary ponction. The econ­ omy was to be divided into free, directed, and nationalized sectors. 184

The resistance and structural reform Giacobbi annouced nationalization in principle for a long list of indus­ tries but deferred the final determination of the scope and mode of transfer to a future elected assembly. It seemed the government meant only to extend state control over the banks and insurance companies rather than nationalize them. Giacobbi denounced the in­ famous "coalitions of particular interests" and Vichy's campaign to "return to the soil." "France," he declared, "must be simultaneously agricultural and industrial," and both sectors must be completely renovated. Some members of the Algiers assembly, especially labor leaders and. socialists, expressed concern about what they perceived as gov­ ernment hesitation in seizing control of the economy. A Communist spokesman wanted a commitment from the government to expro­ priate the trusts immediately. Albert Gazier sensed authorities wanted merely to "direct indirectly."102 But this consultative body was so keen on preserving unity among the resistance that it retreated from a dispute. After a brief debate the assembly solemnly called for an "economic democracy," a purge of those who trafficked with the enemy, a return to the nation of key industries including credit and insurance, an independent trade union movement, and aid for the overhaul of agriculture. Otherwise, it merely echoed approval of the government's short-term measures and left definition of a new eco­ nomic regime to the French people. There is no doubt that the resistance was committed to structural overhaul of the liberal order and the creation of a dynamic economy. Yet, given the lack of a political or legal mandate, the differences between neo-liberals and socialists, the scapegoat of the trusts, the paucity of information about economic conditions in France, the un­ certainties in completing the campaign to drive the Germans out of the country, the prudence of de Gaulle, and the reticence of the Communists, it is no surprise that the incoming authorities lacked a precise program of economic reform and that their policies left much unsettled. Wartime declarations such as the National Resistance Council's program concealed a wide range of differences. The essen­ tial dispute was whether socialized structures or a modified market mechanism would best serve the country. There was no agreement about the nature or urgency of either planning or nationalization. Conceptions of planning, for example, ranged from a socialist-style command economy to a mere ordering of allocation priorities. Despite the pressing need to coordinate public policy in a directed economy a MEN remained a vague and controversial notion. Preliminary mea­ sures to introduce both the new ministry and planning were tabled. 185

Capitalism and the state in modem France Whether priority was to be given capital formation or consumption was an open question. No decision had been reached about the fate of Vichy's institutional legacy. Nor had a final determination been made regarding the permanence of controls or the means of combating inflation. Although the de Gaulle government appeared to be com­ mitted to a hard line, it had nevertheless decided on a wage increase and on postponing austerity measures until the country was entirely liberated. Moreover, the need for dirigisme contradicted a popular desire to end wartime regulations and dispose of a hated past. The obsession with liberating the economy and the state from the stranglehold of the "money powers" was the proverbial scapegoat that served, at most, to unify the movement and put the capitalist class on the defensive. Otherwise, it was a crude polemic that dis­ tracted attention from hard questions and distorted renovation. As a result de Gaulle's team was to improvise much and quarrel bitterly over structural reform and economic policy. And their achievements, which were considerable, did not measure up to their aspirations.

186

7 The turning point: the liberation and early postwar years, 1944-1949

The liberation and early postwar years marked the turning point for the economic order of twentieth-century France. Renovation brought drastic change in economic institutions and the goals of public policy. The objective of economic renewal became paramount, and structural change moved in the direction of a new liberalism marked with strong statist and technocorporatist features. Some actors in this redressement also saw an opportunity to create a more just economy or even storm the citadels of capitalism and launch socialism. In the end these ex­ travagant hopes were dashed, and the new order resembled managed capitalism more than it did socialism.1 The country's economic situation in the late summer of 1944 was appalling and far more critical than it had been in 1919. Production had fallen to a third of prewar levels. Port facilities and the transport system were in shambles. Bombing, sabotage, pillage, and overuse had ruined much of the industrial plant. Agriculture was starved of manpower and equipment. Over 2 million Frenchmen were in Ger­ man camps or factories, leaving an anemic labor force. Everything from coal to eggs was in short supply. Hoarding was prevalent, and the black market continued to flourish. Farmers held back food, and trade between town and country was tenuous. In many cases the standard of living had fallen below sustaining life; the adult food ration in Paris was half of what the medical profession deemed neces­ sary for minimum health.2 The war also assembled the elements for inflation. A swollen money supply signaled trouble, and wartime controls had only dammed up the pressure for wage and price in­ creases. Nor could the nation supply itself: France had to rely on massive imports from its Allies for fuel, food, raw materials, and equipment. De Gaulle's provisional government in 1944 did not possess a defi­ nite strategy for economic reconstruction or a settled policy on most major issues. Considerable thought and discussion had been given to the postwar economy by the resistance, but the various projects, some of which advocated a veritable socialization of the economy, 187

Capitalism and the state in modem France had not received official endorsement. Harmony among the diverse factions that fought Hitler and Vichy could be achieved only by fram­ ing general objectives. What the resistance lacked in programmatic precision it compen­ sated for in dedication. The psychological climate in which economic reform occurred was one of struggle. What began as an international war against nazism increasingly became a civil war against Vichy and its supporters. The internal enemy, in economic terms, which was held heavily responsible for the defeat of 1940 and accused of being the mainstay of collaboration, was capitalism in general and the trusts in particular. The trusts, from this perspective, had to be laid low before they had the opportunity to regroup themselves and obstruct the people's will. The second element of the spirit of 1944 was the determination to build a better, or more moral, institutional life. Polit­ ically this meant a break with the regime marked with corruption and defeat, the Third Republic, and with its successor, Vichy, stained with national disgrace. Economically this meant transcending liberalism, which had brought egotism, disorder, and backwardness under the republic, and destroying corporatism, which had ended in subjugation under Pétain. Alongside the republic "pure et dure" was to be an organized, yet free, economy dedicated to human dignity, economic equality, growth, and the national interest. And in place of capitalism there was to be an economy at least open to socialism. What the provisional government took with it to France at the moment of liberation were some general commitments and some carefully prepared guidelines for resuming economic activity. For example, Pierre Mendès-France, who was the commissioner for fi­ nance and otherwise an advocate of immediate overhaul, gave de­ tailed instructions to his corps of administrators not to disturb the existing financial system during the liberation. Blocking bank ac­ counts of collaborators and bending rules to help victims of the occu­ pation were to be the only exceptions. Though every effort was to be made to curb the black market and inflation, the commissioner post­ poned new policies.3 The government's decision to look first to sup­ ply questions and to maintain normal activity was reflected in giving the supply commissioner, Giacobbi, authority over the economy dur­ ing the initial stage of liberation.4 When de Gaulle's ministers assembled in Paris in September 1944 there were many issues that seemed far more urgent than structural reform. German troops still occupied much of the country, and civil war raged between the paramilitary forces of the resistance and Vichy. Epuration of collaborators captured population attention. The provisional government that had been formed outside the country 188

The liberation arid early postwar years without any popular mandate except that given by the resistance movement had yet to establish its legitimacy. On the economic front there was the need to supply a civilian population suffering from four years of war, occupation, and deprivation. Providing fuel, food, and housing took precedence. De Gaulle preferred to move cautiously on economic overhaul, submitting to necessity, delaying when possible. He was unsure of his authority, intent upon rallying rather than dividing the people, and eager to have them participate in an Allied victory. Measures that he could postpone, like formal nationalization, he did by declaring the need to wait for a duly elected parliament. Among his ministers there was general agreement on the desirability of dirigisme, plan­ ning, nationalization, and renovation. This disposition marked a sharp break with past French public policy. Even a liberal minister like René Pleven called modernization the country's "fundamental problem" and declared the nationalization of certain economic activi­ ties a precondition for modernization.5 At the opposite end of the political spectrum the Communists led a "battle for production" and encouraged workers to extend the forty-hour week with overtime. Nevertheless, there were serious differences both within and outside the cabinet about interpreting these principles. Thus, when Pleven criticized the prewar economy he stressed its departure from freedom and competition. Even more ambiguity arose when he proclaimed his support for a "directed economy though of a liberal and democratic type."6 How the economy was to be reordered was unsettled. There were two postures within the government toward economic recovery. The partisans of renovation held a comprehensive and inte­ grated vision of a new economy. Socialist, syndicalist, and étatiste principles informed their program. They wanted to use the élan of the liberation immediately to enact sweeping structural changes that would transform the very basis of the prewar order. And they linked policy with reform. The protagonists were Blum's former advisor Mendès-France and Socialists like André Philip, Jules Moch, and Adrien Tixier. Philip and Moch, it should be recalled, had been en­ thusiastic planistes in the thirties. The report of Philip's commission described in Chapter 6 represents this strategy.7 It called for the im­ mediate creation of a completely planned economy composed of nationalized, directed, and controlled sectors. The state was to direct the economy through a Ministry of National Economy. Full-scale in­ dustrialization and a streamlined agriculture were goals. Those who emerged as a rival ministerial group to these radicals adopted a more pragmatic and less abstract approach. Figures like Pleven, Aimé Lepercq, and René Mayer, all former businessmen, 189

Capitalism and the state in modem France preferred to limit and delay serious reform, to attend to the im­ mediate problems of supply and recovery, and to separate policy from overhaul. They were more interested in reviving the economy than leading it in any particular direction. Their inclination was to rely on market forces. The war-torn economy, in their view, needed guid­ ance, order, and the least possible disturbance. Neo-liberal and technocratic principles predominated in this camp. The Communists belonged to neither faction. They were in a buoyant mood. Their leadership in the resistance carried them to a powerful position within the Constituent Assembly and to ministerial positions after November 1945. Yet Stalin's global policy and the presence of American forces precluded revolutionary activity. It was time to seize the opportunities offered by political power and to widen and consolidate the party's gains. "National" and "demo­ cratic" were the adjectives Thorez chose to describe the party's pro­ gram.8 Communist strategy was reminiscent of 1936; they sought to preserve a united resistance front, avoid divisive issues, and join forces with socialist and Catholic workers and all other democratic elements. In foreign policy the Communists intended to keep France from falling into the hands of the Western allies. In economic policy the party preached national reconstruction, appealing, for example, to the miners to raise coal output. Their economic program offered little more than recovery through hard work, punishment for capitalist collaborators, and nationalization of monopolies. On this last point the party had only gradually rallied to the cause after 1938. In some cases the desires of the provisional government had little to do with what happened. It faced a fait accompli in late 1944 when strikes in the Nord and Pas-de-Calais coal mines against owners ac­ cused of collaboration and against deteriorating work conditions forced the government to take preliminary steps toward nationaliza­ tion. Any halt in coal production was intolerable. And in the case of Louis Renault, charges against him for supplying the enemy with military equipment during the war as well as strong pressure from labor led to the confiscation of his property. Moreover, popular de­ mand for an immediate wage hike to compensate for four years of blocked wage scales and rising prices forced the government to honor its pledge and permit a large increase in September. Unlike 1918-19, there was little if any desire outside, as well as inside, the government for a simple return to the prewar economic order. Renovation rather than normalcy was the mood in 1944. Public opinion favored nationalization and an attack on the trusts. Senti­ ment, however, was more evenly divided among the partisans of an économie dirigée and those backing an économie liberale.9 Bastions of 190

The liberation and early postwar years liberalism within the state bureaucracy could not resist the demand for change. Even the finance ministry, it was said, was compliant for the moment in countersigning decrees: "In 1944-5," one minister re­ called, "the Minister of Finance signed without discussion; in 1946 he grumbled but signed; in 1947 he no longer signed at all."10 Sweeping allegations of unpatriotic behavior intimidated big business. The prewar national employers' federation was defunct, and most trade associations had been absorbed into Vichy's corporatist structures. In the summer of 1944 business leaders discreetly held meetings to re­ group themselves in face of what they perceived was the danger of a communist revolution and a statist takeover of the economy. They decided to revive their employers' associations and rely on in­ stitutionalized contact with the administration in order to influence public authorities.11 Otherwise employers resigned themselves and waited for a shift in the political climate. It was not until June 1946 that they felt confident enough to launch a new peak association, the Conseil National du Patronat Français (CNPF).12 Mendès-France and the drive for radical reform

Mendès-France seems in retrospect to have been the key figure in the early stage of the liberation. He championed the cause of radical overhaul within the de Gaulle government and stirred up opposition by forcing choices. Although Mendès-France had studied orthodox political economy in his youth, he was rebellious and contentious by temperament. Between the wars he joined the Jeunes Turcs who tried to rejuvenate the Radical Party. In 1938 Léon Blum appointed him to his first cabinet post as an under secretary for the Treasury. He es­ caped from a Vichy prison in 1941, fled to England, and flew missions for the Free French air force. Mendès-France, like other prominent figures who shaped postwar economic policy, learned much from his wartime stay in Britain. He admired the way the British mobilized their economy, fought inflation, and planned for full employment. To him the British seemed determined "to build a new world on rational foundations."13 In November 1943 de Gaulle appointed him commis­ sioner for finance with the CFLN in Algiers. When the general named his first cabinet in September 1944 he decided against making Mendès-France finance minister; instead, he asked him to create the new position of minister of national economy (MEN). As the leading partisan of radical reform in the cabinet MendèsFrance hoped to move quickly toward a more modem, planned, democratic economy and a more just society. The moral energy of the resistance was his strength. Immediate adoption of structural reform 191

Capitalism and the state in modem France and a temporary dose of austerity were his means.14 The provisional government, from his view, should seize the moment to launch a program of renewal before old ways revived. Austerity meant wage and price restraint, controls, and a monetary ponction. When asked how a populace that had endured four years of deprivation could be made to accept further sacrifice, he answered that they must be con­ vinced that an assainissement had begun. They must believe that they were working for the country's renewal rather than rebuilding old privileges and inequities. There must be tangible evidence that the monetary and commercial disorder, and those who fed off it like the black marketeers, were being eliminated. The new MEN'S combative and righteous personality informed his economic program. To many Mendès-France would appear to be an intolerant zealot who wanted to make excessive demands on the people. His critics believed the French needed to recuperate rather than undertake a forced march. The cutting edge, but not the whole, of Mendès-France's program was his monetary and wage-price policies. The basic problem was how to stop inflation before it began. The economy in 1944 held the potential for unlimited disorder: a swollen money supply, empty stocks, low production levels, shrunken imports, shortages of all types, and a flourishing black market. Mendès-France urged a quick ponction of the money supply through an exchange of currency and the temporary withdrawal from circulation of part of the bills pre­ sented for exchange, as well as blocked bank accounts. What the MEN proposed was to siphon off and ration purchasing power in order to curb inflationary pressure and to reduce the inequalities of consumption. His policy was mildly and temporarily deflationary. The model was Belgium where similar measures had been success­ fully applied in 1944. Accompanying this monetary offensive there was to be a rationing of necessities and a wage and price freeze for eight to ten months or until production revived and sufficient imports arrived. Such a policy, according to Mendès-France, would mop up inflationary tendencies; break the black market, which required an ample supply of currency; inventory liquid assets as a preliminary to the confiscation of illicit profits; and prevent the psychology of an inflationary spiral from beginning. It would strike hardest at speculators, profiteers, and hoarders and thus help sustain the moral fervor for recovery. The middle class and farmers would be assured of monetary stability, and the working class would enjoy stable real wages. Once the immediate problems were solved there could be gradual upward adjustments in prices and wages linked to rising productivity. The state would assist recovery by supplying equip­ ment for retooling industry, encouraging the rationalization of pro192

The liberation and early postwar years duction, and channeling investment according to a plan. The Keynes­ ian in Mendès-France led him to tolerate a mild amount of inflation to spur investment once the initial phase of recovery had passed. A second and much less known element of the mendèsiste formula was economic planning. With so few goods and resources on hand, he argued, the priority of needs had to be rationally determined and immediate satisfaction balanced against investment. Furthermore, if the economy were to be reequipped and modernized quickly, there must be a coherent approach to reconstruction. Rebuilding the distri­ bution system for electricity, for example, should not follow the inter­ ests of power companies but should aim at installing a national power grid. In describing his project Mendès-France evoked the Soviet five-year plans and, like the Russians, he assigned priority to heavy industry and the manufacture of machinery. Other industries, includ­ ing construction, as well as the military received second priority. Some consequences of planned reconstruction were that workers would have to extend the forty-hour week and everyone would face low levels of consumption. Renovation had its costs. It was also a mendèsiste ambition to revive the left-wing alternative to the Ministry of Finance and create an overarching MEN freed from liberal orthodoxy and a preoccupation with financial considerations. The new ministry would plan the economy and direct economic pol­ icy. It would control the technical ministries and coordinate the eco­ nomic activities of other ministries. Accordingly all decrees of an eco­ nomic nature, from prices to investments, required the countersigna­ ture of the MEN. The mendèsiste version of the MEN fell short of being an outright superministry because it did not subordinate the finance ministry, nor did it diminish other ministries to the status of state secretariats. The MEN was to assume many functions that, be­ fore the liberation, had been scattered among the CFLN's commis­ sions and mediated by an interministerial Comité Economique. The new ministry would also absorb many services from Vichy's minis­ tries, especially those of the Ministry of Industrial Production, and thus become responsible for price control, the allocation of materials, the collection of economic statistics, the tutelle over all public corpora­ tions, and even the negotiation of international economic agreements. Vichy's planning office (DGEN) and elements of its allo­ cation services (OCRPI) were to become the MEN's bureau for eco­ nomic programs that would prepare and execute the plan. The plan­ ning office that formed part of this bureau would possess authority to bypass normal ministerial channels in order to obtain assistance in formulating the plan. In Mendès-France's conception all major public and private construction or equipment projects fell under the plan, 193

Capitalism and the state in modem France and the MEN and the finance ministry would exercise tandem control over the pace of its implementation. By making the planning office an agency of the MEN, Mendès-France inadvertently entered planning into ministerial jurisdictional disputes and linked it to the MEN's attempt to supervise the administration. Yet a third element in the mendèsiste scheme of 1944 was restruc­ turing the economy in order to make it more dynamic and prosper­ ous.15 Here Mendès-France blended modernizing and socialist themes. Although most of the left believed a major goal of structural change was the liberation of the economy from servitude to the trusts, he gave little weight to this motive. He saw economic development as the .purpose of remodeling. He envisaged three sectors. A nationalized sector encompassed all industries essential for recon­ struction and sustained economic growth: energy, banking, insur­ ance, transportation, iron and steel, and machine tools. Within this broad public sector the state would concentrate production units, deepen technology, and bring overall "rationality." Yet nationaliza­ tion was a supple category in the mendèsiste formulation because it meant state control over an industry but not necessarily a complete transference of ownership or management. Thus his project for nationalizing iron and steel was essentially a decentralized arrange­ ment of mixed, regional companies. And within many activities, like banking, he preferred only limited nationalization. A second, or "controlled," sector covered the rest of industry and wholesale trade. Private initiative remained in this sector but was confined within rules set by Offices Professionnels, that is, reformed CO. These offices were to gather data, execute directives, suballocate goods, propose production programs and price schedules, and regulate in general fashion the activities of private enterprise. A third, or "free," sector was to embrace small-scale enterprise and farmers; intervention re­ mained only with respect to allocating raw materials and dissolving commençai monopolies. An economic plan would link all three sec­ tors. Structural change, like monetary reform, according to the men­ dèsiste formula, should be enacted rapidly even if nationalization were only provisional. Such action would restrain the big interests, who were bound to reassert themselves, from opposing future reforms, and it would create the moral and psychological climate for economic expansion. From the outset the new minister of the economy encountered difficulty in introducing his program. He spent three months in the fall of 1944 getting the government to define the authority of his ministry.16 Robert Lacoste, the Socialist minister of industrial produc194

The liberation and early postwar years tion, led the attack within the cabinet on the mendèsiste conception of the MEN. Lacoste, a representative of the civil servants' union and a prewar planiste, tended toward a moderate position on most policy issues. He tried to deflate any pretension Mendès-France entertained of creating an administration that encroached on other ministries. Lacoste's ministry, which had burgeoned under Vichy, stood to lose most of its personnel and its functions to the MEN. He argued that the MEN should "coordinate" rather than "direct" policy and op­ posed giving it the authority to countersign decrees. Planning, ac­ cording to the Socialist leader, was to be the product of a collective ministerial effort rather than the prerogative of Mendès-France. The defense of ministerial jurisdictions surfaced quickly within the pro­ visional government and cut across political affiliations. At a dinner party only days after the formation of the September cabinet the new ministers spoke of the MEN as an "intruder."17 Nevertheless, the effort to dismember Mendès-France's proposal failed. The govern­ ment introduced only minor revisions in his project. But the long debate over the powers of the MEN revealed an unwillingness within the cabinet and the administration to elevate the new ministry. Though Mendès-France won this initial skirmish he still had to over­ come the determination of the ministries to protect their autonomy and maintain collective control over policy. After the MEN'S constitution in November 1944 there were further delays. De Gaulle resisted immediate action on nationalization. The new ministry, like the DGEN during the war, could not recruit qual­ ified personnel. It also lacked both basic data about the economy's condition and the statistical services to obtain such information. When Mendès-France sought help from other administrations in col­ lecting material for the formulation of a plan and asked them to create their own planning services he encountered reluctance, skepticism, and resistance.18 He asked his friend Georges Boris to serve as the interim director for planning, but Boris had trouble establishing his agency's authority. Mendès-France later recalled that almost no one in the cabinet thought highly of planning.19 De Gaulle for one did not yet accept its necessity.20 The complexity of drafting a plan caused difficulty. A plan could not be ready before January or even July 1946. Until then MendèsFrance insisted that the ministries should not be allowed to go their own way, and he tried to introduce new procedures and provisional priorities. He turned to Vichy's plan, the Tranche de Démarrage, for guidance.21 He anticipated a période de démarrage for 1946-7, much like the DGEN had, when the transition from war to peace occurred and reconstruction began. But after this initial two-year period 195

Capitalism and the state in modem France Mendès-France wanted a true long-term plan. He circulated Vichy's tranche throughout the administration and asked departments, CO, and other professional organs to use it as a basis for defining their own programs.22 Even if they disagreed with the principles enunci­ ated in the Vichy document, he believed it would expedite planning. He asked each ministry to give an opinion of the tranche so that the MEN's staff could prepare a definitive two-year plan. The Ministry of Urbanism and Reconstruction, and a few others, incorporated many of the DGEN's proposals in their own programs.23 Although Mendès-France vigorously urged the introduction of planning, he made little progress before his resignation in April 1945. Centrifugal and anti-dirigiste forces in the cabinet and the administration blocked him, and without Mendès-France the momentum for planning was to slacken even further. The initial, and potentially boldest, phase of economic renovation passed with Mendès-France's withdrawal from the cabinet after only eight months in office. The skirmishes and delays over setting up the MEN, planning, and nationalization were only preliminaries to a showdown over anti-inflationary policy. In October 1944 MendèsFrance had incurred an ominous defeat when the government, de­ spite its promises, voted against his effort to hold the line on wheat prices. De Gaulle sided with the majority, who wanted an increase, out of his desire for social peace or, as he put it, because of "the political and moral situation of the country."24 This increase followed September's big 50 percent wage hike. In November Finance Minister Lepercq chose to combat inflation with a so-called liberation loan rather than follow the mendèsiste approach. Pleven, who replaced Lepercq as minister of finance when the latter died in an automobile accident, continued his liberal policy. In January 1945 the differences between Mendès-France and Pleven came to a head. Mendès-France expressed to de Gaulle his fear that half-measures and weakness were allowing the country to slip into an inflationary cycle.25 While the government approved wage and price increases, he pointed out, there were no more goods in circulation. Ministries raised expenditures, deepening an already enormous budgetary deficit. The promised ponction that would sterilize part of the stock of money could not be postponed any longer. A policy of facilité, he warned, favored speculators and profiteers whereas the young, vigorous elements of the population wanted serious reform. The opponents of change, the prewar reactionaries, were willing to grant nominal satisfactions like wage increases in order to blunt the drive for structural renovation. In desperation Mendès-France ap­ pealed t© de Gaulle to use his personal standing with the French 196

The liberation and early postwar years people and, as in 1940, to again choose the high road in order to save the country. Faced with a resignation tendered by his minister, de Gaulle sum­ moned Mendès-France and Pleven together in order to resolve the conflict. Pleven was a former businessman who had served on a wartime purchasing commission in England and rallied to de Gaulle in 1940. He had been minister of colonies before taking over the fi­ nance ministry. Reserved and practical, preferring to deal with each problem as it arose, his temperament contrasted with that of the aggressive, crusading MEN. Pleven was also much closer personally to the general than his rival. The minister of finance argued that the mendèsiste strategy would disrupt the economy by placing the cur­ rency in jeopardy and drying up sources of investment. He preferred to absorb purchasing power by floating treasury loans, which in turn would encourage saving and investment. The liberal minister sought to build confidence as the way to restore economic equilibrium. Ple­ ven warned de Gaulle that farmers who were already holding back commodities would treat the note exchange as governmental theft and might completely rupture food supplies. He asked only that dras­ tic measures be delayed till the spring, pointing out that without a new set of bank notes Mendès-France lacked the means to carry out a currency exchange. De Gaulle deferred a decision and persuaded Mendès-France to stay on in the hope that the two strategies could be reconciled. Mendès-France continued as minister but without much support for his austerity program. In their pursuit of voters the Communists denounced any monetary manipulation or currency freeze. The re­ formist Catholics were unsympathetic, and even the Socialists re­ fused to stand solidly behind him. When the issue reached the floor of the Consultative Assembly only the hard-line Socialists like Philip and Moch backed Mendès-France.26 In his address Pleven argued that the abundance of money was a symptom, not a cause, of the current disequilibrium. The heart of the matter was the gap between supply and demand, and he refused to aggravate the existing disor­ der and inhibit production by rationing money. Instead, the finance minister stressed the need for France to modernize its plant and raise productivity in order to catch up with the leading industrial nations. While Pleven spoke, Moch whispered to a colleague: "Aren't we hear­ ing our old teachers, Colson or Leroy-Beaulieu?"27 Pleven's stand enjoyed widespread support within the cabinet, especially from neo­ liberals like René Mayer, and he had the backing of key financial officials including Emmanuel Monick, the governor of the Bank of France.28 And René Courtin, who had been a key figure in drafting 197

Capitalism and the state in modem France economic studies for the resistance, spoke for the liberal economists in presenting a series of arguments, mostly technical, against the mendèsiste policy.29 When the provisional government finally took sides on the issue on March 29,1945, only two Socialist ministers backed Mendès-France.30 The arguments against a ponction included the fact that all of French territory had still not been liberated, making a nationwide currency exchange impossible. And for financial experts who were sympa­ thetic to the cause the decisive argument was that new currency did not yet exist to use in an exchange.31 There was also a fear that a ponction might disrupt production at a time when growing supplies werfe vital. De Gaulle might still have rescued Mendès-France, but he decided against it. The conventional explanation for de Gaulle's choice makes too much of the general's supposed indifference to economics. The head of the government understood the gravity of the problem and decided it on political grounds. His government still lacked an electoral mandate. He faced stiff opposition within his cabinet and from the parties. And he worried lest Pleven was correct in predicting that an exchange might provoke rural disturbances and intensify civil disorder while the war was still in progress. He rejected the Belgian parallel because the Belgians had not suffered as great a "national upheaval," nor were the Communists as powerful there as in France.32 If his temperament attracted him to lead the French to­ ward grandeur, in this instance his political instinct made him accept the low road. As he later explained: In economy as in politics or strategy, there exists, I believe, no absolute truth. There are only circumstances. It was my conception of the latter that was responsible for my decision. The country was sick and hurt. . . If there were no other means of recovery than to play all or nothing I would certainly not hesitate. But why throw the nation into dangerous convulsions if it would recover its health sooner or later in any case?33

In retrospect it seems that the provisional government missed an opportunity to control inflation and preserve the élan of the resis­ tance. Mendès-France resigned in April 1945 when it became clear the government intended to follow Pleven's policy. His resignation de­ prived the government of its most vigorous advocate of radical re­ form. His defeat marked a serious setback for structural overhaul and a socialist form of recovery. In economic, psychological, and moral terms Mendès-France was correct. The policy of facilité contributed to the growing disenchantment of 1945^6. Black-marketeering, wage strikes, bungled economic controls, slow recovery, along with disap­ pointments in constitution making, all brought demoralization. In political terms, however, Mendès-France was out of touch with the 198

The liberation and early postwar years situation. The French people did not want more austerity and further controls. Most politicians grasped this political reality better than he did. Mendès-France claimed later, and rightly I think, that had his policy been followed reconstruction would have been more equitable, rational, and vigorous and achieved with less inflation and better morale.34 The economy would have gotten off to a better and earlier start. De Gaulle sealed Pleven's triumph in April by naming the neo­ liberal to hold jointly the MEN with the finance ministry. The new ministry that the left had expected to overcome administrative frag­ mentation and breathe new life into public policy thus fell under the control of the rue de Rivoli for most of 1945. Pleven recognized that the MEN had failed to coordinate policy and that planning had stalled. Yet aside from some administrative streamlining he offered no solutions.35 One resolute planner in the cabinet, Raoul Dautry, criticized Pleven for allowing reconstruction to proceed "without the slightest trace of an overall plan."36 The minister for urbanism and reconstruction complained of administrative disorder and ineptitude. As things are, he asserted, "the American bar will be rebuilt before the ruined farm."37 How can we make a "new France," he inquired, when exist­ ing procedures lead us to rebuild the same factories in the same location with the same equipment? Six months later, in December 1945, Dautry saw no improvement in the situation. It seemed as though each ministry and nearly every industry was preparing a "plan" as an excuse to demand as much material, credit, and labor as possible. He implored Pleven and his staff at the MEN to draft a real plan and secure its endorsement by the government.38 The planners themselves acknowledged that their enterprise was moribund. Georges Boris, the agency's former director, accused the ministries of practicing old-fashioned empiricism under the guise of planning.39 Worse yet, Pleven seemed determined to demote their undertaking to the status of a "study." Like Mendès-France, Dautry, and others, Boris believed that planning was not taken seriously by the government and that the drift of things was to let each administra­ tion formulate its own sectoral plans and relegate the staff at the MEN to making last-minute adjustments. Such a method, according to Boris, could not furnish new solutions to national problems or raise the ardor of the people. For a year, he lamented, sectoral plans had proliferated. The press reported a five-year plan for automobiles, a ten-year plan for railways, a twenty-year plan for hydroelectricity: "one of these days silk manufacturers will announce a five-year plan to furnish every Frenchmen with half a dozen silk shirts."40 These 199

Capitalism and the state in modem France plans, he warned, deceived the public because they were divergent and competitive; each falsely assumed it had priority for labor, mate­ rials, and energy. What this criticism ignored, however, about these sectoral plans was that they facilitated recovery and accustomed the public to the idea of planning. According to Boris, it was necessary to fix fundamental objectives like the proportions for investment and consumption. He also suggested that the planning director should be a minister supported by a team of experts rather than a fonctionnaire heading a staff of bureaucrats. Boris recognized that planning had bogged down because it had become embedded as a subordinate in the ministerial hierarchy. Boris was a Socialist, a keen observer of the Anglo-American economies, and an early Keynesian who had helped shape the eco­ nomic policy of Blum's second government in 1938. He had spent the entire war in London where he had watched the way the British had managed their wartime economy; that is, they calculated a gross na­ tional product, rationally apportioned investment, and blocked infla­ tion.41 To him the war years verified the triumph of planning; it had made the Soviet Union an industrial power, helped Germany defy the rest of the world, and mobilized Anglo-American might. The desperate situation in France made planning indispensable; it would be "stupid" to abandon reconstruction to individual initiative. And the French could not merely reconstruct the outmoded, inadequate plant of 1939, not after the Germans had pillaged it and the British and Americans had superseded it. The MEN and its planning unit, after Mendès-France and Boris had left the scene, found itself preoccupied with meeting one emergency after another rather than looking ahead. Gaston Cusin, who had been a CGT planiste in the thirties, took charge of the ministry in 1945 for Pleven, but he bent all his efforts toward trying to cope with urgent demands for bare necessities such as fuel. He and his staff could not plan because the economy was not working. When the mines were put back in operation, for example, coal could not be delivered be­ cause the war had removed so many freight cars from service. The ministry's planners, moreover, received almost no cooperation from the administration in drafting what was called the Equipment Plan for 1946. All they could do was to compress the sectoral plans submitted to them, recognizing that without any overview the result was what Boris called a "shabby" imitation of a plan.42 The 1946 plan did not purport to guide the economy, ignored coherence, and lacked any serious consideration of resources, incentives, or controls. It was little more than a loose collection of short-term, sectoral programs.43 The MEN'S staff and the administration relied heavily on Vichy's tranche 200

The liberation and early postwar years so that the 1946 version bore a strong resemblance to its predeces­ sor.44 Both plans shared the same impulse for renewing equipment and creating a popular mystique de l'effort. Many of the sectoral pro­ grams were similar; there was the same emphasis on overcoming the transportation bottleneck, expanding energy production, increasing food supply, and furnishing farm machinery. Much like the 1944 tranche, the 1946 plan was to function within the framework of a projected ten-year plan. Moreover, the scale of investments (68 billion francs at 1939 prices for one year) and the sources of credits were nearly identical. There were, to be sure, certain major differences such as the loss of priority for the transformation industries and the dependence of the later plan on the United States for imports and loans. Still, the similarities between the Vichy and the liberation plans outweighed their differences. By late 1945 the movement to institute economic planning was dy­ ing. The ministries were killing it with indifference, and the public was either misled or uninterested. Planning never attracted the atten­ tion that nationalization did. The mendèsiste approach that gave planning a socialist as well as a modernizing character and lodged its machinery within a ministry had not succeeded. Yet, just when plan­ ning seemed on the verge of disappearing, it found a new champion in the person of Jean Monnet. A full account of the Monnet Plan will appear in the next chapter. Monnet would introduce an altogether different conception of planning and, unlike Mendès-France, win it wide political support, including the endorsement of de Gaulle before his abrupt resignation as premier in January 1946. Félix Gouin, a Socialist, succeeded de Gaulle and formed a new government composed of members of the three parties that had dominated the October 1945 elections to the Constituent Assembly: the Communists, Socialists, and moderate Catholics (Popular Repub­ licans or MRP). The Gouin cabinet, which held office for the first half of 1946, presided over the nationalizations and most of the other major structural reforms of the early postwar era. Gouin wanted to reverse Pleven's policy and appoint Mendès-France as his minister of finance, but the former MEN refused to join the cabinet when the Communists and Socialists objected to his austerity program.45 André Philip then became Gouin's choice to hold jointly the positions of finance minister and MEN. Philip, himself an enthusiastic re­ former, tried to revive the mendèsiste idea of tying planning and nationalization together and making the MEN the central actor in economic management. Some Socialists, like Christian Pineau, also continued to speak out in the assembly for a mendèsiste program. But by this time structural reform was in the hands of the political parties 201

Capitalism and the state in modem France in the assembly. The inflationary cycle was underway, and the oppor­ tunity of an early ponction was gone. Besides, it was not the ministers but Monnet and his team of experts who had taken charge of plan­ ning. The nationalizations of 1945-1946

The second stage of the liberation centered on the structural reforms proposed by the Gouin government and enacted by the Constituent Assembly. From this history's perspective the principal issue with respect to the nationalizations is why these measures represented less a breakthrough to socialism than an advance toward state economic management and technocratic overhaul. The left's reforms made the French economy more managed and dynamic but not more socialist. In chronological order the assembly adopted acts of nationalization for the banks (December 1945); electric power and gas (March 1946); insurance (April 1946); and coal (April 1946). There is no question that the principle of nationalization enjoyed the general approval of the French people during the liberation. It was proclaimed in the charter of the resistance and subscribed to by the three major political parties as well as by de Gaulle. But the charter's call for "the return to the nation of the major, monopolized means of production" concealed basic differences among the major political actors that in the end led to compromise and disappoint­ ment. There were numerous motives for nationalization among its parti­ sans, but few sprang from a desire to introduce socialism.46 The polit­ ical battle against the trusts was paramount. Popular trustophobia derived from a belief that between the wars the money powers had thwarted the people's will at critical moments and corrupted the Third Republic. The time had come to curb their power and free French democracy from their interference. The two Marxist parties also viewed the antitrust campaign as a means of weakening capitalism by driving its oligarchs out of vital branches of the econ­ omy. A second political objective was the punishment of col­ laborators. Big business labored under the charge of unpatriotic be­ havior during the occupation. The vengeful mood of the liberation led to sweeping accusations and abrupt expropriations. Nationalization became a form of democratic and patriotic retaliation against the al­ leged defeatist and collaborationist activities of the capitalist oligar­ chy. In contrast, a more strictly economic motive derived from the contention that certain sectors of the economy had become public services and should be under public control. Industries like transport 202

The liberation and early postwar years or energy, it was argued, should serve the nation rather than private profits. And in many cases these de facto monopolies were also seen as strongholds of the trusts. Another impulse, which was explicitly socialist, was to construe nationalization as a step toward industrial democracy and workers' control. Yet this objective, which also gave rise to the formation of plant committees in 1945-6, mingled with a broader desire to improve work conditions, create a new civic spirit among workers, and stimulate productivity in vital industries like the mines.47 Even the goal of workers' control pointed as much to eco­ nomic recovery as it did to socialist progress. Socialist goals were difficult to promote at a time when increasing production seemed so urgent. Nationalization, to those who framed the legislation, besides liberating democracy from the trusts, was mainly a step toward economic recovery, growth, and independence. All the major political parties and General de Gaulle gave priority to modernizing motives in the reform of industry, and even in the finan­ cial sector where political motives were more explicit the need for reorganization and control was critical. It was painfully obvious that several key industries like coal and electricity lacked the capacity to meet the nation's current needs, much less its future ambitions. De Gaulle, for example, was shocked to learn at a cabinet meeting in 1945 that power lines emanating from Germany had supplied Maginotline fortifications until the late 1930s.48 This backwardness was usu­ ally ascribed to the Malthusian attitudes of business. Whatever the cause of inadequate productive capacity, it seemed clear to the re­ formers that private capital was incapable of providing the invest­ ments and the dynamism to compensate for years of lagging de­ velopment. The banks should be taken over, according to this line of reasoning, in order to assure a generous flow of credit for economic recovery and expansion. Nationalization, it was also held, was an agent of economic development because it would "rationalize" or concentrate sectors. An extensive public sector, furthermore, would provide the means for the nation, or the state in de Gaulle's view, to manage the whole economy. For some of the Socialists economic planning and a public sector were interdependent. As Philip stated: "There can be direction or planning in the French economy only if the nation has in its hands energy, transport, the banks, and the insur­ ance companies."49 In short, among the multiplicity of motives for nationalization economic recovery, renovation, and management held an unacknowledged priority. The Socialists, of the three parties who dominated the Constituent Assembly, most eagerly championed nationalization and most explicitly emphasized its socialist character.50 They had insisted that it 203

Capitalism and the state in modem France be included in the resistance charter and first adopted it in their party program. They employed the term "socialization" partly to distin­ guish it from similar actions taken by Soviet and fascist states and partly to convey a sense of the imminence of socialism. That is, al­ though the Socialists did not equate socialization with socialism they did hold that such measures would change capitalism into a tran­ sitional regime that would usher in socialism. This view was held by party spokesmen Philip, Moch, and Pineau, and even Léon Blum, who had attacked such an interpretation before the war, now ac­ knowledged that such measures were socialist in character and repre­ sented an intermediate stage between socialism and capitalism.51 True »socialism was, of course, more than the transference of property and management in some vital economic sectors; in Moch's words it transformed society, its mores and values.52 Though the party wanted extensive socialization and the unified functioning of a public sector, it sought to decentralize authority and operations. In its scheme the state delegated broad powers to a council composed of representatives of the nation, technical services, and personnel that controlled each autonomous, socialized enterprise. The Socialists stressed the technical competence of management and minimized the representation of interest groups. Among the partisans of nationalization, the CGT had the oldest credentials. In 1945 Léon Jouhaux, the prewar syndicalist leader, stated once again, as he had in 1918, that the trade unions wanted the immediate nationalization of key industries.53 The CGT repeated its syndicalist formula for a takeover that featured separate public corpo­ rations for each sector managed by tripartite boards of representatives of employees, consumers, and the state. Such a scheme would gather the nation's productive forces together and yet distance public enter­ prise from the state. Jouhaux, Jean Duret, Pierre Lebrun, and other syndicalists criticized the Socialist approach to nationalization for its accent on decentralization and expert management. The Communists and their allies, it should be noted, following the wartime (1943) reunification of the labor movement, now commanded a majority of the CGT's directors. The trade union federation accordingly followed the Communists closely when it portrayed nationalization as a con­ tinuation of patriotic resistance rather than the beginning of the destruction of capitalism. Trade union officials rejected the term "so­ cialization" and said only provocateurs spoke of socialism and revolu­ tion at a time of economic distress. Nationalizations, they insisted, were democratic and patriotic measures that eliminated capitalist monopolies, expedited economic recovery, and secured the basis for 204

The liberation and early postwar years French economic independence - currently in jeopardy because of the Western Allies. The Communist Party and the CGT worked together in shaping nationalization. Partly out of conviction and partly for tactical reasons the party became a forceful advocate in 1945-6, whereas throughout most of the thirties it had shunned such measures. For months the party had avoided taking a stand on the issue (except for supporting the coal miners' demand for nationalization), arguing that the war against fascism took precedence. But the party could not ignore the zealots of the Socialist Party and the anticapitalist mood of the coun­ try. Motivated by a desire to unite the two Marxist parties, the Com­ munists in March 1945 subscribed to a joint declaration with the So­ cialists on nationalization. Nevertheless, Maurice Thorez, the party leader, pointed out that such measures were democratic and had nothing to do with either socialism or communism.54 He rejected the socialist contention, as he had in the 1930s, that nationalization an­ nounced an intermediate order between capitalism and socialism. Another party leader reiterated the venerable proposition that nationalization was a socialist measure only when enacted by a so­ cialist state, that is, when it followed a political revolution that over­ turned the capitalist state.55 This interpretation enabled the party to profit from trustophobia without frightening potential supporters who feared socialism. Nationalization was part of a political strategy; it helped unify the left, tapped the general desire for redress, evicted capitalist opponents - all of which served to boost the party to power. Therefore the Communists' campaign for nationalization stressed punishing the capitalists' "centers of treason," that is, the trusts that had sabotaged rearmament, collaborated with Hitler, and served in­ ternational capitalism. They also linked it to economic renovation and independence; Thorez asserted there could be no economic recovery without the elimination of the trusts, and without a strong recovery France might become permanently dependent upon the AngloAmericans. The Communists had little to say about the form of nationalization except that it should be complete rather than partial and that they preferred centralized structures. The third major party, the MRP, also did not subscribe to the notion that nationalization announced the advent of socialism.56 The Popu­ lar Republicans endorsed the reform out of deference to the tripartite coalition and public opinion and because they believed it would safeguard the state from intrusion by the trusts and make the econ­ omy serve the nation. But nationalization was to be the exception, not the rule. The Catholics stressed moral purposes. They wanted to 205

Capitalism and the state in modem France "humanize" the economy and subordinate it to the service of man, the family, and the nation rather than see it serve selfish, materialis­ tic, or class interests. Nationalization, in this view, was only one of many ways, along with government controls, reform of enterprise, and professional organization, to reach these ends. Where intensified state regulation might do, as in banking, nationalization was un­ necessary. Nor was it right to take ownership entirely out of private hands; a mixed arrangement where the state acquired only the shares needed for control and left intact the property of those who had built an enterprise would usually suffice. The MRP was also skeptical that the lot of labor would be improved by nationalization; the worker might merely exchange one anonymous employer for another. Thus the party warned against statism, centralization, and politicization, that is, the danger that the Marxists might staff these sectors with militants and use them to overturn the existing social order. Nor should this transfer, according to the Catholics, be construed as a punitive measure or as retribution against the bourgeoisie. But on one major point they did agree with the Marxists. Nationalization would assist reconstruction in industries like the mines by removing oligarchs who had obstructed investment and mechanization. The MRP tried to moderate the drive to nationalize in 1945-6 - to limit its scope, protect property rights, improve the terms of indemnification, block politicization, increase managerial autonomy, and in general make the public enterprise conform as closely as possible to the ideals of private industrial and commercial operation. Catholic trade unions, organized in the CFTC, which had rejected collectivization before 1939, now subscribed to a strategy nearly iden­ tical with that of the MRP. And what survived of the Radical Party in the Constituent Assembly was even more reticent than the Catholics about nationalization. Radicals scarcely concealed their preference for a return to a market economy. The fourth major political force that determined the shape of struc­ tural reform was General de Gaulle and the Gaullists. His position resembled that of the Catholics more than it did that of anyone else, but it had its unique Gaullist features. Before the liberation the head of the CFLN had been deliberately vague about this ideological ques­ tion from a desire to avoid damaging the fragile unity of the resis­ tance. Upon his return to France he insisted that action be deferred, ostensibly because winning the war and electing a Constituent As­ sembly took precedence. The premier worried about aggravating internal disorder and about letting the Marxist parties shape nationalization for ideological purposes before the state had been put 206

The liberation and early postwar years in order. In the spring of 1945 after the Communists and Socialists had taken a firm stand on the issue and attacked his hesitation, he declared that the transfer of coal, electricity, and credit would occur before the end of the year.57 A certain prudence and concern for order and justice continued to dictate de Gaulle's approach. He used the concept of "levers of command" to narrow the boundaries for nationalization and insisted such measures were not punitive and should further national reconciliation. He also emphasized a techno­ cratic rather than an interest type of management and made no distinc­ tion between nationalization and étatisation. The principal advantage of nationalization from the Gaullist perspective was to give the state the means of dirigisme so that it might spur economic development, which would in turn aid the nation's pursuit of grandeur. In the end he was able only to influence the initial legislation passed by the assembly, the bank bill, before he resigned from office. The MRP, however, continued to champion a quasi-Gaullist position. The scope of nationalization turned out to be considerably less than what its partisans had anticipated. In the course of 1945 the Socialists and Communists had designated iron and steel, nonferrous metals, cement, chemicals, and petroleum along with the usual key indus­ tries like coal and electricity, and the Constituent Assembly had en­ dorsed a similar list. Yet, when the flurry of legislation passed, aside from transferring a few individual firms like Renault, only four sec­ tors were nationalized, and within these sectors the transfer was not complete. Why did the nationalizes end up with a short list of achievements? Banks and insurance were nationalized first because the mur d'ar­ gent and its alleged political influence had been the principal target of left-wing polemics for two decades. Credit, moreover, was a critical element for reconstructing and managing the economy. Coal was high on the list because of the severe fuel shortage, the dependence on coal imports, the need for long-term development of energy re­ sources, the dispersed character of private coal mining that blocked concentration, and the fact that strikes in the Nord and Pas-de-Calais fields had forced the government to act against unpopular mine own­ ers in 1944.58 Electricity and gas attracted attention because of the frequent interruptions in power during 1944-6/ the industry's oligopolistic character, and the importance of expanding energy re­ sources, especially hydroelectric power, for economic development. Here again the swarm of small private utility companies that sur­ rounded the few major firms seemed to be an obstacle to overhaul. And the press blamed the managers of these utilities for having prac207

Capitalism and the state in modem France ticed Malthusianism. The dominant motive was to reorganize this basic sector and make it more productive. Economic expansion was the primary reason for nationalizing all these industries. The scope of action was limited in part because the proponents of extensive nationalization were not free to do as they pleased in spite of the commanding position of the left. De Gaulle postponed action for fifteen months, allowing the fervor of the liberation to subside. He then used his authority to circumscribe nationalization of credit so that investment banking was excluded. After his resignation, the MRP, the party most closely associated with him, succeeded in per­ suading his successor, Gouin, to confine nationalization to the short list of sectors and then fought, with some success, to limit the mea­ sures within these sectors. Time and other priorities also restricted action. The principal concerns of the Constituent Assembly were drafting a constitution and adopting budgets; few sessions were de­ voted to economic reform. In fact, it required a last-minute extension of the assembly's final session in April 1946, a quick debate, and a voice vote to adopt the transfer of the mines. However, the protracted debate over the gas and electricity bill the month before had demon­ strated growing dissension among the three parties. Even though a compromise was arranged, it was clear that the fragile consensus for nationalization was collapsing and enthusiasm waning. As the triparty coalition disintegrated in 1946 over constitution making, the opportunity for further measures disappeared. What were the actual changes wrought in the economy by the nationalizations of 1945-6?59 The banking act completed the process begun by the Popular Front of eliminating private interests from the Bank of France. It also brought public ownership to the four largest deposit banks and extended regulations over private investment banks. A new National Credit Council, in conjunction with the Bank of France and a Banking Control Commission, controlled credit and regulated banking practices. The nationalization of insurance com­ panies affected only the largest firms. Like the deposit banks the insurance companies retained their corporate identities despite the transference of ownership and came under control of quadripartite governing boards.60 A National Insurance Council supervised the whole sector. Gas and electricity experienced a far more intricate change. All major producers and distributors were dissolved and re­ placed by two public corporations, Gaz de France and Electricité de France. These enterprises were to operate under the laws regulating private enterprise. CGT-style tripartite boards set policy and ap­ pointed, subject to ministerial approval, the managers. In similar fash208

The liberation and early postwar years ion the former mining companies lost their identity; the coal act re­ placed them with public corporations. At the national level Charbon­ nages de France directed the industry - drafted plans, coordinated investment programs. Separate Houillères de Bassin conducted min­ ing operations at the regional level. Decentralization, sought by the Socialists and the MRP, was a strong feature in this instance. Tripar­ tite boards at the Charbonnages and at each Houillères set policy and nominated general managers. In all cases former owners were in­ demnified. Opposition to these measures was either intimidated or ineffectual. The left-wing coalition in the assembly overwhelmed political resis­ tance. Business interests tried to obstruct or shape the legislation by exerting influence on the MRP and on the administration but with little success. Business had lost its prewar national employers' federa­ tion, the sympathetic political parties of the Third Republic, and most of its friendly press. Another potential center of resistance was the hauts fonctionnaires at the ministries of finance and industrial produc­ tion. A few officials at the latter ministry welcomed nationalization as a way to rationalize industry and promote technological progress. Others were skeptical about its usefulness and disapproved of its ideological caste. Whatever their attitude they could do little to affect the outcome.61 Officials at the rue de Rivoli had their reservations, especially about the nationalization of credit. And even the gas and electricity bill was a cause for concern because any spoliation, in their view, would compromise future borrowing by an industry needing massive investment. Nevertheless, finance officials bowed to the de­ mands of the assembly's majority and accepted the rationalizing ad­ vantages of the measure. The manner in which the nationalized sector was finally organized was a compromise that fell short of the high hopes of advocates like Philip and Moch. Neither a uniform nor a unified public sector that could supervise the entire economy emerged. The vision of an inter­ locking group of nationalized industries run by representative style boards and coordinated by a superministry and a national plan that functioned as the opening wedge for socialism vanished in the pro­ cess of lawmaking. The government conducted the legislative process in piecemeal fashion with different ministers drafting proposals for each sector. Pleven prepared the bank bill, Philip the one for insur­ ance companies, and the communist-syndicalist Marcel Paul the legislation for gas, electricity, and mines. The assembly debated each measure separately and concentrated mainly on details of internal organization and indemnification. The compromise character of each 209

Capitalism and the state in modem France settlement assured diversity among the statutes. The nation ended up with a variety of arrangements for each nationalized industry and little mechanism for coordinating the whole public sector. The efforts made after 1946 to standardize the statutes all failed. There was hope that the MEN or a national economic plan or an economic council would act as a harmonizing and guiding institution, but none of these emerged. The MEN was losing its struggle with the Ministry of Fi­ nance; the Economic Council never lived up to its promise; only plan­ ning was to give some semblance of overall management. The assembly did not pay much attention to the question of setting standards of performance for the new enterprises.62 Legislation was evasiye on price policy and profits. If the nationalized firms were supposed to operate without deficits, it was not always clear whether they were supposed to earn profits or what kind of exceptions to market pricing were legitimate. Personnel policy and wages were open questions. Nationalized firms were assigned various, and often conflicting, goals including raising productivity, curbing inflation, expanding capacity, improving working conditions and labor rela­ tions, subsidizing certain social and economic interests, as well as maintaining financial equilibrium. Practice and circumstances rather than legislation decided policy for the new corporations. A major issue in framing nationalization was the form of organiza­ tion. There were alternatives to outright public ownership, but the political and psychological conditions of the moment precluded any other solution. Mixed companies, for example, evoked memories of interwar years when the state had timidly participated in or salvaged private enterprises. Such structures, moreover, left capitalist owner­ ship and existing management partly intact and did not create a new social milieu for the worker. Simply reinforcing state control over an industry suffered from the same deficiencies. The only acceptable solution was wholesale transference of ownership, eviction of private managers, and reorganization of the sectors.63 Centralization was another, and more divisive, organizational issue. Whereas the CGT and the Communists sought to create extensive, centralized structures, the Socialists and the MRP, fearing exces­ sive bureaucratization and politicization, preferred looser arrange­ ments. For example, the latter parties tried to separate gas from elec­ tricity and establish regional bodies for producing and distributing power. Though some decentralizing provisions appeared in the final act, they were never implemented. Gaz de France and Electricité de France signed a convention in May 1946 subordinating the former, and regionalization remained very limited. The need to rationalize operations and raise output led to centralization as it did to increasing 210

The liberation and early postwar years étatisation. Again economic imperatives prevailed over political ideals. The precise form of organization and management given each in­ dustry was a result of blending different conceptions of nationaliza­ tion. An amalgam of statist, technocratic, and syndicalist formulas emerged. The first stressed government direction, the second inde­ pendent expert management, and the third autonomy and interest representation. The latter scheme, championed by the CGT, took the form of assigning responsibility for policy and operations to tripartite governing boards. De Gaulle preferred a statist-technocratic alterna­ tive. When the cabinet, for example, reviewed the proposal for elec­ tricity he expressed misgivings about the minority position given rep­ resentatives of the state on the governing board; he believed they should have outranked consumers or personnel. De Gaulle added that it was '■'indispensable, at a time when equipment problems stood out, to make room for individuals with administrative and technical temperaments and skills."64 The MRP leaned toward a Gaullist posi­ tion whereas the Socialists advocated a mixture of all three ap­ proaches. The basic issue was how to have interests, like consumers and employees, participate in the management of public firms yet provide for managerial autonomy and initiative and also maintain government control. The compromise reached by the Constituent Assembly was to separate policy making from management, that is, the tripartite boards from company directors, yet preserve the gov­ ernment's veto power. What the legislators specified and what fol­ lowed once the public corporations began operations, however, were rather different. In practice the technocratic and statist elements predorfiinated. Pro­ fessional competence and ministerial control gained sway over the representation of interests.65 The tripartite boards foundered when they became politicized. Paul abused his authority as minister of in­ dustrial production in 1946 when he stacked the coal, gas, and elec­ tricity boards with communists. Such boards could not function as neutral arenas for interests to negotiate. And interest bargaining, when it did operate, did not prove to be an effective basis for an executive organ. One rather skeptical proponent of nationalization expressed doubts that the working class had a clearer grasp of longrange national interests than the bourgeoisie.66 Once the peak of Communist influence passed, after 1947, the syndicalist mode of organization gave way to government controls and managerial direc­ tion. Subsequent legislation streamlined the boards and added ex­ perts. The hope of making public enterprise independent of the ad­ ministration faded quickly in practice. 211

Capitalism and the state in modem France The new economic order of the late 1940s

By mid-1946 the most significant structural reforms had been enacted. The second Constituent Assembly that met in the summer and fall did not even discuss any further measures. The essential elements for a managed economy had been assembled. What was the shape of economic reorganization in the late 1940s after the surge of postwar reform? There was a substantial, but static, public sector. Except for some reorganization in the transport industry (for example. Air France in 1948), nationalization ceased. The new public enterprises proved to be multipurpose corporations pursuing a wide range of goals. Although some enterprises like Renault tried to lead the way toward industrial democracy and though workers in the public sector outdistanced their peers in private industry in winning such benefits as low retire­ ment age, pensions, and job security, there was doubt by 1949 that labor relations had been improved, much less transformed. The skep­ ticism of the MRP and others seemed vindicated. Control tended to shift from the governing boards to management and the ministries. The state intervened in order to cover the large operating deficits of many firms and then, in order to protect the budget, extended its controls. When public money came to furnish most of the investment capital for expansion in the later 1940s government officials intensified their supervision. The battle against inflation that peaked in 1947-9 prompted the republic to use the public sector to control prices and wages. Soon borrowing, wage scales, rates, and even personnel stat­ utes all became subject to ministerial authorization. At the same time professional management asserted itself. Lacoste, who again served as minister of industrial production from late 1946 to 1950, gave the companies more autonomy. Indeed, from the outset, there had probably been much less change in managerial personnel than the left had intended.67 Of the new postwar managers, some like Louis Armand at the SNCF and Pierre Lefaucheux at Renault proved to be flamboyant technocrats. As one authority observed: "in an economy where a conservative spirit too often took the place of the entrepreneurial spirit in the psychology of the private businessman, the nationalized sector sometimes assumed the role of the last refuge of such traditional 'capitalist' virtues as audacity, the taste for farreaching endeavors, and dynamism."68 The case of Lefaucheux best suggests the transition from social radicalism to technocracy. His con­ ception of nationalization harkened back to the tradition of Albert Thomas and Jouhaux who had conceived of it as an instrument of 212

The liberation and early postwar years economic growth and as an autonomous enterprise free from both the state and the bourgeoisie.69 At the height of the liberation in 1944 Lefaucheux castigated the bourgeoisie for its selfishness and lack of dynamism, wrote enthusiastically about socialism, and addressed au­ toworkers as "mes camarades."70 But in 1952 he criticized those who wanted to turn the company into a showplace for socialism and in­ sisted that his task was to manufacture automobiles. His very success as a manufacturer helped him shake off state controls and create, in his words, "a technocracy" at Renault where engineers like himself ran the enterprise. The tension between the managerial and the statist conception of nationalization rather than socialism seemed to be the enduring and significant issue. By 1947 a national economic plan was in operation that represented the institutionalization of planning as an element of economic man­ agement. Jean Monnet succeeded where his predecessors beginning with Clémentel and ending with Mendès-France had failed. But under Monnet the plan became a rational investment program nourished by American aid, and planners became nonbureaucratic experts who coordinated and cajoled rather than commanded eco­ nomic actors. The two new economic ministries spawned by the war faded quickly. By 1946 the once powerful Ministry of Industrial Production inherited from Vichy had lost its corporatist auxiliaries (the CO), its network for materials allocation (OCRPI), and its regional services.71 The following year it resumed its prewar commercial functions, and it once again became the Ministry of Industry and Commerce. "Indus­ try" now preceded "commerce" in the title and its new structure remained, but it no longer enjoyed its wartime powers. The MEN did not long survive as an independent ministry; during much of the early postwar period it was held jointly with the ministry of finance.72 The ambition for creating an autonomous, supervisory ministry dis­ appeared after the tenure of André Philip during 1946-7. When re­ source allocation ended and price controls relaxed, the ministry lost its most important functions, and as issues like investment became more pressing the stock of the finance ministry rose. The rue de Rivoli, furthermore, did its best to dismantle its rival. The Treasury, for example, assumed responsibility for investment in the nationalized sector. Monnet's planning commissariat also outflanked the MEN by absorbing its bureau for economic planning. After 1947 remnants of the ministry's services lingered but without the capacity to either define or impose economic policy and reduced in stature to that of a state secretariat. Nevertheless, many of the functions of economic 213

Capitalism and the state in modem France management and its philosophy had been incorporated in the plan­ ning commissariat and the Treasury, and thus the principles of the MEN survived its own demise. Nationalization of the Bank of France and the major deposit banks was more form than substance. What proved more effective in disci­ plining the banking community was the new control network centered around the Treasury, the National Credit Council, the Bank of France, the Banking Control Commission, and the professional bankers' as­ sociation.73 Together they charted and applied credit policy and re­ strained private banks from acting contrary to public economic policy. Furthermore, semipublic lending institutions, like the Crédit National and the Caisse des Dépôts et Consignations, which often lent public funds and employed finance officials as managers, were, to a degree, instruments of government policy. One other structural reform adopted by the Constituent Assembly in 1946 was the creation of the Economic Council (Conseil Economique). Trade unions and reformist Catholics in particular de­ sired a parliamentary body that would represent social and economic groups. But the MRP did not get a full-fledged corporatist and re­ gionalist assembly because the Communists and Socialists insisted that the basis of interest representation should be national profes­ sional bodies like the CGT rather than a wide variety of both regional and national economic and social organizations. Like the nationaliza­ tions the council was defined by a compromise among the political parties and turned out to be neither a true corporatist-style economic parliament nor a clearly defined technical advisory body.74 Nor did this pluralistic assembly of interests approximate the desires of war­ time reformers who had sought an overarching assembly that would set public policy for a mixed economy. The council was empowered to advise the political parliament on all legislation of an economic character and on a national economic plan. Appropriately, Léon Jouhaux, who had promoted the cause of an economic parliament for two decades, became the council's first president. The Economic Council of the Fourth Republic came to resemble closely its predeces­ sor, the National Economic Council, even though it enjoyed constitu­ tional status. It proved to be a weak body, ignored by parliament and by most governments. There were several substantial, but less publicized, reforms achieved during 1944-6. Prompted by the new demands on the state for economic management and an awareness of the superiority of British and American services, a small group of civil servants, led by Alfred Sauvy, Claude Gruson, and Francis-Louis Closon, began 214

The liberation and early postwar years overhauling the state's apparatus for collecting and analyzing eco­ nomic and statistical data.75 Various information-gathering bureaus were unified, and the Institut National de la Statistique et des Etudes Economiques (INSEE) was created as an agency of the MEN. This was an important development in a nation known for its antipathy to providing economic data to the state. Up-to-date methods appeared, even within the inner sanctum of the rue de Rivoli, for the prepara­ tion of national accounts, the budget, general statistical studies, and economic forecasts. In the same period the provisional government founded or rejuvenated major scientific and technical research insti­ tutes: atomic energy, communications and electronics, aeronautics and aerospace. In the long run the work of these institutes was to help French industry reduce its technological lag.76 The reformers of the liberation recognized that new institutions were only as good as the men who staffed them. The training of hauts fonctionnaires was at issue. The castelike recruitment of the grands corps, their attachment to liberalism, their narrow outlook and con­ servative attitudes prompted the establishment of a new graduate school for public administration, the Ecole Nationale d'Administra­ tion (ENA), in 1945. It replaced the Ecole Libre as the antechamber to the upper civil service. Its inspiration was Michel Debré, a former member of the CGE in the resistance and a Gaullist.77 Debré wanted the ENA to democratize and centralize recruitment and to breathe unity and dynamism into the entire administration. Preparation was to be less specialized and more widely functional. At the very mo­ ment officials were obliged to assume greater responsibilities for the economy, Keynesian principles and a new pragmatic approach re­ placed doctrinaire liberalism. The ENA stressed economics in its cur­ riculum, taught it through case study, and made it more mathemati­ cal. The new mentors were Sauvy, Gruson, Closon, Paul Delouvrier, and François Bloch-Lainé. The enemy was Malthusianism; the way out was "flexible planning" and the économie concertée - a framework within which the state could make "constant adjustments... to as­ sure maximum economic growth with social and financial stability."78 Although the ENA was unable to transform the behavior of the ad­ ministration or democratize access to high office, it inspired many to see the state in a new technocratic light. The heavy dirigiste style of economic management that charac­ terized the initial postwar years soon lifted. As the most serious short­ ages disappeared and as the coalition of resistance parties disinte­ grated, opposition to dirigisme revived. Controls and corporatist bodies were also tainted with connections to a collaborationist regime 215

Capitalism and the state in modem France and wartime privations. Had not the aim of the struggle against Vichy and the occupiers, some asked, been to liberate the nation from just such constraints? An early casualty of the liberation was the CO network. Lacoste, the minister in charge, intended to use these organs as permanent instruments of dirigisme. In February 1945 he announced a reorgani­ zation of the CO, now renamed Offices Professionnels; he wanted to subordinate them to state control, remove the wartime directors, break the hold of big business, restore freedom to employers' associa­ tions, and in general streamline and democratize their bureaucratic machinery.79 But the offices were no more popular than the CO had been, and there was reason to doubt that Lacoste had changed either their personnel or their habits. Once sufficient imports arrived, alloca­ tion of raw materials was less urgent and the network became ex­ pendable. The Communists led the attack against them as "vichyssois" bureaucracies and as agents of big business, and liberals and employers criticized them for interfering with commerce. The MRP wanted them completely remade. In April 1946 the Gouin gov­ ernment proposed and the assembly approved dismantling the net­ work of offices. This action closed a chapter in wartime dirigisme and unwittingly served to revive organized business.80 With respect to other forms of wartime controls, food rationing had disappeared by the end of 1949 and price controls had been relaxed. In early 1950 wages were freed. One reason price and wage controls lapsed was because they failed to curb inflation. The price board tended to do little more than record increases, and wage controls often worked to amplify rises rather than restrain them.81 Abuses and scandals in the administration of controls were commonplace. Busi­ nessmen complained about annoying regulations, supply muddles, and "le gouffre du budget."82 The grievances of 1946 resembled those raised in 1919, but this second wave of anti-dirigisme mounted by business blamed the Communists as well as the administration for the troubles. The basic cause for the ineffectiveness of controls, however, was political. Governments of the early Fourth Republic, like those of the Third, were unable or unwilling to resist pressure for price and wage inflation. This was especially true when business, labor, and farmers agreed among themselves, as they did, for example, in July 1946, on simultaneous increases in prices and wages. And as the governing majority moved to the right in 1948-9 and liberal premiers like Robert Schuman and René Mayer took charge, the will to operate unpopular controls faded. Yet there was no simple reversion to the unregulated prewar situation because the state retained its authority 216

The liberation and early postwar years and the machinery necessary to reimpose regulations such as a gen­ eral price freeze. The major outcome of the period 1944-6 with respect to economic change was the triumph of certain elements of liberation élan over others. Socialist, syndicalist, egalitarian, and moral fervor receded before the more potent desires for recovery, reconstruction, man­ agement, and national independence. The high hopes of the moralists for a more just and more humane economic order and of the socialists for transcending capitalism were bypassed by modernizing achievements. What the drive for structural reform brought were vast economic and social responsibilities for the state; new, or trans­ formed, state institutions; and, in time, new men to occupy the ap­ paratus of economic direction. Archetypes of this modernizing type of official were Jean Monnet at the planning commissariat or François Bloch-Lainé at the Treasury. These men, and others like them, were to pursue expansionist and interventionist public policies that would make the 1950s contrast sharply with the prewar period. The reasons for this outcome are complex. First, in 1944-6 there was no unified will, with one major exception, about the nature of struc­ tural change. The dominant parties, interests, and personalities of the liberation era held a mélange of views and priorities. They had not reached agreement on the design of the new economy before the invasion of France, and once they had become a governing coalition and decisions had to be taken the fissures widened. In fact, the only broad area of agreement was that structural reform meant economic management and modernization. It is this aspect of the reformers' program that has been slighted and that largely accounts for what happened. Second, although the opportunity for radical change was far better in 1946 than in 1919 the proponents of socialist overhaul were rare. Only a few leaders from the noncommunist left like Mendès-France and André Philip spoke out. For all the others there were reser­ vations, hesitations, or more appealing alternatives. And even among the militants who wanted to seize the opportunity afforded by the euphoria of the liberation, there was no sense that the socialist or syndicalist future was at hand. The task, as they perceived it, was to begin the construction of a mixed socialist and capitalist order. They were building a more just economy and society but not an entirely different one. Certain capitalists - the trusts, black-market profiteers, and collaborators - were to be expunged but not the capitalist system. The thrust of reform was to create socializing institutions within a 217

Capitalism and the state in modem France capitalist economy. Yet the key socializing agents, like the nationalized enterprises, the MEN, and the plan, turned out to be far different from the wishes of their boldest champions. They were products of compromises that reflected technocratic and étatiste goals as much as they did socialist or syndicalist ones. Yet a third reason for the outcome of reform was the severe con­ straints that faced the advocates of moral and social revolution. An adequate supply of food, fuel, and transport, and other necessities took precedence in the miserable situation left by war and occupation. Regaining a decent standard of living seemed paramount. Finally, and most important, the reformers of 1944-6 consciously extended their concern for immediate recovery to give priority to long-term renovation and the introduction of institutions of economic management. They fully recognized that the cause of their economic predicament was not merely the setbacks of 1940-4 but an accumula­ tion of backwardness. Thus the programs of all the major political actors from de Gaulle and Pleven to Mendès-France and the Com­ munists emphasized modernization and management. This change marked a revolution in the thinking of the French political and admin­ istrative elite about the structure of economic institutions and the direction and nature of economic policy.

218

8 The M onnet Plan, 1945-1952: the prototype of planning

"You talk about grandeur, " Jean Monnet remembered telling Charles de Gaulle, ''but the French are a small people today."1 Monnet went on to say that in order for the French to attain the stature for grandeur they needed to modernize and increase production. This conversa­ tion between the French supply commissioner and the head of the provisional government took place in Washington in August 1945. A few months later the machinery for economic planning had been designed and authorized. France introduced economic planning in the wake of the Second World War in order to allocate scarce resources and meet the urgent need for renovation and reconstruction. French planning was also intimately linked to American foreign aid. It owed its inspiration and conception indirectly to the Anglo-American wartime planners and directly to Jean Monnet and his team. Monnet began his career at the turn of the century selling cognac to Canadians and ended it sixty years later selling the idea of European integration to West Europeans. He believed his life's work was to bring men together, to help them solve problems that divided them. The problems he chose to solve were of national or international magnitude. He also believed that persuasion rather than authority was the way to resolve issues. But the price of convincing those with authority to adopt his ideas was self-effacement. Politicians could be won over if he permitted them to assume paternity. "In my work," he commented, "one must forget the laurels."2 Monnet rejected a politi­ cal career for himself because from his viewpoint politicians spent their energy seeking power rather than facing problems. Nor did he pursue an administrative career; officials, it seemed, spent their time regulating the status quo. Business never commanded his whole at­ tention, though he ran the family cognac firm in later life, because it could not satisfy his urge to act as a public servant. Monnet, instead, made a career in the interstices of politics, administration, and busi­ ness; he became a high-level economic troubleshooter for gov­ ernments and the prime mover behind efforts to mobilize men to fight 219

Capitalism and the state in modem France wars, make peace, and gain prosperity. His talent was for anticipating problems, getting advice from the best minds on solutions, and con­ vincing those in power how to act. During the First World War Monnet had served in London as a member of the inter-Allied supply councils where he had supported Clémentel's project for the postwar pooling of resources. Between the wars he held posts as a League of Nations official, a financial consul­ tant to several governments, and an executive in an American in­ vestment bank. In the late 1930s Monnet acted as his government's liaison with the Anglo-Americans on armament problems. The fall of France while he was in London terminated his work channeling supplies. In 1940, as a member of the British supply mission, he moved to Washington where he helped initiate the American mobilization program and coined the phrase "the arsenal of democ­ racy," which President Roosevelt employed to describe early United States contributions to the war. In 1943 Monnet was in Algiers han­ dling armament and supply matters for the CFLN.3He had known de Gaulle from the beginning of the war but was never one of the gener­ al's followers. For one thing he rejected the latter's brand of nationalism. For another, in 1940 Monnet had chosen to fight the war by serving France's allies rather than by rallying to the Free French. Nor had his effort to moderate the quarrel between General Giraud and de Gaulle within the CFLN endeared him to the latter. Neverthe­ less, in October 1943 de Gaulle, wanting to take advantage of Monnet's contacts in the United States, sent him back to Washington to manage supply questions and help gain diplomatic recognition for the CFLN. At this date Monnet assumed the job of overseeing import programs in the United States for the provisioning and reconstruction of his country. He realized, long before others, that American aid would be indispensable for French recovery. While in Washington from 1943 to 1945 Monnet ran the staff of the French Supply Council and gathered the nucleus of his postwar team. Robert Marjolin, who had been a socialist planner in the 1930s and had studied Keynes, acted as the staff economist. Félix Gaillard, young, bright, and ambitious like Marjolin, became Monnet's chef de cabinet. Etienne Hirsch, former manager of a chemical firm whom we encountered among the Free French planners, was Monnet's coun­ terpart in London. He became the principal technical advisor and a stabilizing influence on Monnet's youthful team.4 Monnet earnestly cultivated contacts in high political, military, legal, banking, academic, and business circles in the United States. He learned much from economists Stacy May and Robert Nathan who applied their statistical and analytical skills to United States war production pro220

The Monnet Plan grams. Nathan was to become a consultant on drafting the first French plan. Monnet, moreover, absorbed his hosts' optimistic at­ titude toward economic growth. The success of American war pro­ duction programs impressed the French mission who perceived that wartime mobilization techniques could readily be adapted to peacetime purposes. Once the Allied invasion of France began Monnet urged the CFLN to take steps to organize the ordering and distribution of foreign supplies.5 The CFLN's commissariats, he complained, could not con­ tinue their uncoordinated approach to purchasing. Without an "over­ all plan" and centralized governmental supervision, he warned, supplies would run out before the country was freed. In August 1944 the supply commissioner proposed a six-month plan to cover imports for the liberation and a subsequent "start-up plan" for raw materials, machinery, food, and medical supplies. His proposals, which the CFLN endorsed, served as the basis for lend-lease negotiations with the United States. The French became eligible for lend-lease at the very end of the war. Under an agreement signed in February 1945 that Monnet helped negotiate, the United States government gave France military aid, raw materials, and food and provided capital equipment on the basis of a long-term, low-interest loan. But in August 1945 the Ameri­ can government informed Monnet as head of the French Supply Council that it would no longer accept orders under lend-lease and wanted to wind up the program.6 It also expressed a desire to return commerce to private channels and remove restrictions on trade as rapidly as possible.7 The termination of lend-lease required a com­ plete overhaul of the French import system and marked a decisive step toward planning. Henceforth France was going to have to pay for its raw materials, equipment, and food and resume normal trade relations with the United States. It would also have to compete with other nations seeking American aid. The disorderly way the French missions operated had annoyed the Americans and impaired their effectiveness.8 Without an overall equipment plan each ministry had competed independently for supplies. Their perfunctory procedures and the absence of technical personnel were especially distressing to officials in Washington. The expiration of lend-lease intensified the problem. In June 1945 William Clayton, the under secretary for eco­ nomic affairs at the State Department, reportedly told the head of a major purchasing mission: Be liberals or dirigistes. Return to capitalism or head toward socialism. That's your business. . . But in either case the government must choose and not compromise between these two economies. It must formulate a precise pro221

Capitalism and the state in modem France gram proving its desire to give France an economy that will permit it to reach international production costs calculated in man hours. If it makes the choice and demonstrates to us the seriousness of its program, we shall help your country for its prosperity is necessary to peace.9

Thus the Americans took the lead in tying aid to a modernization program and to strict accountability.10 Monnet understood that no one on the Supply Council or in Paris had both the necessary over­ view and the refined analytical techniques to measure the condition of French capital equipment, national income, and other economic indexes and thus document the country's needs to the satisfaction of the Americans. It was at this juncture, in August 1945, that Monnet spoke with de Gaulle in Washington about the need to overhaul French production. He drafted a memorandum for de Gaulle to send to President Tru­ man. It sought a loan to settle the debt contracted through lend-lease and informed the American president of French intentions to seek future loans for new equipment. France intended to regain its rank as an industrial power. Monnet also indicated that the French were con­ templating a plan: "we intend to submit to you in the near future our industrial equipment program aimed at modernizing our produc­ tion."11 Monnet returned to Paris in October 1945 determined to find a way to use American aid to renovate the economy. He brought Marjolin, Hirsch, and Gaillard together in hotel rooms where they studied data supplied by government statisticians that documented the nation's long-term decline. The relatively poor standard of living of the French and low production-productivity levels, they reasoned, could be traced back to a neglect of productive investment. Hirsch told Monnet that the most modem steel plant in France dated from 1906, and it had been taken over from the Germans. Capital investment was the key to the problem of economic redressement. Yet how was the economy going to pay for a high level of imports, meet current consumption needs, begin reconstruction, and also provide sufficient investment for modernization? Only American aid could solve the dilemma. All Monnet could count on at this point was de Gaulle's support. The latter had told him to draft a proposal before the end of the year. In November de Gaulle declared his government's intention of framing a "grand plan" for reconstruction and renovation.12 In the same month the French and American governments exchanged letters set­ ting the stage for the plan. The French agreed to negotiate the open­ ing of foreign trade in return for help in rebuilding and modernizing their economy.13 On December 4 Monnet, Hirsch, and Marjolin completed a lengthy 222

The Monnet Plan memorandum for de Gaulle that became the birth certificate of plan­ ning.14 This historic note argued that for the nation to recover its place in world affairs and raise its standard of living it had to pursue reconstruction and modernization simultaneously. Modernization meant raising productivity in both agriculture and industry by intro­ ducing the latest machinery and production methods. The French people needed to appreciate that the cause of their relative backward­ ness was the country's antiquated capital equipment, which had de­ teriorated during the war while the other belligerents were experienc­ ing "a veritable technical revolution." Monnet warned de Gaulle that, unless the government acted quickly before available resources were fully absorbed by other needs, economic interests would seek protec­ tion of the existing productive plant and the economy would "crystal­ lize at a level of mediocrity." Only increased production at competi­ tive costs would permit France to raise its exports to the point where it could pay for massive imports of needed raw materials like coal and equipment. The memorandum stated that the pace of modernization depended on the ease with which France obtained foreign credit to buy equipment. Monnet echoed the view of other planners like Georges Boris when he described the need for a long-term equipment and production plan that would coordinate the numerous piecemeal plans that currently competed for scarce resources. In order to exe­ cute such a plan Monnet recommended that all the "vital elements of the nation" (e.g., officials, experts, representatives of employers' as­ sociations and trade unions) collaborate in its formulation. They would form Modernization Commissions and draft sectoral plans. He asked for the creation of a high commissioner for planning to super­ vise and synthesize the labors of the Modernization Commissions, review existing plans, and then draft a Plan de Modernisation et d'Equipement (PME) for submission to a new planning council. This organ, composed of some thirty members, half of whom represented the ministries and the rest various economic interests, would examine the commissioner's work and propose the plan to the government for its approval. Armed with de Gaulle's blessing, Monnet presented his proposal to a meeting of cabinet ministers to whom he stressed "the pragmatic character" of planning and the narrowness of his assignment, that is, synthesizing the diverse plans of the ministries.15 He also maintained that France could obtain American aid only if it had a definite plan that demonstrated its determination to undertake renovation. François Billoux, the Communist MEN, supported Monnet but noted that plan­ ning was to be a collaborative effort of the ministries and that the planning unit would disappear once the PME was drafted. De Gaulle 223

Capitalism and the state in modem France added that the execution of the plan would be left to the MEN and the technical ministries. The ministers recommended Monnet's project to the full cabinet which, a week later, officially adopted it. On January 3,1946, a decree created and defined the responsibilities of the Commissariat Général du Plan (CGP) and the Planning Coun­ cil. 16Both organs were attached to the head of the government. Within six months, the decree specified, a PME was to be drafted to attain five goals: increase production, expand trade, relise productivity to the level of the most advanced countries, assure full employment, and raise the standard of living. The MEN was to place its planning and statistical services temporarily at the disposal of the commissioner, and other ministries were to furnish him with information freely. The CGP was to formulate and propose a PME to the Planning Council. A week later de Gaulle sent a set of "instructions" to Monnet, the new plan­ ning commissioner, that was nothing more than Monnet's original December 4 memorandum verbatim. Monnet, with de Gaulle's sup­ port, had successfully created his own planning unit. Drafting the PME, 1945-1946 For the history of the managed economy, perhaps the most important contribution of Monnet's team was that they created the prototype of French planning. Their conception of planning was to give this key element of economic management its distinctive characteristics. Yet its inspiration, like so much of the plan, was borrowed from the Anglo-Americans, especially the Americans. The United States supplied the first plan with equipment and materials, credits, and its expansionist economic philosophy. As we shall see, even the idea of how a planning unit should function owed much to Anglo-American example and advice. The Monnet method of planning developed largely as a solution to two fundamental problems. The first was how to plan in a market economy, and the second was how to circumvent ministerial domina­ tion. Monnet named Marjolin his assistant commissioner and appointed Hirsch and the young inspector of finance Paul Delouvrier heads of his technical and financial services. The noted statisticians Jean Fourastié and Jacques Dumontier headed the economic and statistical division.17 The team worked feverishly in early 1946 to hammer out the principles of the PME. They rushed to compose a first draft in order to help negotiate a loan from the United States. The starting point of their thought was that France was on the verge of becoming a "backward country."18 The long-term decay of its capital equipment 224

The Monnet Plan was responsible for low productivity and high costs, which in turn yielded a low standard of living and deficits in the balance of pay­ ments. With the capital losses caused by the war and the aging and shrinking of the work force it had become necessary to work harder to produce the same levels of goods and services. Like the underde­ veloped nations France could devalue or reduce real wages and trade more labor to pay for imports from advanced countries. Or, to avoid slipping into backwardness, it could plan for reequipping and modernizing its productive capacity. As Monnet phrased it, the choice was between "modernization or decadence."19 What the CGP believed France needed was an investment pro­ gram. There was no notion of planning as an element in a socialist restructuring of the economy.20 The only tie between the PME and socialism was that the investment program was designed to help build the nationalized sector. But even this objective was sought for economic rather than ideological reasons. Marjolin, who was consid­ ered the house socialist, saw the PME as a practical, nondoctrinaire affair.21 The premise of the first generation of planners was that they were dealing with a mixed economy but one still predominantly capitalist in nature. The second premise was that the country did not possess the productive capacity to meet consumer needs, pay for large quantities of imports, and also furnish investment capital. Thus the PME was to be an investment plan, a means of gaining American aid to rebuild and modernize the economy to the point where it could correct its payments deficit and generate its own investments. The Monnet Plan marked a disjuncture with the radical conception of planning that had been spawned among CGT officials and young socialists during the 1930s. Its French antecedents were Clémentel's scheme of 1919, neo-liberal planisme of the interwar years, and Vichy planning. In order to force the pace of economic growth it was necessary to require adherence to priorities and demand certain sacrifices. The planners wanted to lower the output of consumer goods as much as possible without arousing opposition to the PME. They intended to give priority to allocating resources to a number of basic sectors whose development, they believed, determined the volume of pro­ duction and cost levels of the entire economy. Reconstruction of non­ productive buildings and houses, which was dear to many French­ men in 1946, would be delayed. The planners chose investment over consumption, modernization over reconstruction, or the future over the present. Though the planners needed to direct postwar recovery and require sacrifices, they could not command it. They faced the dilemma of 225

Capitalism and the state in modem France trying to guide what was essentially a market economy composed of hundreds of thousands of independent producers at a time when dirigisme was unpopular. Economic controls evoked wartime hard­ ships and the German occupation.22 Moreover, it was not Monnet's way to order. As he told Hirsch, "we will prepare the plan without imposing it on anyone."23 Yet to make the plan a success the eco­ nomic behavior of many actors had to be orchestrated. If they could not command, then how could they plan? Or, as Monnet said, the question was "how to lead an immense collective effort without our­ selves controlling the decision-making apparatus - of either the state or the firms."24 To this question the planners found three related answers. By far the most innovative solution was to have those who were to execute the PME participate in its formulation. Monnet distinguished his method from the conventional bureaucratic approach, which either imposed directives by administrative fiat or consulted interests in such a way as to place them on the defensive. His method, which contrasted with Vichy's "administrative" type of planning, associated economic interests in a process of collective problem solving. By virtue of having devised a solution the participants committed them­ selves to executing it. Participants, moreover, would not represent organizations and would thus be more free to discuss and reach agreement. The use of the unanimity principle would overcome the hesitation of private interests; the planners promised not to proceed without everyone's consent. The major activity would be exchanging information. As Marjolin stated: The principal advantage of a method that gathers together for the formulation of the plan those who will be asked to execute it is to take account in advance, and thus overcome, the observations and objections that are sure to be made when the time comes for operations. Instead of seeming like a creation of ivory-tower intellectuals the plan appears as an exposition of possibilities for the national economy and an expression of the will of its most energetic elements.25

Monnet believed that "nothing is so effective as persuasion" and that modernization was more a state of mind than a matter of equip­ ment.26 What he hoped to sell in the commissions was a dynamic attitude toward economic development inspired by America's exam­ ple. Thus, when it came to deciding what the best method was to stimulate agriculture, the commissariat chose farm machinery be­ cause, as Hirsch observed, "a farmer on a tractor will no longer think like a farmer behind a horse."27 The institutional expression of Monnet's approach was the eigh­ teen Modernization Commissions where the planners assembled 226

The Monnet Plan hundreds of businessmen, administrators, trade union officials, farmers, experts, and consumers. The essential, questions Marjolin posed for these commissions were: What do you need in the way of equipment or reorganization to raise production and productivity quickly and to become competitive with manufacturers in the most advanced countries? In particular, what should be done to break "production bottlenecks" so that we can raise output above prewar levels? The staff at the commissariat considered these commissions the "essential works of the new machine."28 Marjolin described the men he wanted to serve on them: not prominent officeholders but those who recommended themselves by "the knowledge they have of industry, by their dynamism, by their willingness to do something modem."29 Nevertheless, industrywide authority was not ignored, and in fact heads of Modernization Commissions were often officers of professional syndicats. Here then was the source of the "demo­ cratic," "representative," or "consensual" quality of the PME. Here also was the inspiration for the idea of the économie concertée. This phrase was a musical metaphor suggested by Hirsch that Monnet adopted because he wanted to efface the legend that the French people were, in Péguy's celebrated rebuke, a "peuple inconcerté."30 The idea for the commissions came from Hirsch. As supply chief in London he had observed the British experiment with industrial work­ ing parties.31 The Labour government had created these organs in 1945 to conduct a systematic self-examination of certain faltering in­ dustries. However, the French commissions did not simply imitate the working parties because the British organizations omitted public officials and were not integrated into an overall program. In contrast to the working parties, Vichy's CO seem to have had little or no influence on the CGP in creating the commissions. A rare CO official or Vichy planner, like Roger Boutteville, headed a Modernization Commission in 1946, and one, Frédéric Surleau, even joined the commissariat's staff. But this was exceptional. There was rather little overlap between the CO and the commissions, not because Vichyites were systematically excluded from formulating the PME but because Monnet's team, who had lived outside the country for the war's dura­ tion, had had few contacts with Vichy personnel and simply recruited elsewhere.32 Although the Modernization Commissions were the principal way of both formulating and implementing the PME, the commissariat employed two, more direct, methods of execution.33 The nationaliza­ tions of 1945-6 presented the planners with a command sector com­ posed of large, centralized units. Coal, electricity, and rail capacity appeared to be bottlenecks for production, and it was these sectors 227

Capitalism and the state in modem France that had already formulated plans for reconstruction. A major reason for the nationalizations, it should be recalled, was to assure the rapid development of these industries, and on this point the motives of the nationalizes and the planners coincided. For the public sector the plan's directives simply became orders to be fulfilled. The other way of enforcing compliance was to maintain essential wartime controls for the duration of the PME. Although much of Vichy's regulatory apparatus quickly disappeared, the commissariat intended to use controls over bank credit, foreign exchange, trade, raw materials, and prices to help achieve the PME's targets. Some of the planners were more enthusiastic about this dirigiste approach than Monnet. He dis­ approved of bureaucratic ways and pointed out that the regulatory machinery was in the hands of the ministries, who were not likely to accept the plan's priorities. He was no more eager to leave the task of ordering economic recovery to hundreds of officials than he was to rely on the independent decisions of a multitude of businessmen, labor leaders, and farmers. The second major conceptual question facing Monnet's planners in 1946 was how to avoid ministerial jurisdictional struggles and, to a lesser extent, parliamentary supervision. Earlier attempts at initiating planning had foundered because of these obstacles. The failure of Mendès-France to create a planning unit at the MEN in 1944-5 under­ scored the gravity of the problem. Monnet's staff was fully aware of the mistakes Mendès-France had made.34 The question was how to shelter the planning unit from jealous ministries and politicians, yet still provide it with the authority at the governmental level to draft a plan. The sine qua non for Monnet was attaching the CGP directly to the head of the government, which placed the planning unit outside any ministry's control. On this question he was adamant and on several occasions threatened resignation. In fact only a month after the forma­ tion of the CGP he considered quitting when Premier Gouin proposed subordinating the commissariat to the MEN. Monnet instructed Gouin on the failure of planning under this ministry. Eighteen months, he said, "have been wasted in sterile polemics between ministerial departments on questions of competence, jurisdiction, and authority. The Commissariat Général du Plan at the time of its formation was attached to the president of the Council of Ministers in order to place it above these polemics."35 The planners bent every effort to avoid giving the appearance of challenging administrative prerogatives. "The first principle that we worked out," according to Marjolin, "was that we were not going to create an administration to supersede existing services."36 The regu228

The Monnet Plan lar staff of planners was kept below forty in size. Such a minuscule staff was possible because the Modernization Commissions provided broad participation in the planning process. Monnet purposely shunned a specific delegation of authority for the commissioner. He took pride in asserting, "I took no one's place. I was not superior to any­ one. I occupied territory that up to then had neither name nor mas­ ter."37 As if to prove the modesty of their ambitions the planners housed themselves in a small hôtel particulier on the rue de Martignac whose baroque decor clashed with the futuristic plotting of its ten­ ants. The budget of the commissariat was allegedly the smallest of any public agency, and the planners discreetly spoke of their opera­ tion as "une petite chose." They disarmed administrative suspicions by emphasizing that the commissariat itself was to disappear once the PME was drafted and that their task was mainly to synthesize existing partial plans generated by the ministries.38 The planners in fact mis­ represented their task, leading others to believe in their proximate self-dissolution while in private they spoke of a second plan.39 There was more to the planners' deliberate self-effacement than a strategy for installing their agency. Monnet's staff also sought to dis­ associate themselves from bureaucratic procedures and attitudes. One reason the planners liked the close quarters of the rue de Martig­ nac was that the hôtel particulier bred intimacy and was "as far from being administrative as possible."40 Monnet, who had learned the importance of informal contact from the Americans and the British, also insisted on having a dining room in the planning offices. He preferred to act with others rather than to formulate and enforce rules. He relied on his powers of persuasion, on the objective charac­ ter of statistics, on men's common sense and goodwill rather than on invoking legal authority. He chastised his friend André Philip when the latter, as minister, attempted to attain production targets by using the "administrative method" of issuing directives.41 Planning, ac­ cording to the staff, should not be left to officials because "where we need a motor one finds only antiquated regulations." In their view bureaucrats were tied to administering what exists, not to transform­ ing the economy. Hauts fonctionnaires were "for the most part... very cultivated, honest, and technically competent - but they usually do not have any entrepreneurial spirit or taste for action."42 In order to help overhaul production and operate the new nationalized com­ panies the planners recommended dissolving the grands corps such as the inspectors of finance and replacing all the principal ministerial directeurs. In similar fashion the commissariat hoped to bypass parliament lest party politics disrupt the planning process. They feared that parlia229

Capitalism and the state in modem France ment would disfigure the plan with petty amendments and purely political considerations. Moreover, a general parliamentary debate over the PME might revive the quarrel over nationalization. The commissariat preferred to count on the government's authority and the support of the nation's "vital forces." Despite the planners' discretion they could not escape ministerial interference. From the outset the ministères de tutelle tried to colonize the Modernization Commissions, but Monnet managed to turn back this effort at an administrative takeover of the planning apparatus.43 A particularly delicate issue was the relationship of the commissariat to the already extant planning unit at the MEN. Monnet diplo­ matically attached this service to his commissariat and generously appointed its staff to important positions. The MEN, the ministères de tutelle, and the finance ministry, however, reserved their right to administer the PME once the CGP had formulated it. This corre­ sponded with the planners' original intention of staying clear of oper­ ations or becoming a large administrative service. Yet the issue of executing the PME was far from resolved. It would be unfair to Monnet's team to claim that they imported their conception of a planning agency, but American influence was significant. Not only did the first generation of planners have direct experience with American wartime planning but their principal out­ side consultant was Robert Nathan, the former chairman of the plan­ ning committee of the War Production Board and deputy director of the Office of War Mobilization. Nathan visited Paris twice in the course of 1946 as a consultant to the CGP. His advice ranged from detailed evaluations of data and forecasts to policy recommendations. In one of his lengthy memorandums the American economist urged the formation of a small, highly skilled, apolitical staff of planners attached to the head of the government.44 He further recommended that the planning unit stay out of operations yet assure the coopera­ tion of the ministries that would implement the PME by closely in­ volving them in the drafting process. Similarly labor, industry, and consumers should become active participants in the process. The CGP, it should be clear, did as Nathan advised. The drafting process for the country's first investment plan was hurried in order to assist a diplomatic mission to the United States headed by Léon Blum. The Modernization Commissions had not even been formed before the CGP submitted a preliminary sketch for the Planning Council's endorsement. Monnet outlined the nature and the magnitude of the investment problem for the council in March 1946 and stressed the need for American aid.45 As an aggregate target for the PME he suggested raising 1929 production levels by 25 percent 230

The Monnet Plan in four years. Premier Gouin and the council approved his recom­ mendations though labor leaders expressed concern about lowering consumption levels. A few hours after the council's meeting, Monnet, carrying an authorized draft of the PME, flew to Washington where he joined Blum's delegation. The purpose of Blum's mission was to settle French war debts, delineate trade policy, and negotiate credits for economic recovery.46 Blum acted as spokesman and leader for the delegation, and Monnet and Emmanuel Monick, head of the Bank of France, were the princi­ pal negotiators. The psychological obstacle that faced the delegation was to convince the Americans, who were reviewing a request for aid from Britain, that the French were going to make a serious effort to rebuild their economy. There was a certain suspicion, prompted by the way lend-lease had been mishandled, that the French were wait­ ing for the United States to rescue them.47 In order to overcome this doubt the CGP prepared a quantitative analysis for the Americans on the state of the economy. This report demonstrated that the country's plight was due to inadequate long-term capital investment and to the destruction of two wars. It stressed the progress that had been made toward recovery since the liberation - for example, in raising coal production above prewar levels - and the way that most obstacles to recovery, such as manpower shortages, could be overcome through the country's own efforts. Nevertheless, the report argued, the French could neither generate the needed investments nor pay for the large deficits in foreign exchange. "France is in the dilemma that it must invest to increase its present insufficient output, yet this insuffi­ cient output provides no margin for investment."48 Modernization was a burden that the country could not meet, at least not by itself. Besides requests for increased coal imports and freer access to Ameri­ can markets, the French asked for credits to enable them to procure raw materials and equipment for reconstruction and renovation. As a bargaining counter, the negotiators argued that France could stabilize its balance of payments, end its dependence on the United States, and free its trade from controls only if it modernized. For six weeks American experts examined the statistics and the preliminary version of the PME.49 This early draft enumerated some production targets and described how the economy was to be trans­ formed by 1950 so that it could eliminate trade deficits and become competitive in world markets. After making some minor adjustments in calculations, American officials judged the PME reasonable and coherent; it convinced them of French determination to redress their economy. But they had concessions to ask of Blum's mission before extending a loan. Washington wanted the French to relax import 231

Capitalism and the state in modem France controls immediately and liquidate government purchasing missions rapidly so that trade could return to private channels. The United States government also expressed concern about the wave of nationalizations that was sweeping France on the grounds they might discourage American commerce and investment in France. After in­ sisting that there was no connection between a managed or partly nationalized domestic economy and a return to free trade, the French mission refused to discuss the subject and the Americans dropped the matter.50 The French agreed to a gradual relaxation of controls as recovery advanced, a curtailment of its purchasing missions, and some other minor concessions. American willingness to help France had a political as well as an economic motive. During the negotiations in Washington, fear of Communist gains at coming elections grew, and the alleged danger of a Communist coup d'état prompted an alert of American troops in Germany for a move into France.51 State Department officials like William Clayton and Jefferson Caffery, the ambassador in Paris, championed the loan as a way of supporting anticommunist elements in France. Caffery wrote the secretary of state that, "even though to a banker's eye France might not be considered an A-i risk," to refuse or drastically cut the amount of the grant "will pull out one of the last props of substance and of hope from those in France who want to see France remain an independent and democratic country."52 The State Department did not want pro-American leaders like Blum to feel abandoned. Clayton told those responsible for granting the loan that for political reasons "a decision against a substantial loan would be a catastrophe."53 Some officials objected to Clayton's reasoning, which appeared to be an attempt to buy a foreign election, yet they sup­ ported the loan on economic grounds.54 On May 28 the two governments concluded their long talks with a formal agreement announcing a war debt settlement and a $650 mil­ lion credit, administered through the Export-Import Bank, for the years 1946-9, "to facilitate the restoration, reconstruction, and modernization of the French economy."55 Assurances were also made that led to another $250 million reconstruction loan a year later from the World Bank. The United States was going to furnish the financial means to launch the PME. Monnet reported to his govern­ ment that not only was the PME "the essential subject of the dis­ cussions and the determining factor in their favorable outcome, but the amount of American aid was calculated on its execution."56 And he was quick to point out that the American loan was morally, if not legally, tied to the PME. Monnet acted as the self-proclaimed trustee of American economic policy; he warned against losing America's 232

The Monnet Plan confidence if the credits were used by the government for such other purposes as current operations. He later used his American connec­ tion to insulate the PME from those who might deform it. Throughout the summer and autumn of 1946 the Modernization Commissions met, and their deliberations made participants out of hundreds of businessmen, syndicalists, farmers, and others. But they worked slowly, and it was not till November, months behind schedule, that the commissariat presented the completed PME in the form of reports to the Planning Council.57 As if to prove the urgency of an equipment plan electrical blackouts delayed the printing of the reports so that council members barely had time to read them before they met. The general report, or the PME proper, emphasized the innovative way it had been composed, a method that, it was said, mobilized the creative forces of the nation. The work of the Modernization Commis­ sions yielded an économie concertée rather than a bureaucratic or corporatist order. The PME, which was to run from 1947 to 1950, fur­ thermore, was flexible, more "a process of continuous creation" than a fixed schema.58 But the planners had made certain choices. They assigned priority to six "basic sectors" where production bottlenecks seemed most likely: coal, electricity, steel, transport, ce­ ment, and farm machinery. Annual and terminal production targets, most of which were quite ambitious, appeared for each basic sector.59 Transforming farm production received a secondary priority even though agriculture was called "by far the most important French ac­ tivity."60 And the PME showed its loss of faith in the traditional balance between agriculture and industry when it projected a sharp drop in the rural work force. A lesser priority went to speeding recon­ struction and overhauling the building industries. Indeed, the PME intended to delay full reconstruction; restoring entirely destroyed structures and building new houses were to be postponed till after 1950. The lowest priority was assigned "essential" consumer goods. In addition, the CGP recommended, with the backing of organized labor, increasing the workweek to forty-eight hours as one element in a series of proposals designed to raise workers' productivity.61 Thus the planners asked the people to sacrifice while the basic productive plant was rebuilt. Investment as a share of national income, according to the PME, was to reach between 23 and 25 percent, which marked a considerable rise above prewar levels.62 Yet only cursory attention was given to financing the PME.63 Keynesian theory played little part in concep­ tualizing the investment problem.64 Materials, rather than investment capital, were considered to be the limiting factor on production. Fi233

Capitalism and the state in modem France nancial resources would be available, it was held, if consumption were controlled through such means as rationing. Then personal sav­ ings would accumulate and furnish the necessary investments. Al­ though the report was not precise about financing the basic sectors, the planners counted on foreign aid and public funds. All other sec­ tors had to depend upon individual savings, company funds, gold and exchange holdings, and bank credit. Price stability was consid­ ered a precondition for reviving personal savings, but this proved illusory. Moreover, the inflationary character of the investment pro­ gram was seriously underestimated.65 Insufficient attention was given to the question of mobilizing investments and to the impact of the PME on the nation's economic equilibrium. The planners as­ sumed that the inflationary situation was due to shortages of goods, which an investment program could rectify by accelerating supply. Short-run inflationary pressures could be met by direct price-wage controls. Such a strategy, as we shall see, had its flaws. To carry out the plan the CGP proposed to make the nationalized industries adhere strictly to targets. For concentrated industries in the private sector such as steel, it advocated (but never used) state con­ tracts with trade associations, groups of concerns, or, in exceptional cases, individual enterprises. The PME's bias toward organized busi­ ness and concentrated industry was apparent. Marjolin had recom­ mended that trade associations act as intermediaries in the private sector, and he suggested labeling employers who cooperated, as had been done during the New Deal, with a blue eagle.66 For the dis­ persed sectors such as the building industry or agriculture, the PME looked to programs operated by local professional bodies and offi­ cials. But as it turned out, the real coercive force behind the plan in the private sector was the controls over foreign exchange, credits, and especially scarce materials like coal and steel. In November 1946 the Planning Council under the presidency of Premier Georges Bidault reviewed the CGP's reports, and the PME won the unanimous support of interest groups represented on the council. Philippe Lamour, the secretary-general of the Confédération Générale de l'Agriculture and a prewar planiste, declared the federa­ tion's unqualified approval. He remarked that the farmers preferred an économie concertée with its consultative procedures to an économie dirigée and suggested, as did other spokesmen, maintaining the Modernization Commissions to implement the plan.67 Pierre Lebrun, a CGT official, stressed the intense involvement of trade unions in the deliberations of the commissions. He endorsed the PME, though he expressed concern that business might not do its share.68 Because labor accepted the burden of raising productivity and the rationing of 234

The Monnet Plan consumables, he insisted business must hold the line on prices. Lebrun urged strong measures, such as controlling profits, against capitalists who resisted the plan. Pierre Ricard, a ranking official of the CNPF, had to speak ''unofficially" because an oversight of the CGP had prevented the employers' federation from having time to review the reports. Ricard called the work of the planners "remark­ able," "conscientious," and "intelligent."69 He singled out for praise statements in the report that supported private initiative, legitimate profits, and contractual agreements. He commended the PME for rendering state intervention coherent and predictable and used his chance to lecture the assembled members of the cabinet on the la­ mentable effects of economic controls - until Bidault had to interrupt his diatribe. A few days later Ricard addressed the CNPF itself, stress­ ing that a coherent plan was preferable, at a time when some con­ trols were inevitable, to the chaos of the existing system.70 Like Lamour, Ricard perceived the plan as a step away from state coercion and thus commendable. Yet he worried that the PME might become a pretext to extend dirigisme and thus hedged his support. It was not till January 1947, a year after the formation of the CGP, that the Planning Council formally approved the PME. Léon Blum, the premier, warmly recommended the document calling it the "pièce essentielle" of economic recovery. He also urged extending the man­ date of the CGP so that it might monitor the execution of the plan and continue as a coordinating agency for the administration. The only dissent was led by Georges Boris who called the targets of the 1947 tranche overly optimistic. But the Communist Benoît Frachon speak­ ing for the CGT backed Monnet, reaffirmed labor's support for the PME, and insisted that the resources must be found to launch the basic sectors immediately. The council, and through it organized eco­ nomic interests, endorsed the PME and an extension of the CGP.71 The council concluded that the success of the planners was due to their mode of working and that what was valuable for drafting the plan would be useful for executing it. Implementing the PME re­ quired a stable, nonpolitical agency that would coordinate ministerial actions and modify the plan as circumstances changed. For their part the planners were confident after their initial success and in no mood to dissolve their agency and simply turn over the operation of the PME to the administration. This had been an issue from the begin­ ning, and though certain staff members wanted the commissariat to stay out of operations, Monnet and others were inclined to watch over their creation. On January 14, 1947, the Blum cabinet adopted the PME and de­ fined the responsibilities of the CGP and the council for executing the 235

Capitalism and the state in modem France plan.72 The commissioner, acting as the premier's deputy, was charged with "watching over" its implementation for the govern­ ment. Although the technical ministries carried out the plan's annual programs, they were to do so in agreement with the commissariat. This decree extended the life of the CGP, but it also introduced am­ biguity about responsibility for the plan's implementation. One of the most important reasons for the introduction of planning in 1946-7 was that a consensus existed for the kind of investment plan designed by the CGP. Public opinion acclaimed it, though people's knowledge of the PME was superficial.73 Industry, labor, agriculture, and the administration endorsed it. The support of organized labor was critical to the PME's success. Hirsch, for example, remembered the shortage of skilled manpower as a severe constraint that trade unions alleviated through their willingness in 1946 to extend the dura­ tion of the workweek beyond the legal forty hours.74 The business press and the major employers' associations were almost unanimous in accepting the PME in principle while saving their criticism for state controls.75 Yet the consensus was fragile. It derived from a general sense of economic crisis in the immediate postwar period and the grudging acceptance of necessity. It required mutual trust among the partners. Thus the support given by business and labor depended on each interest believing the other was bearing its share of the sacrifice. At the political level the PME enjoyed the enthusiastic support of the left-wing coalition that held power after 1944. The Socialists, led by Blum, Gouin, and Philip, were partisans, and the Communists sub­ scribed through the CGT. But this coalition was as fragile as the social consensus. Neither survived 1947 fully intact. The expulsion of the Communists from the governing coalition in the course of 1947 led to the withdrawal of the CGT from the planning process though the other trade union federations remained. CGT officials simply stopped attending sessions of the Modernization Commissions and without going into opposition ceased acting as the advocates of a forceful style of planning. Business continued its par­ ticipation, but its behavior was far from that of a cooperative partner. Hirsch, who knew the business community best, generously de­ scribed the employers as skeptical.76 The CNPF officially accepted the PME in 1947 but only on the grounds that it met certain conditions, most of which ran counter to the intentions of the CGP.77 The peak employers' federation conceived of the PME as a temporary expedient until "normal" conditions could be restored. In its view planning should lead to the elimination of all controls and should not create a privileged position for the basic sectors. The only issue on which the CNPF clearly agreed with the planners was that the programs should 236

The Monnet Plan be carried out in collaboration with trade associations. Underlying employers' attitudes were jealousy and fear that thç advantages given the nationalized industries came at their expense. After giving its formal approval the CNPF largely abstained from taking a position on the PME, at least till 1949-50, and left it to the trade associations, some of which collaborated while others sharply attacked the whole under­ taking. The Confédération Générale des Petites et Moyennes Entre­ prises (CGPME), after initially approving the PME, denounced the planners as "technocrats" and alternated between requests for a share of the plan's investments for small business and condemnations of any form of dirigisme.78 Nor was the ideal of concertation realized between the planning unit and the ministries. The technical minis­ tries, irrespective of the politics of the incumbent minister, regarded the commissariat more as a competitor than as a partner. And a keen rivalry developed between the planners and finance ministry officials, largely because of the different functional roles each had to play in managing the economy. Executing the PME, 1947-1949

The PME did not get off to a promising start in 1947. The pessimists were vindicated when shortages of coal and labor curtailed produc­ tion. Yet what quickly came to preoccupy the planners and delayed launching the plan for another year were domestic inflation, in­ adequate foreign exchange, and uncertain funding. These problems were to force the commissariat into broadening the scope of planning to include prices, wages, and public spending and brought Monnet into the inner circle of government decision making. These difficulties also forced the French to seek further American aid and led to a major revision of the PME. Disastrous harvests in 1947 caused an enormous increase in the volume of food imports and a precipitous drop in foreign exchange reserves. As inflation drove up prices exports became more dear and the shortage of dollars grew. Most West Europeans faced the same critical situation in external payments by mid-1947, which, among other motives, prompted Secretary George Marshall's announcement of a new aid program in June. At the same time the Fourth Republic proved singularly ineffective in holding the line against inflation. Food prices doubled between August 1946 and May 1947, and indus­ trial prices followed at about the same rate. The planners had been overly confident in the government's ability to stabilize prices and wages. They had also overestimated the recovery of exports and had underestimated the whole problem of financing the PME. They soon 237

Capitalism and the state in modem France realized they needed additional assistance from the United States and an effective stabilization program from the Fourth Republic. To the commissariat's dismay politicians and the public blamed the state's investment budget for the inflationary spiral.79 Worse still, inflation deadened private investment. At first the planners urged compressing public spending and adopting a hard line on wages and prices to protect the investment program for 1947. The deteriorating situation forced Monnet to intervene directly. He bombarded first the Ramadier cabinet (January-November 1947) and then the Schu­ man-Mayer cabinet (November 1947-July 1948) with advice on com­ bating inflation. Monnet viewed a stabilization program as he did equipment planning; it could be attained only through a long-term, collective, nonpartisan effort whose objectivity compelled com­ pliance.80 Ramadier accepted the commissioner's advice. In October he ordered the CGP to create a Commission du Bilan National com­ posed of key officials like François Bloch-Lainé, the director of the Treasury, and heads of professional associations like Lebrun of the CGT. The brilliant. Princeton-trained economist Pierre Uri, a member of the commissariat who had inspired the project, took charge of supervising the commission's work and drafting a bilan or balance sheet. Before the balance sheet could be completed, however, the patience of the working class broke under the strain of rising prices. Massive strikes erupted in the fall of 1947, and Monnet advised the government to grant wage hikes and invite the CGT and CNPF to examine the general situation using the data gathered by the commis­ sion.81 Uri's balance sheet, which appeared in December, measured the magnitude of the "inflationary gap" for early 1948.82 The imbal­ ance between available resources and aggregate demand for the com­ ing year that reached over 365 billion francs was an indisputable fact in Monnet's eyes. Just how to close the gap, however, was not so indisputable. Monnet drew the conclusion that the government needed to enact a prélèvement on the beneficiaries of inflation in the form of new taxes and a forced loan. Unless excess disposable income were absorbed by such energetic measures, Monnet warned the government, the wage increases that followed the strikes would widen the gap even further and drag the country into "a chaos whose outcome we cannot pre­ dict."83 Part of this prélèvement would be set aside for reconstruction and investment in the basic sectors of the PME. The desire to save the investment program had drawn the planners into making public policy and widened the scope of the plan itself. In fact, the Schuman-Mayer government (René Mayer was the minister of finance) incorporated the prélèvement scheme of the planners in its 238

The Monnet Plan stabilization program.84 This program succeeded in slowing inflation slightly by early 1948. But the struggle against inflation had set back the PME; the CGP accepted a pause in its investments to assist stabili­ zation. It was not till mid-1948 that the planners were confident in having launched the PME. It was a condition of the Marshall Plan that the West European nations coordinate their economic recovery programs through a new international body, the Organization for European Economic Cooper­ ation (OEEC). This entailed a revision of the PME to make it fit into a common program. By the end of 1948 a new version of the plan was ready for the OEEC. The terminal date of the PME was extended to 1952 and the agriculture program recast. Instead of aiming at selfsufficiency and resuming traditional quality exports, France was to become an exporter of basic food commodities as part of an effort to revive inter-European trade. The CGP contemplated a "veritable ag­ ricultural revolution" between 1948 and 1952 involving a wide range of measures to raise farm productivity and grow surpluses.85 The revised plan also shifted emphasis from overcoming production bottlenecks to promoting industrial activities with export potential, indicating a growing concern about the balance of payments. More­ over, a good many targets, like coal and rail traffic where the original PME had greatly overestimated demand, were scaled down whereas others, like electricity and steel, were raised. The basic sectors con­ tinued to receive the bulk of investments, and housing was still ig­ nored. The accent of the new PME was on stimulating productivity, restoring equilibrium in the balance of payments, and widening European trade. But the crux of the matter for the planners was American aid and how it was to be used. Perhaps the central problem facing the planners during 1947-9 was financing the PME. They needed to secure a substantial source of investment funds and win a voice for the CGP in controlling their allocation. This problem arose because the planners were unwilling to leave operations entirely to the administration. Financial matters also attained critical importance at this time because a major shift occurred about 1948 when the distribution of credits replaced materials as the determining factor in equipping industry.86 The issue turned into a struggle over the use of American counterpart francs and over control of a new equipment fund. "Counterpart" refers to the francs accumu­ lated by the French government by selling goods delivered and paid for by the American government through the Marshall Plan or the preceding so-called interim agreement. The funding of the PME was precarious from the start. First, the private capital market because of inflation failed to respond to the 239

Capitalism and the state in modem France investment drive.87 This required a greater dependence than antici­ pated on public resources. Public funding, however, was in practice made on a month-to-month basis and was susceptible to constant adjustments by ministries and vulnerable to political and even jour­ nalistic intrusion.88 In the fall of 1947, for example, there was a 20 percent cut in the budget for the basic sectors. Because parliament voted total annual appropriations for both modernization and equip­ ment and for nationalized enterprise it exercised a kind of surveil­ lance over the PME. But the assembly's habitual procrastination in voting annual budgets forced the PME to operate on provisional al­ lotments for most of the year. It also introduced politics into invest­ ment decisions; thus appropriations for the Charbonnages were kept high to maintain full employment among the volatile coal miners. Yet in order to get equipment industries to expand and renovate the planners needed to assure them of long-term orders. To make matters worse, the nationalized banks proved reluctant to advance loans to the nationalized industries included in the basic sectors.89 The banks based their reticence on the grounds that the way medium-term cred­ its were created was inflationary. In fact, the management of Crédit Lyonnais, the Société Générale, and the Comptoir National d'Escompte had been left intact by nationalization, and the old managers wanted to wreak revenge on the nationalizes. In their eyes Monnet and Delouvrier, who headed the commissariat's financial division, were a bit reckless with investments, yet they were "hommes de bonne compagnie."90 It was their "cousins indésirés" in the nationalized firms who inspired no confidence. Monnet began late in 1947 to lobby for the formation of an autono­ mous fund for the PME. He was nearing the peak of his influence in government decision making as the issues of stabilization, American aid, and launching of the PME coalesced. He later recalled how from 1947 to 1949 a "small committee" composed of the premier, the minis­ ter of finance, the MEN, the governor of the Bank of France, and himself met at the beginning of each year to set the main lines of policy for production, trade, and investments.91 Monnet persuaded the Schuman-Mayer government in January 1948 to establish the Fonds de Modernisation et d'Equipement (FME), which was to re­ ceive receipts from the prélèvement.92 For the first time funding for the basic sectors was at least partly budgeted. But the FME needed a continuous flow of capital that the prélèvement could not supply, and this led Monnet into a debate over the use of counterpart accounts. The United States government preferred to "sterilize" these francs so as not to nourish inflation and to control their release in order to force stabilization policies on the French.93 The French government hoped 240

The Monnet Plan to count the francs as budget receipts. Monnet fought a threecornered contest that he eventually won in getting the counterpart account applied to financing the basic sectors. With the help of inter­ mediaries like Ambassador David Bruce and ministers like Maurice Petsche he convinced Washington that investing counterpart francs in the PME was not inflationary. And he instructed French cabinets not to waste the country's last chance - either France used counter­ part balances to meet the 1952 deadline, or it would slip into a perma­ nent state of economic backwardness and dependence. "If we do not face this deadline," he wrote to René Mayer, "we shall inevitably become like Spain."94 The Americans wanted France to "walk alone," he insisted, and this could be achieved only by completing the PME. Monnet persuaded the French government to apply all the counter­ part aid to the PME and blocked American efforts to control lending the funds on a project-by-project basis. This was an important victory for the plan because it corrected an initial oversight and secured the financing of the basic sectors through 1952.95 Monnet lost another equally important contest over investments, however. And this defeat revealed the weakness of his whole concep­ tion of institutionalizing planning. It also permanently curtailed the planners' functions. For two years the CGP and the Ministry of Fi­ nance fought over control of the new equipment fund, the FME. Although the FME had dispensed counterpart aid and treasury resources during 1948-9, the question of who would manage the fonds had not been settled. Under a provisional arrangement the Treasury issued loans and the CGP gave advice. This situation gave rise to complaints from the planners that they were unable to fulfill their mandate of monitoring the PME; they could not guarantee that proper use was being made of advances.96 The commissioner wanted an autonomous fund run by a powerful, independent director, pre­ sumably a planner rather than an administrator. But the finance ministry resisted this attempt to make the FME independent of the Treasury. It insisted that a separate treasury account sufficed and urged the formation of a governing board composed of a collegial body of ministers, which, it was obvious, the finance ministry would dominate.97 It is ironic that Monnet's chief adversary in this dispute was Bloch-Lainé, the director of the Treasury, who was a fervent supporter of the plan and an économie concertée. Nevertheless, Bloch-Lainé fought his friends at the commissariat when they tried to separate and dispose of the fonds themselves. He told the govern­ ment that the unity of the Treasury was at stake and insisted on confining the CGP to a strictly advisory role in allocating credits.98 Monnet was persistent. He resorted to playing his American trump. 241

Capitalism and the state in modem France arguing that the Americans did not want counterpart funds confused with treasury accounts. But this convinced no one because the Ameri­ cans had not made this argument themselves. At the height of the affair Monnet risked taking his case before the National Assembly by tying it to the long-delayed presentation of the entire plan. He was even willing, if necessary, to face parliament without government support. The conflict had to be settled finally by the cabinet. In November 1949 Bidault's government decided against Monnet on the grounds that it was constitutionally impossible for ministers to surrender their responsibility for public funds to the CGP." It seems likely that this legal, argument was an excuse to conceal what was nothing more than the ministers' determination to protect their prerogatives and prevent the CGP from extending its control over planning. Whatever the case, Monnet paid for choosing to stand on the margin of the administra­ tion. The ministries had only to become punctilious about their au­ thority to set down the planners. The cabinet thanked Monnet effu­ sively for his services yet relegated the CGP to an advisory capacity in operating the FME, affirmed the Treasury's control, and left the monitoring of loans to the ministères de tutelle. Once the government had decided the issue Christian Pineau, the minister of public works and a friend of Monnet, offered to instruct his services to enter into contact with the planners in order to share information about the progress of projects. But his offer. Pineau noted, was a personal ges­ ture that would lapse should the commissioner's post change hands. If anything Pineau's action testified to the isolation of the planners and their inability to control the execution of what they had designed. Adapting the PME, 1949-1952 The PME was devised for an economy that was largely private in character, and before it had run its course it was adapted even further to market principles. Circumstances in 1949-50 were so different from what they had been at the end of the war that a major reorientation of planning occurred. A general stabilization of the economy and the need to ready it for the day Marshall aid ended raised questions about the selection of investments, profitability, and competitiveness. At the same time business and parliament seized the opportunity to assert themselves. The CGP responded by redefining the goals of the PME. The specific issue that prompted public debate over the PME and led to its reorientation was the government's budget proposal for 1950, which included the investment program for the basic sectors. 242

The Monnet Plan Unfortunately for the CGP the way the Bidault ministry presented its budget raised the possibility that additional taxes might be levied in order to cover these investments. New taxes always provoked con­ trariness in the National Assembly, and on this occasion they fed lingering resentment against the commissioner for promising but never submitting the full PME for parliamentary approval. The com­ missariat had intentionally bypassed parliament both in formulating and executing the PME mainly because it was apprehensive lest the plan become vulnerable to the vagaries and demagoguery of party politics.100 Business, aided by liberal economists, mounted a press campaign against the investment budget. First Charles Rist, then Georges Villiers, president of the CNPF, and Léon Gigembre, head of the CGPME, and soon spokesmen for other employer groups including the Chambers of Commerce joined the attack. They often evoked parallels between the two postwar periods. Some recalled the "hymn to production" speech given by Louis Loucheur in 1919 as the kind of exhortation that should have been ignored. Rist observed that the country was approaching a new situation as prices stabilized and production returned to "normal" levels.101 The danger was to go on multiplying investments, building excess plant capacity, and aug­ menting budget deficits. He recommended cutting back the invest­ ment program in order to maintain a balanced budget and preserve monetary stability. The most aggravating feature of the PME for Villiers and other businessmen was that it favored nationalized en­ terprises at the expense of private industry.102 The transformation industries, they contended, which had to carry the burden of exports after 1952, had been neglected. Villiers advised more prudence in making investments, and other employers and parliamentarians said it was time the nationalized sector became self-sufficient. There was a strong Malthusian tone to attacks that raised the danger of suréquipe­ ment and sought a return to "normal," that is, private, ways of fund­ ing investment.103 The shortages and bottlenecks of 1944-7 seemed forgotten, and the conservative reflex of businessmen operated once again. The press campaign and the danger that parliament might ax the investment budget aroused the planners to defend their program before parliamentary hearings. Monnet and Hirsch argued that the nation faced a deadline in 1952. By that time the economy had to be able to generate its own investments and send exports abroad at competitive prices.104 They warned that if France were not ready when Marshall aid ended only a restoration of state controls would save the economy. But the parliamentarians expressed doubts that 243

Capitalism and the state in modem France sufficient attention had been paid to rentabilité and dted a recent shift to building thermal plants as evidence that the earlier crash program for hydroelectric power had been a mistake. In an effort to defend the PME the planners devised a new strategy; they turned their backs on the original aims of raising output and overcoming production bottlenecks to emphasize productivity and competitiveness. The criteria for investment were shifting. Monnet also disarmed his critics with a new economic analysis. "We are in a world undergoing a total transformation," he said. "You can no longer think of the future in the context of the past. We Europeans are still haunted by past no­ tions of security and stability. Today the principal idea is that of expansion. That is what is happening in the United States. They are always ready to evolve and search out progress."105 The Frenchman, Monnet contended, must accept "the psychology of an American," that is, "the disposition to change constantly."106 He criticized the farmer who worked a tiny parcel of land and the railway worker who featherbedded because they were a burden on the economy. "Expan­ sion and productivity, that is the heart of the problem." The themes of productivity, profitability, competitiveness, and labor mobility had been present in 1946, but now they dominated the planners' rationale. The Bidault government with Maurice Petsche as finance minister and Edgar Faure as budget director threw its weight behind the CGP. Bidault in a sharp reply to the Malthusians observed that "there might be the possibility or danger of suréquipement somewhere in the world. But not in France."107 And to those deputies who wanted the entire PME submitted to the assembly Faure caustically com­ mented they could easily do so if they thought it would be useful to debate which railway station or dam should or should not be built. Lacoste, the minister of industrial production, in response to criticism of the nationalized industries pointed out that all the purchasing or­ ders of these firms were placed in the private sector. In the end Petsche managed to annul the threatened slash in the plan's budget. Despite the gravity of this dispute it never placed the PME itself in danger. What business wanted was the application of market-type criteria for new public investments and its share of credits, not an end to them. For its part the National Assembly sought to gain a real say over planning rather than to scuttle it. But even this ambition was not fulfilled, and parliament never managed to review the PME.108 The debate over the 1950 budget represented the beginning of a new era for the French economy, one marked by the revival of compe­ tition, both domestic and international, the disappearance of wartime controls and shortages, and the growth of private funding of invest­ ment. As the economy evolved, planning was adjusted to a market 244

The Monnet Plan economy and assumed the shape that it was to have in the next decade. By 1950 one staff member wrote that the plan's goals were: 'T o achieve planning that is flexible in its methods and limited in its objectives while modifying as little as possible the existing social structure and accommodating itself to an accelerated return to a free economy."109 As we look back at the Monnet Plan, its faults and costs are appar­ ent. Perhaps its major flaw was in assuming that investment capital was readily available and in neglecting the program's impact on the economy's equilibrium. The capital market languished after the war, and the PME came to rely much more heavily than anticipated on public funds, that is, on FME loans, treasury advances, and the state budget.110 Some analysts of the PME have concluded that it contrib­ uted in an important way to inflation because public funding was not completely covered by taxes or current savings. Others are less cer­ tain.111 Postwar inflation, whatever the case, was due to other, far more weighty causes than the stimulus of the investment plan. More­ over, to have postponed a modernization program until the monetary situation stabilized would have fulfilled Monnet's warning about mis­ sing an opportunity to expedite recovery through American aid. The planners made mistakes in forecasting demand for certain items like coal and rail service and thus erred in investment choices. And they discovered that transforming French agriculture required something other than forcing the pace of mechanization. Finally, the choice of a large-scale investment program made the French people wait longer for reconstruction and housing, although it probably had little effect on lowering the output of consumption goods even in the short run. The first plan's achievements seem in balance to far outweigh its costs. It launched vast investment programs in basic industries, espe­ cially in the nationalized enterprises. The commissariat ably maneu­ vered a reluctant sector like steel to modernize.112 The CGP was successful for the most part in sheltering its programs and mounting a counterattack when others would have slowed or stopped invest­ ment. Had it not been for the PME scarce resources would have been scattered among several competitive, if not mutually exclusive, pro­ grams sponsored by the technical ministries or drained away in re­ constructing buildings or in extending outmoded facilities. Were the PME's targets attained? This question cannot be answered easily. Recall, for example, that many production schedules were revised both upward and downward in 1948 to meet the 1952 terminus. And to criticize the planners for setting targets too high would miss the psychological element in the PME. According to the commissariat, "the plan, in fact, would serve no purpose if it were only a passive 245

Capitalism and the state in modem France forecast of the natural course of events; it is a set of goals for everyone which both commands us and captivates us."113 What is clear is that either the 1952 goals for the basic sectors were reached or the shortfalls were small. The PME also facilitated grants of American aid beginning with the loan negotiated by Blum and Monnet in 1946 and extending through the Marshall Plan. The commissariat liked to believe that in the com­ petition for American assistance the French fared better than others because of the quality of their planning. The PME engaged organized labor in its programs, convinced it to extend the duration of the workweek and to shoulder much of the burden. Business cooperated but was not yet won over to the expansionist, American-style eco­ nomic philosophy that Monnet evangelized. The Modernization Commissions at least neutralized potential opposition from this quar­ ter and won some converts. Most important for this study, the CGP institutionalized planning; its success placed planning itself beyond debate. It fostered among major economic actors, both private and public, an exchange of data and a disposition to forecast and coordi­ nate activity. And the state began to synchronize its economic action - an ideal sought by reformers since the days of Clémentel and an important element in any system of economic management. Yet the kind of planning Monnet's team introduced in France had both strengths and weaknesses as an instrument of economic direction. The PME is critical in the history of French economic planning because it was the prototype. Subsequent plans have only modified what Monnet's experts designed in 1946.114 Planning, first of all, be­ came an agent of economic growth rather than a step toward so­ cialism. It brought economic development and technological progress but not social or political change. French planning became neo­ liberal, rather than socialist-syndicalist, in character. The PME also displayed a certain bias toward large-scale, concentrated industry. From the outset planners found it easier to work with oligopolistic sectors, public or private, run by dynamic managers. Moreover, within the short life of the first plan a trend toward more comprehen­ sive planning appeared; what began as an investment program for several sectors quickly escalated into other aspects of economic man­ agement. Planning also assumed an impartial aura, aloof from party politics and parliamentary scrutiny. Monnet's generation, fur­ thermore, gave French planning its distinctive "democratic," "flexi­ ble," and "indicative" characteristics. These derived from his method of collective problem solving, which lent the PME its representative quality, made planning continuous and adaptive, and muted its coer­ cive features. Planning became the symbol of the économie concertée. 246

The Monnet Plan Monnet chose a relatively small role for the planning unit within the machinery of economic management. Planning became not a method of command but a way of facilitating collective decision mak­ ing and encouraging communication, forecasting, reflection, and coordination. Monnet chose to stand aside from administrative methods and channels. As he proudly stated in 1950, in y'administra­ tive terms" the commissioner's authority had never been defined. "I am not capable of giving an order to anyone," he declared.115 Real authority, he professed, consisted of helping others solve problems that they could not resolve because they had only a partial grasp of a situation. In fact, Monnet's posture was weak with respect to estab­ lished state administrations. By choosing to make the planning unit an agency for coordination and purposely standing outside ministe­ rial hierarchies he helped overcome a major obstacle to introducing planning, but he also failed to secure for the CGP a tight grip over planning or a powerful position in making public policy. When the ministries, led by the Ministry of Finance, decided to exclude the CGP from operations Monnet could not resist. The planners depended heavily on their powers of persuasion, on their command of economic data, and on perseverance and tact. They relied on continuous brokerage or bargaining with ministries and interests. They bent au­ thority to their viewpoint. This method worked satisfactorily during the early postwar period when everyone believed in the urgency of allocating scarce resources and in mounting a recovery program with American aid. But in the long run the planners ended with a very restricted and vulnerable role in making economic policy. Their posi­ tion diminished when the postwar emergency passed, American aid stopped, and controls ended. And by the 1960s planning weakened further, and liberalization reached the point that there was talk of deplanification. For all its virtues, indicative planning as Monnet de­ signed it assumed a modest and not entirely secure position in the structure of French economic management.

247

9 The neo-liberal order: the m anaged econom y of the early 1950s

There, has been a secular trend in the structure of western capitalist nations as they evolve from a liberal order toward economic man­ agement. The liberal economy of the nineteenth century was in theory and, to a large extent, in practice run by market forces, natural economic laws, and automatic regulators. The state's role was essen­ tially to keep the market free and secure. Yet early in the twentieth century observers began to comment on a new phenomenon, what Rudolf Hilferding called "organized capitalism."1 Between the wars commentators pointed to the emergence of "neocapitalism," the "new corporatism," and the "planned economy." In 1930 John Maynard Keynes could write, "there is no design but our own and the invisible hand is merely our own bleeding feet moving through pain and loss to an uncertain future."2 After the Second World War it was evident to almost everyone that Britain, Italy, West Germany, the United States, as well as France had all embarked on some form of managing capitalism.3 France resembled other capitalist countries in developing an arse­ nal of institutions for managing the economy. Like the others it rec­ ognized the need for fulfilling certain vital functions such as smooth­ ing out the business cycle, easing adjustments caused by economic dislocation, promoting growth and full employment, and facilitating the general coordination of public policy. Yet France found its own way to perform these tasks. It lodged responsibility in new public institutions and staffed them with modernizers. It relied heavily on state intervention and planning, and it developed a corporatist net­ work to intensify the participation of private interests in the making of public policy. The market and the liberal credo, nevertheless, sur­ vived and functioned vigorously alongside the new organs of man­ agement. The result was a Gallic style of economic management that blended state direction, corporatist bodies, and market forces. What emerged during the early 1950s in France was a new synthesis of these elements or what should be defined as a neo-liberal political 248

The neo-liberal order of the 1950s economy. Despite the socialist surge of the liberation most of the private sector remained intact. After its temporary eclipse in the 1940s the market revived, though tempered by public economic manage­ ment and heightened self-organization among private interests. For its part the state altered its behavior and priorities. It acted more as a guide than as an arbiter among competing interests. The state also simultaneously encouraged expansion through selective promotion and control of industry and through more lively competition. A corporatist network developed and competed with the traditional mode of relations between public authorities and organized interests. Al­ though some ministries practiced the tutelle and pressure groups con­ tinued to lobby, a new, highly structured form of interaction emerged. The symbol of the new political economy of France was the plan, and its slogan was the économie concertée. Neo-liberalism changed the goals of public policy. When faced with a choice between growth and stability, growth now had priority. The state, from this perspective, accepted the responsibility for counter­ cyclical policies and made its goal an economy that could compete with the most advanced industrial nations in the world. This necessi­ tated more efficient production units employing the most advanced technology, manufacturing, and marketing techniques. The gap, which had reached alarming proportions in the 1940s, between the costs of production in France and those in the United States, Ger­ many, and Britain had to be closed. Expansion also required the re­ moval of structural obstacles. These restraints included an economy laced with privileged situations acquises, an archaic distribution net­ work, a retrograde agriculture, a tax system that discouraged invest­ ment, a weak capital market, flabby competition, timid entrepre­ neurs, restrictive cartels, and a web of state subsidies that preserved the inefficient. Neo-liberals viewed the 1950s as a duel between modernization and Malthusianism, between expansion and the parasitical situations acquises. This struggle led to an "opening" of the economy both internally and externally. The laissez-faire cum protectionist model of the past became the scapegoat of the neo­ liberals. One spokesman declared: The economic liberalism that prevailed in France until recently has operated for the profit of the wealthy. The latter endeavored to limit the harsh conse­ quences of the liberal regime: risk and competition. In contrast they exploited the opportunities presented by the absence of state control and direction. Thus there developed a taste for gain without risk. The necessity of preserv­ ing and even improving human relations between employers and workers in the modem economy was lost. And our industry experienced a slow and mediocre development under the shelters they created.4

249

Capitalism and the state in modem France Though the Fourth Republic often succumbed to the cries of those who were to be sacrificed to expansion, it also tolerated the disap­ pearance of archaic industry, commerce, and agriculture. The neo­ liberal republic accepted the attendant costs and risks that had pre­ viously seemed excessive, such as high rates of inflation and the loss of "social ballast." The emergence of this new synthesis of economic management and the market also marked the failure of more radical alternatives. Neo­ liberal institutions and policies were built over the broken dreams and bold designs of socialists, syndicalists, and doctrinaire corporatists. The socialist or syndicalist programs proposed by Albert Thomas, Léon Jouhaux, André Philip, and others proved unattainable. So did those of a more corporatist persuasion, such as the creation of a professional parliament, the double syndicalism of Detoeuf, or the wartime schemes of Jean Bichelonne. What were successful were the more modest, more pragmatic, and less sectarian reforms of the neoliberals. Instead of an elaborate corporatist hierarchy France settled for the Monnet Plan's Modernization Commissions. The true ar­ chitects of the new political economy were reformers drawn from administrative, academic, and business circles, men like Courtin, Monnet, and Bloch-Lainé and centrist politicians like Pleven and Edgar Faure. The more radical partisans helped push France toward the neo-liberal synthesis, but their programs were truncated, dis­ torted, or absorbed. The development of the neo-liberal order was a defeat for those who would have replaced, rather than reformed, the market economy. The ideal of the économie concertée was first enunciated by the planners in the late 1940s, but others soon took up the cause. A career civil servant, François Bloch-Lainé, best articulated the concept of the neo-liberal order. He had become an inspector of finance in 1936 and during the war served the resistance as a kind of clandestine trea­ surer. After 1947 he was director of the Treasury at the Ministry of Finance where he played a critical part in our story; later he became head of the principal state investment bank, the Caisse des Dépôts et Consignations. In his influential lecture entitled A la Recherche d'une "économie con­ certée, " Bloch-Lainé did not evoke Proust's memory of the past but a haut fonctionnaire's hope for the future.5 France, in his view, was searching for an economic formula that suited the realities of the second half of the twentieth century; it was to be found in neither liberal nor socialist theories but in recent experience. The key issue was to find a way to bypass the sterile debate over the merits of free enterprise or dirigisme and reconcile the market with an interven250

The neo-liberal order of the 1950s tionist state. Bloch-Lainé defined the alternative, the économie con­ certée, as a system of permanent collaboration among the administra­ tion, business, and labor. They were to deliberate together, make decisions, and offer advice to the government on investment, produc­ tion, and trade policy. He sought an institutional framework to con­ nect public authorities and private interests where they could ex­ change information and adjust relations. Why was this necessary? According to Bloch-Lainé, private firms needed to know the state's intentions and forecasts in order to help them adapt to rapidly chang­ ing technology and markets. Nor could most private enterprises ig­ nore the fact that the state had become a major supplier and cus­ tomer. Moreover, an informed and confident administration would be less dirigiste. A continuous dialogue between private interests and the state also drained the "politics" out of such relations. An ex­ change of useful data between the public and private sectors would yield a flexible type of economic planning in which a wide latitude of choice existed for those who implemented it. He foresaw a "contrac­ tual economy" developing in which firms agreed to a defined task in return for state assistance. His model was the plan's Modernization Commissions which, he claimed, had already launched a "silent revo­ lution." Bloch-Lainé's ideas captured a wide audience among public officials and employers in the 1950s.6 If Bloch-Lainé was the most celebrated spokesman for the économie concertée, others voiced similar views. Most notable were a number of ranking civil servants, all of whom were inspectors of finance: Gabriel Ardant, Claude Gruson, Paul Delouvrier, Maurice Lauré, Simon Nora, and Guy de Carmoy.7 Mendès-France, who had a different career pattern, should also be included in this group. They criticized liberal orthodoxy and substituted a neo-liberal formula in­ fused with state intervention and Keynesian economic analysis.8 That is, there was a recognition of the interdependence of public finances and the economy, a perception that budgetary problems were deriva­ tive of underemployment, of manpower, and of productive capacity. Similarly, budgetary deficits could become a means, among others, of stimulating aggregate demand. A dynamic investment policy was the key to growth. This reasoning derived not only from Keynesian theory, which arrived in France largely after the war, but also from the internal logic of a state that had become the economy's principal consumer, producer, employer, and researcher. In a textlike exposition of the new economics Ardant and MendèsFrance expressed a healthy respect for the advantages of the market and free initiative. For public services they recommended adopting methods that imitated the market in order to promote optimal 251

Capitalism and the state in modem France functioning. Yet they also outlined the weaknesses and obstacles, both practical and theoretical, to the market's effectiveness. For example, with respect to investment they asserted that Keynes had shown that what might be most useful to the community may not be the most profitable to the investor. "The neo-liberal solution," Ardant and Mendès-France declared, "consists in an attempt to make the search for profit and the search for utility coincide." "In principle the management of an enterprise remains free, but the state, through a number of measures, modifies the conditions under which it is run. These measures are based on the criterion of usefulness instead of profit."9 Thus the state decides which imports are to be encouraged or who is to receive foreign exchange, and it carefully calculates the utility and costs of public spending on capital formation. The neo-liberals found enlightened state intervention indispensa­ ble for demolishing the archaic structure of the French economy. To Delouvrier, "state intervention in economic affairs appears necessary in twentieth-century capitalism in order to battle against the forces of restriction and conservatism."10 They fretted over the condition of relative backwardness and criticized the state for subsidizing mar­ ginal enterprises. As guardians of the public interest they frowned on protection-minded interests that obstructed market mechanisms, held up price levels, held down productivity, and clogged the distri­ bution system. The French must, according to de Carmoy, "suppress the rigidities that emanate from the state, from firms, or from indi­ viduals which impede the free functioning of the market and raise the costs of production."11 Maurice Lauré, in his book Révolution: dernier chance de la France, appealed to national pride and fears during the Cold War; the United States and the Soviet Union, he argued, threatened French independence. He warned that by i960 the Soviet standard of living would surpass that of France, and then "our most effective protection against the economic expansion of communism will disappear."12 He urged the French to commit themselves to effi­ cient production and emphasized that the state should assume the direction of economic renovation, especially in the suppression of all forms of protectionism. The changing structure of public economic management

By the 1950s the principal institutions of public economic manage­ ment in France were in place. Some were new; others had been reno­ vated or expanded. Nationalized enterprises, at least in theory, came under direct state control and could serve its policies. National eco­ nomic planning was a major instrument for orchestrating public pol252

The neo-liberal order of the 1950s icy and private actors. The CGP played the role of a broker among public agencies and proselytized for modernization. A second eco­ nomic plan, which is best discussed separately, covered the years 1954 to 1957. An elaborate corporatist network engaged government officials and private interests in jointly ordering the nation's economic life. The state also possessed impressive regulatory powers; among others, investment, credit, prices, wages, and foreign trade were all, in some measure, subject to state control. The state exercised leverage over wage levels, for example, by setting the minimum wage as well as fixing wage scales in the public sector. New forecasting and statis­ tical agencies proved highly useful and symbolized the new disposi­ tion of the state toward anticipating the future in order to better manage it. An important development of this period was the emergence of the finance ministry as a superministry and the center of economic man­ agement. 13 Whereas the vertical or technical ministries tended to nar­ row their responsibilities the Ministry of Finance extended its role and influence. It had always been the most powerful ministry in economic affairs, using its control over the public purse to "colonize" other ministries. In 1947 it officially became the Ministry of Finance and Economic Affairs when the services of the former MEN came under its supervision. The rue de Rivoli increasingly looked beyond fiscal and budgetary matters and concerned itself with the economy as a whole. By the early 1950s it assumed undeniable preeminence, second only to the cabinet itself, in economic management.14 Other ministries acknowledged the superior quality of the ministry's top personnel and complained that they almost always lost any showdown with the finance ministry. "The President of the Council himself trembles," according to one knowledgeable minister, "when faced with his Minister of Finance who repeats over and over and under every re­ gime: 'Watch out, inflation is threatening; if you give in to our col­ league this time, I have no more answers.'"15 The persistence of inflation, the state's interest in manipulating the supply of credit and money, its loan programs and subsidies all played into the hands of the staff at the rue de Rivoli. The key directions at the Ministry of Finance and Economic Affairs were the Budget and the Treasury, both of which expanded their authority after the war. The former went far beyond preparing the budget and acquired de facto control over the expenditures of all the "spending" ministries. The Treasury gathered new responsibilities. Working with affiliated bodies like the Caisse des Dépôts et Consig­ nations, the National Credit Council, and the Bank of France, it con­ trolled monetary policy and the capital and money markets. Through 253

Capitalism and the state in modem France a kind of gentlemen's agreement the Bank of France managed bank credit and the Treasury supervised investment. That is. Treasury offi­ cials authorized subsidies, loans, and new stock issues; transformed private savings into state loans; and directed investment programs in the public sector. In 1955 the Fonds de Développement Economique et Social (FDES) was established within the Treasury in order to handle funding for public equipment programs, especially projects set forth in the plan. And like its predecessor, the FME, the new special purpose fund came under the finance ministry's rather than the planners' authority (though the CGP helped administer it). More­ over, most private investment fell under indirect state control.16 The ministry also inherited the office of price control from the MEN. Im­ portant categories of mass consumption products and services as well as key industrial products remained subject to price regulation. In 1950 the ministry created a statistical and forecasting bureau, the Ser­ vice des Etudes Economiques et Financières (SEEF). Inspired by Claude Gruson and spurred by Anglo-American achievements, this agency developed a system of national accounts and soon extended its work to preparing forecasts for both the budget and the plan. In brief, under the Fourth Republic the Ministry of Finance and Eco­ nomic Affairs, by itself or with other public agencies, managed the money supply, credit, prices, the capital market, and most invest­ ment, public or private. Meanwhile the technical ministries retreated. Some, such as the labor and agriculture ministries, reverted to the traditional role of the tutelle, acting as both arbiter and advocate for their clientele. The once powerful industrial ministry lost most of its wartime preroga­ tives and its general responsibility for nationalized enterprises and confined itself to the technical aspects of industrial production. The ministry still retained, however, de jure authority over materials allo­ cation; it exercised this power only briefly during the Suez crisis of 1956.

The making of economic policy shifted under the Fourth Republic from parliament and its committees to the government and the ad­ ministration. The centers of decision making, which were still dis­ persed, were the cabinet, the finance ministry, the CGP, the technical ministries, and parliament - though the latter's influence was on the wane. Both nationalized enterprises and planning largely escaped parliamentary tutelage, and new legislative practices adopted in 1956 curbed the assembly's control over the budget.17 "The new proce­ dure," according to one authority, "without depriving parliament of its authority, gave the administration more chance to function and the government more chance to govern."18 In the early 1950s strong254

The neo-liberal order of the 1950s willed premiers or finance ministers like Antoine Pinay, René Mayer, Joseph Laniel, Edgar Faure, and Mendès-France took charge of eco­ nomic affairs, and between 1953 and 1955 governments freely exer­ cised decree powers over the economy. The drift away from parlia­ ment was unmistakable. The state's dynamic behavior in the 1950s can in part be accounted for by the conversion of the hauts fonctionnaires in charge of eco­ nomic affairs to managing growth. The major economic reforms of the liberation era had not been inspired or even supported by the major­ ity of top officials.19 It was the enlarged economic responsibilities of the state, however, that forced intervention and a general change in outlook on the upper levels of the administration. An awareness of national decline, the arrival of new faces in important positions, new or reformed institutions for training civil servants, and the spread of Keynesian theory also prompted the shift. To be sure the administra­ tion was not a single, cohesive unit in the 1950s any more than it had ever been. It continued to be fragmented by disputes between minis­ tries, services, and corps; by traditional rivalries and jealousies; and by differing conceptions of the public interest. But the outlook of many was changing. The new school for public administration, the ENA, promoted this change.20 It fell far short of its founders' hopes of rejuvenating the entire administration. Nor did it introduce much alteration in the social composition of the administrative elite. In fact, the Parisian haute bourgeoisie crowded into the ENA much as it had the Ecole Libre. In this instance there was a fundamental shift in an elite's orientation without a corresponding modification in its social base. Some of the school's graduates were assimilated to a more traditional viewpoint, but others carried the pragmatic, activist message of the ENA into the administration. They soon populated the grands corps, and their pref­ erence for economic affairs made the Ministry of Finance their strong­ hold. To the older generation of officials the graduates of the ENA seemed to herald the arrival of the barbarians. It should be noted that there were many top civil servants who shared the ENA's dynamism. The inspectors of finance have already been discussed. The polytechnicians who staffed certain technical ministries, for example, industry and public works, and many nation­ alized enterprises had always displayed a Saint-Simonian bent. And it is possible that the younger generation of officials as a whole was sympathetic. The new breed of top administrators was visible to one insider as early as 1953.21 He discerned that officials had turned their backs on economic liberalism and become critics of businessmen - of their lack 255

Capitalism and the state in modem France of dynamism, their pleas for protection, and their backward social policy. The new generation of officials had turned to macroeconomic analysis, to planning, and to interventionism for promoting growth, especially with respect to providing a constant flow of investment. Other observers concluded that during the 1950s the idea of an éco­ nomie concertée gained widespread acceptance throughout upper levels of the administration.22 A close look at the administration in fact revealed two basic outlooks or, rather, two different definitions of the general interest.23 Among the older generation and among those serving in the judicial, diplomatic, and prefectoral corps, a traditional view of the public weal prevailed; the state was to act as an impartial arbiter that maintained harmony and order among competing inter­ ests. The duty of higher civil servants was to see that the momentum of technological and economic progress as well as the competition among political parties and social groups did not generate conflict and endanger the supremacy of the state. In contrast, younger adminis­ trators, the alumni of the ENA, technicians, engineers, and officials in the financial and economic bureaus held a conception of the state as the carrier of progress. The state should encourage the forces of economic expansion; it was the agent of material and cultural uplift and when necessary might tear the citizenry away from old habits. The two outlooks were not necessarily contradictory, and in some ways they were complementary, but the growth of the newer attitude indicated a fundamental change in officialdom. The administration in its quickening pursuit of prosperity shifted its alliances. It preferred to work with private groups that shared an expansionist outlook. For example, the planners preferred large firms and oligopolistic industries that could more easily implement the plan.24 Large corporations and powerful trade associations could also provide the data the administration wanted and tended to be more willing to adopt broader views. The state increasingly looked to the most dynamic sectors rather than trying to please everyone. Officials were inclined to treat only with those interests that were considered representative or progressive, and they acted with disdain toward the others, the "special interests." Perhaps the principal success of the modernizers was the gradual conversion of the Ministry of Finance and Economic Affairs. The ministry's staff, beginning in the 1950s, acquired a new reputation. In 1952, for example, when Pinay attempted to reduce capital invest­ ments ministry officials led the opposition that forced him to restore these appropriations.25 The Treasury initiated the change with help from key directions like that of the Budget. Practice preceded theory; the Treasury's enlarged responsibilities converted officials to a more 256

The neo-liberal order of the 1950s interventionist and dynamic posture. Gruson wrote: "The behavior of the Ministry of Finance was radically transformed the day it had to play the double role of banker and industrialist."26 Rivalry from the CGP and the secretariat for economic affairs, the remnant of the MEN that the Ministry of Finance absorbed in the course of the 1950s, also prodded the rue de Rivoli to give itself an equally modern allure. Bloch-Lainé, head of the Treasury from 1947 to 1953 and mentor to the postwar generation of inspectors of finance; Didier Gregh, who was concurrently the budget director; Guillaume Guindey, the direc­ tor for external finance; Gruson; and others did all they could to overhaul the ministry's stance. Bloch-Lainé commented: I wished that the Ministry of Finance would drop its traditional attitude toward the economy: this attitude was to act against what appeared untimely or harmful rather than to act for what could be beneficial. I wished that it would deliberately play a positive role in the modernization and equipment of our country.27

He saw his task as "making the Treasury, the budget's banker, a banker for the economy."28 He also helped the planners seize the opportunity to break with past practice: "If we had waited until we had sound and secure resources in hand, we would never have changed our former habits in France."29 Bloch-Lainé preferred the risk of overspending to letting the economy stagnate at a level of underdevelopment. The new generation at the rue de Rivoli modified the classic role of the ministry as watchdog of the public treasury.30 They discarded the belief in the neutrality of fiscal policy and con­ ceived of public finances more as a means of economic and social action and orientation. The new wisdom at the ministry accepted intervention; the only question was how to intervene correctly. Ministry officials, however, continued to deny their full coopera­ tion to the planners. Whereas the CGP made long-term development, a steady flow of investment, and macroeconomic coherence its chief concern, finance officials were responsible for the soundness of the Treasury, for incremental adjustments in policy, and for day-to-day economic equilibrium. Only with the preparation of the fourth plan in the 1960s did finance officials coordinate their short-term decisions with the plan's long-term goals. At this point, after the Fifth Republic and the Gaullists had adopted planning, the CGP expressed its con­ viction that the rue de Rivoli had been converted to planning.31 Even then, however, there was reason to doubt the two were fully aligned. At the same time that the state extended its economic prerogatives and shed traditional ways, organized interests asserted themselves and received more formal representation and acceptance within the 257

Capitalism and the state in modem France public administration. Under the Fourth Republic organizations of private interests proliferated and assumed more aggressive pos­ tures.32 Some observers feared the republic had fallen prey to interests like beet growers, steelmakers, truckers, and home distillers. Gov­ ernments were vulnerable; specialized parliamentary committees be­ came ''colonized"; and even the administration, some thought, wa­ vered in its defense of the public good. Pressure groups practiced lobbying until they became exasperated; then they tried to subdue public authorities by resorting to direct action like tax strikes. Yet at the same time interest groups also came to function more openly and extensively as part of the public administration. By the end of the 1950s .private interests staffed almost 5,000 consultative committees, councils, or tripartite boards. The Ministry of Finance alone had 130 such bodies.33 Such participation gave interests like the professional bankers' association semiofficial status. What passed for consultation was often pro forma and meaningless, yet in many instances or­ ganized interests assumed such state functions as helping draft regu­ lations, implementing credit policy, or administering taxes. Many administrators welcomed this corporatist practice and endorsed it as an element of the économie concertée. Business often manipulated these corporatist bodies to its advan­ tage or simply ignored them. A historian of the employers' movement summarized the situation as follows: The attitudes of the employers' movement toward the official organizations which coexisted or succeeded each other were, as in other fields, conditioned by the desire to be closely associated with the processes of decision-making, to insure to its members access to available funds, and to prevent a strengthening of economic controls by the government.34

Once employers assessed the Economic Council as ineffectual and excessively public for expressing their views, they opted for informal and more private lobbying. When the government pursued the "wrong" course for industry, as was the case for steel, engineering, and chemicals with respect to negotiating the European Coal and Steel Community trade associations bombarded parliament with lit­ erature in order to halt the treaty. Yet at the same time employers' associations exhibited a more corporatist behavior when they col­ lected industrial statistics and parafiscal taxes or administered regu­ lations - responsibilities that had been introduced by the Vichy CO.35 Bureaucrats and officials from the employers' movement, fur­ thermore, agreed on the advantages of strengthening trade associa­ tions in order to assure communication and control. A corporatist core grew within the framework of French democracy, and this bilat258

The neo-liberal order of the 1950s eral relationship seemed potentially dangerous to those who worried that the Fourth Republic was not strong enough to withstand such pressures from organized interests. Trade unions, in contrast, with their relatively anemic membership, intense rivalries, and anticapitalist ideologies participated diffidently and on the periphery of this corporatist network. Thus the CGT withdrew from the planning apparatus in 1947, and those trade union federations that chose to remain assumed a more critical stance. Simi­ larly, unions lost control of the governing boards of the nationalized firms in the 1950s and even drifted away from their ministère de tutelle, the labor department. The économie concertée seemed better suited for administrators and businessmen than for labor. For agriculture, which was not satisfied with the drift of public policy in the 1950s, the corporatist network was turned to advantage or disregarded altogether. Farm organizations annexed specialized parliamentary committees as well as the Ministry of Agriculture and shamelessly exploited the weaknesses of the Fourth Republic.36 The principal agricultural syndicate inspired a peasant bloc in parliament and alternated between collaborating with politicians and officials at the Ministry of Agriculture and inciting rural strikes and demon­ strations. Such tactics won a stream of concessions. To the degree that pressure groups of all types resorted to direct action and avoided the path of bargaining with public officials the corporatist ideal of the économie concertée was largely fiction. Where the ideal best functioned was where it began - with the Modernization Commis­ sions of the plan, but there, as has been pointed out, the nature of consultation was unlike what transpired in routine administrative operations. The corporatist network of the 1950s was scarcely the system Bloch-Lainé envisioned; it may have been little more than a heightened form of pluralism. Nevertheless, it was part of a long­ term trend in the changing relationship between private interests and public authorities in France. And the intensification of this relation­ ship gave rise to fear that the neutrality of the state was in jeopardy. Some observers expressed concern that the administration's def­ erence to powerful interests like agricultural syndicates or trade as­ sociations, its willingness to let private organizations assume official functions, its eagerness for collaboration, and such practices as the exchange of top personnel with private companies had bred such dependence on private interests that the autonomy of the state was in doubt.37 This accusation went unproven, but it reflected the gravity of the corporatist trend in the minds of some analysts. 259

Capitalism and the state in modem France Planning and its effects on economic performance

The role of the planners in the Fourth Republic diminished from what it had been under Monnet. In 1950 the latter turned over the commis­ sariat to his deputy commissioner Etienne Hirsch when he became president of the European Coal and Steel Community. Monnet took much of the original planning group with him so that Hirsch's team consisted of Jean Vergeot, Pierre Uri, Jean-Paul Delcourt, and Jean Ripert.38 Hirsch, it should be recalled, had been a manager for the Kuhlmann chemical firm before the war. He was an affable expert who understood the business community as an insider. Although the commissariat came under the supervision of the Ministry of Finance in 1954 it made no difference in the planners' autonomy or behavior. They continued to advise the government on all aspects of planning and to perform the brokerage role within the administration. They were more than mere advisors, however, for they participated in several decision-making organs including interministerial commit­ tees. The CGP itself made no rules, controlled no resources, and left execution to the ministries. The vertical ministries cooperated and competed with the CGP. The planners had good rapport with the forecasting and statistical agencies like the SEEF and the INSEE, the horizontal administrative services, and the planning units within other departments; they functioned as the head of a kind of pressure group inside the administration. Planning in the 1950s declined in its general influence on industrial strategy and assumed its more enduring character. This came about as shortages disappeared, controls lapsed, the urgency of reconstruc­ tion faded, nationalized enterprises asserted their autonomy, and American aid shifted toward military assistance. Planning served as a useful, but limited, instrument for coordination, forecasting, reflec­ tion, and exchange of information in a mixed economy. The principle of planning was settled; only its content was a matter for debate. Preparation of the second plan, or Hirsch Plan, began before the Monnet Plan was completed.39 But it was still in the hands of the Modernization Commissions in 1953 so that it could not begin its four year run until 1954. Among its general objectives were a 25 per­ cent growth in national income over 1952; this was to be achieved through a 20 percent gain in agricultural production, a 30 percent rise in industrial output, and a 60 percent increase in construction. These output levels would raise the standard of living 4 percent each year and bring equilibrium to the balance of payments as exports were to increase markedly while imports held steady. The Hirsch Plan had a broader scope and different emphases than Monnet's. Whereas the 260

The neo-liberal order of the 1950s original plan stressed expanding the capacity of a few basic sectors and breaking supply bottlenecks, its successor looked to overall, bal­ anced development of the economy, a rising standard of living, and especially improved productivity and competitiveness as France pre­ pared to liberalize import restrictions and expand foreign trade. The goal was growth with stability; thus the new plan emphasized eco­ nomic coherence. Advances in national accounting helped the plan­ ners determine what rate and volume of investment was consistent with economic equilibrium. The second plan had twin strategies. Its '"basic programs" aimed at reorganizing the manufacturing sector, the construction industry, and agriculture (through remembrement, mechanization, organization of commodity markets, etc.). None of these had been essential to the CGP in 1946. The new plan's "basic operations" aimed at overhauling the country's productive and marketing processes, reducing costs, and improving the quality of products. This involved the develop­ ment of technical and scientific research, the diffusion of advanced production methods, an increase in plant size and product stan­ dardization, streamlined marketing in retail trade and agriculture, and so forth. Such operations would move France closer to becoming a competitive market economy. The CGP formulated targets for sev­ enteen sectors, as opposed to six for the first plan. Among these were basic sectors, coal, electricity, gas, oil, steel, and chemicals, which had mandatory output targets, and textiles, machine tools, mechanical and electrical equipment, which had indicative targets. The Hirsch Plan's programs, like Monnet's, were addressed to sectors rather than to specific firms, and intervention was indirect; that is, it was mediated by the tutelle of ministries and professional syndicates. How were these goals to be reached? According to the planners, by appropriate investment programs, the reform of "basic operations," and incentives such as tax advantages. When Hirsch was asked years later what the principal instruments of planning were, he quipped, "saliva and taxes."40 The CGP's influence over the capital market exercised through its representation in the FDES, the National Credit Council, the Crédit National (which made loans to private business), and other such bodies was its best weapon in seeing the plan through to completion. Hirsch's staff had far fewer controls available than Monnet's; financial pressures were all that remained. The planners fixed the sources of investment expenditures as follows: 55 percent was to come from self-financing by private and public enterprise, 30 percent from public funds, and 15 percent from banks and other credit institutions. This marked a considerable shift away from the reliance on public funding and foreign aid that characterized the first plan. Yet 261

Capitalism and the state in modem France compared to prewar practice the Fourth Republic directed a sharply increased proportion of its budget toward capital formation; it swelled from 5 percent in 1938 to average between 20 and 30 percent during the period 1947-58.41 This expansive attitude toward public spending contrasted vividly with the reserve of the British during the 1950s.42 The Modernization Commissions that formulated the second plan assembled even more employers, civil servants, farmers, and experts than in 1946, yet trade union representation declined.43 The CGT stayed away, and other labor federations participated at a distance. Farmers continued their active support. Employers bargained hard and fought to keep planning at an aggregate level, fearing it would become coercive if it reached down to the level of individual firms. Industry was satisfied that, unlike the Monnet Plan, the manufactur­ ing sector received priority. The CNPF even posed as protector of the plan's integrity; the peak employers' federation defended the plan against parliamentary attempts to shift emphasis from lowering costs to assuring full employment.44 Yet employers' representatives at the Economic Council refused officially to endorse the plan, and the CNPF mixed praise of public funding with veiled criticism that such investments were dangerous to free enterprise.45 The divergent inter­ ests and attitudes among employers prevented any uniform re­ sponse. By the 1950s the CNPF and other trade associations had come to combine an acceptance of a certain measure of state planning and funding and the économie concertée with their traditional antipathy toward what they deemed dirigisme, for example, price controls. The Laniel government submitted the Hirsch Plan to the legislature in 1954 in order to earn parliamentary sanction and a commitment on appropriations.46 The plan spent a year in committee, and after a debate in the National Assembly attended by less than fifty members the lower house authorized it in May 1955. The plan did not become law, strictly speaking, because the assembly adopted it only as an "instrument for orienting the economy and as a framework for in­ vestment programs."47 But the governments of the era took the plan seriously. In 1954 the Laniel cabinet, with Edgar Faure as finance minister, introduced programs to expedite the plan, and a year later when Faure became premier he used his decree powers to fix the investment schedule and introduce tax reform and other supportive measures. A program loosely connected to planning was the governmentsponsored productivity drive.48The sense of relative backwardness in productivity that had aroused Monnet to action after the war spurred this effort. The productivity drive owed its inspiration to the Ameri262

The neo-liberal order of the 1950s cans who staffed the Marshall Plan mission in France. They proposed organizing French labor-management visits to the United States in order to help the French catch up with best practice.49 In 1950 a decree established a Comité National de la Productivité; three years later the committee was strengthened and placed under a new commissioner attached to the planning office. Gabriel Ardant, an inspector of fi­ nance and a zealous Keynesian, became commissioner. The commit­ tee was to advise the government on how to promote productivity. Noncommunist trade unions as well as employers' associations par­ ticipated in the direction of the committee and its missions. It also subsidized a private agency to popularize the notion of productivity among the business community and the public at large. At first the French state provided the major funding, but after 1952 American financing grew. The committee enthusiastically adopted the Ameri­ can consumer economy and the American human relations approach to industrial relations. It launched a campaign to change the spending habits of French consumers, inform industrialists, and calm labor's fears about raising output. France was flooded with information about American efficiency, such as how few hours of work were required for an American laborer to buy a given product. Propaganda reached the point where the CNPF spoke of "collective hysteria."50 By 1952 some 2,600 people had visited the United States, and numer­ ous American experts had traveled to France as advisors. Nearly 200 productivity loans amounting to 3 billion francs, drawn heavily from American aid, had been extended by 1956. Any industry accepting these loans had to grant production bonuses to workers, avoid layoffs, and introduce worker training programs. Some of the pilot projects had beneficial effects (e.g., textiles), whereas others encoun­ tered stiff resistance from industry and labor. Whatever the actual influence of the drive, we know that pro­ ductivity grew rapidly in France in the 1950s and that, according to all analysts, it was a major factor in accounting for the economy's growth. The gain in the mean annual rate of labor productivity (out­ put per man-hour) between 1949 and 1959 was 4.3 percent or nearly double that of the United States or Britain.51 A Brookings Institution study of comparative growth rates between 1950 and 1962 pointed up the unique role played by rising "output per unit of input" as op­ posed to increases in factor output of labor, capital, and land in France's economic performance.52 The study attributed this rapid growth in productivity largely to improvements in technology, man­ agement, and average practice (though transfers of part of the rural workforce to high-productivity jobs also contributed). These im263

Capitalism and the state in modem France provements resulted, in turn, from two state-inspired efforts: the Modernization Commissions and the "largest and most varied [productivity programs] in Europe." Once the Hirsch Plan had run its course it became evident that almost all its targets had been surpassed. Goals for the GNP, the standard of living, investments, exports, the basic programs for man­ ufacturing, housing, and agriculture had been exceeded, in some cases, by wide margins.53 Hirsch insisted that one of the second plan's major achievements was in transforming French agriculture, reducing the marginal farm population, and raising farm exports. The planners also claimed a series of specific reforms, such as introducing the tax on value added, creating a synthetic rubber industry (despite opposition from Michelin), and persuading Electricité de France to shift investment toward construction of thermal power plants.54 In­ deed the general problem by 1957 was that too rapid expansion had destroyed stability. The volume of investment had been excessive, especially from the public side where ministries, despite the plan, overspent on housing, education, and health. Moreover, expensive farm subsidies continued, and the outbreak of the Algerian war in 1954 multiplied military outlays. At the same time demand for both consumer products and capital goods outstripped output and the planners' forecasts. Market forces were slow to respond. Strains on output brought labor shortages, rising wages and prices, and demand for imports that rose faster than exports. The planners' hopes for equilibrium died as the economy overheated in the mid-1950s bring­ ing renewed inflation and serious trade deficits. Some fault lay with the planners' forecasting methods, even though they had improved since 1946; they underestimated demand and the possibility of in­ duced demand with economic expansion, and they overestimated the productive capacity of major sectors as well as outlets for exports. Moreover, they preferred expansion to stable prices, as they had in the days of the Monnet Plan, and did little to check inflationary pres­ sures.55 There is no question that the growth rates of the 1950s were impres­ sive. They averaged 4.5 percent per annum for the decade compared to minus 1.1 percent for the 1930s. French rates in the 1950s ranked with those of Italy (4.8) and ahead of West Germany (4.3), the United Kingdom (2.4), and the United States (3.3).56 Growth occurred with virtually no unemployment, but French price and wage inflation led that of Western countries. By 1956 the general level of domestic pro­ duction surpassed the stage reached in 1929, the nation's previous high, by 25 to 30 percent.57 What part did planning have in this performance? For this question 264

The neo-liberal order of the 1950s the most authoritative study on postwar growth is that written by Jean-Jacques Carré, Paul Dubois, and Edmond Majinvaud. Even with the most advanced econometric methods these economists concluded that it was impossible to isolate and measure the influence of plan­ ning on accelerating economic growth.58 Indeed, most analyses of postwar growth tend to relegate planning to a minor role compared with such stimulants as productivity gains, high rates of investment, and buoyant demand. Nevertheless, the Carré investigation and most other analyses positively assess the role of the first two plans. The one point that all studies make is that the early plans helped change the prevailing Malthusian attitudes in the business community.59 They transmitted an expansionist message and helped overcome the fears of stagnation that reappeared during the 1952-3 recession. The plan­ ning process reduced future uncertainties, engendered confidence and optimism, and created a positive psychological climate for expan­ sion. The striking change in the pattern of private investment in the mid-1950s testifies to a shift away from business conservatism.60 Hirsch believed that the major contribution of his plan was this con­ version of business in which many of its leaders gave up their prewar cautiousness and insularity, their diffidence toward the state, and accepted the économie concertée and its practice of mutual en­ lightenment.61 Private enterprise clearly assumed a good part of the investment burden in the 1950s, reequipped plants, and expanded capacity. This was due at least in part to planning and the pro­ ductivity drive that encouraged entrepreneurial optimism as well as to other stimuli such as fiscal reform, the opening of markets, brisk consumer demand, and the example of public enterprise.62 Beyond what may be attributed to the missionary qualities of the early plans assessment becomes even more difficult. Carré's study argues that the plans' effect on the rational and coherent allocation of resources was rather weak; the plans' forecasts were often inaccurate, targets were not scaled to individual firms, nor were they always set to make optimal use of resources.63 But the early plans were impor­ tant for channeling public investment to nationalized enterprises and, to a lesser extent, to the infrastructure of the economy. The Hirsch Plan also hastened structural reform, advanced the restoration of a market economy and competition, and replaced dirigisme with con­ certation.64 With respect to the plans' impact on public policy they heightened medium- and long-term considerations in decision making, improved the flow of information, provided a reference point for policy, and rendered policy somewhat more consistent. Still, much of public pol­ icy in the 1950s did not conform to the plan; transport, education, and 265

Capitalism and the state in modem France even industrial programs were not coordinated. And the finance ministry withheld important matters such as general monetary and fiscal policy from the planners.65 The second plan marked a further adaption of planning, already perceptible in the adjustments made in 1948 to the Monnet Plan, to a market economy. As planning became more comprehensive it also lost much of its coercive character and all of its socialist inheritance. The Hirsch Plan imitated its predecessor's preoccupation with eco­ nomic and technological growth and pressed harder to ready the economy for internal and external market forces. A decade later leftist critics would claim planning had become "biased"; its "one­ dimensional economic ideology" sustained "modem capitalism in its frenetic course of expansion, concertation, and therefore inflation."66 This is a somewhat distorted reading of the early plans that ignores the circumstances facing the Monnet and Hirsch teams and over­ simplifies their intentions, but it does highlight a tendency in French planning that was apparent from the outset. One might inquire, as with planning, what part public enterprise had on the growth of the 1950s. The nationalized companies, it seems evident, were expansionist in their own operations and in their effect on the French economy.67 Electricité de France (EDF) and the state railways led the way in applying econometric techniques. The uni­ form purchasing procedures of state firms fostered the standardiza­ tion of equipment supply. In a few instances a public enterprise, such as Renault, served as a model for private firms and sharpened compe­ tition. The directors of the nationalized companies successfully pressed for higher productivity, new technology, and more invest­ ment. The result was a large expansion of capacity (e.g., EDF) and rising productivity (e.g., coal mines and railways). A former coal board official speaks of public enterprises run by engineers as "technocracies" in which the pursuit of output led to slighting such problems as operating costs.68 The example of public enterprise con­ tributed to leading private industry toward a pattem of high invest­ ment and a decisive break with prewar behavior. An economist sur­ veying the machine tool industry of Renault, the Caravelle jet, and EDF's high-voltage power grid, concluded that "much of the stimulus for technological change came from nationalized industry."69 Nationalized firms tended to behave increasingly as commercial enterprises run by independent managers. In the early 1950s the tripartite governing boards gave over day-to-day operations to man­ agement. The plethora of state controls had proved largely ineffective even before the state set the public enterprises free from direct de­ pendence on the budget. Nationalized enterprises accommodated 266

The neo-liberal order of the 1950s themselves to a market economy, and organized business ended its quarrel with them when it became clear that no further nationaliza­ tions were forthcoming.70 Parallel to the performance of nationalized companies, we have already observed marked changes in the behavior of private enter­ prise. The Malthusian stereotype was beginning to fade. The fear expressed by the CNPF that French industry could not face the re­ moval of trade barriers without safeguards against international com­ petition contrasted with the more aggressive attitudes of entre­ preneurs toward investment. The 1950s also witnessed certain struc­ tural changes in capitalist enterprise. Decades after its maturation in the United States the modem corporation emerged in France.71 In sectors like automobiles, machinery, and chemicals business adopted the organizational arrangements and production and market strategies that enabled them to manufacture for mass markets. The weight of sectors also shifted by the early fifties as industry assumed more contemporary contours. Between 1913 and 1954 textiles, cloth­ ing, and leather goods lost half their work force (from 42.4 to 20.8 percent of the total population working in industry), whereas metal­ lurgy (1.8 to 3.6 percent), chemicals (1.6 to 4.5 percent), and electricity (0.4 to 1.3 percent) flourished and engineering industries became pre­ dominant (12.8 to 22.6 percent).72 Nevertheless, economic growth occurred without significant further concentration of industrial pro­ duction.73 The dimensions of French production units remained small when compared with those in other advanced countries. Public policy under the Fourth Republic

Public policy under the Fourth Republic intended to promote growth at stable prices.74 That the latter was not achieved demonstrates only that priority went to expansion and that stability was politically more difficult to attain. A second goal was for the republic to abandon direct controls, such as rationing, and substitute more indirect fiscal and monetary incentives and restraints. Governments also declared war on the web of protected interests that impeded market forces. Despite these intentions policy was erratic and inconsistent. Gov­ ernments mixed determination with leniency and intervened for a host of reasons, many of which were at cross-purposes with renova­ tion, liberalization, or planning.75 The Fourth Republic tried to manage economic fluctuations with a resolve that had not been true of the Third Republic though the effort did not always yield success. It proved easier to overcome recession than it did to combat inflation. France had been the last major Euro267

Capitalism and the state in modem France pean country to bring postwar inflation under control, and its price levels by 1949 were higher than most other countries. In the late 1940s French governments had direct controls available but chose not to apply them, and their fiscal and monetary policies may even have prolonged inflation. The Korean War inflation of 1950-2 was more intense and lasted longer in France than elsewhere, and again gov­ ernments were lax in allowing upward adjustments of key prices and wages. They tended to cave in before the inflationary demands of pressure groups. They also ran deficits and delayed tightening credit restrictions. Yet the republic was committed to countercyclical man­ agement; thus even an orthodox liberal premier, Pinay, in 1952 re­ sorted to a price freeze while at the same time trying to spur competi­ tion as a means of forcing down price levels. Anti-inflationary policies are usually more difficult to carry out than expansionary ones, and this goes a long way toward explaining the republic's failure to stem inflation. Governments, despite their strong-minded leaders, were almost always politically beleaguered, and counterpressures were formidable. A tough line risked political and social upheaval, as postwar experience demonstrated. Or, in a more positive light, governments in the 1950s, except for Pinay's, preferred inflation to stagnation; they deliberately pursued growth and tolerated rising prices. "This priority assigned to expansion," one authority states, "is undoubtedly the characteristic that most clearly distinguishes postwar French economic policy from that followed be­ tween the wars."76 The recession that followed the Korean War necessitated new policies. French premiers after 1952, many of whom enjoyed decree powers, took strong action to combat economic stagnation. René Mayer (1953), Joseph Laniel (1953-4), Mendès-France (1954-5), and Edgar Faure (1955) all vigorously pursued countercyclical programs. In order to stimulate consumer demand they froze prices during 1952-4, a rarity in Europe, and substantially increased wages. Fiscal reforms and credit policies fostered investment, mergers, product specialization, and other types of expansionist activity. Perhaps the most successful economic manager of the time was Faure, whose tenure as finance minister and then as premier covered some thirty months between 1953 and 1955. Through an adroit combination of economic stimulants, wage hikes, and a measure of price discipline Faure achieved lively economic expansion and rising purchasing power without inflation. The republic's battle against recession after the Korean War was more than mere countercyclical management; it aimed at stimulating 268

The neo-liberal order of the 1950s long-term expansion and opening the French economy to market forces. Success came from state promotion of ^elected industries (e.g., steel, electric power), heightened competition for others, plan­ ning, controls, and the stimulation of excellent demand conditions. Whereas France had previously been falling behind other nations, in the 1950s French industry forged ahead but "only when new tech­ niques of government intervention were adopted to help."77 Taxa­ tion, for example, became an agent of industrial reform, and the introduction of the tax on value added in 1954 has been described as "a major incentive to the modernization and re-equipment of French industry."78 Similarly, Mendès-France's cabinet created new funds for reconverting obsolescent firms, retraining displaced labor, and promoting regional industrial development. Along with these efforts toward selective promotion, neo-liberal governments after 1952 deliberately intensified competition. Policy aimed at letting prices more accurately reflect costs while freeing the labor and capital markets from restraints and privileges. In the prod­ uct market, although import and price controls remained, other mea­ sures liberated market forces.79 Anticartel legislation in 1952-3 sought, though with little success, to remove blockages caused by producer ententes. Although the Fourth Republic was far too submis­ sive to sweep away the accumulation of privilege and continued to harbor restrictive lobbies, a campaign against all forms of protec­ tionism was inaugurated. René Mayer, the premier, denounced the "system of protectionism" that permitted the survival of marginal producers and was, he contended, the essential cause of high price levels.80 Mayer asked for decree power to attack, among other eco­ nomic problems, the most notorious situation acquise, the "alcohol lobby." The latter, however, exploited a parliamentary crisis to force him to resign. Civil servants from the ministries of finance and health, nevertheless, continued to press for the eradication of the privileges of this lobby.81 There was progress in this direction even though at the end of the decade experts still testified to the persistence of rigidities and blockages in the economy and to lingering Malthu­ sianism.82 Perhaps most important, the economy was exposed in­ creasingly to outside competition. As late as 1954 the OEEC was still prodding France to remove its controls on trade.83 Yet slowly the safe and sleepy commercial policy of the past eroded. First came the Euro­ pean Coal and Steel Community in 1951. Jean Monnet inspired For­ eign Minister Robert Schuman to propose this scheme, which placed key industries under a supranational authority and provided them with an enormous continental market. Then in 1957 France signed 269

Capitalism and the state in modem France treaties with its five new trading partners that launched the Common Market. In the next decade all French manufactures and agricultural products were to enjoy wide free trade areas. The controversy over economic growth The 1950s produced a flurry of literature celebrating economic growth and cashgating Malthusianism. There was also a corresponding rise of technophobia. Among the most prolific campaigners for expansion was the economist-statistician and former planner Jean Fourastié; he documented the low standard of living and low productivity levels in postwar France when compared with the United States. To Fourastié technology was the moving force of our times, and America led the way toward the final age of automation and a tertiary or service econ­ omy.84 Alfred Sauvy criticized Malthusianism for his nation's retarda­ tion. "At a time when the machine, the airplane, and technology continuously widen horizons and quicken rhythms, France seems to shrink its perspective and slow down its activity." Malthusianism was a "state of mind" characterized by complacency, an excessive respect for the status quo, and "a turning away from life."85 Sauvy blamed the malaise on the rapid aging of the French population. Raymond Aron, the eminent political sociologist, was one of the ear­ liest and most influential spokesman for an "industrial society" that would eliminate poverty and enlarge opportunity.86 In 1955 the Swiss writer Herbert Luethy published a scathing critique of entrenched economic interests in his widely read work, France against Herself. Luethy described France as a "stagnating guild economy" looted by parasitical situations acquises: "a whole population is busily engaged in 'skimming the cream' " off an economy striving for modernity.87 American scholars joined the attack by exposing the penchant of French entrepreneurs for security and protection.88 The volume and intensity of die critique of old ways indicated a widening and more receptive audience. The state's turn to economic management and growth, the mis­ sionary zeal that accompanied it, the actual expansion of the 1950s, and the growing number of prominent spokesmen for rattrapage pro­ voked both a political-social and an intellectual reaction. In the first instance the most vituperative and politically significant was the Poujadist "revolt."89 This movement began as a tax strike against the republic's stepped-up effort to end tax evasion. The rhetoric of Pierre Poujade, the shopkeeper turned politician, and his followers con­ jured up a malevolent "system" of international trusts and foreign financial institutions run by stateless technocrats who sought to con270

The neo-liberal order of the 1950s quer France and uproot its traditions.90 They saw the French being drugged by "progressive" propaganda about efficiency while the planners surreptitiously sought to eliminate small farms and shops. The Poujadists claimed to be modern but insisted that technological progress must be placed in the service of man. They saw themselves defending French traditions, even Western civilization, against the "system." They wanted to preserve individualism, freedom, and the French way of life, which included craftsmanship and the personal service of small shopkeepers. By 1956 the Poujadists attracted two and a half million electors, especially from rural areas, in parliamentary elections. The "revolt," however, quickly subsided. In the long run economic development lightened the weight of les petits - the polycul­ ture farmers and small retailers who had been sustained first by the depression and then by postwar inflation. Economic advance that provoked dissatisfaction among social groups that had once formed the patient, dependable reserves of the Third Republic also inevitably weakened the social ballast for traditional liberalism. The new liberalism of the 1950s, in contrast, made its alliance with dynamic social interests like big industry. Many others expressed concern, even alarm, at the course of events. The dark forebodings of a philosopher like Jacques Ellul were an expression of a growing literary technophobia.91 To some, French democracy seemed threatened with a new form of state dictatorship called "technocracy" or rule by experts. Social scientists began to evaluate the significance of the technocratic phenomenon.92 In the popular mind technocrats were identified as high-ranking dvil ser­ vants who supposedly tried to depoliticize decision making by elevat­ ing technical considerations. They were regarded as impractical and clannish system builders.93 To the Poujadists, the communists, and other critics, technocrats were heartless productivity maniacs who imposed their will on others, took orders from foreign trusts, blindly admired America, patronized supermarkets, knew only Paris, and drank whiskey and Coca-Cola.94 By the 1960s technocracy and technological society became even more popular and controversial topics. The debate in France intensified to the point where some saw the need to proclaim a new freedom - the freedom to be inefficient.95

271

10 Conclusion: reflections on renovation

It seems appropriate before concluding this history to reflect on the causes for the resurgence of the French economy in midcentury. My thesis may stand forth more boldly if it is first compared with other interpretations of the transition from a "static" to a "dynamic" France. My view resembles those offered by analysts like Stanley Hoffmann, Charles Kindleberger, 'Andrew Shonfield, and the team of economists around Jean-Jacques Carré. There are, nevertheless, im­ portant differences. The most influential and comprehensive interpretation of the twentieth-century French renaissance belongs to Stanley Hoffmann. I cannot, in a few lines, do justice to the rich texture of a thesis that embraces far more than political economy. What he argues, in brief, is that a "republican synthesis" collapsed between 1934 and 1945 under the shocks administered by depression and war. The basis of this synthesis was what Hoffmann dubbed a "stalemate society." It fea­ tured an economic equilibrium that thwarted rapid growth and a powerful bourgeoisie, backed by peasant reserves, that diluted such capitalist values as competition in the name of stability and harmony. And a beleaguered state preserved the status quo. But after 1934 dissenters attacked "liberal capitalism," the republic's hallowed "in­ dividualism," and the impotent parliamentary regime. Then Vichy and the resistance pushed and pulled France toward a new dynamic order. Both wartime movements fostered, among other goals, a quest for power and prestige that entailed a commitment to economic over­ haul. Hoffmann attributed the "decisive impulse" for economic and social change after 1945 to the state.1 De Gaulle, Monnet, and the bureaucracy all worked to extend the state's responsibility and com­ petence while officials pressured the private sector to relinquish con­ servative habits. Business, now faced with the choice between expan­ sion or extinction and lured by government incentives, reformed its ways. Hoffmann stressed: "the basic reason for liquidating the stale­ mate society was not that a higher standard of living could be attained thereby, but that only through economic and social change could 272

Conclusion France hope to rescue some of her international prestige and power from the previous shipwreck of 1940. "2 To a considerable extent my study elaborates what Hoffmann only charted. My interpretation, nevertheless, departs from his in certain ways. The "stalemate society" suffered shocks before 1934 - especially from the First World War. Dissent had been gathering for two de­ cades. My thesis also balances the responsibility for renovation among business, labor, and state officials, though the latter still seem paramount. I find the decisive role played by neo-liberal reformers but assign a part to those of a socialist-syndicalist persuasion. Though it was national rank that was the predominant motive, it was formulated as a sense of economic backwardness. Moreover, the quest for economic growth, order, and social justice also contributed to overhaul. Finally, where Hoffmann was disappointed with the remaking of the political system after the war, I find some success in the institutionalization of economic management. My modifications only serve to advance what remains the most fruitful paradigm for change in twentieth-century France. Charles Kindleberger, like Hoffmann writing in the early 1960s, pioneered in exploring French renewal. Kindleberger, an economist who refused to be bound by conventional economic hypotheses, con­ cluded "that the basic change in the French economy is one of people and attitudes."3 He identified "new men" with expansionist ideas who took command of the economy, both in private industry and in the public sector, as well as a new "universal" consensus about the desirability of growth that had its origins in the frustrations of the 1930s, the war, and occupation. Postwar population growth and new attitudes toward consumption were manifestations of this grass-roots change in values. Kindleberger also stressed French technological virtuosity, but he thought it accompanied, rather than caused, post­ war resurgence. Kindleberger thus identified the key changes in economic person­ nel and attitudes and discerned the pivotal nature of the years be­ tween 1930 and 1950. I reach further back to find the origins of these changes, and I also attribute more responsibility to certain public officials and to government policy. Kindleberger, for example, was unimpressed with planning though he praised the enterprise of nationalized firms. My view, furthermore, suggests a more fragile consensus about growth, a division about means among those who wanted to grow, and a hesitancy among private entrepreneurs who had to be pushed toward adopting a more expansionist stance. Andrew Shonfield included France in his general treatise on the development of managed capitalism in the West. His conception of 273

Capitalism and the state in modem France French economic management, however, was rather narrowly fo­ cused on the introduction of planning. The nationalized sector and the finance ministry merit more attention than he allowed. And his notion of a more or less continuous practice of enlightened state in­ tervention that stretches back to Colbert underestimates the strength of market principles in both 1900 and 1950. Contrary to Shonfield I do not think the means of wielding economic power were just waiting to be used after 1945 - they had to be invented, and their adoption came grudgingly.4 What Shonfield correctly points out is that the neo­ liberal, or what he terms the Keynesian, style of economic manage­ ment more strongly shaped postwar capitalist management than the socialist movement that sought to seize the commanding heights of the economy. Where Shonfield looked to explain managed capitalism the French economists Carré, Dubois, and Malinvaud focused on postwar eco­ nomic growth.5 Their econometric study attempted to measure quan­ titatively the causes of the rapid growth of French industry and ag­ riculture for the period 1949-69. Approximately half the gains in production and productivity, they found, were due to physical fac­ tors, that is, to changes in labor and capital. Improved training and distribution of the work force meant workers were more productively employed. A high rate of investment expanded and renewed produc­ tive capital. The concentration of productive units, much more in agriculture than in industry, brought economies of scale. After cal­ culating the contribution of these physical determinants the re­ searchers were left with the problem of explaining the remainder of growth as well as what lay behind the shifts in labor and capital. At this point Carré's team all but abandoned mathematical preci­ sion. They rejected all monocausal theories of postwar growth such as the rising birth rate, planning, or the shock dealt by 1940. Any cause, they argued, that was singularly French overlooked the fact that France participated in a general trend among Western nations toward postwar expansion. Growth was due rather to multiple causes or a conjoncture of factors some of which were international in character. Rapid growth, they reasoned, began between 1896 and 1929, stalled but did not altogether stop in the following fifteen years, and then accelerated after 1945-9. Immediately after 1945 there was rattrapage; accumulated demand, public spending, and external stimulants like American aid brought recovery and reconstruction. Once catch-up was complete, three new determinants intervened to sustain and then accelerate expansion. The first was the willingness of labor both to shift employment and to maintain a long workweek. The second was the adoption of a more expansionist and competitive outlook by 274

Conclusion public and private enterprise. Nationalized firms initially and then private companies accepted the rules of the market, including entry into the Common Market, and reequipped their plants. Finally the government acted. Carré and his fellow economists gave high marks to public policy. They saw planning, the productivity drive, public outlays, fiscal reform, and the opening of the economy to competition all contributing to the turnabout in investment behavior. And coun­ tercyclical interventions more often than not were beneficial. In short, these economists openly endorsed the hybrid neo-liberal economy. The change in behavior of private capitalists and public officials that these analysts discerned corresponds with my thesis. The residue of causality that the economists find unmeasurable and even inexplica­ ble, however, for me lay in a long-term shift in men's attitudes about their economy and in the institutions they devised to direct it. Here events like the two world wars become critical for explanation. Though recognizing that events, institutions, and attitudes played a part, Carré's group refused to accept them as "the predominant cause." Here is where we part ways. What they find inexplicable my historical account, which emphasizes a changing national conscious­ ness, should render comprehensible. How, in contrast to other interpretations, has this study accounted for the emergence of a dynamic and managed economy? Recall that I treat growth and management as twin aspects of the same phenome­ non of renovation. At the outset it must be noted that France did not begin the twen­ tieth century with the kind of market economy that prospered in Britain or the United States. The British reverence for free trade or the American adulation of free enterprise were not features of French political economy. The Gallic form of liberalism combined a certain reserve about competition with a protectionist state. Thus the step to economic management was easier for the French than it was for oth­ ers. From the broadest perspective a few universal imperatives moved capitalist nations toward economic management in the course of the twentieth century. These were the needs for economic stability, growth, and social justice. A mix of these drives, which escalated after 1900, supplied the impetus for everyone including the French. In the first instance it was the vastly expanded productive capacity of industry, its interdependence, and its internal dynamism that heightened the need for economic stability. As long as resources and markets were uncertain, as long as supply and demand were in dis­ equilibrium, as long as technology and products continuously evolved, there would be economic dislocation and insecurity. Infla275

Capitalism and the state in modem France tion, recession, business failure, unemployment, and other ills were endemic. Adjustments by way of the market seemed slow, too imper­ fect, and too costly in human terms; it could no longer be relied upon as the sole means of allocating resources and regulating the economy. Stability necessitated forecasting and regulatory agencies, coordinat­ ing mechanisms, and countercyclical policies in order to improve pub­ lic control over economic fluctuations. Assistance, moreover, had to be extended to producers and labor in order to help them adapt to rapid change and to ease the adjustment process. The twentieth cen­ tury, especially after the depression of the 1930s, would not tolerate what the nineteenth century had as the cost of economic develop­ ment. A second imperative was the desire for growth. "Modernization," "efficiency," "productivity," "competitiveness," "the standard of liv­ ing" were all formulations or variations of this goal. Where the mar­ ket functioned to promote expansion it often did so with considerable waste of resources, or it failed to supply the desired rate or kind of growth. Where the market malfunctioned because of collusion, pro­ tectionism, or other restraints there was usually stagnation. In either situation some form of economic management was in order. Interven­ tion might bypass the market in order to promote selective develop­ ment, or it might free the market so that competitive forces could function more vigorously. The propensity toward growth also had an international dimension. Competition among nations for markets, re­ sources, and higher standards of living yielded leaders and laggers. When a sense of relative backwardness arose, as it did, for example, in Britain at the turn of the century, movements for "national effi­ ciency" appeared to force the pace of development.6 Such catch-up efforts usually postulated a turn toward economic management. When efficiency assumed the status of a national priority, as it did during periods of war or postwar reconstruction, state management, at least temporarily, replaced the free functioning of the market. Social justice was yet another impulse toward management and a mixed economy. This motive stemmed from recognition of the in­ equities created by capitalism and the market. It took two forms. On the one hand the system failed to supply all the goods that society wanted; it produced only the most profitable ones, leaving vast areas of public or collective needs unsatisfied. These deficiencies were especially acute in sectors like transportation and energy. Although many of these industries had the character of public services, they were in the hands of large-scale private enterprises. In some cases capitalists could not operate the industry profitably and had to turn to the state for assistance. In other cases where profits were plentiful 276

Conclusion private enterprise seemed to be exploiting a national resource or an oligopolistic or monopolistic situation. This gave rise to the demand for collective ownership or control of these industries. On the other hand there was the problem of the persistent and perhaps the grow­ ing inequalities of income and wealth under capitalism. To some the answer lay in regulating capitalism in order to make it operate more equitably. To others of a more radical persuasion the solution was to collectivize the economy because, they contended, the capitalist sys­ tem itself was inherently unjust and irredeemable. Whatever the remedy the quest for social justice led toward economic management. In France all these imperatives for economic management were present but mixed in a peculiar Gallic blend. The need for stability was important but not primary. Hyperinflation during the mid-i920s prompted some mild but fleeting intervention. Economic instability became chronic and countercyclical policies routine only with the onset of the depression. During the 1930s the reasons for corrective government action were virtually universal - unemployment, protec­ tion of home markets, salvage operations, for examples. But after 1945, unlike the United States and Britain where authorities employed Keynesian policies to sustain full employment and aggregate de­ mand, their French counterparts faced different problems. Under the Fourth Republic inflation was the principal form of economic instabil­ ity, and it necessitated continuous state therapy. Social justice was a minor reason for economic overhaul in France. Insofar as the nationalizations of the 1940s were prompted by a need to correct deficiencies in what were considered public services, social justice was an element. But the disparities of income and wealth in France, which were at least as severe as in other capitalist countries, had little role in abetting economic management except for contribut­ ing to the application of price and wage controls and to modifications of the tax structure. What was distinctive about France was the compelling sense of relative economic backwardness. This impulse, that is, the need for growth and structural overhaul, was the principal stimulus for eco­ nomic renovation and set France apart from other countries. The urgency of the problem was first recognized by a perceptive few as early as the First World War or even 1900, but complacency about the existing order did not disappear until the end of the Second World War. By 1945 French public authorities had developed a keen sense of economic retardation and accepted the need for expanding and mak­ ing more efficient use of the nation's economic potential. Private eco­ nomic actors followed the lead of public officials. Neither of France's wartime capitalist allies, Britain or the United States, shared this con277

Capitalism and the state in modem France viction about the urgency of rattrapage. The modernizing motive predominated in creating most of the new institutions of economic management including nationalized enterprises and planning. The consciousness of relative backwardness had a second aspect. The French tended to hold liberal capitalism responsible for the unin­ spired performance of the economy. Market capitalism and the liberal orthodoxy had functioned well enough until 1914. At least the bourgeois ruling class and the peasant reserves were complacent if not content. The two decades before 1914 had been prosperous; rapid growth was underway, the franc was stable, and real wages were on the rise. Except for the interruption of the First World War and seri­ ous postwar inflation, prosperity continued through the 1920s. The depression ended all this. In France, as elsewhere, it was the principal economic event of the first half of the century. Many blamed the depression on the disorder and malfunctions of the market and its hallowed laws. The 1930s seemed the final crisis of capitalism and spawned a wide range of alternatives to liberalism including cor­ poratism and planning. The crisis even undermined the confidence of some capitalists. Liberal policy makers and business stumbled blindly without finding a way out of the depression before 1938-9. The war and occupation only darkened the prospects for the liberal regime. Accusations of defeatism and collaboration stained the business community. By 1943 liberal capitalism had to bear its share of the blame for a general sense of national decline. It had left the country poorly equipped - for fifteen years there had been virtually no growth in the gross national product, and productivity levels were far behind the leaders. Malthusian capitalists and the trusts became scapegoats. At war's end many believed private enterprise could not be relied upon for rapid reconstruction and overhaul. Doubts about the quality of French entrepreneurship, some of which dated back to the turn of the century, surfaced. Were French capitalists either as dynamic or as enlightened as elsewhere? Employers had amassed a sorry record in labor relations, and the shortcomings of the nation's productive struc­ ture were laid bare in the aftermath of the Second World War. At this juncture market capitalism and liberal economics were in lower es­ teem in France than in the United States or Britain where the perfor­ mance of their economies seemed partly responsible for their military triumph. In France, in contrast, the accumulation of grievances against capitalism, the trauma of defeat, occupation, and extensive physical damage to the productive plant led to a compelling desire for a new departure. The solution chosen by the French was for the state to take charge; it assumed the tasks of managing and stimulating the 278

Conclusion economy, sustaining a constant flow of investment, and "liberating" the market in certain sectors. A final distinctive cause of the shift toward a managed and expan­ sive economy in France was the impact of war. Between 1914 and 1945 the country was at war for over ten years. The world wars required extensive economic mobilization and prompted self-examination among the nation's leaders. In both instances war exposed deficien­ cies in the national economy: shortages of raw materials and skilled labor, inadequate plant capacity, dependence on foreign suppliers, and primitive institutional arrangements for mobilization. Although the First World War brought the original experiment with dirigisme, it largely failed to introduce any permanent changes in the existing liberal order. The Second World War witnessed the adoption of even more sweeping controls and more thorough state intervention under the Vichy regime. On this occasion the momentum for wartime di­ rigisme carried over into the postwar period. The reaction against controls after 1945, which resembled what happened in 1919, did not wash away all wartime innovations. In fact, the provisional govern­ ment maintained, in modified form, some of Vichy's experiments in economic direction and introduced others. Two key mechanisms of a market economy, for example, prices and wages, which had come under state control in 1939, were never completely freed thereafter. Up to this point my explanation for renovation has stressed the imperatives of overcoming backwardness and global events like the Great Depression and the world wars. What still needs emphasis, however, is the role of leaders. Historical actors as well as mounting social and economic needs and the intrusion of awesome events moved the nation toward neo-liberal ways. These modernizers were found among public officials, politicians, labor leaders, industrialists, and academics. Both left and right contributed to the trend. The nation's move toward a mixed, managed, and dynamic economy proceeded in fits and starts rather than through a linear progres­ sion, and the fate of the modernizers mirrored this history. Some prescient individuals anticipated the trend as early as 1900. At the end of the First World War reformers like Albert Thomas and Etienne Clémentel tried to force the pace, overreached themselves, and failed. Between the wars critics of the existing order pro­ posed more radical alternatives than economic management and modernization. There were corporatists, technocrats, syndicalists, and socialists, but their designs were too daring or sectarian to be successful. By the end of the Second World War, however, the French were ready to listen to the partisans of management and expansion. 279

Capitalism and the state in modem France The creators and spokesmen for the new order were men like Jean Monnet and François Bloch-Lainé. After decades of failure the neo­ liberal modernizers succeeded in the 1950s. They not only introduced and staffed new instruments of economic management and growth but also spread their message throughout the state administration, industry, labor, and the public. Market capitalism and traditional liberal policy in France, as else­ where, were assailed in the course of the first half of the twentieth century by escalating needs like the desire for economic stability. What was unique about France was the way a collective sense of national decline and disenchantment with the liberal order provided the fundamental impetus for change. This conviction peaked at the end of the Second World War and expressed itself in both a commit­ ment to overhaul and an interventionist state. Basic to all the agents of change in France was a ripening of a nation's collective conscious­ ness. What the French came to accept by midcentury was the neces­ sity of renovation.

280

N otes

Unless otherwise stated, all French publications were published in Paris; all Englishlanguage publications in New York. Chapter 1. The liberal order of 1900 1 Surveys of French political economy that cover this era are: Gaëtan Pirou, Les D o ctrin es économ iques en France depuis 1870 (1925); Charles Brouilhet, Le C o n flit des doctrin es dans l'économ ie p o litiq u e contem poraine (1910); Charles Rist and Charles Gide, A H is to ry o f Econom ie D octrines, trans. R. Richards, 2nd ed. (London, 1948); Luc Bourcier de Carbon, Essai s u r l'h isto ire de la pensée e t des doctrines économ iques, 3 vols. (1971-9). Lucette Le Van-Lemesle describes the liberals' self-promotion in her arti­ cle, "La Promotion de l'économie politique en France au XIXe siècle jusqu'à son introduction dans les facultés, 1815-1881," R e v u e d 'h isto ire m oderne e t contem poraine 27 (Apr.-June 1980)1270-94. 2 René Stourm, "Paul Leroy-Beaulieu," R e v u e des d e u x m ondes 38 (Apr. 1917)1532-53. 3 From the article on political economy by Courcelle-Seneuil in the N o u vea u D ictio n ­ naire d 'économ ie politique, ed. Léon Say and Joseph Chailley (1891), 1:770. 4 Quoted by Bourcier de Carbon, Essai, 2:132. 5 N o u ve a u D ictionnaire, 1:951. 6 Summaries of such liberal criticism can be found in: Gaëtan Pirou, Econom ie libérale e t économ ie dirigée (1946), 1:270-2; Maurice Lévy-Leboyer, "Histoire économique et histoire de l'administration," in H isto ire de l'a d m in istra tio n française dep u is 1800, Actes du colloque de l'Institut Français des Sciences Administratives. . . mars 1972 (Geneva, 1975), pp. 66-8. 7 Paul Leroy-Beaulieu, T h e M o d e m S ta te in R elation to S o ciety a n d th e In d iv id u a l (Lon­ don, 1891), pp. 148-9. 8 Paul Leroy-Beaulieu, Essai s u r la répartition des richesses (1880), dted by Bourcier de Carbon, Essai, 2:130. 9 Leroy-Beaulieu, M o d e m S ta te, p. 158. 10 N o u ve a u D ictionnaire, 1: 783. 11 Alfred Jourdan, D u R ôle de l'é ta t (1882), p. 156. For economists' objections to price controls, see Pirou, Econom ie libérale, 1: 273. 12 Jourdan, D u R ôle de l'éta t, p. 196. 13 Henri Hatzfeld, D u P aupérism e à la sécurité sociale: essai s u r les origines de la sécurité sociale en France, 1 8 5 0 -1 9 4 0 (1971), pp. 33-101. 14 Leroy-Beaulieu, writing in 1901, quoted in ibid., p. 91. 15 Pirou, Les D octrines économ iques, pp. 119-25. 16 Leroy-Beaulieu, M o d e m S ta te , p. 22. 17 Ibid., p. 162. 18 Thomas R. Osborne, "The Recruitment of the Administrative Elite in the Third French Republic, 1870-1905: The System of the Ecole Libre des Sciences Politiques"

281

Notes to pp. 6 - io (thesis. University of Connecticut, 1974); Pierre Rain and Jacques Chapsal, L'E cole Libre des Sciences P olitiques, 18 7 1 -1 9 4 5 (1962); Charles Rist et al., L 'E n se ig n e m en t économ ique en France e t à l'étra n g er (1937); Michalina Vaughan, 'T h e Grandes Ecoles," in G o vern in g Elites: S tu d ie s in T ra in in g a n d Selection, ed. Rupert Wilkinson (1969), pp. 74-107. René Stourm, L e B udget: cours de finance, 7th ed. (1913). Rain and Chapsal, L'E cole Libre, p. 90. Clément Colson, C ours d'économ ie politique, definitive ed., 6 vols. (1924-9), 1:150-77. Rain and Chapsal, L'E cole Libre, pp. 117-18. As late as the 1930s some economists deplored the sad state of their discipline in higher education, i.e., its subordinate status in the law faculties, the lack of specialized training in mathematical econom­ ics, economic theory, and statistics (Rist, L 'E n se ig n e m en t économ ique, pp. 12-13,41-6, 59)23 Jacques de Fouchier, "Le Rôle de l'Inspection Générale des Finances dans l'ad­ ministration française," R e v u e politique e t parlem entaire 46 (Aug. 1939): 268-9; De Peyster, "L'Inspection Générale des Finances en France," R e v u e in tern a tio n a le des sciences a d m in istra tives 12 (Oct.-Dec. 1939): 67. The wide range of the inspection's influence is described in Pierre Lalumière, L 'Inspection des finances (1959); and Fran­ çois Piétri, Le F inancier (1931), pp. 79-93. 24 Leroy-Beaulieu, M o d e m S ta te, p. 158. 25 An incisive analysis is Lévy-Leboyer's "Histoire économique." A comprehensive and highly interpretive treatment is Pierre Legendre, H isto ire de l'a d m in istra tio n de 1750 à nos jo u rs (1968). A handy guide that contains some historical perspective is F. Ridley and J. Blondel, Public A d m in istr a tio n in France (London, 1964). For biblio­ graphies on the administration and the economy, see: Legendre, H isto ire, pp. 385-9; and Institut Français des Sciences Administratives, H isto ire de l'a d m in istra tio n (1972), book 7. 26 Edmond Théry, H istoire des grandes com pagnies françaises de chem in de fe r dans leurs rapports financiers avec l'é ta t (1894); Marie-Noëlle Thibault, "La Question du rachat des chemins de fer dans l'idéologie républicaine au i9eme siècle, 1832-1883" (thesis. Université de Dijon, 1975); Kimon Doukas, T h e French R ailw ays a n d th e S ta te (1945). 27 Chambers of Commerce in the 1880s registered their opposition to state repurchase of the railways in AN F 12 4840. One chamber objected to state operation because it would permit the lowliest railway employee to claim, "l'état c'est moi." 28 Jean Bouvier, "L'Etat et les finances publiques: histoire financière et problèmes d'analyse des dépenses publiques," A n n a les 33 (Mar.-Apr. 1978): 209. This essay raises a series of probing questions about relations between the state and a capitalist economy. 29 Legendre, H istoire, p. 385. 30 Christine André and Robert Delorme, "L'Evolution séculaire des dépenses pub­ liques en France," A n n a les 33 (Mar.-Apr. 1978): 256-7, 264-7. 31 Lévy-Leboyer, "Histoire économique," p. 70. 32 G. Temy, Christine André, and Robert Delorme, "Premiers Eléments d'une théorie positive de l'évolution de longue période des dépenses publiques françaises" (pro­ visional report, 1973), p. 158. 33 François Crouzet, "Recherches sur la production d'armements en France, 18151913," R e v u e h istorique 251 (Jan.-Mar. 1974): 68-69, 73- Between 1870 and 1884 the rate had been 3.55%. What increase there was in arms spending was due mainly to naval construction. 34 Stability, however, did not mean immobility because there were some changes, such as a growing proportion of revenue from taxes on consumption and a dedin19 20 21 22

282

Notes to pp. i l - lg ing share from taxes on incomes before 1913. See Jean Bouvier, "Sur 1''Immobilisme' du système fiscal français au îçem e siècle," R e v u e d 'h isto ire économ ique et sociale 50, 4 (1972): 482-93. 35 Daniel Salem, "Le Sénat 'conservateur' de la Troisième République," R e v u e d 'h is ­ toire économ ique et sociale 50, 4 (1972): 535-42. 36 Myriam Frajerman and Dominique Winock, "Le Vote de l'impôt général sur le revenu, 1907-1914" (master's thesis. Université de Paris VUI-Vincennes, 1972); Ber­ nard Vandeginste, "Le Sénat et l'impôt sur le revenu, 1900-1917" (thesis, Université de Paris, 1961). 37 Quoted in Gil C. Alroy, "Radicalism and Modernization: The French Problem" (thesis, Princeton University, 1962), chap. 8, p. 2. Alroy analyzes Radical ideology and industrial capitalism in chaps. 6 and 8. 38 Maurice Duverger, In s titu tio n s financières, 2nd ed. (1957), pp. 1-44. 39 Quoted in Bouvier, "Sur l'Tmmobilisme' du système fiscal," p. 485. 40 Walter R. Sharp, T h e French C iv il Service: B ureaucracy in T ransition (1931), p. 373. 41 Jean Bouvier, U n Siècle de banque fra n g iise (1973), pp. 155-78. For an account of the continuing debate over the role of the central bank in expanding or contracting the money supply, see Charles P. Kindleberger, "Keynesianism vs. Monetarism in 18th and 19th Century France", H isto ry o f Political Econom y 12, 4 (1980): 499-523. 42 Pierre Gousset, "Pour une Histoire des ministères: évolution historique de l'ad­ ministration centrale du commerce et de l'industrie," R e v u e a d m in istra tive 14 (Mar.-Apr. 1961): 132-7; Robert Catherine, L 'In d u s tr ie (1965), pp. 8-10. 43 Jean Cruppi, P o u r l'E xp a n sio n économ ique de la France (1910), p. 4. 44 Jean-André Toumerie, Le M in istè r e d u Travail: origines et prem iers développem ents (1971); Georges Cusson, O rig ines et évolution d u M in istè re de l'A g r ic u ltu r e (1929). 45 Charles E. Freedeman, T h e C onseil d 'E ta t in M o d e m France (1961), pp. 79, 105-6, 161-2. 46 Jules Méline, R e tu r n to th e L and, trans. Justin McCarthy (1907), pp. 201-2. For an earlier period, there is Dennis Sherman, "Governmental Responses to Economic Modernization in Mid-Nineteenth Century France," Journal o f European Econom ic H is to ry 6, 3 (Winter 1977): 717-36. 47 Stanley Hoffmann, "Paradoxes of the French Political Community," In Search o f France (Cambridge, Mass., 1963), pp. 1-117. 48 Michel Debré, "Pour une Administration de l'économie française," Sciences po litiq u es, no. 8 (June 1938), p. 246. 49 Gordon Wright, R u ra l R e v o lu tio n in France (Stanford, 1964), p. 18. Also see: Pierre Barrai, Les A g ra rien s en France de M é lin e à P isani (1968), pp. 67-176; Michel AugéLaribé, La P olitique agricole de la France de 1880 à 1940 (1950), pp. 63-300. 50 Méline, R e tu r n to th e L and, p. 86. 51 My analysis of tariff policy relies on Michael S. Smith, T a riff R eform in France, 1 8 6 0 -1 9 0 0 (Ithaca and London, 1980). Also see Jürgen Hilsheimer, Interessen g ru p p en u n d Z o llp o litik in Frankreich (Heidelberg, 1973). 52 Free traders, like the Chamber of Commerce in Le Havre, argued that "taking account of other countries' productive resources and commercial methods, protec­ tion should aim at equalizing forces and not at diminishing effort" (AN F 12 6916). 53 Pirou, Les D octrines économ iques, pp. 183-9. Cauwès not only opposed the principle of free trade but also anticipated a widening role for the state at home. His major work is his C ours d'économ ie politique, which first appeared in 1879. Cauwès was an academic outsider who had few disciples. 54 Cited in Michael S. Smith, "Free Trade versus Protection in the Early Third Repub­ lic," F rench H istorical S tu d ies 10, 2 (Fall 1977): 314. 283

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Cnippi, P o u r l'E x p a n sio n économ ique, p. 23. Ibid., p. 9. Another minister of commerce, Jules Roche, also expressed concern about German trade superiority in his A llem a g n e e t France (1898). A recent survey of the employers' movement is Georges Lefranc, Les O rg a n isa tio n s patronales en France (1976), which contains a good bibliography. Other surveys are: Jean Lambert, Le Patron (1969); Pierre Bezard-Falgas, Les S yn d ica ts p a tro n a u x de l'in ­ d u s trie m étallurgique en France (1922); Etienne Villey, L 'O rg a n isa tio n professionnelle des em p lo yeu rs dans l'in d u s trie française (1923); ''Employers' Organizations in France," In tern a tio n a l Labour R e v ie w 16 (July 1927): 50-77. Peter N. Stearns, "Against the Strike Threat: Employer Policy toward Labor Agita­ tion in France, 1900-1914," Journal o f M o d e m H is to ry 40, 4 (Dec. 1968): 474-500; Jacques Expert-Bezançon, Les O rganisations de défense patronale (1911). Bezard-Falgas, Les S yn d ica ts p a tro n a u x, pp. 98-103. Ibid., p. 120. Henry Peiter, "Institutions and Attitudes: The Consolidation of the Business Com­ munity in Bourgeois France, 1880-1914," Journal o f Social H is to ry 9, 4 (June 1976): 510-25. General studies of the cartel movement are: Henri Prévost, Les E n ten te s en tre p ro d ­ u cteu rs en France (1904); J. Tchemoff, E n ten tes économ iques e t financières (1933); Charles Brouilhet, Essai s u r les e n ten tes com merciales e t industrielles (1895); Paul de Rousiers, Les S y n d ic a ts in d u striels de p roducteurs en France et à l'étra n g er (1901). Recent studies of specific cartels are: Marcel Gillet, Les C harbonnages d u nord de la France au iç e m e siècle (Paris and The Hague, 1973); Henri Morsel, "Contribution à l'histoire des ententes industrielles: à partir d'un exemple, l'industrie des chlorates," R e v u e d 'h isto ire économ ique e t sociale 54,1 (1976): 118-29; Robert O. Paxton, "L'Affaire des carbures et l'abolition du délit de coalition, 1915-1926," in 19 1 4 -1 9 1 8 : l'a u tr e fr o n t, ed. Patrick Fridenson, Cahiers du Mouvement social, no. 2 (1977), pp. 145-69. Paxton, "L'Affaire des carbures," p. 147. Quoted by Prévost, Les E n ten te s, p. 202. Smith, T a riff R eform , p. 226. Cf. Alfred Aftalion, "Les Kartells dans la région du nord de la France," R e v u e économ ique in ternationale 4,1 (’an. 1908): 144-65. Gillet, Les C harbonnages, pp. 145-335. Dijon Chamber of Commerce, 1913, quoted in Peiter, "Institutions and Attitudes," p. 518. Before the war there was a parallel movement led by the deputy Jean Hennessy to overhaul the republic's consultative system. He proposed regional and professional representation to prepare the way for industrialization (Gabriel Car­ rière, La R eprésentation des in térêts et l'im portance des élém ents professionnels da n s l'é vo lu ­ tion et le g o u v ern e m en t des peuples [1917]). My discussion of the Comité des Forges depends on the research of Michael Rust; see his "Business and Politics in the Third Republic: The Comité des Forges and the French Steel Industry, 1896-1914" (thesis, Princeton University, 1973). André François-Poncet, La Vie et l'o eu vre de R obert P in o t (1927), pp. 1-190. In the words of François-Poncet, ibid., p. 105. François Crouzet, "Essor, déclin et renaissance de l'industrie française des locomo­ tives, 1838-1914," R e v u e d 'h isto ire économ ique et sociale 55, 1-2 (1977): 189-92. The railroads wanted to undercut the formation of a domestic comptoir by buying im­ ported machinery. 72 Rust, "Business and Politics," pp. 285, 321. 73 Ibid., p. 363. 74 Ibid;, pp. 346-8. 75 Jean-Jacques Carré, Paul Dubois, and Edmond Malinvaud, La C roissance fr a n ç iise 284

Notes to pp. 26-28 (1972), pp. 32, 45, 110. The English version of this study is French Econom ic G ro w th (Stanford, 1975). Maurice Lévy-Leboyer estimates that on a per capita basis overall growth rates advanced from 0.68% for the period 1860-90 to 1.56% for 1890-1910 ("La Croissance économique en France au i9eme siècle," A n n a le s 23 [July-Aug. 1968]: 788-807). Cf. François Crouzet, "An Annual Index of French Industrial Pro­ duction in the 19th C entury," in E ssays in French Econom ic H isto ry , ed. Rondo Came­ ron (Homewood, 111., 1970), pp. 245-78. 76 François Crouzet cites U.S. Commerce Department figures in his article "French Economic Growth in the Nineteenth Century Reconsidered," H is to ry 59,196 (June 1 9 7 4 ): 1 6 9 - 7 0 .

77 James M. Laux, In F irst Gear: T h e F rench A u to m o b ile In d u s tr y to 1914 (Montreal, 1976), pp. 195-208. Also see Patrick Fridenson, H istoire des u sines R e n a u lt (1972), 1:19-86. 78 Ernest Labrousse, "The Evolution of Peasant Society in France from the Eighteenth Century to the Present," trans. David S. Landes, in French Society a n d C u ltu r e since th e O ld R egim e, ed. Evelyn M. Acomb and Marvin L. Brown (1966), p. 51. 79 W. A. Cole and Phyllis Deane, 'T h e Growth of National Incomes," in T h e C a m ­ bridge Econom ic H is to ry o f Europe, ed. H. J. Habakkuk and M. Postan, vol. 6, pt. 1 (Cambridge, 1966), p. 27. Some historians believe these figures overestimate French performance; cf. Alan S. Milward and S. B. Saul, T h e D evelo p m en t o f th e Econom ies o f C o n tin e n ta l Europe, 18 5 0 -1 9 1 4 (Cambridge, Mass., 1977), pp. 138-9. For a different approach at estimating growing personal wealth and its distribution in France, see Adeline Daumard, "L'Evolution des structures sociales en France à l'époque de l'industrialisation, 1815-1914," R e v u e historique 247 (Apr.-June 1972): 325-46. 80 David S. Landes, T h e U n b o u n d P ro m eth eu s (London, 1969), p. 330. 81 P. K. O'Brien, D. Heath, and C. Keyder, "Agricultural Efficiency in Britain and France, 1815-1914," Journal o f European Econom ic H is to ry 6, 2 (Fall 1977): 339-91. 82 Méline, R e tu r n to th e L and, pp. 78-79. 83 Literature that assesses French industry, and the economy, in the nineteenth cen­ tury is immense. The best up-to-date review is Crouzet's "French Economic Growth Reconsidered." The latest expert synthesis, which contains extensive bib­ liographies, is the H isto ire économ ique et sociale de la France, prepared under the direction of Fernand Braudel and Ernest Labrousse. Tome 4 (1979-80), written by Jean Bouvier et al., covers the decades between 1880 and the 1950s. A recent bibliog­ raphy is James M. Laux, "The Economic History of the Third Republic: A Survey of Publications since the 1950s," T h ir d RepublicIT roisièm e R épublique, no. 5 (Spring 1978), pp. 21-43. Of note for English readers are: François Caron, A n Econom ic H is to ry o f M o d e m France (1979); Landes, U n b o u n d P rom etheus; Milward and Saul, Econom ies o f C o n tin e n ta l Europe; Charles P. Kindleberger, Econom ic G ro w th in France a n d B rita in , 1 8 5 1 -1 9 5 0 (Cambridge, Mass., 1964); Rondo E. Cameron, "Economic Growth and Stagnation in France, 1815-1914," Journal o f M o d e m H is to ry 30, 1 (Mar. 1958): 1-13; and Claude Fohlen's essay on France in T h e F ontana Econom ic H is to ry o f Europe, ed. Carlo M. Cipolla (London and Glasgow, 1973), 1, pt. 1: 7-75. 84 David S. Landes, "Social Attitudes, Entrepreneurship, and Economic Develop­ m ent," E xplorations in E ntrepreneurial H is to ry 6 (1953-4): 252, 267-72. 85 Landes, U n b o u n d P ro m eth eu s, pp. 245-7. For German cartels, see Erich Maschke, "Outline of the History of German Cartels from 1873 to 1914/" in E ssays in European E conom ic H is to ry , ed. François Crouzet et al. (1969), pp. 226-58. In America the Sherman Antitrust Act, which prohibited cartellike agreements, hastened the emergence of the modem , integrated business enterprise, according to Alfred D. Chandler, Jr., T h e V isible H and: T h e M anagerial R ev o lu tio n in A m erica n B u sin ess (Cam­ bridge, Mass., and London, 1977), pp. 333-4, 375-6, 499.

285

Notes to pp. 28-35 86 Maurice Lévy-Leboyer, "Innovation and Business Strategies in Nineteenth- and Twentieth-Century France/" in E nterprise a n d E ntrepreneurs in N in e te e n th - a n d T w e n tie th -C e n tu ry France, ed. Edward C. Carter et al. (Baltimore and London, 1976), pp. 93-ioo. 87 Aimée Moutet, ""Les Origines du système de Taylor en France," Le M o u v e m e n t social 93 (Oct.-Dec. 1975), pp. 15-49. The pessimism in M outet's essay on French receptiv­ ity may be excessive. Taylorism encountered similar obstacles in England and Ger­ many. 88 Crouzet, ""Essor," p. 179. 89 Milward and Saul, Econom ies o f C o n tin en ta l Europe, p. 124. 90 Eugène Letailleur [Lysis], Vers la D ém ocratie nouvelle (1917), p. 9. Cf. Charles Mourre, D 'o ù v ie n t la D écadence économ ique de la France (1899); Francis Delaisi, La D ém ocratie et les fin a n ciers (1911). 91 Victor Griffuelhes, ""L'Infériorité des capitalistes français," Le M o u v e m e n t socialiste 226 (1910), pp. 330-7. Also see the essay by Michelle Perrot in the H isto ire économ ique et sociale de la France, tome 4, 1: 533. 92 Quoted by Richard D. Mandell, Paris 1900 (Toronto, 1967), p. 115. Chapter 2. The interruption of the Great War, 1914- 1918: ministerial plans for reconstruction 1 Some general studies that treat the French economy at war are: Gerd Hardach, T h e F irst W orld W ar, 1 9 1 4 -1 9 1 8 (Berkeley, 1977); Arthur Fontaine, F rench In d u s tr y d u rin g th e W ar (London and New Haven, 1926); Gaston Jèze and Henri Truchy, T h e W ar F inance o f France (London and New Haven, 1927); Pierre Pinot, Le C ontrôle d u ra vita il­ le m en t de la population civile (1925); G. Olphe-Galliard, H isto ire économ ique e t fin a n cière de la gu erre, 1 9 1 4 -1 9 1 8 (1923); Jean-Baptiste Duroselle, La France e t les français, 1 9 1 4 1920 (1973). 2 JO , C ham bre débats, Dec. 15, 1915, p. 2136. 3 Jèze and Truchy, W ar Finance, p. 192. 4 Useful studies of Thomas's ideas are: Madeleine Rebérioux and Patrick Fridenson, "Albert Thomas pivot du réformisme français," Le M o u v e m e n t social, no. 87 (A pr.June 1974), pp. 85-97; and Martin Fine, 'T ow ard Corporatism: The Movement for Capital-Labor Collaboration in France, 1914-1936" (thesis. University of Wisconsin, 1971). John Godfrey ("Bureaucracy, Industry, and Politics in France during the First World War" [thesis, Oxford University, 1974]) assessed Thomas's wartime career fairly but critically. The way Thomas mixed socialist ideas with his responsibilities as armaments minister is examined by Alain Hennebicque, "Albert Thomas et le régime des usines de guerre, 1915-1917," in 1 9 14-1918: l'a u tre fr o n t, ed. Patrick Fridenson, Cahiers du Mouvement social, no. 2 (1977), pp. 111-44. An unsym pa­ thetic appraisal of this topic appears in the same volume: Gerd Hardach, "La Mobilisation industrielle en 1914-1918: production, planification, et idéologie," ibid., pp. 81-109. Two older studies are: Bertus W. Schaper, A lb ert Thom a s, tren te a n s de réform ism e social (Assen, 1959); and Guy de Lusignan, "Albert Thomas et la justice sociale," L 'A ctu a lité de l'h isto ire, no. 24 (July-Aug. 1958): 2-18. Thomas's papers are in the Archives Nationales and classified as 94AP. 5 La R e v u e syndicaliste, Oct. 1907, quoted in Rebérioux and Fridenson, "Albert Thomas," p. 88. 6 Jean-Michel Chevrier, "Le Rôle de Loucheur dans l'économie de guerre, 1914-1918" (memoir, Université de Paris X-Nanterre, 1972), pp. 26-34. Among the Normaliens in Thomas's cabinet were: François Simiand, Mario Roques, William Oualid, Hubert Bourgin, and Maurice Halbwachs. 286

Notes to pp. 3 5 -4 0 7 Hennebicque, "Albert Thomas," pp. 115-17.

8 Godfrey, ''Bureaucracy, Industry, and Politics," pp. 239-64. 9 See his declaration in "Proposition de loi tendant à modifier les lois du 1er juillet 1916 et du 31 décembre 1917 sur les bénéfices de guerre" (AN 94AP 366). 10 Speech to Renault workers, Nov. 25, 1917 (AN 94AP 238). 11 Speech, Sept. 1, 1917, quoted in Rebérioux and Fridenson, "Albert Thomas," pp. 90-1. 12 William Oualid and Charles Picquenard, Salaires e t tarifs , conven tio n s collectives, et grèves (Paris and New Haven, 1928), pp. 441-55. For an illustration of how shop delegates became a source of agitation in a war plant, see: Gilbert Hatry, "Les Délégués d'atelier aux usines Renault," in Fridenson, 1 9 1 4 -1 9 1 8 , pp. 221-35; and Hatry's book, R e n a u lt, u sin e de g u erre (1978). 13 Godfrey, "Bureaucracy, Industry, and Politics," pp. 308-44; Hennebicque, "Albert Thomas," pp. 138-40; C.-J. Gignoux, V A r s e n a l de R o a n n e e t l'é ta t in d u striel de g u erre (Lyon, 1920). 14 His epic called V ercingétorix was set to music and later performed at the Paris Opera. Scattered among his papers, which are housed in the Archives départementales du Puy-de-Dôme (Clermont-Ferrand), are studies of the Celtic soul and the moral and social ideas of Ibsen. Some information on his youth can be found in the memorial volume published after his retirement from politics: E tien n e C lém en tel (1932), pp. i9ff. 15 Etienne Clémentel, "Budget pour tous," La G rande R e vu e, Feb. 1904, pp. 3-38. 16 Clémentel, U n D ra m e économ ique: les délim ita tio n s, le passé, l'a v en ir (1914). 17 AN F 12 8039, 8041. The economic blockade is explained by Marjorie M. Farrar, C o n flict a n d C om prom ise: T h e S tra te g y, P olitics, an d D iplom acy o f th e French Blockade, 1 9 1 4 -1 9 1 8 (The Hague, 1974). 18 The labor ministry created mixed labor commissions at the departmental level, and the war ministry instituted regional Comités Consultatifs d'Action Economique. These latter committees, organized according to military districts, grouped local officials together with business and farm representatives. Prefects and war ministry officials, however, dominated their operation. Efforts by military authorities to in­ itiate long-range projects and modify the economic status quo were not welcomed by local interests. See Henry Peiter, "Men of Good Will: French Businessmen and the First World War" (thesis. University of Michigan, 1973), pp. 62-5, 73-4,122-36, i96ff.; Antoine Scheikevitch, "Les Comités Consultatifs d'Action Economique pen­ dant la guerre de 1914-1918," R e v u e politique et parlem entaire 137 (Oct. 1928): 114-33. These committees were absorbed in Clémentel's regional reorganization scheme of 1919. 19 L 'E xp a n sio n économ ique, June 1917, pp. 65-78,107. Quotes in this paragraph are from this speech. The ANEE adopted resolutions that supported Clémentel in principle but masked their differences (ibid., pp. 86-119); e.g., the association sidestepped the • issue of the state's role in encouraging economic expansion and organization. 20 Clémentel's explanation of the origin of import controls is in his address to the Budget Commission of the Chamber, May 17,1918 (AN F 12 7662); hereafter dted as Budget Commission, 1918. The best studies of the consortiums are: Bernard Plutino, "Un Aspect de l'intervention de l'état dans le secteur privé pendant la guerre de 1914-1918: les consortiums" (memoir. Université de Paris X-Nanterre, 1969); J. Manteilhet, "Vers une Economie nationale: le régime des consortiums" (n.d.), in the Clémentel papers; F. Bassetti, Les C o n so rtiu m s, étudiés spécialem ent au p o in t de v u e de leu r d éveloppem ent en France p e n d a n t la g u erre (1919); and Godfrey, "Bureaucracy, Industry, and Politics," pp. 107-68.

287

Notes to pp. 41-44 21 Because materials were allocated on prewar import figures or on existing capacity, there was a bias toward the status quo. 22 Plutino, "Un Aspect de l'intervention de l'é ta t/' pp. 69-85; Basse tti, Les C o n so r­ tiu m s , pp. 63-92. 23 Blazeix, the head of technical services, quoted in Lucien Romier, R a p p o rt s u r les co n so rtiu m s (1918), p. 11. 24 Note from the Chef de la section du contentieux et du contrôle to the Directeur du service de l'information économique, Apr. 5,1918 (AN F 12 7662). 25 Budget Commission, 1918. 26 Le T em p s, June 21, 1918. 27 L 'E xp a n sio n économ ique, June-July 1918, p. 11. 28 JO , C ha m bre débats, June 28,1918, pp. 1833-44,1849-51. 29 Le T em p s, Sept. 12, 1918. 30 La Journée industrielle, Aug. 6, 1918. 31 Budget Commission, 1918. 32 A detailed statement of the ministry's views is the "Rapport à M. le Ministre sur le régime économique de la France" written by Blazeix, Feb. 20,1917 (AN F 12 7995). 33 Speech to a congress of civil engineers in 1919 (AN F 12 7657). The commerce de­ partm ent "documented" Germany's intent to dominate the world economy in its circular, "Tableau des conditions économiques de la paix allemande," Sept. 1918 (AN F 12 7985). A book that popularized this view, going through seven editions by 1917, was Henri Hauser, Les M éth o d es allem andes d'exp a n sio n économ ique (1915). 34 Clémentel called the raw materials of the Allies their "trum p card" over Germany (Budget Commission, 1918). 35 Blazeix proposed to accomplish this by summoning an "Estates General" where public officials and representatives of economic interests would meet in corporatist commissions to perform tasks like drafting legislation and creating new private enterprises ("Rapport," Feb. 20, 1917). 36 Clémentel to Guillet, n.d. (AN F 12 7657). The commerce department completed its industrial survey in March 1919: Ministère du commerce. R a p p o rt général s u r l'in d u s ­ trie française, sa situ a tio n , son a v en ir d'après les tra va u x des sections d u C o m ité C o n su lta tif des A r ts et M a n u fa c tu re s e t de la D irection des études techniques, 3 vols. (1919). The

records of the hearings for this report are to be found in AN F 12 8045. In a letter presenting the inventory to Clemenceau, the minister of commerce cogently sum ­ marized his plan for postwar recovery. What France needed, according to Clémen­ tel, in order to increase productivity and improve its trade balance was a m odem manufacturing plant based on the latest technology, standardized models, mass production. Taylorism, joint scientific and industrial research facilities, and bold entrepreneurs. He also called "collective initiative. . . a superior form of private initiative" and advised industry to transfer its competitive spirit from the internal market to the global contest for resources and markets. Clémentel recommended remodeling the commerce department so that it could "orient the country's activity" and proposed a "general plan" for the economy. Quotes in this note are from vol. 1, pp. 534-9/ of this report. 37 Clémentel to Loucheur, Feb. 9,1918 (AN F 12 8029); Ministère du commerce. P ro jet de réorganisation des services d u M in istè r e d u com m erce e t de l'in d u s trie (1917), p. 93. The commerce department and the war department proposed creating a National Dyes Company by turning over sequestered German chemical plants to a French syndi­ cate. This combine could compete with German firms and provide the capacity for producing explosives. But in October 1918 the project was scaled down; it lost its production functions and became simply a purchasing and sales agent for the 288

Notes to pp. 4 4 -4 8 dyes industry under government supervision. In 1919 it shrank even further, end­ ing up as a private sales comptoir (Godfrey, "Bureaucracy, Industry, and Poli­ tics," pp. 186-213). 38 The ministry also extended its overseas network of commercial attachés, and Clémentel personally persuaded a group of businessmen and bankers to form a new export bank. This Banque Nationale du Commerce Extérieur received a state sub­ sidy but remained a private venture. See L 'O e u v r e d 'u tt m in is tre d u g o u v ern e m en t de défense nationale, 79/5-/979 (1919), pp. 31-2. 39 Fighiera, in his "Note pour M. le Ministre," Feb. 21,1918 (AN F 12 7657). 40 Budget Commission, 1918. 41 Blazeix, "Rapport," Feb. 20,1917. 42 An extreme example of the ministry's corporatist mood was a memorandum drafted in 1917 entitled "Note sur l'organisation de la production" (AN F 12 8040). The premise of this proposal was that scarcity of raw materials and labor had deformed liberalism's hallowed principle of supply and demand. The answer was a hierarchi­ cal system built on the consortium's monopoly of raw materials. The author de­ scribed his scheme as a veritable "constitution" for the economy; the "pillars" of the edifice were consortiums and raw material committees staffed by representatives of the administration, industry, commerce, and labor; its "capitals" were supervisory raw material committees and auxiliary services; and its "roof" was a grand commit­ tee for national production. The whole corporatist structure rested on the "soil" of democracy. 43 For the economic regions project, see: Ministère du commerce, P rojet de d ivisio n de la France en régions économ iques (1917) in AN F 12 8037; also materials in AN F 12 7657, 7886; and G ém entel's presentation in JO , C ham bre débats, Oct. 18,1918, pp. 2735-40. A complete history is Henri Hauser, Le Problèm e d u régionalism e (1924). 44 The regional groups, which absorbed the rival Comités Consultatifs d'Action Economique in 1919, had authority to operate shops, warehouses, and commercial schools; publish regional reviews; organize exhibitions; and administer certain pub­ lic services. Their funds came from taxes on Chamber of Commerce membership. 45 Ministère du commerce. P rojet de réorganisation. This proposal contained most of the departm ent's reconstruction plans including expansion of services for overseas trade, national science and engineering laboratories, extension of technical educa­ tion, etc. Early drafts of this project employed the term "Ministère de l'economie nationale" (AN F 12 8037). 46 Ministère du commerce. P rojet de réorganisation, p. 1. 47 Ibid., p. ii. 48 For Clémentel's own account, see his La France e t la p olitique économ ique interalliée (1931). A probing analysis of his policy with respect to reassessing the reparation question is Marc Trachtenberg, Reparation in W orld Politics: France a n d European Eco­ n o m ic D iplom acy, 1 9 1 6 -1 9 2 3 (1980), pp. 1-27. 49 G ém entel to Wilson, Oct. 6,1917 (Gémentel papers 42). 50 Jean Monnet describes his activities in London, his rapport with Gém entel, and his differences with Loucheur in his M ém oires (1976), pp. 59-89. 51 Speech to the Qiam bre Syndicale de la Bijouterie et de l'Orfèvrerie de Paris, May 15, 1917 (Gém entel papers 29). 52 It is a pity Loucheur has not found his biographer. In part this is due to the incompleteness of his papers, which are housed at the Hoover Institution. Jacques de Launay published an edition of his papers, L ouis Loucheur: carnets secrets, 1 9 0 8 1932 (Brussels and Paris, 1962). Jean-Michel G ievrier utilized armament ministry archives for his study, "Le Rôle de Loucheur."

289

Notes to pp. 49-54 53 Loucheur papers, box 12, folder 10. Launay reproduced most of this material, L ouis L o u ch eu r, pp. 21-48. 54 Among others his chef de cabinet, Xavier Loisy, and the heads of his technical services, Ernest Mercier and Albert Petsche, were all polytechnidans (Chevrier, "Le Rôle de Loucheur," pp. 26-34). 55 Launay, L ouis Loucheur, pp. 45-6. 56 Chevrier, "Le Rôle de Loucheur," pp. 47-71, 89-96. 57 B u lletin des u sines de guerre, Aug. 27,1917. 58 The commerce department proposal is P rojet de rapport à M . le P résid en t de la R é p u b ­ lique (AN F 12 7657). The letters between Clemenceau and President Poincaré defin­ ing the powers of the Ministry of Industrial Reconstruction were published in the B u lletin des u sines de guerre, Dec. 2, 1918. It is not dear whether or not Qém entel wanted the post himself. He probably preferred retaining his ministry and running the inter-Allied network, but when this arrangement disappeared he was left al­ most* powerless. 59 Béziers Chamber, Feb. 11,1919. These petitions are in AN F 12 8043. 60 Quotes in this paragraph from Romier, R apport, pp. 10-14. Romier's career is de­ scribed by Christine Roussel, Lucien R o m ier (1979). 61 JO , C ham bre débats, July 23,1919, p. 3630. 62 Loucheur to president of the Syndicat des Industriels Français, reprinted in La Journée in dustrielle, Jan. 26-27, 1919. 63 Loucheur to president of the Conseil Général de la Seine, Dec. 1918 (AN F 12 8043). 64 Commerce officials drafted their response to the Chambers of Commerce, which had demanded decontrol on the basis of Loucheur's directives (Fighiera to Merlot, Jan. 15, 1919 [AN F 12 8043]). 65 Henri Flu, Les C om ptoirs m étallurgiques d'après-guerre, 1919 -1 9 2 2 (Lyon, 1924), pp. 51-9; JO , C ham bre débats, Jan. 24, 31, 1919, pp. 204-20, 340-57; Robert Pinot, Le C o m ité des Forges au service de la nation (1919), pp. 219-26. A major issue in this attack on the Comité des Forges was its alleged influence in preventing the High Com­ mand from bombarding factories and mines in Lorraine that had fallen into German hands, i.e., the Briey incident. The best account of this affair is Jean-Noël Jeanneney, François de W endel en république: l'a rg en t et le p ouvoir, 1 9 1 4 -1 9 4 0 (1976), pp. 67-107. 66 Clémentel to Clemenceau, Sept. 19,1918. Copies of this letter can be found in AN F 12 8029 and in Clémentel papers 42. The best study of Clémentel's policy toward the Allies is Trachtenberg, Reparation in W orld Politics. 67 Quoted by Trachtenberg, Reparation in W orld Politics, p. 23. Also see Michael Hogan, "The United States and the Problem of International Economic Control: American Attitudes toward European Reconstruction, 1918-1920," Pacific H istorical R e v ie w 44 (Feb. 1975): 84-103. 68 Plutino, "Un Aspect de l'intervention de l'état," p. 84. 69 Clémentel papers 2. 70 One exception was the president of the Fédération des Industriels et des Commer­ çants, André Lebon, who backed Clémentel's program ( L 'E conom ie n ouvelle, Mar. 1919). 71 B u lletin m ensuel du com merce, de l'in d u strie , et de l'a g ricu ltu re, Apr.-June 1919, pp. 10-15. 72 L 'E xp a n sio n économ ique, July 1919, p. 5. 73 Address to a delegation of British industrialists (ibid.. Mar. 1919, pp. 7-8). 74 JO , C ha m bre débats, Feb. 14,1919, p. 646. 75 Meeting of the Conseil Economique, May 1, 1919 (AN F 12 7657). 290

Notes to pp. 5 4 -6 0 76 Loucheur-Clémentel correspondence, Feb.-Mar. 1918 (AN F 12 8028, 8029). 77 Thomas's staff kept a careful record of Loucheur's declarations on the war plants issue (AN 94AP 367). 78 "Proposition de loi tendant à l'autonomie financière et industrielle des établisse­ m ents de l'état," Apr. 1919 (AN 94AP 367). Thomas also proposed nationalizing the railroads in 1919 by a simple repurchase arrangement, without indicating, however, just how they were to be reorganized (AN 94AP 366). 79 "Proposition de lo i. . . établissements de l'état." 80 Clémentel to presidents of employers' associations, Dec. 1918 (AN F 12 7657). 81 René Duchemin, O rganisation syndicale patronale en France (1940), pp. 46-7. 82 La Journée industrielle, Jan. 17, 1919. 83. André François-Poncet, La V ie et l'oeuvre de Robert P in o t (1927), pp. 260-3. 84 La Journée industrielle, May 5, 1923. 85 Law of Apr. 10, 1919. 86 Clémentel returned to Riom after his defeat in order to reestablish his political base. He had neglected his constituency while serving in wartime cabinets. In January 1920 he recovered his support and successfully ran for the Senate (Clémentel papers 53)87 My assessment contrasts with that of Henry Peiter ("Men of Good Will") who attributes selfless motives and tends to exaggerate the eagerness of businessmen to collaborate with the state. As a result Peiter is hard-pressed to explain what he regards as a reversal of attitudes in 1919 when business abandoned its wartime partnership. Godfrey ("Bureaucracy, Industry, and Politics") takes a harsher line and argues that industrialists tried to take advantage of the war to substitute them­ selves for German exporters and to build new capacity, exploit shortages, and maximize profits at the expense of taxpayers and consumers. Bureaucrats and, to a lesser extent, politicians tried to curb their greed and channel their energies. Both of these interpretations of business behavior are extreme and need qualification. Chapter 3. The twenties: "normalcy" or modernity? 1 Léon Guillet, Clémentel's former technical advisor, and Jean Durand drew such lessons in L 'In d u s tr ie française: l'œ u v r e d 'h ie r, l'effort de dem ain (1920). Louis de Launay, a professor at the Ecole des Mines, wrote Q u a lités à acquérir (1918). The engineer Victor Cambon exhorted the French in many publications such as N o tre A v e n ir (1916) and O ù a llons-nous? (1918). André Lebon, the head of an employers' association, did likewise in Problèm es économ iques nés de la g u erre (1918). And Edouard Herriot in his book Créer, 2 vols. (1919), called for a comprehensive recon­ struction of France that included honoring the "laws of industry," i.e.. Taylorism, producers' ententes, and institutionalized scientific research. Yet this future head of the Radical Party qualified his enthusiasm for industry: "That a brutal and arrogant Germany seeks its future at the forges, wants to increase the importance of metallurgy, is a fact that we must take account. But France is, above all, a land: it cannot deny this without compromising its future and sacrificing all its history. I would gladly ascribe a rose and a sheaf of wheat for its emblem" (1: 371). 2 One of these publicists tried to build a political party around a productivist appeal. In 1918-19 the businessman turned journalist Eugène Letailleur, whose pseudonym was "Lysis," launched a campaign for a "new democracy." Letailleur believed that France could overcome class warfare and catch up with industrial leaders by encouraging science, technology, and cartels and by erecting a hierar­ chy of disciplined personnel in the factory. In the "new democracy" the beaux 291

Notes to pp. 60-64 of parliament would be replaced by representatives of economic interests. Letailleur refused to enroll in the right-wing electoral bloc and entered the 1919 elections alone. With this nonpartisan stance his party won no seats and quickly disappeared. The program of his new politics appears in P o u r renaître (1917); V ers la D ém ocratie no uvelle (1917); and D em ain: profession de fo i de la dém ocratie n o u velle (1919). 3 Bernard Georges and Denise Tintant, Léon Jo u h a u x, c in q u a n te an s de syn d ica lism e, 2 vols. (1962-79), 1: 65-101; Michael Deluda, "The Remaking of French Syndicalism, 1911-1918: The Growth of the Reformist Philosophy" (thesis, Boston University, 1971). 4 As part of this response to Loucheur, the CGT newspaper La Bataille (Mar. 28,1919) also called for "the complete reorganization of the country's industry and agricul­ ture according to the most modem principles and most productivist methods" and echoed the grand schemes of the Saint-Simonians for rebuilding the economy's infrastructure. 5 La Bataille, Mar. 2, 1919. 6 Text of the "minimum program" can be found in Georges and Tintant, Léon J o u h a u x, 1: 461-6. Also Léon Jouhaux, Le S y n d ica lism e e t la C G T (1920). 7 The story of the labor movement's bid for nationalization and an economic council can be traced through police reports on the CGT (AN F 713576) and the issues of La B ataille from Dec. 1918 to Sept. 1919. 8 La Bataille, Mar. 2,1919. 9 Quoted in Georges and Tintant, Léon Jo u h a u x, 1: 327. 10 For comparative studies of postwar reconstruction and decontrol, see: Charles S. Maier, R ecasting Bourgeois E urope (Princeton, 1975); Susan Armitage, T h e P olitics o f D econtrol: B ritain an d th e U n ite d States (London, 1969); Paul B. Johnson, L a n d F it fo r H eroes: T h e P la n n in g o f B ritish R econstruction, 79/6-79/9 (Chicago, 1968); Ellis Haw­ ley, "The New Corporatism and the Liberal Democracies, 1918-1925" (1977), and "Herbert Hoover, the Commerce Secretariat, and the Vision of an Associative State," Journal o f A m erica n H is to ry 61 Qune 1974): 116-40; Gerald D. Feldman, "Eco­ nomic and Social Problems of the German Demobilization," Journal o f M o d e m H is to ry 47,1 (Mar. 1975): 1-47. 11 L 'E xp a n sio n économ ique, Jan. 1920, pp. 46-8. 12 From Dior's speech to the Senate, Nov. 8,1921 (AN F 12 8191). 13 La Journée in d u strielle, Nov. 9, 1921, Jan. 17,1922. 14 Daniel Serruys was the official in charge of commercial agreements through the 1920s. For his role, see Jean Serruys, D e Colbert au m arché c o m m u n (1970), pp. 277-94- General treatments of postwar commercial policy are: Anita Hirsch's es­ say, in Alfred Sauvy, H isto ire économ ique de la France en tre les d e u x guerres (1965-75), 4: 12-26; and Frank A. Haight, A H is to ry o f F rench C om m ercial Policies (1941), pp. 101-38. 15 André Lebon, quoted in Stéphane Rials, A d m in istr a tio n e t organisatio n , 1 9 1 0 -1 9 3 0 (1977), p. 83. Among the literature of this genre are: R. Carnot, L 'E ta tism e in d u striel (1920); Adolphe Delemer, Le B ilan de l'é ta tism e (1922); Albert Schatz, L 'E n tre p rise g o u vern em en ta le et son a d m in istra tio n (1922). 16 Delemer, Le Bilan de l'éta tism e, p. 224. 17 René Favareille, R éform e a d m in istra tive par l'a u to n o m ie e t la responsabilité des fo n c tio n s (1919)/ P- 5018 Riais, A d m in istr a tio n e t organisation, pp. 117-31. Henri Chardon's works of this period cire L 'O rg a n isa tio n d 'u n e dém ocratie (1921) and L 'O rg a n isa tio n de la république p o u r la p a ix (1926). 19 Henri Fayol, L'Incapacité in d u strielle de l'état: les P .T .T . (1921). parleurs

292

Notes to pp.

6 j -7 /

20 Quoted by Marguerite Perrot,

La M o n n a ie et l'opinion publique eri France et en

A n g le te r re de 1924 à 1936 (1953), p. 181. Riais, A d m in istr a tio n e t organisation, pp.

21 171-222. 22 Correspondence of finance ministers François-Marsal, Paul Doumer, and Charles de Lasteyrie for 1920-3 (AN F 3 0 2387-92). 23 In the late twenties the Association Française de Normalisation employed one engineer compared with fourteen on the staff of its German counterpart ("Note sur la Commission Permanente de Standardisation," Feb. 1, 1930, Clémentel papers 42). 24 Georges Platon, L 'E ta t actionnaire e t a d m in istra teu r de sociétés (Marseille, 1925). Mixed companies were ambiguous; they could be viewed either as a way of disen­ cumbering the state or as the opening wedge of étatisme. 25 Government records for the founding of the CFP can be consulted at the Ministry of Finance in the series F 3 01402-9. André Nouschi used company archives to write "L'Etat français et les pétroliers anglo-saxons: la naissance de la Cie. Française des Pétroles, 1923-1924," R elations internationales, no. 7 (1976), pp. 241-59. For surveys of the company and French petroleum policy, see: Richard F. Kuisel, E rn est M e r ­ cier: French T echnocrat (Berkeley and Los Angeles, 1967), pp. 21-44; Jean Rondot, La C o m p a g n ie Française des Pétroles (1962); Edgar Faure, La P olitique française d u pétrole (1938). 26 Documents in AN F 3 01402: correspondence between Briand and Doumer, Oct. 29, 1921, and Jan. 12, 1922; "Note pour le ministre," Feb. 1, 1922; de Lasteyrie to Poincaré, Apr. 10, 1922. 27 Dior to Poincaré, Mar. 7, 1924 (AN F 3 0 1403). 28 Kimon Doukas, T h e French R a ilw a ys a n d th e S ta te (1945), pp. 115-76. 29 The only years the railroads collectively showed an operating surplus were 1926 and 1928-9, and once the depression came losses were continuous. Competition from the trucking industry, a growing fixed debt, high operating costs especially for labor, and poor coordination accounted for these deficits. Cf. François Caron, H isto ire de l'e xploitation d 'u n g ra n d réseau, la C om pagnie de C h em in de Fer d u N o rd , 1 8 4 6 -1 9 3 7 (Paris and The Hague, 1973), pp. 443-508.

30 My account of rebuilding the northeast depends heavily on Thomas Grabau, "In­ dustrial Reconstruction in France after World War I" (thesis, Indiana University, 1976). Also see: F. Bidaux, Le R ôle de l'é ta t e t l'in itia tiv e privée dans la reconstruction des régions dévastées (1922); William MacDonald, R eco n stru ctio n in France (1922). We may never know the full story of this episode because the essential ministerial records seem to be missing. 31 Ogier to François-Marsal, Nov. 5,1920 (AN F 3 0 2389). 32 Grabau, "Industrial Reconstruction," pp. 147-50. 33 Ministry of Pensions and Liberated Regions, R econstitution de la France dévas­ tée," Mar. 31, 1932 (AN 324AP 62). 34 William F. Ogbum and William Jaffé, T h e Econom ic D evelo p m en t o f P o stw a r France (1929), pp. 156-81. 35 The literature on public finance in the twenties is voluminous; for a bibliography, see Sauvy, H isto ire économ ique, 4: 242-55, 267-70. Useful surveys are: Robert M. Haig, T h e P ublic Finances o f P o stw a r France (1929); Eleanor Dulles, T h e French Franc, 1 9 1 4 -1 9 2 8 (1929); James H. Rogers, T h e Process o f In fla tio n in France, 1 9 1 4 -1 9 2 7 (1929); Raymond Philippe, Le D ram e fin a n c ie r de 1924 à 1928 (1931); Sauvy, H isto ire économ ique, 1: 39-99; Martin Wolfe, T h e French Franc betw een th e W ars, 1 9 1 9 -1 9 3 9 (1951); Edouard Bonnefous, H isto ire p olitique de la T roisièm e R épubliq u e (1956-67), vols. 3, 4. 293

Notes to pp. 72 - 7 5 36 Haig, P u blic Finances, pp. 71-2. 37 An analysis of the 1924 predicament for France both internally and externally is Stephen A. Schuker, T h e E n d o f French Predom inance in Europe (Chapel Hill, N.C., 1976). 38 Business opinion about public finance can be ascertained in some detail through finance ministry records (AN F 3 0 2176-7). 39 Quoted by Schuker, E n d o f F rench P redom inance, p. 83. 40 In May-June 1926 the government and the Bank of France fought bitterly over intervening on the open market in order to break speculation against the franc as had been done successfully in 1924. Finance Minister Raoul Péret wanted to use the $89 million balance of the 1924 Morgan loan, and he pleaded with Robineau, the bank's governor, to let him use the bank's gold as collateral in order to negotiate another American loan. W ithout more generous funds, Péret reasoned, intervention would be ineffective. Robineau forced concessions from the govern­ ment over general financial policy and allowed the panic to spread before acquiesc­ ing on the Morgan money. But he refused adamantly to permit use of the bank's gold reserves from fear of jeopardizing the chances of the franc's recovering its stability. The bank defied the government; intervention failed; Péret resigned; and so did the cabinet. This confrontation is recorded in the correspondence between Péret and Robineau, May 5-June 10, 1926 (AN F 30 2350). 41 R a p p o rt du C om ité des E xperts: décret du 31 m ai 1926 (1926). The recommendations of this committee were so conservative that the communists were moved to proclaim, "the experts have declared war on the proletariat" (L 'H u m a n ité , July 5,1926). 42 The debate over stabilization is explained by: Emile Moreau, S o u v en irs d 'u n g o u v e r ­ n e u r de la B anque de France (1954); Gregory C. Schmid, "The Politics of Currency Stabilization: The French Franc, 1926," Journal o f European Econom ic H is to ry 3,2 (Fall 1974): 359-77; François Bobrie and Pierre Gaston, "L'Opinion et les groupes de pression face à la politique financière et monétaire de Poincaré, 1926-1928" (memoir. Université de Paris VÜI-Vincennes, 1970); Jean-Noël Jeanneney, François de W endel en république: l'a rg en t e t le p ouvoir, 1 9 1 4 -1 9 4 0 (1976), pp. 321-409. Views of Treasury officials and the Bank of France for 1928 appear in AN F 3 0 2353. 43 Regents who represented industry such as Cordier, the head of Péchiney, Gillet, the silk manufacturer, and Laedrich pressed for stabilization (Bobrie and Gaston, "L'Opinion," pp. 156-67). The regent François de Wendel was a maverick among industrialists; he favored revaluation, mainly to protect savings, contrary to the wishes of his own managers (Jeanneney, Françpis de W endel, pp. 342-3, 393-4, 406-9). Industry reportedly favored stabilization whereas bankers, regents aside, especially those who were the state's creditors, preferred a reflated currency, though they eventually accepted stabilization. Small business was of two minds. A typical reaction was that of the Société pour la Défense du Commerce et de l'Indus­ trie de Marseille, which expressed a preference for gradual revaluation to aid creditors yet noted that many businessmen wanted stabilization in order to stimu­ late the economy (AN F 30 2177). Charles S. Maier (R eca stin g Bourgeois Europe pp. 494-510) argues that a rather bewildered bourgeoisie had difficulty in choosing between guarding their interests as savers or as producers. 44 France had renounced convertibility to gold in August 1914 but had nominally retained the exchange rate of the fra n c g erm in a l until 1928. 45 Moreau, S o u ven irs d 'u n g o u v ern e u r, p. 584. 46 Sauvy, H istoire économ ique, 1: 99. 47 The Bank of France argued that the gold exchange standard whereby foreign exchange (d evises) had been utilized since 1926 to regulate parity invited global 294

Notes to pp. 76-81 credit inflation. The true gold standard, in contrast, warded off this danger and restored "national independence - political, financial, and economic" ("Méthodes propres à assurer la stabilité du franc," June 1928, AN F 30 2353). 48 Instead of relying on the quatre vieilles and indirect taxes, the postwar system generated a large share of revenue from the income tax and the turnover tax as well as from a wider range of indirect taxes. 49 Among these issues were: the growth of bureaucracy; the imperative of technol­ ogy; the managerial revolution; the end of ideology; and economic planning (John M. Sherwood, 'Technocracy in Postwar France: The History of an Idea" [1978]). The term has nothing to do with the technocracy movement of the 1930s in the United States. 50 A few general treatments of the movement in France are: P. Bourgoin, "La Rationalisation," R e v u e de France, no. 22 (Nov. 15, 1929), pp. 269-94; André Fourgeaud, La R ationalisation (1929); Max Namy, R ationalisation e t organisation scien ­ tifiq u e de la production (1931); Charles Roy, La F orm ule allem ande de prod u ctio n ration­ nelle dans l'in d u s trie (1929). Two case studies are: Odette Hardy-Hémery, "Ra­ tionalisation technique et rationalisation du travail à la Compagnie des Mines d'Anzin, 1927-1938," Le M o u v e m e n t social, no. 72 (July-Sept. 1970), pp. 3-48; John M. Sherwood, "Rationalization and Railway Workers in France: Raoul Dautry and Les Chemins de Fer de l'Est, 1928-1937," Journal o f C ontem porary H isto ry , (July 15, 1980): 443-74. For comparison, there is Robert A. Brady, T h e R ationalization M o v e ­ m e n t in G erm an In d u s tr y (Berkeley, 1933). It was industrial concentration in Ger­ many that gave rise to the term "rationalization." Julius Hirsch, a friend of Rathenau and an official at Weimar's ministry of production, instructed French business on the German approach in his lecture. La R ationalisation de la prod u ctio n (1927). There is another large body of literature on "scientific management" or Taylorism in France. See, e.g., the writings of Henry Le Chatelier, Charles de Fréminville, and Jean-M. Lahy. François Le Chatelier has written a biography of his father (H e n ry Le C hatelier [1969]), and there is a bibliography in Paul Devinât, S cien tific M a n a g e m e n t in Europe, International Labor Office (Geneva, 1927). 51 Georges Lefranc, "Les Origines de l'idée de nationalisation industrialisée en France, 1919-1920," Essais s u r les problèm es socialistes e t s y n d ic a u x (1970), pp. 109-25. 52 CGT, La N ationalisation industrialisée, les raisons, la nécessité de sa réalisation (1920). 53 Ibid., p. 6. 54 Ibid., p. 13. 55 Parti socialiste, SFIO, P rogra m m e électoral. . . projet du congrès national extraordinaire des 20, 21, et 22 a vril 1919 (1919). 56 Tony Judt, La R econstruction d u p a rti socialiste, 1 9 2 1 -1 9 2 6 (1976), pp. 105-7. 57 "Le Conseil Economique du Travail," La Bataille, Nov. 4, 1919. Material on the council can also be found in AN 94AP 366. 58 Maxime Leroy, Les Techniques nouvelles d u syn d ica lism e (1921), p. 207. 59 Sammy Beracha, R ationalisation et révolution (1930); Charles Albert, L 'E ta t m oderne (1929); André Fourgeaud, D u C ode in d ivid u a liste au d ro it syndical (1929); Leroy, T ech­ niq u es n o uvelles; the articles in L 'A v e n ir de la république (1927). 60 Quoted by René Pinon, "Les Nouvelles Conceptions de l'état," R e v u e économ ique in tern a tio nale, Oct. 1929, p. 11. 61 Georges Valois, L'E conom ie n ouvelle (1919); also his La R é vo lu tio n nationale (1924). 62 Quoted by Yves Guchet, "Georges Valois ou l'illusion fasciste," R e v u e française de science po litique 15 (Dec. 1965): 1134. Also see: Jules Levey, "Georges Valois and the Faisceau," French H istorical S tu d ie s 8, 2 (Fall 1973): 279-304; Klaus-Jürgen Müller, "French Fascism and Modernization," Journal o f C ontem porary H is to ry 11, 4 (1976):

295

Notes to pp. 8 1 -84 75-107. The technocratic elements of early Italian fascism are discussed by Roland Sarti, "Fascist Modernization in Italy: Traditional or Revolutionary?" A m erica n H istorical R e v ie w 75, 4 (Apr. 1970): 1029-45. 63 Zeev Sternhell, "Anatomie d'un mouvement fasciste en France, le Faisceau de Georges Valois," R e v u e fra n g iise de science politique 26 (Feb. 1976): 35. 64 He wrote books; edited monographs under the auspices of the Librairie Valois, most notably the C ahiers bleus (1928-32) and the C h a n tiers coopératifs (1932-4); and published a journal, the N o u v e l A g e (1934-40). Valois wrote about his career in L 'H o m m e contre l'a rg en t: so u ven irs de d ix ans, 1 9 1 8 -1 9 2 8 (1928). 65 Valois, U n N o u v e l A g e de l'h u m a n ité (1929), p. 150. 66 Ibid., p. 119. 67 Edouard Daladier, Pierre Mendès-France, Pierre Cot, Emile Roche, and Jacques Kayser (Mildred Schlesinger, "The Development of the Radical Party in the Third Republic: The New Radical Movement, 1926-1932," Journal o f M o d e m H is to ry 46, 3 [Sept. 1974]: 493-6)68 Bertrand de Jouvenel, L 'E conom ie dirigée: le p rogram m e de la nouvelle gén éra tio n (1928). De Jouvenel's autobiography is U n V oyageur dans le siècle, 19 0 3 -1 9 4 5 (1980). 69 Other Radicals expressed the same ambiguity. Thus La R épublique (Oct. 28,1928) declared that rationalization not only enhanced productivity but also effectively defended "merchants, independent producers, and small industries against large enterprise" (quoted by Gil C. Alroy, "Radicalism and Modernization: The French Problem" [thesis, Princeton University, 1962], chap. 8, p. 26). 70 Among those who sought a professional economic council besides the CGT were the technicians' and intellectuals' trade unions, the Catholic trade union federation (CFTC), the regionalists, and the cooperative movement. Major studies are: Georges Dubost, Le C onseil N a tio n a l Econom ique (1936); Yves Tedeschi, Le C onseil N a tio n a l Econom ique et l'organ isation de la production en France (1927); David A. Ro­ gers, "The Campaign for the French National Economie Council, 1918-1925" (the­ sis, University of Wisconsin, 1957). The intellectual history of professional repre­ sentation is traced by Jean-Phüippe Parrot, La R eprésentation des in térêts d a n s le m o u v e m e n t des idées politiques (1974). 71 If the council adopted a resolution by a two-thirds majority, it submitted the proposed to the premier who had either to inform the council of what action he had taken or to return it for a second vote. 72 CGT, "Rapport sur les problèmes de la production et la classe ouvrière," A telie r, Oct., Nov. 1926; CGT, Congrès national corporatif. C o m p te ren d u , 1927, pp. 205-6. Hyacinthe Dubreuil, a CGT official, worked on Ford's assembly line in order to assess "Fordism" in his popular book. Standards: le travail am éricain v u p a r u n o u vrier français (1929). 73 Georges Lefranc, Le M o u v e m e n t syndical sous la Troisièm e R épubliqu e (1967), pp.

275-6. 74 Jules Moch,

(Brussels, 1927). Also see Blum's articles in between Apr. 23 and May 10, 1927. Besides Moch, André Philip, Charles Spinasse, and Barthélémy Montagnon also supported rationalization de­ spite the opposition of more orthodox Marxists within the party (Jean Charles, "SFIO et CGT dans la période de prospérité, 1921-1931," H isto ire d u réform ism e en France d epuis 1920 [1976], 1: 47-85). 75 Sauvy, H istoire économ ique, 1: 266. Between 1922 and 1929 gross domestic product grew at 4.4% annually in comparison to 2.5% for the period 1906-13 (Jean-Jacques Carré, Paul Dubois, and Edmond Malinvaud, La C roissance fr a n g iise [1972], p. 49). 76 Charles Gide and William Oualid, Le B ilan de la g u erre p o u r la France (1931), pp. Le Populaire

296

Socialism e et rationalisation

Notes to pp. 8 4 -8 7 195-278; Sauvy, H isto ire économ ique, 1: 267-9; Carré, Dubois, and Malinvaud, La C roissance française, p. 45; Ogbum and Jaffé, Econom ie D evelopm ent, pp. 219-469.

3S3S

77 INSEE, M o u v e m e n t économ ique en France de 1944 à 1937 (1958), p. 150. Data on Europe's international trade are in Ingvar Svennilson, G ro w th a n d S ta g n a tio n in th e European E conom y (Geneva, 1954), pp. 168-202. 78 Figures in this paragraph are from L. Cahen, "La Concentration des établissements en France de 1896 à 1936," E tudes et conjoncture 54 (Sept. 1954): 850-1,859-60, 880-1. 79 Maurice Lévy-Leboyer, "The Large Corporation in Modem France," in M an a g eria l H ierarchies, ed. Alfred D. Chandler and Herman Daems (Cambridge, Mass., and London, 1980), p. 118. 80 The protracted campaign by business to relax the penal code's prohibition of in­ dustrial cartels finally succeeded. In 1926 parliament revised the code so that there­ after industrialists no longer worried about prosecution under article 419. Robert O. Paxton, "L'Affaire des carbures et l'abolition du délit de coalition, 1915-1926," in 1 9 1 4 -1 9 1 8 : l'a u tr e fr o n t, ed. Patrick Fridenson, Cahiers du Mouvement social, no. 2 (1977), pp. 145-69; Anita Hirsch's essay on cartels and ententes in Sauvy, H isto ire économ ique, 4; 49-83. 81 Alfred D. Chandler, Jr., T h e Visible H and: T h e M anagerial R evo lu tio n in A m erica n B u sin ess (Cambridge, Mass., and London, 1977). Lévy-Leboyer, "Large Corporation." Patrick Fridenson, H istoire des u sines R e n a u lt, vol. 1 (1972). Devinât, Scien tific M a n a g em en t, p. 80; also pp. 233-45. Maurice Lévy-Leboyer, "Innovation and Business Strategies in Nineteenth- and Twentieth-Century France," in E nterprise a n d E n trepreneurs in N in e te e n th - a n d T w e n tie th -C e n tu r y France, ed. Edward C. Carter et al. (Baltimore and London, 1976), p. 111. Cf. in the same collection the essay by Charles P. Kindleberger, 'Technical Education and the French Entrepreneur," pp. 3-39. Paul Gagnon, "French Views of the Second American Revolution," French H is to ri­ cal S tu d ie s 2, 4 (Fall 1962): 430-49; David Strauss, M enace in th e W est: T h e R ise o f F rench A n ti-A m e r ic a n is m in M o d e m T im es (Westport, Conn., 1978). Louis Marlio, "Les Ententes industrielles," R e v u e de Paris, Feb. 15,1930, pp. 82352. Marlio was a manager at Péchiney. For a stout defense of neocapitalism, there is Edmond Giscard d'Estaing, C apitalism e (1931). For an introduction, see Gaëtan Pirou, Les D octrines économ iques en France depuis 1870, 3rd ed. (1934), pp. 153-7. Henri De Peyerimhoff, "Les Formules modernes d'organisation économique," R e v u e des d e u x m ondes 50 (Mar. 15, 1929): 439-58. Patrick Fridenson, "L'Idéologie des grands constructeurs dans l'entre-deuxguerres," Le M o u v e m e n t social, no. 81 (Oct.-Dec. 1972), p. 52. L o u is Loucheur: carnets secrets, 1 9 0 8 -1 9 3 2 , ed. Jacques de Launay (Brussels and Paris, 1962), p. 158. De Peyerimhoff, "Les Formules m odernes," p. 452. Quoted by Martin Fine, "Un Instrument pour la réforme: l'Association Française pour le Progrès Social, 1927-1929," Le M o u v e m e n t social, no. 94 (Jan.-Mar. 1976), p. *593 Ibid.; also Martin Fine, 'T ow ard Corporatism: The Movement for Capital-Labor Collaboration in France, 1914-1936" (thesis. University of Wisconsin, 1971). Another spokesman for neocapitalism, the politician P.-E. Flandin, contended that rationalization could solve the social problem; new wealth generated tax revenue, which in turn permitted spending on social programs (Flandin, "Le Problème social," R e v u e de Paris, Feb. 1,1928, pp. 497-509). 94 Charles S. Maier, "Between Taylorism and Technocracy: European Ideologies and

3 So 3 S S SS

297

Notes to pp. 88-93 the Vision of Industrial Productivity in the 1920s/' ] o u m a l o f C ontem p o ra ry H is to ry 5, 2 (1970): 27-61. 95 From an address to the CGPF in March 1928 (René P. Duchemin, O rg a n isa tio n syn d ica le patronale en France [1940], pp. 39-41). The CGPF in 1927 created a Commis­ sion Générale d'Organisation Scientifique to study rationalization. For business hesitancy about rationalization, see François Le G rix, "L'Homme d'affaires et la France," R e v u e hebdom adaire, Dec. 1927, pp. 338-51. 96 Kuisel, E rn est M ercier, pp. 45-88. 97 Lucien Romier, Le R edressem ent F rançiis: idées très sim ples p o u r les français (1928), pp. 8 -u , 59. 98 The program of the organization appeared as some thirty-five C ahiers d u R edresse­ m e n t Français (1927), of which Mercier wrote two on the social aspects of rationaliza­ tion. 99 Redressement poster. May 1927 (AN F 713240). . 100 Romier, Le R edressem ent Français, p. 62. 101 This account relies mainly on the Tardieu papers (AN 324AP). Studies of his government include: Monique Clague, "Vision and Myopia in the New Politics of André Tardieu," French H istorical S tu d ie s 8,1 (Spring 1973): 105-29; Louis Aubert et al., A n d r é Tardieu, 1 8 7 6 -1 9 4 5 (1957); René Capitant, "La Crise et la réforme du parlementarisme en France," Jahrbuch des Ö ffen tlich en R ech ts der G eg en w a rt 23 (1936): 1-71; Rudolph Binion, D efeated Leaders: T h e Political Fate o f C ailla u x, Jouvenel, a n d Tardieu (i960), pp. 284-309. 102 Tardieu's speech to the Chambres d'Agriculture de France, Mar. 17, 1930 (AN 324AP 54). 103 François-Poncet's address to the National Economie Council, Nov. 5, 1930 (AN 324AP 48). 104 Tardieu's ministerial declaration. Mar. 5, 1930 (AN 324AP 66). 105 Tardieu's address in Nancy, July 27,1930 (Tardieu, L 'E p re u v e du p o u vo ir [1931], p. 106). 106 R. Lacour-Gayet, financial attaché, Jan. 1, 1930 (AN 324AP 64). 107 Speech in Dijon, June 1, 1930 (Tardieu, L 'E p reu ve, pp. 52-3). 108 JO , C ham bre débats, July 8, 1930, p. 2989. 109 Speech to UIE, Nov. 19, 1930 (AN 324AP 55). 110 "Plan d'outillage national," Mar. 14,1932 (AN 324AP 65). Supplemental appropria­ tions from the budget and contributions of local governments would raise the total to 17 billion. 111 Speech to the Chambres d'Agriculture de France. 112 JO , C ham bre débats, July 8, 1930, p. 2987. 113 Pierre Saly, "La Politique des grands travaux, 1929-1939," (thesis. Université de Paris VIII-Vincennes, 1975), pp. 303-21. Chapter 4. The thirties: experiments and alternatives to liberal economics 1 René P. Duchemin, O rganisation syndicale patronale en Charles Gide and William Oualid, Le Bilan de la g u erre

France

(1940), p. 68. Cf. (1931), pp.

p o u r la France

348-532 Jean Bouvier et al., H istoire économ ique e t sociale de la France, tome 4 (1979-80), vol. 2; François Caron, A n Econom ie H is to ry o f M o d e m France (1979); Jean-Jacques Carré, Paul Dubois, and Edmond Malinvaud, La Croissance française (1972); Tom Kemp,

298

Notes to pp. 9 4-96 "The French Economy under the Franc Poincaré," E n g lish H is to ry R e v ie w 2 4 ,1 (Feb. 1971): 82-99; Kemp, T h e French E conom y, 1 9 1 3 -1 9 3 9 (London, 1972); Alfred Sauvy, H isto ire économ ique de la France en tre les d e u x g uerres, vol. 2 (1967). 3 Carré, Dubois, and Malinvaud, La C roissance française, p. 45. 4 Maurice Lévy-Leboyer, " The Large Corporation in Modem France," in M anagerial H ierarchies, ed. Alfred D. Chandler and Herman Daems (Cambridge, Mass., and London, 1980), p. 149. 5 J. Dessiner, "Secteurs 'abrité' et 'non abrité' dans le déséquilibre actuel de l'économie française," R e v u e d'économ ie p olitique 49 (Aug. 1935): 1330-58. 6 Carré, Dubois, and Malinvaud, La C roissance française, p. 162. By 1935 company issues of stock among chemical firms were 17% and among metallurgists 5% of what they had been in 1930 (Caron, E conom ic H isto ry , p. 261). 7 Production in the United States was 75% ahead of 1929, and labor productivity (measured as output per man-hour) was 40% higher; in the United Kingdom increases were 40% and 10% respectively, whereas in France in 1946 production was 20% lower and productivity 5% below 1929 (Carré, Dubois, and Malinvaud, La C roissance française, pp. 617-18). In contrast, the country's "productive poten­ tial," i.e., the training of the work force and the development of new production techniques, improved in the 1930s. 8 Caron, Econom ic H isto ry , p. 365. 9 Richard F. Kuisel, "Auguste Detoeuf, Conscience of French Industry, 1926-47," In te rn a tio n a l R e v ie w o f Social H isto ry 20, pt. 2 (1975): 156. 10 Cited by Marguerite Perrot, La M o n n a ie et l'opinion p ublique en France et en A n g leterre de 1924 à 1936 (1955), p. 237; and Gignoux's address to the Société des Anciens Elèves et Elèves de l'Ecole Libre des Sciences Politiques ( L'E conom ie dirigée [1934]/ p p - 265-94). 11 Duchemin, head of the CGPF, insisted that government interfere less in time of depression, and he avidly promoted producers' ententes (Henry W. Ehrmann, O rg a n ized B u sin ess in France [Princeton, 1957], pp. 29-31). One Chamber of Com­ merce official observed: "there are circumstances in which laissez-faire is not a solution and when some organization is desirable in order to facilitate a return to a more liberal economy" (quoted by Elizabeth Dussauze, L 'E ta t e t les e n ten tes in d u s ­ trielles [1938], p. 109). Dussauze interviewed several employers on the entente issue in 1937. Baron Petiet, a spokesman for the automotive industry, recommended the voluntary entente to manufacturers (Odette de Puiffe de Magondeaux, Les E n ten tes in d u strielles obligatories e t le corporatism e en France [1937], p. 123). Also see Patrick Punelle, "Etude d'une mentalité patronale: le 'Nord industriel' de 1930 à 1935," R e v u e d u N o rd 51 (Oct.-Dec. 1969): 641-50. 12 On entente formation, the best study is André Piettre, L 'E vo lu tio n des en ten tes in d u strielles en France depuis la crise (1936). Also see: Dussauze, L 'E ta t; de Magon­ deaux, Les E n ten te s; Didier Lazard, Les E n ten te s économ iques im posées ou contrôlées p a r l'é ta t (1937); and J. Tchemoff, E n ten tes économ iques e t financières (1933)/ pp. 101-62. 13 Sauvy, H isto ire économ ique, 2: 359-78. 14 Ibid., p. 378. 15 An illuminating comparative treatment of depression policies is John Garraty, "The New Deal, National Socialism, and the Great Depression," A m erica n H isto ri­ cal R e v ie w 78, 4 (Oct. 1973): 907-44. 16 Serge Berstein, "Les Conceptions du parti radical en matière de politique économique extérieure," R ela tio n s internationales, no. 13 (Spring 1978), pp. 71-89. 17 For a digest of state intervention in France and elsewhere during the 1930s, see

299

Notes to pp. 96-102 Henry Laufenburger, L 'In terv en tio n de l'é ta t en m atière économ ique (1939); also J. Denuc, "Structure des entreprises," R e v u e d'économ ie po litiq u e 53 (Jan.-Feb. 1939): *44-5918 Marthe Barbance, H istoire de la C om pagnie G énérale T ra n sa tla n tiq u e (1955), pp. 2617319 Le M a tin , Aug. 20, 1934, d ted by H. de La Tour du Pin Chambly, "Les Idées économiques de Paul Reynaud vues par la presse de droite entre 1930 et 1940" (memoir. Université de Paris 1, 1972), p. 91. For the public debate over devaluation, see Perrot, La M o n n a ie, pp. 226-8. 20 De Peyster, "L'Inspection Générale des Finances en France," R e v u e in tern a tio n a le des sciences a d m in istra tives 12 (Oct.-Dec. 1939): 667; Jacques de Fouchier, "Le Rôle de l'Inspection Générale des Finances dans l'administration française," R e v u e p o litiq u e et p a rlem entaire 46 (Aug. 1939): 268. 21 Rist was under governor of the Bank of France in the late twenties and French representative to severed international conferences in the early thirties. Rueff served as a financial expert in the London embassy, becoming head of the Treasury between 1936 and 1939. He tells of his latter career in C om bats p o u r Vordre fin a n c ie r (1972), pp. 43-122, and D e l'A u b e au crépuscule: a utobiographie (1977), pp. 117-63. Rist and Rueff also taught at Sciences Po. Despite the impressive qualifications of many instructors the general level of training in economics, especially at the law facul­ ties, was not high. Too much time was spent studying law and administration and too little learning economic theory, statistics, specialized subjects, and practical application (Charles Rist et al., L 'E n se ig n e m en t économ ique en France e t à l'étra n g er [1937]). Cf. the situation at Sciences Po described by Pierre Rain and Jacques Chapsal, L'E cole Libre des Sciences P olitiques, 1871 -19 4 5 (1962), pp. 71-85. 22 For example, Robert Wolff, "Réflexions sur les crises," R e v u e d'économ ie p o litiq u e 46 (July-Aug. 1932): 1288-1322. This review devoted an entire issue (48 [Sept.-Oct. 1934]: 1401-1688) to the économ ie dirigée. The Journal des économ istes, another or­ thodox review, rejected all state intervention and recommended a return to the free circulation of capital and products. 23 Rueff (D e l'A u b e , pp. 98-108) claims he recognized the fatal flaw in Keynesianism, i.e., its inflationary bias, in the 1930s. And Rist found Keynes's analysis of the depression and his solution unpersuasive (Charles Rist and Charles Gide, A H is ­ to ry o f Econom ic D octrines, trans. R. Richards, 2nd ed. [London, 1948], pp. 738-47). 24 Surveys of this phenomenon are: Bernard Gotlieb, "Les Origines de l'idée de plan" (memoir. Université de Paris X-Nanterre, 1971); Jocelyne Loggh, "Notion de plan dans la période de l'entre deux guerres" (memoir. Université de Paris 1, 1971); Henri de Noyelle, "Plans d'économie dirigée," R e v u e d'économ ie po litiq u e 48 (Sept.-Oct. 1934): 1595-1668. 25 Groupe du 9 Juillet, Plan d u 9 ju ille t (1934), pp. 42-4. 26 Jean-Louis Loubet del Bayle, Les N o n -C o n fo rm istes des années 3 0 (1969), p. 233. Other studies of these intellectuals are: Pierre Andreu, "Les Idées politiques de la jeunesse intellectuelle de 1927 à la guerre," R e v u e des tra va u x de l'A ca d ém ie des Sciences M orales e t P olitiques, 1957, pp. 17-30; Jean Touchard, "L'Esprit des années 1930," Tendances politiques dans la vie française depuis 1789 (i960), pp. 89-120. 27 E sp rit published Henri de Man's plan in 1934 but subjected it to a Proudhonist-type critique in rejecting its é ta tism e (Michel Winock, H isto ire p olitique de la revu e 'E sp rit, ' 1 9 3 0 -1 9 5 0 [1975 l PP- 95-100)28 The Radicals' plan appears in Emile Roche, O n a vo té! (1936). For the handful of Radicals who took planning seriously, see Noyelle, "Plans," pp. 1652-4. Gaston

300

Notes to pp. 102 -109 Bergery, a dissident Radical, formed an antifascist front in 1933 and also adopted planning. 29 The CFTC's plan is in Jules Zimheld, C in q u a n te A n n é e s d é syndica lism e chrétien (1937)- pp- 261-74. 30 Among the principal corporatist theorists were academies like Roger Bonnard, Maurice Bouvier-Ajam, and Brethe de la Gressaye; employers like Eugène Mathon and Pierre Lucius; social Catholics like Paul Chanson; and royalists like Finnin Bacconnier. Useful critical syntheses are: Roger Bonnard, S y n d ica lism e, cor­ p o ra tism e, et éta t corporatif (1937); Gaëtan Pirou, Essais s u r le corporatism e (1937) and La C rise d u capitalism e (1936); and Matthew H. Elbow, French C orporative T heory, 1 7 8 9 -1 9 4 8 (1953). The corporatist views of the Croix de Feu appear in François de la Rocque, Service public (1934), pp. 140-8. For the inroads of corporatism among employers after 1936, see Ehrmann, O rganized B u sin ess, pp. 34-53. The Fédération Nationale des Contribuables called economic liberalism outmoded and embraced corporatist ideas (William A. Hoisington, T axpayer R e v o lt in France: T h e N a tio n a l T a xp a yers' Federation, 1 9 2 8 -1 9 3 9 , Hoover Institution manuscripts in microfilm, no. 3 [Stanford, 1973]). In a broad-ranging discussion, Philippe C. Schmitter suggests this "ism " is far from dead ("Still the Century of Corporatism?" R e v ie w o f Politics 36, 1 [Jan. 1974]: 85-131). 31 Quoted from Pirou, Essais, pp. 114-15. 32 X-Crise, founded in 1931, evolved into the Centre Polytechnicien d'Etudes Economiques, which assembled some two thousand members. The center was a forum, and not all its participants were planistes. These poly technicians' views are dissected in Guy Desaunay, "X-Crise, contribution à l'étude des idéologies économiques d'un groupe de polytechniciens durant la grande crise économique, 1931-1939" (thesis. Université de Paris, 1965). The authors of the plan sponsored by L 'O r d re n ouveau were Loustau and Gibrat. Bardet, Branger, Coutrot, and Louis Vallon (a socialist planner) all signed the Plan of 9 July. 33 Auguste Detoeuf, "La Fin du libéralisme," B u lletin d u C en tre P olytech n icien d 'E tu d e s Econom iques, nos. 31-32 (1936), p. 37. 34 Quoted by Desaunay, "X-Crise," p. 47. 35 Jean Coutrot, L 'H u m a n is m e économ ique (1936), p. 62. 36 Jacques Branger, "Le Contenu économique des plans et le planisme," X -C rise, nos. 20-21 (Mar.-Apr. 1935), p. 11. 37 Ibid., p. 12. 38 De Man defined his position in A u delà d u M a r x ism e (Brussels, 1927) and Socialism e c o n str u c tif (1932). A recent biography is Peter Dodge, B eyond M a r x is m : T h e Faith a n d W orks o f H e n d rik de M a n (The Hague, 1966). An entire issue of the R e v u e européenne des sciences sociales: cahiers Vilfredo Pareto (12, 31 [1974]) was devoted to de Man. It included the following essay on his influence in France: Georges Lefranc, "La Diffusion des idées planistes en France," pp. 189-96. Lefranc also examined this them e and the entire movement toward socialist planning in "Le Courant planiste dans le mouvement ouvrier français de 1933 à 1936," Le M o u v e m e n t social, no. 54 (1966), pp. 69-89. The plan of the Belgian Labor Party is reproduced in A D o cu m en ­ ta ry S tu d y o f H e n d rik de M a n , ed. Peter Dodge (Princeton, 1979), pp. 289-99. 39 Dodge, D o cu m e n ta ry S tu d y , p. 303. 40 CGT, C o n tre la C rise, p o u r l'économ ie dirigée, exposé s u r le p lan de rénovation économ ique (1934). The principal studies of planning and the CGT are: Jacques Amoyal, "Les Origines socialistes et syndicalistes de la planification en France," L e M o u v e m e n t social, no. 87 (Apr.-June 1974), pp. 137-69; Raymond Veillard, Le P la n de la C G T

301

Notes t opp. 109- i i 3

41

42 43

44 45 46 47 48

49 50

51

52

(Annécy, 1938). We also have detailed accounts by participants: Lefranc, "Le Cour­ ant planiste"; Claude Harmel, '"Le Front Populaire contre le planism e/' and Lucien Laurat, "Mémoires d'un planiste, 1932-1939," both in Les E tudes sociales e t s y n ­ dicales, no. 120 (Sept. 1965), pp. 2-19,19-24. Lucien Laurat ( Econom ie planée contre économ ie enchaînée [1932]) recommended so­ cializing monopolies so that demand could be raised, that is, wages increased, prices lowered, and "profits" channeled away to be spent on public works and public welfare. Laurat's "planned economy" surm ounted the crisis by widening the internal market. What the advanced economies of the West needed to do was to move gradually toward socialism by imitating the Soviet New Economic Policy but avoiding War Communism. Laurat's group of planners published a review called C om bat m a rxiste after 1933. To this end the CGT published a new review, L 'A te lie r p o u r le plan, from 1935 to *937Léon Jouhaux, Le Plan de rénovation économ ique e t sociale (1935). The CGT's strategy is explained in a lecture series given at its educational institute: C rise e t p la n : q u in ze conférences et études s u r le p lan de la C G T (1935). The 1936 version of the plan is CGT, A c tu a lité d u plan (Versailles). CGT, A c tu a lité d u plan, p. 35. Amoyal, "Les Origines," p. 166. Veillard, Le Plan de la C G T , p. 175. Léon Jouhaux, La C G T ce qu'elle est, ce qu'elle v e u t, 6th ed. (1937), p. 174. Georges Lefranc, "Histoire d'un groupe du parti socialiste SFIO, Révolution Con­ structive, 1930-1938," in his Essais s u r les problèm es socialistes e t s yn d ic a u x (1970), pp. 1 69-9 6 . Jules Moch, Le R ail et la nation (1931) and C apitalism e e t transports (1932). André Philip, Le Problèm e o u vrier a u x E ta ts-U n is (1927) and H e n ri de M a n e t la crise d octrinale d u socialism e (1928). Philip's p la n ism e can be traced in his study, La C rise e t l'économ ie dirigée (1935); his address on nationalizing credit presented at an interna­ tional planning conference ( D eu xièm e Conférence internationale des pla n s d u travail, G en ève 1 7-1 8 -1 9 avril 1936 [1936]); and the essay he wrote with Albert Monceau, La T o u te-P u issance bancaire et la nationalisation d u crédit (1936). Other planiste fragments on the left were the C om bat m a rxiste group directed by Laurat and the circle around Georges Valois that included Laurat, Philip, Lacoste, and Delaisi. Valois presented a "plan syndical et coopératif" ( N o u ve l A g e , May 9, 1934) that called for the state to supply a collective plan and allocate credit. Oth­ erwise, most economic activity was to be in the hands of syn d ic a ts and coopera­ tives. The technocratic flourish of Valois is obvious in this scheme; he justified the plan as a means of promoting economic growth. E lém en ts d 'u n plan français, Cahier de Révolution Constructive, nos. 5-6 (1934), p.

M53 Ibid., p. 4. 54 Ibid., p. 10. 55 Studies of the Neosocialists are: Donald D. Baker, 'T w o Paths to Socialism: Marcel Déat and Marceau Pivert," Journal o f C ontem porary H is to ry 11 (Jan. 1976): 107-28; Alain Bergounioux, "Le Néo-Socialisme, Marcel Déat," R e v u e histo riq u e, no. 528 (Oct.-Dec. 1978), pp. 389-412; Emily Goodman, "The Socialism of Marcel Déat" (thesis, Stanford University, 1973); Stanley Grossman, "Neo-Socialism" (thesis. University of Wisconsin, 1969). In 1930 (Perspectives socialistes) Déat had outlined a revisionist position. The goal was a broad electoral majority that encompassed most of the middle class; the means to this end was a realistic program of reform 302

Notes to pp. 113-121

Î323S

S3

SSSSS2SSS

within a national context. Like de Man, Déat stressed economic control rather than appropriation of the means of production. 56 Comité du Plan, Le Plan français (1935). 57 Socialist economic policy is carefully analyzed by Michel Margairaz, Les Propo­ sitio n s de po litiq u e économ ique, financière, e t m onétaire de la S F IO de 1934 à 1936, AUDIR microfiche series (memoir. Université de Paris VlII-Vincennes, 1972). After the 1932 elections Blum made nationalization of the railroads and insurance companies one of his conditions for joining a coalition ministry with the Radicals (L e Populaire, May 16, 1932). The government, however, was not formed. The quotes in this paragraph are from Le Populaire, Jan. 25, 1934. Parti Socialiste, 3 1 e C ongrès national tenu à T o u lo u s e . . . m ai 1934 (1934), p. 22. Ibid., p. 398. Ibid., p. 360. Le Populaire, July 12, Aug. 2, 3, 4, 5, 7, 1935. Ibid., Aug. 4, 1935. Ibid., Aug. 7, 1935. Harmel, ''Le Front Populaire," p. 9. CGT, C ongrès confédéral d 'u n ité à T oulouse le 2 au 5 m ars 1936 (1936), pp. 133-4. Pierre Boivin appealed to the Communists by arguing that "the plan is not the last card of reformism but the first trump of the revolution" (L 'H o m m e réel, Feb. 1935, reprinted in his essays entitled C h o ix d'écrits (1938], p. 241). Julien Racamond (CGT, C ongrès, pp. 150-8). Jean-Michel Six, "Nationalisations et environnement capitaliste" (thesis. Université de Paris X-Nanterre, 1977). Veillard, Le Plan de la C G T , pp. 183-7. CGT, C ongrès, p. 180. Georges Lefranc, H istoire d u F ront Populaire, 1 9 3 4 -1 9 3 8 (1965), p. 94. AurioTs testimony in ibid., p. 92. For the negotiations on the Popular Front's program, see: Margairaz, Les P ropositions, pp. 272-300; Bernard Georges, "La CGT et le gouvernement Léon Blum," Le M o u v e m e n t social, no. 54 (Jan. - Mar. 1966), p. 50; René Belin, D u Secrétariat de la C G T au g o u v ern e m en t de V ich y (1978). p. 82. In spite of the outcome of these negotiations the Socialists retained the nationaliza­ tion of credit and monopolies as a feature of their party platform (P ro g ra m m e du P a rti Socialiste: élections législatives de 1936 [1936], pp. 11, 19). 73 Peter J. Larmour, T h e French Radical P a rty in the 1930s (Stanford, 1964), p. 169. 74 The program of the Popular Front is reproduced in Lefranc, H isto ire d u F ro n t Populaire, pp. 441-5. 75 For reform of the Bank of France, see: Jean Bouvier, U n Siècle de banque française (1973), pp. 158-9,178 -90; Lucille Dromer, "Les Limites de la réforme de la Banque de France, juillet 1936," Recherches et tra va u x, Institut d'Histoire Economique et Sociale de l'Université de Paris-I, no. 7 (Dec. 1978), pp. 52-70; Achille DauphinMeunier, La B anque de France (1936). Examples of the left's campaign against the bank are: Albert Aymé-Martin, N o s G rands Financiers contre la nation (1931); Francis Delaisi, La B anque de France a u x m ains des 200 fam illes (1936); Augustin Hamon, Les M a ître s de la France, 3 vols. (1936-8). 76 Dauphin-Meunier, La Banque de France, p. 199. 77 Jeffrey J. Clarke, "The Nationalization of War Industries in France, 1936-1937," Journal o f M o d e m H is to ry 49, 3 (Sept. 1977): 411-30; A. Bignant, La Loi de natio n a lisa ­ tion des u sines de g u erre (1938). 78 According to François Bloch-Lainé, the inspectors of finance were, on the whole, unsympathetic toward the Popular Front, and they took a dim view of the compe-

303

Notes t opp. 121-124 tence of Auriol and his cabinet ("A propos du rôle du Ministère des Finances des années 1930 aux années 1940: questions et réponses/' compte rendu sténographié, Commission d'Histoire Economique et Sociale, réunion du 24 janvier 1977, Comité d'Histoire de la Deuxième Guerre Mondiale, pp. 5-6). 79 Marie-Christine Kessler, L'E cole N ationale d 'A d m in is tr a tio n , vol. 1: La P olitiq u e de la h a u te fo n ction publique (1978), pp. 28-32. A thorough account of the fate of the 1936 project is Guy Thuillier, "Les Projets d'école d'administration de 1936 à 1939," La R e v u e a d m in istra tive, no. 177 (May - June 1977), pp. 236 -53. 80 Francis-Louis Closon and Jean Filippi, L'E conom ie e t les finances (1968), pp. 487-99; Bernard Chenot. O rganisation économ ique de l'é ta t (1951), pp. 121-4. 81 Alfred Sauvy, D e P aul R e y n a u d à Charles de G aulle (Tournai, 1972), p. 45. 82 Anonymous memorandum. May 30, 1938 (AN F60 423). 83 Blum's address to Socialist Party congress. May 31, 1936, reprinted in L 'O e u vre de Léon B lu m (1954-72), 4, pt. 1: 261-2. 84 As an alternative Blum turned to devaluation. Depreciating the franc was a "free solution" to halting the flight of capital. Because the Anglo-Americans accepted the measure as a means of "international monetary stabilization" devaluation served to open international trade and effect an antifascist rapprochement. See: René Girault, "Léon Blum, la dévaluation de 1936 et la conduite de la politique extérieure de la France," and Jean Bouvier, "Contrôle des changes et politique économique extérieure de la SFIO en 1936," both in R elations internatio n a les, no. 13 (1978). pp. 91-109, 111-15; Daniel Leconte and Dominique Pavy, "Le Front Populaire face au m ur d'argent: le problème du contrôle des changes dans les années 1936-1938," (memoir. Université de Paris VIII-Vincennes, 1972). 85 A historian of public works calls the Popular Front's program "a mouse" (Pierre Saly, "La Politique des grands travaux, 1929-1939," [thesis. Université de Paris Vin-Vincennes, 1975], pp. 374-9). Jouhaux was disappointed (Georges, "La CGT et Léon Blum," p. 65). 86 Joel Colton, Léon B lu m , H u m a n is t in P olitics (1966), p. 281. 87 For the dispute among Lacoste, Duret, Vallon, and others, see T roisièm e C onférence in tern a tio nale des pla n s d u travail, A bbaye de P o n tig n y , 2 3 - 2 4 octobre 1937, pp. 82-9. Spinasses turned toward a government-sponsored program of economic modernization. 88 The index of industrial production (1928 = 100) was 87 in May 1936. After a brief climb it slumped back to 89 in May 1937; then the world recession of winter 1937-8 overtook the French economy (Sauvy, H istoire économ ique, 2: 528). 89 Jean-Marcel Jeanneney, "La Politique économique de Léon Blum," in Léon B lu m , c h e f de g o u v ern e m en t, 1 9 3 6 - 1937, Cahiers de la Fondation Nationale des Sciences Politiques, no. 155 (1967), pp. 207-32; Sauvy, H isto ire économ ique, 2 : 191-201, 297307. The most closely argued critique of the forty-hour law, by a historian who accepts the political necessity of the measure, shows the analytical weaknesses of both partisans and adversaries as well as the reform's unfavorable impact on prices and production (Jean-Charles Asselain, "Une Erreur de politique économique: la loi des quarante heures de 1936," R e v u e économ ique 25, 4 [July 1974I: 672 - 705). A review of the debate is Jean Bouvier, "Un Débat toujours ouvert: la politique économique du Front Populaire," Le M o u v e m e n t social, no. 54 (Jan. - Mar. 1966), pp. 175-81. 90 George Boris, "A propos d'une polémique sur Léon Blum et son gouvernement de 1936," Les C ahiers de la république, no. 27 (Sept.-Oct. i960), pp. 8-10; Pierre Mendès-France, in Léon B lu m , c h ef de g o u v ern e m en t, pp. 233-40. Jules Moch (L e F ro n t Populaire, gra n d e espérance [1971I, pp. 167-201, 320-43) believes the economy 304

Notes to p p . 124-129 actually revived. In an excellent recent evaluation, Michel Margairaz defends refla­ tion as a sensible strategy given the situation and finds fau\t with Blum's politics rather than his economics ("Les Socialistes face à l'économie et à la société en juin 1936/' Le M o u v e m e n t social, no. 93 (Oct.-Dec. 1975), pp. 87-108. 91 Colton, Léon B lu m , pp. 282-3. 92 The network's deficit had become so monumental that the state had to come to its rescue. Rather than outright nationalization, the government chose consolidation of the private lines in order to effect economies and coordinate operations. The 1937 railway act transferred the assets and liabilities of the private companies to the SNCF; the state owned 51% of the new enterprise, and the treasury furnished credits to meet the indebtedness. The SNCF was to run the franchises until 1983 when they reverted free and clear to the state. 93 Georges Boris, S e rv ir la république (1963), pp. 191-203; Pierre Mendès-France, C h o isir (1974), pp. 28-9. Blum's presentation of his program is in JO , C ham bre débats, Apr. 5, 1938, pp. 1059-68. The projet de loi can be found in JO , d o cu m en ts parlem entaires, Apr. 5, 1938, annex no. 3936, pp. 507ff. 94 His speech appears in Paul Reynaud, C ourage de la France (1939), pp. 23-39* On the Daladier-Reynaud economic strategy, see: Reynaud, M ém oires (1960-63), 2: 22957; Sauvy, H isto ire économ ique, 2: 308-46, and D e P aul R e y n a u d , pp. 70-85; Albert C. Gay, "The Daladier Administration, 1938-1940" (thesis. University of North Carolina, 1970). The latest reviews of these final peacetime years are the an­ thologies edited by René Rémond and Janine Bourdin, Edouard D aladier, ch ef de g o u v ern e m en t, a vril 1 9 3 8 s e p te m b r e 1939 (1977) and La France et les français en 1 9 3 8 1939 (1978)* 95 An agency for gathering industrial statistics made its debut, and the MEN reap­ peared though still charged merely with liaison functions. 96 CGT, Le P lan de la C G T (1939 ed.). By 1939 the CGT plan exhibited a decided emphasis on economic growth; it indicted private enterprise for retarding technological progress and thus compromising national security. 97 Patrick Fridenson, "Le Patronat français," in Rémond and Bourdin, La France et les fra n ça is, pp. 139-57. 98 Alfred Sauvy, "L'Evolution économique," in Rémond and Bourdin, E douard D aladier, pp. 87-98. 99 Michel Debré, "Pour une Administration de l'économie française," Sciences politiq u es, no. 8 (June 1938), pp. 262-3, 269. 100 Edouard Bonnefous, H isto ire p olitique de la Troisièm e R épublique, vol. 6 (1965), p. 354. 101 Quoted in Paul Delouvrier and Roger Nathan, P olitique économ ique d e la France, cours de droit. Université de Paris, 1957-8, fasc. 1, p. 52. 102 Reynaud, M ém oires, 2: 238. Chapter 5. The National Revolution at Vichy, 1940-1944: survival and renovation 1 Stanley Hoffmann, "The Effects of World War II on French Society and Politics," French H istorical S tu d ie s 2 (spring 1961): 28-63. 2 According to Yves Bouthillier in Hoover Institution, France d u r in g th e G erm an O ccu ­ p a tio n , 1 9 4 0 -1 9 4 4 , trans. Philip W. Whitcomb (Stanford, 1958), 3:1326. 3 Henri Michel, "La Révolution nationale: latitude d'action du gouvernement de Vichy," R e v u e d 'h isto ire de la d eu xièm e guerre m ondiale, no. 81 (Jan. 1971), pp. 3-22, and V ich y: année 4 0 (1966). The best overall treatment of the National Revolution and the Vichy regime is Robert O. Paxton, V ich y France: O ld G u a rd a n d N e w O rder, 1 9 4 0 -1 9 4 4 (1972).

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Notes topp. 129-133 4 Quoted by Gordon Wright, '"Vichy Revisited," V irginia Q u a rterly R e v ie w 34,4 (1958): 504. 5 Pierre Barrai, Les A grariens français de M é lin e à P isa n i (1968), pp. 256-83; Gordon Wright, R u ra l R evo lu tio n in France (Stanford, 1964), pp. 74-94; Michel Cépède, A g ­ ricu ltu re et a lim entation en France d u r a n t le lie g u erre m ondiale (1961); lsabel Boussard, V ich y et la corporation paysa n n e (1980). 6 Among such names were: Luden Romier, minister and advisor to Pétain; Auguste Detoeuf, offirial and major voice for reform of the economic administration; Jacques Bamaud, chief economic negotiator at the armistice commission; Robert Gibrat, minister of communications; Gérard Bardet, official in the production ministry; and Emilie Lefranc, official in the labor ministry. The latter was the wife of Georges Lafranc and an active planiste. 7 Quoted by Léon Liebmann, "Entre le Mythe et la légende: Tanti-capitalisme' de Vichy," R e v u e de l'I n s titu t de soàologie, no. 1 (1964), p. 145. 8 Philippe Pétain, A c te s e t écrits, ed. Jacques Isomi (1974), pp. 470-5, 491-4. 9 This phobia appeared even in the school created to train intellectual cadres for the National Revolution (Janine Bourdin, "Des Intellectuels à la recherche d 'un style de vie: l'Ecole Nationale de Cadres d'Uriage," R e v u e française de science po litiq u e 9 [Dec. 1959]: 1040). Paul Reuter's Les T ru sts (Grenoble, n.d.) is a publication of this school. The law of Sept. 13, 1940, was a trust-busting measure. It curbed the interlocking character of limited liability companies by restricting the number of presidendes a person could hold simultaneously and increasing the company president's legal responsibility for bankruptcy due to mismanagement. Yves Bouthillier (L e D ra m e de V ich y [1950-51], 2:301-3) later defended the law as a way of stripping big business of its "old instrument of domination" and as an alternative to nationalization. 10 Pétain, A ctes, p. 475. 11 Quoted in Pascal Jardin, La G uerre à 9 an s (1971), p. 83. 12 Some of the accounts left by modernizers of their wartime hopes and experiences are: Jean Berthelot, S u r les R ails du p o u vo ir (1968) and Les g rands T ra va u x, Ecole Libre des Sdences Politiques, conférences d'information, Jan. 26, 1942; Bouthillier, Le D ra m e de V ich y and L 'A ctio n économ ique en France depuis l'arm istice (Mâcon, 1941); Auguste Detoeuf, Passé, présent, aven ir de l'organisation professionnelle (1946); and Pierre Pucheu, M a Vie (1948). 13 Hoover Institution, France d u r in g th e O ccupation, 1:44. Bichelonne was a spokesman for those Vichy officials and industrialists who wanted to launch a new economic order within the framework of collaboration, according to Henri Rousso, "L'Or­ ganisation industrielle de Vichy," R e v u e d 'h isto ire de la deuxièm e g u erre m ondiale, no. 116 (Oct. 1979), pp. 27-44. 14 Henri Du Moulin de Labarthète, Le T em ps des illusions (Geneva, 1946), p. 326. 15 Officially, what I refer to as the Ministry of Industrial Production under Vichy was the minister-secretary of state for industrial production and labor. After 1941 labor became a separate state secretariat. 16 Robert Catherine, L 'In d u s tr ie (1965), pp. 16-21. 17 Service National des Statistiques, Institut de Conjoncture, étude spécial no. 3, Le Progrès technique en France depuis cen t ans (1944). The study's authors were André Vincent and René Froment. Alfred Sauvy has given us his account of the wartime statistical agency in "Heurs et malheurs de la statistique pendant la guerre, 19391945," R evu e d'h isto ire de la deu xièm e g uerre m ondiale, no. 57 Gan- 1965), pp. 53-62, and D e P aul R e y n a u d à C harles de G aulle (Tournai, 1972), pp. 134-8,161-9. Cf. Michel Voile, "Naissance de la statistique industrielle en France, 1930-1950," in INSEE, P o u r u n e histoire de la sta tistiq u e (1977), 1: 327-65. 306

Notes to pp. 13 3 - i 37

SSS

S

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S

KB

1313

18 René Belin's account is in Hoover Institution, France d u r in g th e O ccupation, i: 142-8. Belin adds nothing new to his earlier testimony in his recent memoir. D u Secrétariat de la C G T au g o u v ern e m en t de V ich y (1978). 19 For surveys of the French economy during the occupation, see the collection of articles, "La France économique de 1939 à 1946," R e v u e d'économ ie politiq u e 57 (1947): 801-1695; ar»d Alfred Sauvy, La Vie économ ique des Français de 1939 à 1945 (1978). The German perspective can be found in Alan S. Milward. T h e N e w O rder an d th e French E co n o m y (Oxford, 1970). For labor policies there is Jacques Desmarest, La P olitique de la m a in -d 'œ u v r e en France (1946). Useful bibliographies are: ''Aspects de l'économie française sous l'occupation," C ahiers d 'h isto ire de la guerre, no. 4 (May 1950), pp. 97-100; J. Hom ung, "Bibliographie: l'économie française pendant la guerre, 19391945," R e v u e d 'h isto ire de la d eu xièm e guerre m ondiale, no. 57 (Jan. 1965), pp. 119-28. 20 Lafond was a mining engineer and manager who served as an official in the produc­ tion ministry during 1940-2. Laroque, a member of the Conseil d'Etat, was an expert on labor law and social security. 21 JO de l'E ta t Français: lois et décrets, Aug. 18,1940, pp. 4731-3. For the inception of the CO, see Belin's testimony in Hoover Institution, France d u rin g th e O ccu p a tio n , 1: 149-54, and also in Fondation Nationale des Sciences Politiques, Le G o u v ern e m e n t de V ich y , 1940-1942, Travaux et recherches de science politique (1972), pp. 203-7. Raphaël Alibert, the minister of justice and a Maurrasian, was responsible for the dissolution provision of the law. Hoover Institution, France d u r in g th e O ccupation, 1: 148. Bouthillier sought German war contracts in September (Paxton, V ich y France, p. 67, also p. 54). Heads of French aircraft firms wanted to accept German contracts because it was the only way to keep their plants, enlarged by armaments, operating during the armistice. Vichy authorities conceded because they were worried about unemployment and about losing an industry that had been so painfully built. They also wanted to keep the Germans from laying hands on aircraft companies in the unoccupied zone. See Peter Klemm, "La Production aéronautique française de 1940 à 1942," and Patrick Façon and Françoise de Ruffray, "Aperçus sur la collaboration aéronautique franco-allemande, 1940-1943," R e v u e d 'h isto ire de la d eu xièm e gu erre m ondiale, no. 108 (Oct. 1977), pp. 53-74, 85-102. Bernard Chenot, O rganisation économ ique de l'é ta t (1951), pp. 58-62. The Groupements Nationaux d'importation et de Répartition became in 1941 the Groupements Nationaux d'Achat. See A. Heilbronner, "Le Ravitaillement en France depuis 1940," R e v u e d'économ ie politique 57 (1947): 1645-53. Belin complained that prewar speculation about economic management was useless when it came to drafting a control system in 1940. The CGT plan offered him little guidance because it had been designed for a completely different situation (Fonda­ tion Nationale, Le G o u v ern e m e n t de V ich y , pp. 203, 206). The best studies of the OCRPI are Robert Catherine, Econom ie de la répartition des p ro d u its in d u striels (1943), and Henri Culmann, Les Services publics économ iques (1943), pp. 281-305. The OCRPI published a B u lletin officiel from Aug. 1941 to June 1944. Quoted in Milward, N e w O rder, p. 69. Dr. Elmar Michel, head of the economic administration, echoed the same view in a Berlin journal in 1942 (dted by Etienne Dejonghe, "Pénurie charbonnière et répartition en France, 1940-1944," R e v u e d 'h is ­ toire de la d eu xièm e guerre m ondiale, no. 102 [Apr. 1976], p. 38). Dejonghe, "Pénurie charbonnière," p. 39. Fondation Nationale, Le G o u v ern e m e n t de V ich y, p. 204. 31 Several CO presidents, for example, had been part of Mercier's managerial team and participants in the Redressement Français (Richard F. Kuisel, E rn est M ercier: 307

Notes to pp. 138 -143 [Berkeley and Los Angeles, 1967], p. 147). For lists of CO personnel see: Centre d'information Interprofessionnel, L iste des C om ités d 'O rg a n isa tio n (1942); Olivier Lesourd, G u id e a n n u a ire corporatif (1942). 32 Quoted by Jean-Guy Mérigot, Essai s u r les C om ités d 'O rg a n isa tio n professionnelle (1943), p. 400. I depend on Mérigot's thesis for my interpretation of the CO. 33 Ibid., p. 410. 34 G. Liet-Veaux, "L'Organisation professionnelle," R e v u e d'économ ie p o litiq u e 57 (1947): 1282-3. 35 For banking reform under Vichy, see J. S. G. Wilson, French B a n kin g S tr u c tu re a n d C red it P olicy (Cambridge, Mass., 1957), pp. 282-4. 36 Mérigot, Essai, p. 549. 37 Journal de la Bourse, Jan. 24,1942. 38 Mérigot, Essai, pp. 323-5. 39 Ibid., p. 479. 40 Dejonghe, "Pénurie charbonnière," pp. 37-8. 41 Mérigot, Essai, pp. 193-6. 42 Bichelonne's preface (pp. vii - viii) to Catherine, Econom ie. 43 S. Beracha, "La Production industrielle," R e v u e d'économ ie politique 57 (1947): 1261-2. 44 Though extensive CO records existed till recently, they may be unusable. Almost all studies of Vichy deal with the collaboration issue. Of special interest is Stanley Hoffmann, "Collaborationism in France," Journal o f M o d e m H isto ry 40 (Sept. 1968): 375-9545 Philippe Pétain, Q u a tre A n n é e s au po u vo ir (1949), p. 109. 46 Dr. Elmar Michel, in Hoover Institution, France d u r in g th e O ccupation, 3:1627. 47 Occupation authorities thought these figures underestimated Germany's share of French output (Milward, N e w O rder, pp. 277-82). 48 Quoted in Paxton, V ich y France, p. 144. 49 Fanton d'Andon, quoted in Dejonghe, "Pénurie charbonnière," p. 46. 50 Milward, N e w O rder, pp. 150-80. 51 A harsh judgment of the CO as agents of collaboration based, however, on in­ adequate evidence is Henri Rousso, "Les Comités d'Organisation, aspects struc­ turels et économiques, 1940-1944" (memoir. Université de Paris I, 1976). 52 Institut National de la Statistique et des Etudes Economiques, A n n u a ire sta tistiq u e 57 (1946): résumé rétrospectif, 99-118,190, 225; Beracha, "La Production industrielle," pp. 1250-8; Dejonghe, "Pénurie charbonnière," p. 53. 53 Alfred Fabre-Luce, quoted in Paxton, V ich y France, p. 238. 54 Mérigot, Essai, pp. 469-71. 55 Rousso, "Les Comités d'Organisation," pp. 122-3. 56 René Gillouin, J'étais l'a m i d u M aréchal P étain (1966), pp. 34-8, 218-22. 57 Dec. 6, 1941. 58 Du Moulin, Le T em ps des illusions, pp. 328-9, 331-3. 59 Pierre Nicolle, C in q u a n te M o is d'a rm istice (1947), 1:194. 60 L 'O e u vre , Feb. 26, 1941. 61 Richard F. Kuisel, "The Legend of the Vichy Synarchy," French H istorical S tu d ie s 6, 3 (spring 1970): 365-98. 62 Bernard Serrigny, T ren te A n s avec P étain (1959), pp. 198-9. 63 Pétain, Q u a tre A n n é e s, p. 120. 64 Etat Français, Ministère de l'Intérieur, In form ations générales, no. 53 (Sept. 2,1941), p. 625. 65 Bichelonne, for example, tried unsuccessfully to draw Léon Gingembre, a spokes­ man for small- and medium-sized industry, into his cabinet. French Technocrat

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Notes to pp. 14 4 - i 52 66 Quoted in Rousso, "Les Comités d'Organisation," p. 125. 67 My discussion of the Labor Charter relies on Jacques Julliard, "La Charte du Travail," in Fondation Nationale, Le G o u v ern e m e n t de V ich y, pp. 157-210, and Georges Lefranc, Les Expériences syndicales en France de 1939 à 1950 (1950), pp. 37-91. Monique Luirard has examined the difficulties encountered in implementing the charter at the local level ("Les Ouvriers de la Loire et la Charte du Travail," R e v u e d 'h isto ire de la d eu xièm e g u erre m ondiale, no. 57 [Apr. 1976I, pp. 57 - 82). 68 Pétain, A ctes, p. 494. 69 JO de l'E ta t Français: lois et décrets, Oct. 26, 1941, pp. 4650-6. 70 Ibid., pp. 4650-1. 71 I have found two of the rather rare copies of these plans. One is in the papers of Raoul Dautry, the postwar minister of reconstruction and urban affairs (Archives Raoul Dautry, AN 307A P 124). The other is in the archive of the Comité Economique Interministériel (AN F60 658, 659). The plans are Délégation Générale à l'Equipe­ ment National, Plan d 'E q u ip e m e n t N a tio n a l (1942) and Plan d 'E q u ip e m e n t N ational: Tra n ch e de D ém arrage (1944); hereafter cited as PE and TD. A summary of these plans can be found in Direction de la Documentation, Secrétariat d'Etat à la Présidence du Conseil et à l'Information, "Les Plans français d'équipem ent," N otes d ocum entaires et étu d es, no. 267 (Mar. 22,1946). For a detailed analysis of these plans, see Richard F. Kuisel, "Vichy et les origines de la planification économique, 1940-1946," Le M o u v e ­ m e n t social, no. 98 (Jan.-Mar. 1977), pp. 77-101. 72 Lehideux's account of the genesis of the DGEN is in Hoover Institution, France d u r in g th e O ccupation, 1:35-8,193-7, and m Fondation Nationale, Le G o u v ern e m e n t de V ich y , pp. 91-6. 73 Pétain, A c te s, p. 494. 74 Procès verbaux, Comité consultatif, June 16, July 7, 21, 1942 (AN F60 658). 75 PE, p. 506. 76 PE, p. 98. 77 PE, p. 75. 78 PE, pp. 77 bis, 84-5. 79 PE, pp. 27^8. 80 In comparison with the Monnet Plan the high-priority targets of the ten-year plan were rather modest. For example, the latter called for a 10-billion-kw/hr expansion of hydroelectric capacity and an increase of coal output to over 60 million tons. The Monnet Plan, which originally was to run for only four years (1947-50), set goals of 12 billion kw/hr and 65 million tons, respectively. 81 To achieve this autonomy and centralize the allocation of credits, the DGEN pro­ posed creating a special Fonds d'Equipement with its own sources of income, e.g., receipts from profitable public enterprise, taxes on profits of equipment tra va u x. Control of the fund lay jointly in the hands of the DGEN and the Ministry of Finance. Together they were to allocate credits to ministries, communes, private contractors, and others who would execute the tra va u x. Although the state would not directly fund private equipment projects, it would encourage them through tax advantages and financial incentives and supervise them (through the DGEN and the CO network) so that they conformed to the national design. 82 PE, p. 443. 83 For Bichelonne's views on planning, see Conférence de M . B ichelonne s u r la réorgani­ sa tio n in d u strielle et com m erciale de la F r a n c e . .. 5 a o û t 1943 (1943). 84 Les Problèm es d u plan e t de la réorganisation économ ique: tr a va u x d u C onseil S u p érieu r de l'E co n o m ie In d u strielle e t C om m erciale (1943). There are several procès verb a u x of council

309

Notes topp. 153-162 meetings in 1942 in the Georges Lafranc Collection (Hoover Institution Archives, Stanford, Calif.). 85 Pierre Cathala had replaced Bouthillier. Cathala was a friend of Laval's and a parti­ san of agricultural interests. In Jan. 1944 Frédéric Surleau, conseiller d 'é ta t and a disciple of Dautry at the prewar SNCF, took charge of the DGEN. 86 Comité technique consultatif pour l'importation et la répartition des produits indus­ triels, E tu des p o u r u n p la n d 'im p o rta tio n de p ro d u its in d u striels (1944). 87 TD, p. 41. 88 TD, pp. ix - xii. 89 TD, p. iii. 90 TD, p. 50. 91 TD, p. 216. 92 TD, p. 91. 93 Thje influence of Vichy on postwar planning is discussed in Chapter 7. For the impact of the DGEN's contracts, see M. Garrigue, "Le Plan M onnet," C ollection d ro it social, no. 36 (Mar. 1950). p. 29. The major achievements of Vichy's plans claimed by the DGEN were numerous urban relief projects, the reform of building codes, and advances in regional planning. 94 TD, pp.8-9, 123-4. Chapter 6. The resistance and structural reform, 1940-1944 1 A general analysis of the ideas of the resistance is Henri Michel, Les C o u ra n ts de pensée de la résistance (1962). 2 Daniel Villey, "Pamphlet contre l'idéologie des réformes de structure," Les C ahiers politiques, no. 11 (June 1945), pp. 29-53. 3 My discussion of these study commissions is based on the Maisonneuve papers, which have been deposited in the archives of the Comité d'Histoire de la Deuxième Guerre Mondiale in Paris. Pierre Maisonneuve was in charge of the commissions' secretariat during 1941-3. 4 Alphand became ambassador to Washington in the 1950s. Alphand, Hirsch, and Marjolin all became members of Jean Monnet's team of postwar planners. Pleven and Philip both were to serve as ministers of finance in 1944-6. Boris became a key advisor to Mendès-France in 1944-5. 5 Christian Pineau, La S im p le Vérité, 1 9 4 0 -1 9 4 5 (1960), p. 175. 6 Hervé Alphand, "Problèmes économiques d'après-guerre: un point de vue fran­ çais," July 1942 (Commission économique, financière et sociale, Maisonneuve pa­ pers). 7 France Combattante, Commission pour l'étude des problèmes d'après-guerre, d'ordre économique, financièr et social, "Compte-rendu de la réunion. . . 25 août 1942." p. 3 (Section sociale, Maisonneuve papers). 8 British wartime planners impressed the French subcommittee with their approach to social justice. The British had shown the way by introducing a minimum wage and free social services financed by a progressive income tax. For Boris's response to the Beveridge plan, see Georges Boris, S erv ir la république (1963), pp. 324-6. 9 Alphand, "Problèmes économiques d'après-guerre," pp. 10-12. 10 Alphand explained that the reasons for adopting free trade were that some thought it was a desirable posture in itself and, in addition, "we will have to enter negotiations with the United States ("Compte-rendu 25 août 1942," p. 3). 11 Ibid., p. 4. 12 Boris, S ervir, pp. 328-35. 13 "Rapport du Centre Syndical Français sur le texte communiqué par M. A. Philip," 310

Notes to pp. 162 -167 Sept. 17, 1942 (Commission économique, financière et sociale, Maisonneuve pa­ pers); and "Com pte-rendu 25 août 1942," p. 4. 14 What little information London received came mainly from movements like the Organisation Civile et Militaire and a syndicalist group centered around Christian Pineau, Albert Gazier, and Robert Lacoste called the Comité d'Etudes Economi­ ques et Sociales. For the former group's views see "Remarques au point de vue économique sur les projets communiqués," April 30, 1943 (Commission économ­ ique, financière et sociale, Maisonneuve papers). 15 "Note du Commandant Bernard" (Commission économique, financière et sociale, Maisonneuve papers). "Bernard" was Hirsch's code name. 16 Charles de Gaulle, D iscours et m essages (1970), 1: 206. 17 "Rapport du chef du secrétariat sur la marche des commissions," March 25, 1943 (Dossier personnel de M. Maisonneuve, Maisonneuve papers). 18 René Courtin, P o u r les A u tr e s et p o u r soi (Montpellier, 1969), p. 15. 19 Diane de Bellescize, Le C o m ité G énéral d 'E tu d e s de la résistance , AUDIR microfiche series (thesis. Université de droit de Paris H, 1974), 1: 50-1. An abbreviated version of this thesis is Les N e u f Sages de la résistance (1979). 20 André Philip noted that intelligence from France indicated that the communists thought "only of fighting and did not participate in study groups" ("Compte­ rendu 25 août 1942." p. 3). See Stéphane Courtois, Le P C F dans la g u erre (1980). 21 C om bat, Sept. 1942, cited in Les Idées politiques et sociales de la résistance, ed. Henri Michel and Boris Mirkine-Guetzévitch (1954), pp. 143-5. 22 Le F ra n c-T ireur, Jan. 20, 1943, dted in Michel and Mirkine-Guetzévitch, Les Idées politiq u es, pp. 145-6. 23 "Programme d'action d'aprés-guerre proposé par la CGT," Aug. 1943, cited in Michel and Mirkine-Guetzévitch, Les Idées politiques, pp. 199-202. 24 Quoted in Arthur Calmette, L '" O C M " : histoire d 'u n m o u v e m e n t de résistance de 1940 à 1946 (1961), p. 11. 25 Two others who had a hand in composing the cahier were Jacques Rebeyrol, a lawyer and a socialist, and in te n d a n t général André Deschamps. 26 Jean Moulin, quoted in Calmette, L '" O C M ," p. 150. 27 Maxime Blocq-Mascart, C hroniques de la résistance (1945), p. 316. This volume re­ printed the OCM's cahiers after Blocq-Mascart had made revisions. 28 Ibid., p. 313. 29 Ibid., p. 333. The OCM, however, disapproved of the OCRPI because the alloca­ tion system short-circuited the administration and was running industry itself (ibid., p. 335). 30 Ibid., p. 333. 31 Speaking of the response of employers, who were numerous in the OCM, to the cahier, Blocq-Mascart said that they were "basically in agreement - ready to accept it if they felt a strong government was going to impose it on them ." They harbored reservations only about the obligatory syndicates which resembled "a Vichy m ea­ sure" too closely. Quoted in Calmette, L '" O C M " , pp. 60-1. 32 Thanks to the thesis of Diane de Bellescize, we possess an authoritative study of the CGE (L e C om ité G énéral d 'E tu d e s de la résistance). Many of her sources are still closed to researchers. A digest of her thesis is "Le Comité Général d'Etudes de la résistance," R e v u e d 'h isto ire de la d eu xièm e g u erre m ondiale, no. 99 (July 1975), pp. 1-24. Among their clandestine activities the experts published the C ahiers politiques de la résistance.

33 In 1943 the CGE added Michel Debré, the attorney Jacques Charpentier, and Pierre Lefaucheux from the OCM.

3™

Notes t opp. 168-174 34 Comité Général d'Etudes to the president of the Commission Économique, Financière, et Sociale in London, Apr. 27,1943 (document in the possesssion of Mme de Bellesdze). 35 CGE, "Questionnaire sur la politique économique d'après guerre," and "Note d'orientation et questionnaire sur le problème monétaire" (questionnaires in pos­ session of Mme de Bellesdze). 36 "Rapport établi par le CGE sur les mesures immédiates à prendre par le gouverne­ ment provisoire" (report in possession of Mme de Bellesdze). 37 "Rapport sur la mission de Guizot [Laffon] en France, 15 juillet au 12 septembre 1943" (reproduced in de Bellesdze, C om ité G énéral d 'E tu d e s , annex 4, pp. 12-23). 38 Laffon also had to report that he had failed to win unanimous approval from the National Resistance Council for a dedaration of prindples on economic and social reform prepared in London (ibid., pp. 21-3). In an attempt to forestall conflict between the political parties and the more radical resistance groups, the London commission prepared an economic and social charter. When traditional liberals disapproved it, the communists, who would only have endorsed it had it pleased everyone, withdrew their support. 39 The later, published, edition that I have used is René Courtin, R a p p o rt s u r la p o litiq u e économ ique d'après gu erre (Algiers, 1944). 40 Ibid., preface. 41 Ibid., p. 107. 42 Ibid., p. 61. 43 René Courtin, "Pour une Économie progressive," Les Cahiers politiques, no. 1 (Apr. 1943), p. 24. This article was an early sketch of Courtin's program. 44 Ibid., p. 26. 45 Courtin, R apport, p. 29. 46 On this point the report praised the CO despite their "errors" for "extremely fruitful work" in promoting product specialization (ibid., p. 38). 47 Ibid., p. 39. 48 The quotes in this paragraph are from ibid., p. 41. 49 The CFLN continued to receive detailed reports from the CGE on economic policy in 1944. Courtin, under the pseudonym "Berard," contributed the "Note sur la création d'un Ministère de l'Economie Nationale," and the CGE provided "La Mise au point de la législation des dommages de guerre," March 1944. Both docu­ ments are in the archives of the Commissariat à l'Intérieur, London)Algiers (AN F 1“ 3791). 50 Commissariat à l'Intérieur, "Critique du rapport sur la politique économique d'après guerre présenté par le Comité National d'Etudes de la résistance," June 1944 (AN F 18 3791). 51 Ibid. Léo Hamon, a fellow contributor to the C ahiers politiques ("Prix, rationne­ ment, et distribution dirigée," no. 5 [Jan. 1944]), also saw little help in restoring production through a combination of internal market forces and external "subjuga­ tion" to free trade. "The domination of the supplier would replace the yoke of the occupier for this country," he wrote (p. 19). 52 De Bellesdze, "Le Comité Général d'Etudes," pp. 17 - 24. 53 Most useful is Gérard Bouvier, "Idées, plans, et programmes économiques des socialistes dans la résistance" (memoir, Université de Paris X-Nanterre, 1969). Various sodalist programs are reprinted in Michel and Mirkine-Guetzévitch, Les Idées politiques. Also see Michel, Les C o u ra n ts, pp. 487-529; and Daniel Mayer, Les Socialistes dans la résistance (1968). 54 F raternité, July 1944. 312

Notes to pp. 174-181 55 The

pro gram m e co m m u n politiq u es, pp. 202-8.

appears in Michel and Mirkine-Guetzévitch,

Les Idées

56 Quoted in Bouvier, "Idées, plans, et programmes," p. 75. 57 Moch, "Projet de reconstruction politique et économique," reprinted in Michel and Mirkine-Guetzévitch, Les Idées politiques, pp. 304-37. 58 Like the other wartime socialist schemes Moch's permitted the existence of a free sector alongside the autonomous sectors. There were several reasons why the socialists made this concession. Vincent Auriol (H ier, dem ain [1945]/ 2: 138), for example, believed individual property was a "guarantee of liberty." Also, smallscale private properties were less important economic units and more difficult to collectivize. And it was bad politics to threaten such action in a nation of small producers. 59 Cited in Bouvier, "Idées, plans, et programmes," p. 67. 60 P ro g ra m m e co m m u n , in Michel and Mirkine-Guetzévitch, Les Idées p olitiques, p. 206. 61 Moch, "Note sur le Ministère de l'Economie," May 31,1944, Algiers (AN F 18 3792). 62 Reprinted in René Hostache, Le C onseil N a tional de la R ésistance (1958), pp. 457-63. 63 Ibid., p. 177. 64 Charles de Gaulle, M ém oires de guerre (19 5 4 -9 ), 2:174. 65 Jean Rioust de Largentaye was an inspector of finance and an official in the Com­ missariat aux Finances in Algiers. 66 André Philip, "Réformes économiques de structures," E tudes e t d ocu m en ts, nos. 1-2 (Mar.-Apr. 1945), pp. 3-58. 67 Ibid., p. 3. 68 Ibid., p. 4. 69 Ibid., p. 5. 70 Philip's sympathies were not with the farmer. With 40% of the population on the land, he observed, France still could not feed itself or supply its industry. He hoped to "industrialize agriculture" and do it quickly. There was a political grievance, too. Philip accused the Third Republic of keeping agriculture in a stationary state so that it furnished a "reservoir of docile electors" for conservative political parties. 71 Philip, "Réformes économiques," p. 4. 72 Ibid., pp. 6-7. 73 Ibid., p. 7. 74 Ibid., pp. 49-58. 75 Comité Central du Parti Communiste, "Observations du Parti Communiste sur le projet de programme commun présenté par le Parti Socialiste à la résistance," Apr. 25, 1944 (Michel and Mirkine-Guetzévitch, Les Idées politiques, pp. 218-38). Com­ munist comments on the report of the CGE are also found in Jacques Debû-Bridel, D e G a u lle et le C N R (1978), pp. 91-2. 76 In a friendly response to the Communists, Daniel Mayer stressed that the p ro­ g ra m m e c o m m u n was not a specifically Socialist text but a minimum program de• signed to preserve unity within the resistance ("Réponse du Parti Socialiste," in Michel and Mirkine-Guetzévitch, Les Idées politiques, pp. 238-47). Socialist reluc­ tance to prescribe the process of nationalization or the institutions that were to replace the CO stemmed from fear of dividing the National Resistance Council, according to Mayer. 77 "Observations du Parti Communiste," in ibid., p. 233. 78 Speeches of Apr. 20,1943, and July 14,1943, in de Gaulle, D iscours e t m essages, 1: 280, 312. 79 De Gaulle, M ém oires de guerre, 3: 94-5. 80 Speech of Mar. 2, 1944, in de Gaulle, D iscours e t m essages, 1: 378-9.

313

Notes to pp. i 8 i -184 81 De Gaulle, M ém oires de g uerre, 2:174. 82 Ibid.. 3: 5. 83 This committee functioned as a kind of economic cabinet within the provisional government during 1944-6. De Gaulle usually presided over its meetings. In Al­ giers, besides Pleven, Mayer, Mendès-France, and Giacobbi, its members were René Capitant, social policy, Henri Queuille, state commissioner, and René Massigli, foreign affairs. Raymond Offroy served as its general secretary and as an advisor to de Gaulle. The procès verbaux and supporting materials of the Comité Economique Interministériel form part of a remarkable archive, the F60 series, collected by the Secrétariat Général du Président du Conseil. The documents for the period Mar.-Aug. 1944 are in AN F60 896 and 914. For a history of the committee, see "Le Comité Economique/" B u lletin d 'in fo rm a tio n e t de d o cu m en ta tio n , no. 5 (Apr. î-June 3, 1944), pp. 259-70. 84 Giacobbi, "Note sommaire sur les questions d'ordre économique et de ravitaille­ m ent pour lesquelles l'avis de l'assemblée peut être dem andé," Feb. 9,1944 (AN F60 914). 85 Offroy, "Note pour le Général de Gaulle," Feb. 10, 1944 (AN F60 914). 86 Ibid. 87 Offroy, "Note pour le Général de Gaulle," June 25, 1944 (AN F60 914). MendèsFrance spelled out his strategy of soaking up purchasing power in his "Note sur les questions monétaires et financières," Commissariat aux Finances, Algiers, Feb. 1944, reproduced in "M. Pierre Mendès-France, documents 1944-1945," Commis­ sion d'Histoire Economique et Sociale, Comité d'Histoire de la Deuxième Guerre Mondiale, 1978. 88 CFLN. "Projet de décision concernant la politique économique, financière et so­ ciale" (AN F60 914). 89 Mendès-France to Comité Economique, June 22,1944, quoted in Offroy, "Projet de note," July 25, 1944 (AN F60 896). 90 Mendès-France to Offroy, Apr. 20, 1944 (AN F60 896). 91 François Bloch-Lainé, "A propos du Rôle du Ministère des Finances des années 1930 aux années 1940: questions et réponses," compte rendu sténographié. Com­ mission d'Histoire Economique et Sociale réunion du 24 janvier 1977, Comité d'Histoire de la Deuxième Guerre Mondiale. 92 Courtin, P o u r les A u tre s, p. 17. Also see de Bellescize, "Le Comité Général d'Etudes," p. 17. 93 Aimé Lepercq and René Pleven were the first two ministers of finance in 1944-5. After Lepercq's accidental death in Nov. 1944, de Gaulle supposedly considered offering the post to Courtin. 94 Courtin, R apport, p. 91. 95 De Gaulle, D iscours et m essages, 1: 384-5. 96 In his final address to the assembly in July before his return to France, de Gaulle reiterated this explanation of his policy, adding only that he anticipated American aid until production and trade revived, and he promised an adjustm ent in wages (ibid., pp. 433-4). 97 De Gaulle, M ém oires de g uerre, 2:180-1. 98 At its June 26, 1944, session with de Gaulle presiding, the Comité Economique adopted Giacobbi's recommendations with minor revisions ("Procès verbal de la séance du 26 juin 1944," AN F60 896). Giacobbi's position paper is "Politique économique dans la métropole libérée," June 1944 (AN F60 896). 99 "Politique économique dans la métropole libérée" (AN F60 896). 100 Offroy, "Note pour le Général de Gaulle," June 25, 1944 (AN F60 914).

314

Notes to pp. 184-194 101 JO , A ssem blée C o n su lta tive Provisoire, débats, July 21,1944, pp. 202-4. 102 Ibid., p. 208, and July 22,1944, p. 215. Also see Michèle Gazçt, L 'A ssem b lée C o n su l­ ta tiv e Provisoire: A lg er, 3 novem bre 1 9 4 3 -2 3 ju ille t 1944, AUDIR microfiche series (thesis. Université de Paris X-Nanterre, 1970), pp. 226-41. Chapter 7. The turning point: the liberation and early postwar years, 1944-1949 1 The most satisfying interpretation of economic policy during the liberation is Jean Bouvier, "Sur la Politique économique en 1944-1946," La Libération de la France, Comité d'histoire de la deuxième guerre mondiale, actes du colloque. . . octobre 1974 (1976), pp. 835-56. Bouvier argues that the decisions to accept inflation and to introduce structural reform that modernized and rescued capitalism rather than overturning it set France on the path toward long-term growth and neo-liberalism. 2 Ronald Matthews, T h e D eath o f th e F ourth R epublic (1954), p. 178. 3 Commissariat aux Finances, Gouvernement Provisoire de la République Française, La P o litiq ue financière de la France libérée (Algiers, Aug. 1944), p. 46. 4 Comité Economique Interministériel, session of June 26, 1944 (AN F60 896). 5 JO, A ssem blée C o n su lta tive Provisoire, débats, July 4,1945, pp. 1311-12. 6 Ibid. 7 André Philip, "Réformes économiques de structures," E tudes e t docu m en ts, nos. 1-2 (Mar. - Apr. 1945), pp. 3-58. Somewhat less committed to the radical position were ministers like Robert Lacoste and Giacobbi. Moch's account appears in R eco n ­ tres . . . avec de G aulle (1971), pp. 57-79. 8 Thorez interview published in the T im es, Nov. 18,1946; Philippe Robrieux, M a u rice T h o rez (1975), pp. 288-9. Difficulties encountered by the communist-led CGT in its "battle of production" strategy are explained in Annie Lacroix, "CGT et action ouvrière de la libération à mai 1945," R e v u e d'h isto ire de la deu xièm e g u erre m ondiale, no. 116 (Oct. 1979), pp. 44-68. 9 Institut Français d'Opinion Publique, L 'O p in io n d u m onde du travail s u r les con d itio n s de v ie économ ique e t sociale (1946), pp. 52-9. In a series of polls taken between Nov. 1944 and June 1945 roughly two-thirds of each sample favored nationalization. The support for the économ ie libérale came mainly from businessmen and farmers. 10 "1944-1947: des communistes au gouvernement," C ahiers d 'h isto ire de l'I n s titu t M . T horez, ist trimester, 1974, p. 147. 11 "Le Grand Patronat et les problèmes immédiats d'après guerre," Commissariat à l'Intérieur, July 1944 (AN F 1a 3791). The ostracism of employers made it impossible for them to shape events. The provisional government even kept a semiofficial employers' delegation at arm's length. See Jean-Noël Jeanneney, "Hommes d'af­ faires au piquet," R e v u e h istorique 533 (Jan.-Mar. 1980): 81-100. Georges Villiers, an organizer of the postwar employers' movement, recorded his apprehension about communism in his memoirs ( T ém oignages [1978], pp. 115-28). 12 Henry W. Ehrmann, O rganized B usiness in France (Princeton, 1957), pp. 106-7. 13 Gabriel Ardant and Pierre Mendès-France, La Science économ ique e t l'action (1954), preface. 14 He presented his program to the Council of Ministers on Nov. 17, 1944, in a long document entitled "Programme de travail du Ministère de l'Economie Nationale" (AN F60 423). 15 Pierre Mendès-France, "Les Réformes de structure: limites du secteur à nationaliser, ordre d'urgence," mimeographed, 2nd ed., March 1945 (AN 307AP 124).

315

Notes topp. 194-199 16 For the proposals and debates within the cabinet over creating the MEN between Sept, and Nov. 1944, see AN F60 897. 17 Diane de Bellescize, Le C om ité G énéral d 'E tu d e s de la résistance, AUDIR microfiche series (thesis. Université de Paris II, 1974), 1: 407. 18 For Mendès-France's correspondence on planning and for the initial meetings of the planning office between Oct. 1944 and Jan. 1945, see AN F60 915. 19 Pierre Mendès-France, C hoisir (1974), p. 42. 20 Philippe Bauchard, Les Technocrates et le p o u vo ir (1966), p. 227. 21 For Vichy's plans, see Chapter 5. 22 MEN to Ministre d'Etat, Mar. 27, 1945 (AN F60 659). 23 Ministère de la Reconstruction et de l'Urbanisme, L ivre blanc de la reconstruction (1946). 24 Comité Economique Interministériel, session of Oct. 2,1944 (AN F60 897). 25 Mendès-France to de Gaulle, Jan. 18,1945 (de Gaulle, M ém oires de gu erre [1954-9 J, 3: 426-36). A recent study of this dispute is by Steven P. Kramer: "La Crise économique de la libération," R e v u e d 'h isto ire de la deu xièm e g u erre m ondiale, no. 111 (July 1978), pp. 25-44. 26 JO , A ssem blée C o n su lta tive Provisoire, débats, Mar. 29,1945, pp. 904-18. 27 Ibid., p. 917. 28 Emmanuel Monick, P o u r M ém o ire (1970), p. 130. François Bloch-Lainé (P ro fessio n : fo n ctio n n a ire [1976], pp. 72-3) said only a few inspectors of finance such as G. Ardant, G. Guindey, and himself supported Mendès-France; the rest of the corps of inspectors backed Pleven. 29 For Courtin's position, see his "L'Expérience monétaire belge," Les C ahiers p o litiques, no. 7 (Feb. 1945). pp. 47-58. Among other arguments Courtin insisted it would be more difficult to execute a uniform operation in France than in Belgium. The technical reasoning against a currency exchange is presented in Gaëtan Pirou, "Le Problème monétaire en France depuis la libération," R e v u e d'écon o m ie p o litique, nos. 1-2 (Jan.-Feb. 1945), pp. 12-49. 30 A. Laurent and A. Tixier supported him, and the other ministers, including So­ cialists like Lacoste, voted against Mendès-France. 31 François Bloch-Lainé, "A propos du Rôle du Ministère des Finances des années 1930 aux années 1940: questions et réponses," compte rendu sténographié. Commission d'Histoire Economique et Sociale, réunion du 24 janvier 1977, Comité d'Histoire de la Deuxième Guerre Mondiale. 32 De Gaulle, M ém oires de guerre, 3:120. 33 Ibid., pp. 119-20. See Olivier Wormser, "Le Général de Gaulle et la politique monétaire de la France," Le Figaro, June 29,1973. 34 Mendès-France, C hoisir, p. 43. 35 "Communication du MEN," Sept. 28,1945 (AN F60 901). 36 Dautry to Pleven, June 17,1945 (AN 307AP124). The staff at Dautry's ministry were forceful partisans of planning and modernization in 1944-5. One official, the geog­ rapher Jean-François Gravier, published what became one of the most influential postwar books on the need to restructure the economy and society. Entitled Paris et le d ésert français (1947), Gravier's study described Paris as a monster of centralization devouring the vitality of the nation. He urged the adoption of a plan to redistribute people, industry, and wealth and to renovate certain economic sectors. Gravier wrote, much like Clémentel, in the vein of regional planning. 37 Ministère de la Reconstruction et de l'Urbanisme, L ivre blanc, no pagination. 38 "Note sur la reconstruction," Dec. 11,1945 (AN 307AP 123).

316

Notes to pp. 199-207 39 Georges Boris, “La Politique du plan: choix nécessaire," Sept. 29,1945 (AN 307AP i23).

40 Ibid. An example of these sectoral plans is Paul-Marie Pons, “Un Plan quinquennal de l'industrie automobile française," Les C ahiers politiques, no. 10 (May 1945), pp. 52-64. and no. 11 (June 1945), pp. 54-68. 41 Georges Boris, S e rv ir la république (1963), pp. 320-6. 42 Boris, “Politique du plan." 43 Direction de la Documentation, Secrétariat d'Etat à la Présidence du Conseil et à l'Information, “Les Plans français d'équipem ent," N o tes docum entaires et études, no. 268 (Mar. 28, 1946). 44 A government spokesman observed: 'T h e plan de démarrage has not been im­ plemented. It was revised, however, and has served as the point of departure for drafting the 1946 Equipment Plan" (ibid., no. 267 [Mar. 22, 1946], p. 22). 45 Bruce D. Graham, The French Socialists and Tripartism, 1944-1947 (Toronto, 1965), pp. M5-746 My discussion of the motives and viewpoints of the various proponents of nationalization relies on two excellent theses. The first is a study based on superb sources that treats the gas and electricity measures from the perspective of political decision making. See Guy Bouthillier, La N ationalisation du gaz et de l'électricité en France: acteurs et processus, AUDIR microfiche series (thesis. Université de Paris X-Nanterre and FNSP, 1969). The other, older work provides a detailed analysis of the debate. See Harold A. Fletcher, “The Nationalization Debate in France, 19421946“ (thesis, Harvard University, 1959). The newest general account is Jean-Michel Six, “Nationalisations et environnement capitaliste" (thesis. Université de Paris X-Nanterre, 1977). The struggle over nationalization, told from the communist perspective, is by René Gaudy, E t la L um ière f u t nationalisée (1978). 47 The provisional government created the plant committees or Comités d'Entreprises partly to advance the resistance goal of improving industrial relations and partly to check spontaneous expropriations of firms by workers. Legislation adopted in 1946 required these committees in all plants employing more than fifty workers, ex­ tended their role as consultative organs to a wide range of economic matters, and made them administrative bodies for company social services. Like the nationaliza­ tions these committees proved to be a disappointment to their early partisans (Ehrmann, O rganized B u sin ess, pp. 446-60). 48 Moch, R encontres, p. 59. 49 JO , A ssem blée N a tio n a le C o n stitu a n te, débats, Feb. 15, 1946, p. 311. 50 Jules Moch wrote two position papers for the Socialists on nationalization: G u erre a u x tru sts: so lu tio n s socialistes (1945) and “Réflexions sur les socialisations," Les C ahiers p olitiques, no. 8 (Mar. 1945), pp. 21-36. 51 Bouthillier, La N atio n a lisa tio n , pp. 77-8; Fletcher, “Nationalization Debate," pp. 298-9. 52 Moch, G uerre, p. 9. 53 Le M o n d e , Oct. 30,1945. 54 Bouthillier, La N a tionalisation, p. 105. 55 Etienne Fajon, “Les Communistes et les nationalisations," C ahiers d u co m m u n ism e , no. 4 (Feb. 1945), p. 31. 56 For the MRP, see Bouthillier, La N a tio n a lisa tio n , pp. 113-30; Fletcher, “Nationaliza­ tion Debate," pp. 346-56. 57 De Gaulle, D iscours e t m essages (1970), 1: 556-7. The growing rift between the So­ cialists and de Gaulle over his delaying structural reforms is examined by Steven P.

317

Notes to pp. 207-215 Kramer, "La Stratégie socialiste à la libération de la France/' R e v u e d 'h isto ire de la no. 98 (Apr. 1975), pp. 77-90. 58 Etienne Dejonghe, "Les Problèmes sociaux dans les entreprises houillères du Nord et du Pas-de-Calais durant la seconde guerre m ondiale/' R e v u e d 'h isto ire m od ern e et contem poraine 18 (Jan.-Mar. 1971): 124-47. 59 For details, see Fletcher, "Nationalization Debate," pp. 436-45, 505-14, 528-42, 578-90; or Adolf Sturmthal, "The Structure of Nationalized Enterprises in France," Political Science Q u a rterly 67 (1952): 357-77. 60 In the tripartite arrangement the boards contained equal numbers of representatives of the state, personnel, and consumers. Ministries designated the first group, trade unions the second, and various interests including industrial consumers, consumer organizations, and trade unions selected the third. This scheme was used for the gas, electricity, and coal boards. In the quadripartite system, as with the insurance companies, independent experts were added. 61 Bouthillier, La N ationalisation, pp. 174-90. 62 Warren C. Baum, T h e French E conom y a n d th e S ta te (Princeton, 1958), pp. 180-223. 63 Bouthillier, La N ationalisation, pp. 231-41. I 64 Comité Economique Interministériel, session of Dec. 14, 1945 (AN F60 901). 65 Bernard Chenot, Les E ntreprises nationalisées (1972), pp. 106-11; Maurice Byé, "Nationalization in France," N ationalization in France a n d Ita ly (Ithaca, N.Y., 1955), pp. 102-4; David H. Pinkney, "The French Experiment in Nationalization, 19441950," in M o d e m France: Problem s o f th e T h ir d a n d F o u rth R epublics, ed. Edward Mead Earle (Princeton, 1951), pp. 363-67. 66 Pierre Waline, "Les Nationalisations," D ro it social, no. 3 (Mar. 1945), pp. 92-4. 67 On the continuity of direction, see Bouthillier, La N a tionalisation (p. 370), and Bloch-Lainé, Profession (p. 105), for Electricité de France and credit banks, respec­ tively. 68 Le F o n ctio n n em en t des entreprises nationalisées en France, Université de Grenoble, travaux du 3e colloque des facultés de droit (1956), pp. 401-2. 69 My account of Lefaucheux is based on Patrick Fridenson, "Intervention à propos de la communication de M. Bouvier," La Libération de la France, pp. 869-72. 70 Pierre Lefaucheux, 'Tassage au socialisme," Les C ahiers politiques, no. 8 (Mar. 1945), PP- 37-53- no- 9 (Apr. 1945), pp. 37 -48. 71 Robert Catherine, L 'In d u s tr ie (1965), pp. 25-7. 72 For the decline of the MEN, see: Gaston Cusin, "Les Services d e l'économie nationale, 1944-1948," compte rendu sténographié, Commission d'Histoire Economique et Sociale, réunion du 12 décembre 1977, Comité d'Histoire de la Deuxième Guerre Mondiale; Francis-Louis Closon and Jean Filippi, L'E co n o m ie e t les fin a n ces (1968), pp. 495-9; Bernard Chenot, O rganisation économ ique de l'é ta t (1951), pp. 128-42. 73 J. S. G. Wilson, French B anking S tr u c tu re a n d C redit P olicy (Cambridge, Mass., 1957), pp. 285-6, 326. 74 J. E. S. Hayward, P rivate In terests a n d P ublic Policy: T h e E xperience o f th e French Econom ic and Social C ouncil (1964), p. 14. 75 Claude Gruson, O rig in e et espoirs de la planification française (1968), pp. 2-3; Chenot, O rg a n isa tion économ ique, pp. 129-32; Closon and Filippi, L 'E conom ie, pp. 38-9, 60-1; John and Anne-Marie Hackett, E conom ie P la n n in g in France (Cambridge, Mass., 1963), pp. 104-12. 76 Robert Gilpin, France in th e A g e o f the Scien tific S ta te (Princeton, 1968), pp. 151-87. 77 Jean-François Kesler, "La Création de l'ENA," La R e v u e a d m in istra tive , no. 178 (July -Aug. 1977), pp. 354-69; Marie-Christine Kessler, L'E cole N ationale d 'A d m in is tr a tio n , d eu xièm e gu erre m ondiale,

318

Notes to pp. 215-222 vol. 1: La P olitique de la h a u te fo n ctio n publique (1978), pp. 35-66 and Michel Debré's preface; Debré, " L a Réforme de la fonction publique/' R e v u e de l'Ecole N a tio n a le à 'A d m in is tr a tio n , no. 1 (May 1946), pp. 5-48. For the founding of the ENA, also see A ssem b lée C o n su lta tive P rovisoire, débats, June 22-23, 1945, pp. 1168-82,1186-97. 78 Jean-François Kesler, "Les Anciens Elèves de l'Ecole Nationale d'Administration," R e v u e française de science p olitique 14 (Apr. 1964): 249. 79 Robert Lacoste, "Des Comités d'Organisation aux Offices Professionnels," N o tes docu m en ta ires e t études, no. 28 (Mar. 7, 1945), pp. 1-4. 80 The dissolution of the offices called for the ministries to fix quotas of materials for each branch of the economy. Ministries suballocated materials to nationalized en­ terprises and other public services, and employers' associations and Chambers of Commerce handled the m atter for private firms. Thus organized business came to assume many semiofficial functions and rebuilt its trade associations (Ehrmann, O rg a n ized B u sin ess, p. 113). 81 Paul Delouvrier and Roger Nathan, P olitique économ ique de la France, cours de droit, Université de Paris, 1957-8, pp. 222-3. 82 Ministre de l'Intérieur, études générales, Nov. 28,1946 (AN F 18 3362). Chapter 8. The M onnet Plan, 1945- 1952: the prototype of planning 1 2 3 4

Jean Monnet, M ém oires (1976), p. 270. Ibid., p. 273. André Kaspi, La M issio n de Jean M o n n e t à A lg er, m ars - octobre 1943 (1971). Hervé Alphand, Léon Kaplan, and René Mayer also worked with Monnet in Washington. After the war Alphand and Kaplan helped him negotiate loans with the Americans, and Mayer served as minister of finance during an early stage of the Monnet Plan. 5 "Rapport de M. Jean M onnet sur l'approvisionnement de la France pour la période de libération et pour la remise en marche rapide de son économie,',' Aug. 1944 (AN F60 896); "Rapport de M. Jean Monnet, résumé du plan de remise en marche rapide de l'économie française," Aug. 4,1944 (AN F110 918). For details, see the volumi­ nous "Dossier de M. Jean Monnet" (AN F,w 921). 6 Leo T. Crowley to Monnet, Aug. 18,1945 (Monnet papers, correspondence 1945). This chapter depends heavily on M onnet's private papers, which have been deposited in Lausanne. All my references, except those from his correspon­ dence, are drawn from the forty-four cartons that comprise his archive on the Plan de Modernisation et d'Equipement. Henceforth "MP" will refer to the M onnet papers, the first num ber to that of the carton, and the second number, when possible, to the particular dossier within the carton. For the American side to the termination of lend-lease, see James J. Dougherty, T h e Politics o f W a rtim e A id : A m e rica n Econom ic A ssista n c e to France a n d French N o rth w e st A frica , 1 9 4 0 -1 9 4 6

(Westport, Conn., 1978), pp. 189-212. 7 Memorandum by Arnold Quirin, July 30, 1945, in U.S. Department of State, Foreign R elations o f th e U n ite d S ta te s . 1945, vol. 4 (Washington, D.C., 1968), pp. 7637; hereafter cited as F R U S . Fred L. Block ( T h e O rig in s o f In tern a tio n a l Econom ic D iso rd er [Berkeley, 1977], pp. 32-108) explains why the United States keyed its postwar policy to forcing Europeans to open their economies to trade, especially to American exports. 8 M. Armengaud, "La Mission de la production industrielle aux Etats-Unis," C ahiers fra n ça is d 'in fo rm a tio n , May 19, 1946, pp. 13-16. 9 Ibid., p. 14.

319

Notes to pp. 222 -228 10 Edgar Beigel, 'Trance Moves toward National Planning," Political Science Q u a rterly 62 (Sept. 1947): 388-9; and Alfred Sauvy, D e P aul R e y n a u d à C harles de G a u lle (Tournai, 1972), p. 182. 11 "Note pour M. le Général de Gaulle," Aug. 22,1945 (MP, correspondence 1945). 12 Ministerial declaration, Nov. 23,1945, in L 'A n n é e politique 1 9 4 4 -1 9 4 5 (1946), p. 488. 13 These letters appear in F R U S , / 945, 4: 768-71. On Jan. 15,1946, Jefferson Caffery, the United States ambassador, reported to the secretary of state that Monnet and his assistants told embassy officials that "French adoption of American commercial policy is contingent on large-scale US credits." W ithout such credits France would modernize production "but more slowly and necessarily within the framework of a closed economy" {F R U S , 1946. vol. 5 (1969], p. 399). The two governments pro­ ceeded to open negotiations, and United States officials expressed interest in any studies the French prepared to document their needs. 14 Monnet to de Gaulle, "Memorandum sur le Plan de Modernisation et d'Equipem ent," Dec. 4, 1945" (AN F60 901). This document is reproduced in Charles de Gaulle, M ém oires de g uerre (1954-9), 3: 634-9. 15 Comité Economique Interministériel, session of Dec. 14,1945 (AN F60 901). 16 This decree, which the CGP drafted for the government ('T rojet de décret," Dec. 18, 1945, MP 1, 1), can be found in L 'A n n é e politique 1949 (1950), pp. 413-14. 17 Jean Vergeot soon replaced them. Other important members of the original staff were Maurice Aicardi, Roger Auboin, Léon Kaplan, and Pierre Denis. Monnet describes the birth and development of the PME in his M ém oires, pp. 275-311. 18 "Note sur les lignes générales du plan français," 1946 (MP 38, 2). 19 CGP, R a pport général à la d eu xièm e session du C onseil d u Plan (Sept. 1946). 20 When the planners chose to identify a precedent for the PME they ignored the left's contributions, except for the effort of the MEN in 1936, and went back to Clémentel's 1919 report on industry. Clémentel had attempted to relate the stan­ dard of living, production costs, productivity, and modernization. See JacquesRené Rabier, "Le Plan M onnet," C ollection d ro it social, no. 36 (Mar. 1950), p. 2. This collection of articles on the PME will henceforth be cited as "Le Plan M onnet." 21 Interview with Robert Marjolin, Nov. 22,1976. 22 "Note sur les méthodes d'exécution du plan," 1946 (MP 38, 2). 23 Monnet, M ém oires, p. 293. 24 Ibid., p. 274. 25 Marjolin, "Note sur l'élaboration et l'exécution du plan," Apr. 23,1946 (MP 1, 4). 26 Monnet, M ém oires, pp. 305-6. 27 Ibid., p. 306. 28 Robert Marjolin, "Le Commissariat Général du Plan," C ahiers français d 'in fo rm a tio n , June 1,1946, p. 17. 29 Ibid., p. 18. 30 Monnet, M ém oires, p. 306. 31 Interview with Etienne Hirsch, Oct. 29,1976. For the working parties, see Andrew Shonfield, M o d e m C apitalism (New York and London, 1965), pp. 88, 96-9. 32 Interviews with Hirsch and Marjolin. Because the CO served different purposes and their personnel were limited to administrators and businessmen, they were not much of a model for the commissions. 33 "Note sur les méthodes d'exécution du plan," 1946 (MP 38, 2). 34 Rabier, "Le Plan M onnet," p. 2. 35 Monnet to M. le Président Gouin, Feb. 7,1946 (MP 1,1). This letter may never have been sent to Gouin. 36 Marjolin, "Le Commissariat Général du Plan," p. 17. 320

Notes to pp. 229-233 37 38 39 40 41 42 43

Monnet, M é m o ires, p. 285. Comité Economique Interministériel, session of Feb. 19, 1946 (AN F60 925). Hirsch, "Exposé préliminaire sur le PME," June 26, 1946 (MP 3, 1). J.-F. Gravier, quoted in Monnet, M ém oires, p. 286. Monnet to Philip, Jan. 23, 1947 (MP 33). Draft of a letter to Gouin, Feb. 12, 1946 (MP 1, 1). The ministries wanted officials to preside over the commissions. Monnet allowed them to sit as vice-presidents but preserved the presidencies for nonadminis­ trators. 44 Robert Nathan. Organization for Planning, Aug. 23, 1946 (MP 43). 45 Minutes of the first sessions of the Conseil du Plan, Mar. 16-19,1946 (MP 1, 2; 2, 4). Also see "La Première Session du Conseil du Plan," N o tes docum entaires et études, no. 291 (Apr. 27, 1946). 46 Source for this discussion is "Rapport de M. Léon Blum et de la délégation fran­ çaise sur les négociations franco-américaines de Washington, mars-mai 1946" (AN F60 923). 47 N e w Y o rk T im es, Mar. 31, 1946. 48 CGP, D o nnées sta tistiq u es s u r la situ a tio n de la France au d ébut de 1946 (1946), p. 14. An English version was prepared for the negotiations: S ta tistica l R e v ie w o f th e Econom ic a n d Financial S itu a tio n o f France a t th e B eg in n in g o f 1946 (1946). 49 "Avant-projet du premier plan français de modernisation et d'équipem ent," Apr. 13-14, 1946 (MP 3, 1). 50 "Rapport de M. Léon Blum. . . annexe no. 6." Blum addressed the National Advi­ sory Council on the subject of nationalization on Mar. 25, 1946 ( L 'O e u vr e de Léon B lu m , vol. 6 [1958I, pp. 189-96). 51 War Department to the Commanding General, U.S. Forces, European Theater, May 3,1946, F R U S , 1946, 4: 435-6. 52 Caffery to Byrnes, Feb. 9, 1946, ibid., p. 413. 53 Minutes of the National Advisory Council, Apr. 25, 1946, ibid., p. 432. 54 Minutes of the National Advisory Council, May 6,1946, ibid., p. 441. 55 Memorandum of Agreements, May 28,1946, ibid., p. 463. 56 Monnet, "Notes pour le rapport au govemement français sur les négociations conduites par M. Léon Blum . . . " (MP 38, 3). 57 Each commission published its own report; e.g., CGP, P rem ier R a pp o rt de la C o m ­ m issio n de M odern isa tio n de la S idérurgie (Nov. 1946). The PME itself is CGP, R a p p o rt gén éra l s u r le prem ier plan de m odernisation e t d'éq u ip em en t, novem bre 1 9 4 6 -ja n v ie r 1947

(1947)58 CGP, R a p p o rt général, p. 22. 59For example, coal production was to reach 65 million tons by 1950; hydroelectric power was to increase to 24 billion kw/hr and total electricity to 39V2 billion kw/hr by 1951; and 200,000 tractors were to be manufactured by 1950. Targets for other ' industries were less definite and stated only to "guide" activity. 60 CGP, R a p p o rt général, p. 22. 61 CGP, P rem ier R a p p o rt de la C om m ission de la M a in -d 'O e u v r e (Oct. 1946). 62 In 1929 the corresponding figure was 20%; in 1938 it was 16%; in 1946 19%. See Wallace C. Peterson, "Economic Reconstruction in France, 1946-1952" (thesis. University of Nebraska, 1953), pp. 64-5. 63 CGP, R a p p o rt général, pp. 87, 90-1; "Note sur le financement intérieur du plan français," 1946 (MP 38, 2). Also see Pierre Soudet, "Le Plan M onnet," p. 21. 64 Marjolin, the staff economist, was a Keynesian, but he regarded Keynes's influ­ ence as unimportant (Marjolin interview). Marjolin, however, did visit Keynes in 321

Notes to pp. 234-239

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3 Sä 3 S

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2

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1946 for advice on planning (Monnet to Keynes, Mar. 20,1946 [MP 32]). Peterson ("Economic Reconstruction," pp. 47-50) detected Keynesian ideas in the plan's analysis of aggregate income; that is, because savings out of current income were inadequate to finance the PME, the CGP needed to create credit, which through the "multiplier" would generate higher levels of income and savings until the point was reached where savings would sustain a high level of investment or, as Monnet said in 1949, the plan would finance itself. Such an analysis, in my view, was more implicit than explicit in the PME as originally drafted. 65 The PME permitted deficit financing for its projects and for reconstruction but wanted the state to operate with a balanced budget to guard against inflation (CGP, R a pport général , p. 93). Nathan observed that by its very nature the PME was inflationary and warned that a failure to get prices under control would hinder its execution (Nathan, "Inflation and Fiscal Policy," Aug. 17,1946 [MP 43]). 66 ''Note sur l'élaboration et l'exécution du plan," Apr. 23,1946 (MP 1, 4). Marjolin was, nevertheless, forceful with firms that refused to cooperate and proposed that the state confiscate them. 67 "Intervention de P. Lamour au Conseil du Plan," Nov. 27,1946 (MP 3, 2). "Déclaration de P. Lebrun au Conseil du Plan," Nov. 27,1946 (MP 3, 2). C N P F B u lletin , Dec. 15,1946, p. 11. Ibid., Feb. 1947, pp. 12-14. 'Trocès-verbal de la session du 7 janvier 1947, Conseil du Plan" (MP 3, 3). The following federations supported the PME: CGT, CFTC, CGA, CNPF, and CGPME. "Décret du 16 janvier 1947 relatif aux modalités d'exécution du PME," in L 'A n n é e p o litiq u e 1949, pp. 414-15. The CGP absorbed the planning services of the MEN. By 1948 two out of three Frenchmen had heard of the PME, yet only 22% of those who had heard of it knew it had been applied, and 44% thought it had been abandoned, never undertaken, or were uncertain of its progress. Industrialists, professionals, and fonctio n n a ires were far more knowledgeable than farmers or workers (Institut Français d'Opinion Publique, "L'Opinion et les problèmes économiques Plan Monnet - Plan Marshall," June 1948, [MP 44, 3]). Planification e t société: actes d u colloque ten u à G renoble d u 9 au 12 octobre 1973 (Greno­ ble, 1974), p. 644. "Direction des Renseignements Généraux, Sûreté Nationale," Nov. 30,1946 (AN F 1a 3361). At a business conference held in Dec. 1946 officials of the CNPF, ANEE, FIÇIF, and Chambers of Commerce called the PME acceptable (AN F 1a 3361). Hirsch interview. C N P F B u lletin , July 1947, p. 4. Henry W. Ehrmann, O rganized B usiness in France (Princeton, 1957), PP- *8i, 288-9. Delouvrier to Schuman, Feb. 5, 1947 (MP 33); "Communication aux membres du Conseil du Plan au sujet des programmes de 1947," Apr. 15, 1947 (MP 3, 4). Monnet to Ramadier, Sept. 8, 1947 (MP 33). Monnet to Ramadier, Oct. 25, 1947 (MP 33). The CGP wanted to protect the working class by holding the line on prices and taking other measures (working paper of the Commission du Bilan, Sept. 15, 1947 [MP 33]). For an analysis of the balance sheet, see Harold Lubell, "The French Investment Program: A Defense of the Monnet Plan" (thesis. Harvard University, 1951), pp.

SS

72-6. Monnet to Schuman and Mayer, Dec. 6, 1947 (MP 28). For an affirmative appraisal of this program, see Paul Delouvrier and Roger Nathan, P olitique économ ique de la France, cours de droit. Institut d'Etudes Politiques, 1953-4, fasc. 5, pp. 93-9. 322

Notes to pp. 239-243 85 CGP, "Plan 1952 révisé: agriculture," Dec. 1948 (MP 20). In order to overcome farmers' fear of overproduction the planners guaranteed foreign markets and ex­ tended price supports in the revised PME. The farmers were to foot the bill for 75% of improvements such as mechanization and rem em brem ent. The PME now called for maintaining the existing size of the farm population while raising productivity. For the revised 1948 plan, see CGP, D e u x A n s d'exécu tio n d u plan d u m o dernisation et d 'é q u ip em e n t (Apr. 1949). For the effect of the Marshall Plan on the PME see Jean Teissedre, "Le Plan M onnet," pp. 40-5. 86 M. Garrigue, "Le Plan M onnet," p. 32. 87 On the inflation - investment paradox, see Lubell, "French Investment Program," pp. 82-5. 88 M onnet to Schuman, May 12,1947 (MP 28), and Monnet to Schuman, Mayer, and Bidault, June 25,1948 (MP 28). 89 François Bloch-Lainé, Profession: fonctio n n a ire (1976), pp. 104-5; Hirsch interview. 90 Bloch-Lainé, Profession, p. 105. 91 Hearings of the economic and finance commissions of the Conseil Economique, session of Jan. 18,1950 (MP 29, 2). 92 Monnet to Mayer, Jan. 13,1948 (MP 28). 93 Paul Hoffman, administrator for economic cooperation, to Economic Cooperation Administration mission in France, Apr. 22, 1949, F R U S , 1949, vol. 4 (1974), pp. 640-1; George Bingham, chief of ECA mission in France, to Hoffman, Nov. 21, 1949, ibid., pp. 678-80. Also ECA, European R ecovery P rogram in France, 1948 (Paris, 1948), pp. 105-7. 94 Monnet to Mayer, Jan. 13,1948 (MP 28). 95 The debate over counterpart is described in: Monnet, M ém oires, pp. 318-20; Bloch-Lainé, Profession, pp. 111-12. For a breakdown of how most of the counter­ part funds were used for investments in the basic sectors in 1949, see Bingham to Hoffman. Dec. 20, 1949, F R U S , 1949, 4: 688-9. According to Lubell ("French In­ vestment Program," p. 174), from 1948 to 1950 95% of counterpart francs went to investment and reconstruction with the nationalized enterprises receiving the bulk of this aid. 96 "M emorandum sur les mesures à prendre pour assurer la réalisation du PME," Nov. 29,1949 (MP 37). 97 Monnet to Mayer, Dec. 21,1947 (MP 28). 98 Bloch-Lainé and Tixier, cabinet director of the Ministry of Finance, "Note sur les opérations du FME," Sept. 28, 1948 (MP 34). Also Bloch-Lainé, Profession, pp. 108-11. Mayer, the minister of finance and a former colleague of Monnet's, sided with Bloch-Lainé. 99 F. Surleau, "M emorandum sur la conférence tenue au cabinet de M. Petsche le 30 novembre 1949..." (MP 37). 100 H. Bonnet, French ambassador, to Monnet, Apr. 1948 (MP 28, 3). 101 Charles Rist, "Le Plan Monnet contre l'équilibre budgétaire," La Vie française, Nov. 24,1949. 102 Villiers's views are in B u lletin d u C N P F , no. 40 (Dec. 1,1949), no. 42 (Jan. 1950), and no. 44 (Feb. 5,1950). The anti-investment campaign is summarized in CGP, "Les Investissements dans la presse et au parlement," Feb. 1950 (MP 30, 3). 103 In an unpublished paper written in 1980 ("Limites et aléas de l'investissement, 1947-1952") Jean Bouvier documents the decline of total investment in 1950-2 and speculates on why it occurred. 104 Hearing of the economic affairs committee of the Conseil de la République, session of Dec. 30,1949 (MP 29, 2). 323

Notes to pp. 244-248 105 Ibid. 106 Hearing of the economic affairs and industrial production committees of the Con­ seil de la République, session of May 3,1950 (MP 29, 2). 107 JO , A ssem blée N ationale, débats, Dec. 30,1949, p. 7611. 108 Pierre Corbel, Le P a rlem en t français et la planification, Cahiers de l'Institut d'Etudes Politiques de l'Université de Grenoble (1969), pp. 103-30. 109 Soudet, "Le Plan Monnet," p. 19. 110 Bouvier ("Limites et aléas") calculated that for the period 1947-51 (excluding reconstruction) about 50% of investment came from public sources (budgetary credits, treasury advances, and FME funds), 41% derived from self-financing and borrowing on the financial market. Another 9% came from bank credits and spe­ cial lenders. Lubell ("French Investment Program," pp. 96-101) places the share of public funding even higher (67%) and concludes that 80% of investment in nationalized enterprise was from public sources. 111 Peterson ("Economic Reconstruction," p. 206) estimated that about half the funds employed in the PME were inflationary. French and American authorities who argued that the PME aggravated inflation are: André Vène, "Remarques sur l'évolution économique et financière de la France depuis la libération," Journal de la Société de S ta tistiq u e de P aris, nos. 7-8 (July - Aug. 1949), pp. 267 - 76; R. V. Rosa, "The Problem of French Recovery," E conom ic Journal 59 (June 1949): 154-70. But Lubell ("French Investment Program," p. 190) subscribes to the C G P s position that "the inflationary process stemmed from a shortage of goods and that an investment program was essential to an increase in the volume of the flow of goods." He also argued (p. 69) that some resources were not transferable from the production of capital goods to consumer goods; thus a smaller investment program would not have eased inflation by permitting a more rapid recovery of the output of consumer products. A CGP spokesman argued in similar fashion that the PME rapidly created the physical resources to meet whatever increase in monetary incomes it generated and that counterpart aid and other public funds could not have been usefully invested elsewhere (Jean-Paul Delcourt, "Le Plan M onnet," pp. 23-8). 112 Hirsch interview. 113 "Communication aux membres du Conseil du Plan au sujet des programmes de 1947," Apr. 15,1947 (MP 3, 4). 114 A few of the most perceptive recent works on the present state of French planning that help conceptualize its overall evolution are: the articles by Yves Ullmo, Michael Watson, and Stephen Young in P la n n in g , P olitics, a n d P ub lic Policy: T h e B r itis h , F rench, a n d Italian E xperience, ed. Jack Hayward and Michael Watson (Lon­ don and New York, 1975); the contributions of Jean-Jacques Bonnaud, Erhard Friedberg, Jack Hayward, and Lucien Nizard in P lanification e t société; and Yves Ullmo, La P lanification en France (1975). 115 Hearings, Conseil Economique, Jan. 18, 1950. Chapter 9. The neo-liberal order: the managed economy of the early 1950s 1 It was during the First World War that this German social democratic theoretician enunciated the idea. Hilferding envisaged a new stage of capitalism characterized by industrial concentration, scientifically planned production, the formation of interest groups by employers and employees, and an interventionist state, all of which initiated a planned economy and a transition to socialism. For Hilferding and

324

Notes to pp. 248-251 a review of how his conception of capitalist development has been applied to recent historical research on Germany, see Kenneth D. Barkin, "Organized Capitalism /' Journal o f M o d e m H is to ry 47, 1 (Mar. 1975): 125-9. 2 N a tio n a n d A th e n a e u m , Dec. 13, 1930. Quoted by Robert Skidelsky, "The Political Significance of the Keynesian Revolution" (1974). 3 For some comparative analyses of the phenomenon consult: Malcolm MacLennan, Murray Forsyth, and Geoffrey Denton, Econom ic P la n n in g a n d Policies in B rita in , France, a n d G e rm a n y (New York, 1968); Andrew Shonfield, M o d e m C apitalism (New York and London, 1965); P la n n in g , P olitics, a n d P ublic Policy: T h e B ritish , F rench, a n d Italian Experience, ed. Jack Hayward and Michael Watson (London and New York, 1975); O rganisierter K apitalism us: V oraussetzungen u n d A n fä n g e, ed. Heinrich Winkler (Göttingen, 1974). The West Germans embraced neo-liberalism in the form of the "social market economy." They relied on trade associations, banks, and large firms as well as an active state to tame the market. Italy provided minimal coordination through public or semipublic bodies. The British moved in fits and starts toward managing capitalism. They had an extensive public sector and adopted Keynesian short-term management. In the 1960s frustration with ad hoc measures for control­ ling aggregate demand and the balance of payments brought some tentative steps toward planning. See: J. C. R. Dow, T h e M a n a g e m e n t o f th e B ritish E conom y, 1 9 4 5 1960 (Cambridge, 1965); Nigel Harris, C om petition an d th e C orporate Society: B ritish C o n serva tives, th e S ta te , a n d In d u s tr y , 1 9 4 5 -1 9 6 4 (London, 1972). In the United States the initiative for economic management came largely from the private sector. One historian sees progressive businessmen and engineers leading the way toward a blend of liberal and technocorporatist prescriptions (Ellis W. Hawley, "The Techno-Corporatist Formulas in the Liberal State, 1920-1960," [1974]). Americans created planning in the private sector, and the "technostructure" or "private power" tended to impose its will on public authorities (John K. Galbraith, Econom ics a n d th e P ublic P urpose [Boston, 1973]; Grant McConnell, P rivate P ow er a n d A m erica n D em ocracy [1966]). A recent study speaks of the rise of the integrated firm as the "visible hand" of American capitalism (Alfred D. Chandler, Jr., T h e Visible H a n d : T h e M anagerial R evo lu tio n in A m erica n B usiness [Cambridge, Mass., and London, 1977]). Although the government assumed Keynesian policies they did not evolve into public planning, and Americans retained the rhetoric of free enterprise. A provocative attem pt to revive the concept of corporatism to describe contemporary interest representation in comparative terms is Philippe C. Schmitter, "Still the Century of Corporatism," R e v ie w o f P olitics 36 (Jan. 1974): 85-128. In Europe, Schmit­ ter contends, "societal corporatism" appeared as the natural outgrowth of advanced capitalism and the decay of liberal pluralism. 4 Maurice Lauré, R évo lu tio n : dernière chance de la France (1954), p. 108. 5 This lecture was first published in 1959 and went through several editions. 6 Subsequently Bloch-Lainé extended his conception of the économ ie concertée to em ­ brace the creation of a powerful Ministry of Planning, a uniform and more articu­ lated network of corporatist committees representing private interests, and a more democratic internal structure for firms ('T our une Réforme de l'administration économique," R e v u e économ ique, no. 6 [Nov. 1962], pp. 861-85; P o u r u n e R éfo rm e de V enterprise [1963]). 7 Ardant directed an official investigation into the productivity of public services before becoming com m issaire général à la p ro d u ctivité in 1953. Gruson headed a small working group at the Treasury after 1949 that examined the problem of providing France with national accounts; this led to the creation of the SEEF. Gruson directed both the SEEF and the INSEE in the 1960s. Delouvrier served at the CGP with

325

Notes to pp. 251 -254 Monnet before working at the Ministry of Finance; he became a member of René Mayer's cabinet in 1953. Lauré, an assistant director of taxes, led a group of tax experts to the United States as part of the productivity drive. Lauré is credited with designing the tax on value added. Nora, an ENA graduate, acted as secretarygeneral to the finance ministry's Commission of National Accounts and later served as an advisor to the Faure and Mendès-France governments. Guy de Carmoy was an official at the OEEC. My discussion of the economic thought of the inspectorate relies on Pierre Lalumière, L 'Inspection des Finances (1959), pp- 179-200. 8 An inspector of finance, Jean Rioust de Largentaye, first translated Keynes in 1942 (T h éo rie générale de l'em ploi, de l'in té rê t, e t de la m o n n a ie ). The teaching of political economy had always been deeply influenced by the British, and the adoption of Keynes by the inspectorate can be explained in part as the French following the latest trend in British liberal thought (Lalumière, L 'In sp ectio n des Finances, p. 181). Gruson wrote an early study of Keynes: E squisse d 'u n e théorie de l'équilibre économ ique, réflexions s u r la théorie générale de Lord K eynes (1949). André Marchai (La P ensée économ ique en France depuis 1945 [1953]) summarized the major tendencies in postwar French economic theory. Marchai noted the departure from classical liberalism; the absorption of Keynes; the emphasis on economic psychology and sociology, economic structures, statistics, and econometrics; and the effort to con­ nect theory with public policy. 9 Pierre Mendès-France and Gabriel Ardant, Econom ics a n d A c tio n (1955), pp. 200-1. This UNESCO publication, dedicated to the French translator of Keynes, appeared in 1954 as La Science économ ique e t Faction. A rdant's economic ideas were also set forth in Le M o n d e, July 14-20, 21-27,1955, and his program for raising productivity in the public sector appeared in Technique de l'é ta t (1953). Mendès-France further ex­ pounded his views in La R épublique m oderne (1962). He accepted the fact that a mixed economy was likely to endure and looked to controlling it through democratic planning, that is, heightened participation of all interests, especially trade unions, and the pursuit of egalitarian \goals. Mendès-France, like Bloch-Lainé, recom­ m ended associating economic interests with democratic government; he suggested converting the upper house of parliament into a corporatist-style economic council endowed with legislative powers. 10 Paul Delouvrier and Rober Nathan, P olitique économ ique de la France, cours de droit. Institut d'Etudes Politiques, 1953-4, fasc. 4, p. 69. 11 Guy de Carmoy,' F ortune de l'E urope (1957), p. 83. 12 Lauré, R é v o lu tio n , p. 48. 13 Francis-Louis Closon and Jean Filippi, L 'E conom ie e t les finances (1968); F. Ridley and J. Blondel, P ublic A d m in istr a tio n in France (London, 1964), pp. 174-92; John H. McArthur and Bruce R. Scott, In d u stria l P la n n in g in France (Boston, 1969), pp. 317-

2714 Jacques Donnedieu de Vabres, 'T h e Formation of Economie and Financial Policy," In tern a tio n a l Social Science ] o u m a l 8 (1956): 235. 15 Robert Buron, Le P lu s Beau des M étiers (1963), p. 217. 16 This was the case because of the private sector's heavy dependence on public funding after the war as well as government influence on the banking system and the capital and money markets. Taxes and prices also shaped profit margins and thus a firm's capacity to reinvest. 17 Edward G. Lewis, "Parliamentary Control of Nationalized Industry in France," A m erica n Political Science R e v ie w 51 (Sept. 1957): 669. 18 Philip M. Williams, C risis a n d C om prom ise: P olitics in th e F ourth R ep u b lic (Hamden, Conn., 1964), p. 269. 326

Notes to pp.

2 5 5 -2 5 7

19 Bernard Goumay, "Un Groupe dirigeant de la société française: les grands fonctionnaires/' R e v u e française de science p olitique 14 (Apr. 1964): 234. 20 Marie-Christine Kessler, L 'E cole N ationale d 'A d m in is tr a tio n , vol. 1: La P olitique de la h a u te fo n ctio n publique (1978), pp. 67-146; Jean-François Kesler, "Les Anciens Elèves de l'Ecole Nationale d'Administration," R e v u e française de science po litiq u e 14 (Apr. 1964): 243-67; Kesler, "L'Influence de l'Ecole Nationale d'Administration sur la ré­ novation de l'administration et ses limites," Tendances e t volontés de la société française, ed. Jean-Daniel Reynaud (1966), pp. 257-67; Philippe Bauchard, La M y s tiq u e d u plan (1963), pp. 67-97; Closon and Filippi, L'E conom ie, pp. 126-30; Thomas Bottomore, "La Mobilité sociale dans la haute administration française," C ahiers in te rn a tio n a u x de sociologie 13 (1952): 167-78; John A. Armstrong, T h e European A d m in istr a tiv e Elite (Princeton, 1973), pp. 194-9. Armstrong attempts a comparative historical and sociological analysis of the way in which administrators assumed an interventionist role in economic development. 21 Charles Brindillac, "Les Hauts Fonctionnaires," E sprit, June 1953, pp. 862-76. "Charles Brindillac" was the pseudonym of Olivier Chevrillon, graduate of the ENA and member of the Conseil d'Etat. 22 Albert Lanza, Les P rojets de réform e a d m in istra tive en France, de 79/9 à nos jo u rs (1968), p. 133; Henry Ehrmann, "French Bureaucracy and Organized Interests," A d m in is ­ tra tiv e Science Q u a rterly 5 (1961): 554; Bauchard, La M y s tiq u e d u p la n , pp. 73-4. 23 Goum ay, "Un Groupe," pp. 229-31. A study done in the 1960s indicated that the entire staff at the Ministry of Public Works had swung over to the newer view whereas the Ministry of Labor remained divided (Jacques Lautman and Jean-Claude Thoenig, P lanification e t a d m in istra tio n s centrales, 1966). In the latter case older fo n ctio n n a ires retained a sociojuridical conception of their role; their mission was to provide direction and legal protection to the trade unions whereas the younger staff members believed labor's problems were best met through economic expansion. The first group had little interest in planning or extending collaboration with unions; the second championed the plan and wanted to make labor a "social part­ ner" in the ministry. 24 Shonfield (M o d e m C apitalism , pp. 128-9, 138) speaks of a "conspiracy" between senior civil servants and managers of big business to plan in the 1950s and of the planners' belief in the "iron law of oligarchy." Ehrmann ("French Bureaucracy," p. 547) noted that civil servants in general "prefer to deal with large-scale interests or organizations." 25 Delouvrier and Nathan, P olitique économ ique, cours 1957-8, fase. 3, pp. 358-9. 26 Claude Gruson, O rig in e et espoirs de la planification française (1968), p. 43. Also see Alain Chevalier, "Le Ministère des Finances," R e v u e économ ique, Nov. 1962. pp. 934-5. The change in outlook was not the result of an administrative purge during the liberation; it had little or no effect on the Ministry of Finance or the technical ministries (Peter Novick, T h e R esistance v ersu s V ichy: T h e P u rg e o f C ollaborators in Liberated France [1968], pp. 90-1). 27 François Bloch-Lainé, Profession: fo n ctio n n a ire (1976), p. 103. 28 Ibid., p. 104. 29 Ibid., p. 106. 30 Dominique Leca, D u M in is tr e des Finances (1966), pp. 37-48; Maurice Duverger, In s titu tio n s financières, 2nd ed. (1957), pp. 1-33. 31 Hirsch applauded the end of this rivalry, "I must say that to a very great degree the success of the plan has been due to the conversion of the Ministry of Finance, a conversion that is very profound" ("Colloque pour une planification démo­ cratique," Les C ahiers de la république, no. 45 [June 1962]: 465). Also, Bernard Gour-

327

Notes to pp. 258-262 nay and Pierre Viot, "Les Planificateurs et les décisions du plan," in

La P la nification

com m e processus de décision (1965), p. 70. Jean Meynaud, Les G roupes de pression en France Yves Weber, L 'A d m in istr a tio n c o n su lta tive (1968),

32 (1958). 33 pp. 3-6. 34 Henry W. Ehrmann, O rganized B usiness in France (Princeton, 1957), pp. 340-1. This paragraph is drawn largely from Ehrmann, pp. 207-76. 35 How trade associations took charge of collecting industrial statistics is explained by Michel Voile, "L'Organisation des statistiques industrielles françaises dans l'après-deuxième guerre mondiale," R e v u e d 'h isto ire de la d eu xièm e g u e rre m ondiale, no. 116 (Oct. 1979), pp. 1-25. 36 Gordon Wright, R u ra l R evo lu tio n in France (Stanford, 1964), pp. 114-42. 37 Georges E. La vau, "Political Pressures by Interest Groups in France," In te rest G ro u p s on F our C o n tin e n ts, ed. Henry W. Ehrmann (Pittsburgh, 1958), p. 93. Ehrmann reported that officials were increasingly skeptical about the ability of the administration under the Fourth Republic to maintain the neutrality of decision making because of interest group pressure ('Trench Bureaucracy," p. 545). He also expressed concern over the threat of corporatism, represented by organized busi­ ness and its collusion with the administration, to French democracy in O rg a n ized B u sin ess, pp. 475-94. 38 Vergeot and Uri appeared in the preceding chapter. Delcourt headed the financial services at the CGP after 1950 and later served as a member of the Gaillard and Pflimlin ministerial cabinets. Ripert, an agronomist, after service at the CGP, be­ came head of INSEE and then returned as commissioner for planning in 1974. 39 CGP, P rojet de d eu xièm e plan de m odernisation et d 'éq u ip em en t, 1 9 5 4 -1 9 5 7 , exposé de la s itu a tio n et exposé du plan (1954). The second plan as adopted by parliament is: D eu xièm e Plan de m odernisation et d 'équipem ent, 1 9 5 4 -1 9 5 7 : loi no. 5 6 -3 4 2 d u 2 7 m ars 1956 (Journal officiel, 1956). Also see: Pierre Bauchet, L 'E xpérience de p la nification

(1958); Antonio Vasconcellos, "Toward the Systematization of Economic Policy: The French Experience in Economic Planning" (thesis, Tulane University, 1968), pp. 221-36. 40 P la nification e t société: actes du colloque tenu à G renoble d u 9 au 12 octobre 1973 (Greno­ ble, 1974), p. 644. 41 G. Temy, C. André, and R. Delorme, "Premiers Éléments d'une théorie positive de l'évolution de longue période des dépenses publiques françaises," report (n.d.), pp. 128,158. Compared to pre-1914 levels of 3%, expenditures in the 1950s on industry, commerce, and agriculture rose to between 12% and 15% of the budget (p. 141). 42 MacLennan, Forsythe, and Denton, Econom ic P la n n in g , p. 235. 43 Jean-Jacques Bonnaud, "Participation by Workers' and Employers' Organizations in Planning in France," In tern a tio n a l Labour R e v ie w 93 (Apr. 1966): 344. Also see A. Bockel, La P articipation des syn d ica ts ouvriers a u x fo n c tio n s économ iques e t sociales de l'é ta t (1965). 44 C N P F B u lletin , Feb. 1955, pp. 35-6, and Aug. 1955, p. 29. 45 Ehrmann, O rganized B usiness, pp. 292-3. 46 Pierre Corbel, Le P arlem ent français et la planification, Cahiers de l'Institut d'Etudes Politiques de l'Université de Grenoble (1969), pp. 96-7, 150-65. 47 JO , A ssem blée N ationale, D o c u m e n ts parlem entaires, 1954, annexe no. 8555, P rojet de loi p o r ta n t approbation d u deuxièm e plan de m odernisation et d 'éq u ip em en t, p. 899. 48 Comité National de la Productivité, A c tio n s et problèm es de pro d u ctivité: prem ier rap­ p o rt, 1 9 5 0 -1953 (1954). The French embassy in Washington summarized the commit­ tee's annual reports, e.g., R ecent D evelopm ents o f th e P ro d u c tiv ity D rive in France: A n A b s tra ct o f th e S econd R eport o f th e French N a tio n a l P ro d u c tiv ity C o m m itte e (Washington,

328

Notes to pp. 263-266 D.C., 1955). An example of the committee's propaganda is P ro d u ctivité d 'u n e n a tio n , 7 m ai - 6 ju in 1951 114,115, 116 Marjolin, Robert, 112, 160, 161, 220, 222-3, 224 ' 225 ' 226, 227, 228, 234 Marshall Plan, 237-8, 239, 263 Mayer, Daniel, 174, 175, 176, 179-80 Mayer, René, 181,189,197, 216, 238, 240, 241, 269 mechanical manufacturers, 23-5, 26, 84, 94, 261, 267 Méline, Jules, 11, 15, 18-9, 22, 27 Méline tariff, 18-9 Mendès-France, Pierre in 1938, 124 in 1950s, 251, 252, 269, 326n9 as MEN (1944-5), 159, 191-9, 201, 228 and Philip report, 177 program as finance commissioner, 181, 182-3, 184, 188, 189 Menthon, François de, 165,167,168,173 Mercier, Ernest, 68, 88-90 metals industry, 23-6, 52, 70, 71, 84, 85, 95, 207, 267 and plans, 233, 234, 239, 261 see also Comité des Forges

Index Millerand, Alexandre, 25, 35, 65 mixed companies, 66-9, 96, 210 Moch, Jules and the liberation, 189,197, 204 between the wars, 84, 106, 112 wartime projects, 159, 174, 175, 176, 179 Modernization Commissions, 223, 226-7, 233, 234, 246, 251, 262, 264 Monick, Emmanuel, 173, 183, 197, 231 Monnet, Jean (see also Monnet Plan), 213, 217 on Americans as models, 220-1, 224, 226, 229, 244 approach to planning, 222-30, 246-7 career, 39, 47, 219-20 and de Gaulle, 219, 220, 222, 223-4 in retrospect, 280 Monnet Plan and administrative methods, 228-9 American aid, example, and trade, 219, 220-2, 224, 225,226, 230-3, 234, 235, 237-8, 239, 240-2, 246 and British example, 227, 229 compared with other plans, 150, 155, 225, 226, 228, 246-7, 309n8o evaluations of, 245-7 and finance ministry, 237, 241-2 financing of, 233-4, 237-42, 245 formulation of, 224-36 and inflation, 234, 237-8, 243, 245,

324nm and ministerial jurisdictions, 228, 229, 237 and nationalizations, 227-8, 230, 243

244/ 245 and parliament, 229-30, 240, 242, 243-4 political parties and economic intereste, 227, 234-5, 236-7, 243 and socialism, 225 targets of, 233, 239, 242, 245-6 see also Modernization Commissions monopolies, see state MRP (Mouvement Républicain Populaire), 205-6, 207, 208, 209, 210, 211, 216 Nathan, Robert, 220-1, 230 nationalizations Albert Thomas, 34, 36-7, 54-5

34 *

Alphand report, 162 André Philip, 178-9, 203, 204 of arms industry, 120 CGT, 61, 69, 110-1 Clémentel, 38 Courtin report, 169 debate over in 1944, 182, 184-5, 19° Henri de Man, 108-9 legislation 1945-6, 207-11 liberals' view, 6 Loucheur, 49-50 Mendès-France, 194 and Monnet Plan, 227-8, 230, 243, 244, 245 motives for in 1945-6, 202-7 National Resistance Council, 176 in practice, 211, 212-3, 214, 266-7 Radicals' view, 12 socialists, 114-6, 174-5 see also mixed companies National Resistance Council, 174, 176-7 National Revolution, Vichy's, 129-32,164 neocapitalism of 1920s, 86-92 neo-liberalism of the 1950s, 248-52, 271 and the ENA, 215 and neocapitalists, 89, 91 of planners in 1930s, 105-7 and the Provisional Government, 189-90 in the resistance, 160-1, 163-73 and Reynaud, 125-7 at Vichy, 149-50 see also Monnet Plan neosocialists, 112, 113, 114 neosyndicalism, 80-2 Nora, Simon, 251, 325-6n7 N o u v e a u x C ahiers, 105, 130, 148 OCM (Organisation Civile et Militaire), 165-6 OCRPI (Office Central de Répartition des Produits Industriels), 136-40, 143- 4 - 153- 155-156 end of, 216 Mendès-France on, 193 resistance views of, 165, 168, 181, 183, 184 OEEC (Organization for European Eco­ nomic Cooperation), 239, 269 Offroy, Raymond, 182

Index oligarchy, financial, see two hundred families, campaign against O rdre nou veau, 101, 105 parliament, 10-11,17, 24, 34, 254-5 Parodi, Alexandre, 167 Paul, Marcel, 209, 211 Peret, Raoul, 294040 Perroux, François, 145 Pétain, Marshal Philippe, 129, 131, 143, 145, 147, 171 petroleum industry, 9, 27, 41, 67-8, 84, 94/ 207 Petsche, Maurice, 241, 244 Peyerimhoff, Henri de, 87 Philip, André during the liberation, 181,189,197 and nationalizations, 201, 203, 204, 209 and Monnet, 229 and the resistance, 159, 160, 161, 162, 163,165, 167 and report on reconstruction, 177-9 between the wars, 112,122 Piette, Jacques, 165 Pinay, Antoine, 268 Pineau, Christian, 201, 204, 242 Pinot, Robert, 24-5, 35, 56 planning, economic (see also Monnet Plan) after 1918, 61-2 in 1930s, 98-125 passim 1946 plan compared, 200-1, 225 in 1950s (Hirsch Plan), 257, 260-2, 264 CFTC, 102 CGT and 1930s, 109-12 CGT versus CGTU over, 116-8 Clémentel's design, 47, 225 debate over in 1944-5, 195-6,199-201 effects on economy's performance, 264 ~6 and Mendès-France, 193-4 neo-liberal type, 105-7, 163-73, ^ 5 Plan of 9 July, 100-1 and the resistance, 161-2,166,168,169, 175-6,178-9, 182-3, 185 socialists in 1930s, 114-6, 123 socialists during World War II, 175-6, 178-9 Soviet style, 99-100, 106,117, 177,193 Vichy's design, 146-56, 195-6 342

planning regional, 46, 316036 (periodical), 101 Pleven, René, 159, 160,181, 189-90, 196-9, 209 plutocracy, see trusts, campaign against; two hundred families, campaign against Poincaré, Raymond, 65, 66, 67, 72, 74, 75 political economy, see economic theory; keynesianism; liberalism Popular Front (1936), 115, 116-8,119-25 Poujadists, 270-1 prices, controls over, 136,184, 192, 216, 234. 254- 269 productivity, 94,133,151,172,203, 2 9 9 ^ drive of 1950s, 262-4, *65 and plans, 233, 239, 244, 261 see also Taylorism professional representation, see cor­ poratism Progressists, 11-12 protectionism, see tariffs; s itu a tio n s ac­ P lans

quises

PTT (Poste-Télégraphe-Téléphone), 2, 4, 64, 65 public enterprise, see mixed companies; nationalization; state and com­ panies such as Electricité de France public works, 91,110, 150 Public Works, Ministry of, 14, 327023 Pucheu, Pierre, 132, 133 Radical Party, 12,15, 102 in the depression, 96 and dirigism e, 82 and nationalization, 118, 120, 206 Popular Front, 122 and Tardieu, 92 railroads, 2-3, 9, 24, 68-9,141 and Monnet Plan, 227-8,233,239, 245 see also SNCF Ramadier, Paul, 238 rationalization movement of 1920s, 77-8, 107, 295050 and business, 84-90 and the left, 85-6 rationing, 137, 162, 170, 183, 216 see also CO; consortiums; OCRPI reconstruction of northeast after 1918,

69-71

Index Redressement Français, 88-90, 130,148 reflation, policy of, 109, 123 Renault automobile company, 36, 85, 126, 212-3, 266 Renault, Louis, 87, 190 Revolution Constructive, 112-3 Reynaud, Paul, 90,125-7 Ribot, Alexandre, 32 Ricard, Pierre, 235 Rioust de Largentaye, Jean, 177 Ripert, Jean, 260 Rist, Charles, 6, 97, 131, 243 Roche, Jules, 19 Romier, Luden, 51-2, 3o6n6 Rothschild, Edouard de, 74 Rueff, Jacques, 6, 97, 107, 127 Russia, see Soviet Union

state liberal views of, 2-5 liberal state in practice, 8-15 neo-liberal views of, 248-52 state monopolies or enterprises, 2-3, 4, 36-7, 54-5, 63-5; see also nationalization see also administration, public; fi­ nance, public statistics, economic in 1900, 14, 19-20 after 1944, 214-5, 222/ 254 at Vichy, 133, 139 Stourm, René, 6 Surleau, Frédéric, 227 Synarchy (1941), 143

Saint-Gobain company, 85 Sauvy, Alfred, 75, 95,105,121,127,133, 214, 215, 270 Say, Léon, 1, 5, 13 Schuman, Robert, 216, 238, 240 Sdences Po, see Ecole Libre des Sdences Politiques sdentific management, see Taylorism SEEF (Service des Etudes Economiques et Finandères), 254, 260 Shonfield, Andrew, 273-4 s itu a tio n s acquises, 16, 150, 249, 269, 270 SNCF (Sodété Nationale des Chemins de Fer Français), 124, 212, 266,

Tarde, Guillaume de, 148 Tardieu, André, 90-2 tariffs, 4, 8, 17-9, 63 Taylorism, 28, 36, 77, 86 taxes and crisis of franc (1920s), 72, 73, 74 finandng World War I, 32 income tax, 11 to promote change, 257, 269 system of 1900, 10, 16 technocracy in 1960s, 271 defined, 76, 33^192 and nationalized enterprise, 211, 212-3, 266 and neocapitalists, 87, 89 and public administration, 215 and syndicalism, 82 at Vichy, 131-2, 142-3 in World War I, 48-50 technology, 76,111,148, 215, 263, 266, 273 Teitgen, Pierre-Henri, 165, 167,168, 173 textile industry, 22, 84, 94, 95, 261, 267 Thomas, Albert after 1918, 57, 58, 69 as Minister of Armaments, 34-7, 49 on nationalization, 34, 36-7, 54-5 in retrospect, 279 Thorez, Maurice, 116-7, *9°» 205 Tixier, Adrien, 189 TPC (Turkish Petroleum Company), 67-8

305092 sodalists and economic planning in 1930s, 112-3, 114-6 during the liberation, 189,197, 201 and Monnet Plan, 236 and nationalization, 80,114-6, 203-4, 210, 211 and rationalization, 83-4, 296074 in the resistance, 173,174-6,180 and Tardieu, 92 in World War I, 35, 37 socialization, see nationalization sodal legislation, 4-5, 20 sociétés a n o n y m es, 4, 12,131 Soviet Union, 109, 177, 200, 252 see also planning, economic Spinasse, Charles, 112, 121 standardization of products, 66, 86,135

343

Index trade associations, see employers' as­ sociations treasury, see Finance, Ministry of trusts, campaign against, 86, 157, 186, 188 as motive for nationalization, 190, 202, 203, 205 at Vichy, 131,143, 3o6n9 two hundred families, campaign against, 71, 76, 119 UIE (Union des Intérêts Economiques),

23/ 65 UIMM* (Union des Industries Métallur­ giques et Minières), 21, 24 Ullmo, Jean, 105, 127 United States (see also Monnet Plan) anticommunism of, 232 French views of, 15, 25, 28, 29, 43, 59-60, 93, 171, 200, 205, 214 inter-Allied pooling (1914-8), 43, 47, 53 managed capitalism in, 248, 32503 and nationalizations, 232 post 1918 reform, 61-2 productivity drive, 262-3

344

rationalization movement, 86, 88, 90 resistance views of, 161,162,168, 173, 178, 180 see also Marshall Plan urban development, 15,147,149,153 Urbanism and Reconstruction, Ministry of, 196,199 Uri, Pierre, 238, 260 Vallon, Louis, 177 Valois, Georges, 81-2, 165, 302051 Vergeot, Jean, 260 Verger, Jules, 130,145 Villey, Daniel, 158-9 Villiers, Georges, 243 wages controls over, 136, 184,192, 216, 234,

253 levels, 142, 172, 190 Waldeck-Rousseau, René, 10, 11 Wilson, Woodrow, 47, 53 Wright, Gordon, 17 X-Crise, 105, 130