Though victorious, France lost 1.5 million men in World War I, and had 3.5 million wounded. After the war, France faced an increased death rate was up and falling birth rate. The workforce accordingly declined, and France never fully recovered during the inter-war period. Steel production, a good indication of the status of heavy industry, was more than cut in half, and both agriculture and industry fell into serious decline after the war. The value of the franc fell by about 50 percent during 1919, the first year of peace. To pay off bondholders, France was forced to borrow at extremely high short-term rates.
The French government took little action to rectify the economic situation, relying on laissez-faire economics instead. The advocates of socialism began to align themselves in protest of government inaction during the early years of the inter-war period, but the threat from the left was quickly quashed by a coalition of the petite bourgeoisie and the bureaucracy. The fears of the petite bourgeoisie were represented by the Bloc National, a coalition of rightist forces. The Bloc national was determined not to bow to the needs of the lower classes. Under the leadership of this conservative coalition, the French government became totally committed to the belief that Germany should be severely punished for its actions during the war, and should be made to foot the bill for France's war debt. The left put up only slight, disorganized protest to these decisions.
Under Raymond Poincare as prime minister between 1922 and 1924, the French Chamber of Deputies demanded full payment of reparations by Germany. When the Germans asked for a moratorium on payment, and subsequently defaulted on their reparations, Poincare sent 40,000 troops to occupy the Ruhr in Germany. This action cost France considerable funding, and failed to force the Germans to pay, but rather led to the drafting of the Dawes Plan, under which annual payments of reparations were decreased. Due largely to this failure, the Bloc National was replaced by the Cartel des Gauches, a moderate socialistic coalition elected on May 11, 1924. However, the socialists proved themselves disorganized, disunited, and generally unfit for government. They could not agree on how to approach the problem of Germany, and could not make headway on economic issues. Thus in 1926, Poincare was asked to return to the position of prime minister and granted extreme powers. In 1928, Poincare decreed that the franc was to be devalued, a bold move which paid off brilliantly in the short- run.
In July 1929, Poincare resigned from political life, and France was thrown into disarray for a number of years, without stability or a clear ideology. After the onset of the depression in the early 1930s, support for extremist groups began to expand. As the government floundered, support for both fascism and communism grew, climaxing in February 1934 with a series of riots and police confrontations resulting in a number of deaths and the barricading of the main square in Paris. The coming years held much turmoil for the French government, and in the elections of the spring of 1936, the radical leftist Popular Front emerged victorious, and a Jew, Leon Blum, became prime minister on June 3, 1936. Though the concessionary attitude of Blum's government toward the workers earned him popular support, it also strengthened the resolve of Blum's enemies and increased the deficit. Blum proved unable to curtail the rapidly depreciating economy, and a year after its inception, the Popular Front government fell apart.
The rightist government that ensued restored a degree of economic stability with a program that included an increase of armaments manufactures. France would need these armaments soon, since it was not long before France declared war on Germany, on September 3, 1939.
France ended the war on sounder footing than many other nations. Its economic problems were not insurmountable, but the political will was lacking to tackle the fairly major adjustments that did need to be made, and there was little willingness in French society to adopt new attitudes commensurate with significant change. The French government was predominantly bourgeoisie and complacent. The challenge from the left was strong enough to bring the petite bourgeoisie into cahoots with the bureaucracy, but never strong enough to present a real threat during the early years of the inter-war period. Socialists were severely divided among themselves between moderates and zealots, those who advocated political action and those who advocated outright revolution. Many traditional socialist sympathizers were concerned that the movement was far to accepting of communism. Thus the socialist movement grew only slowly. Finally, with the creation of the Cartel des Gauches, the socialists presented a workable alliance, in which the communists weren't powerful enough to threaten the moderate balance.