When France Tried to Tax Its Citizens to Pay Its Bills
France's 1932 legislative elections brought a center-left government to power. The centrist Radical Socialists allied with the socialist French section of the Workers' International Party to select a new prime minister and his Cabinet.
But political turmoil and the continuing economic challenges of the Great Depression made governing difficult.
Sixteen squabbling groups had elected legislators. Worse, both major parties experienced internal splits. The result was that the Cabinet collapsed multiple times between June 1932 and January 1933. Legislative meltdowns led to the forced replacement of three prime ministers.
Taxes were the hot-button issue. Time magazine reported in early February 1933:
"Last week 10,000 solid citizens from various parts of France, members of the National Federation of Taxpayers, met in Paris and clamored for Justice until suddenly, shouting 'On to the Chamber!,' they started a rush for the Chamber of Deputies, grappled with Paris police, had to be beaten back by the ornate cavalry of the Garde Republicaine. 'We will not pay higher taxes!' boomed a fervent spokesman."
With unemployment rising and German war-reparation payments stalled, balancing France's budget demanded tax increases, dramatic spending cuts or both. But opposition to austerity was bitter. Prime Minister Edouard Daladier cut half a billion francs ($19.8 million in 1933) from the national defense budget in March 1933, which triggered "sighs of despair from the French General Staff," Time reported.
A crisis was brewing, and it was no simple taxpayer revolt, the New York Times wrote. "In one sentence it might be described as a revolt against `Etatisme': against too much government, against the interference of the state with the individual liberty of the citizen."
"There is a permanent inequality in the incidence of taxation and in the very arbitrary protection of certain classes of producers," the Paris-Soir newspaper wrote.
For example, in the Department of Gironde, which includes the Bordeaux wine region, agriculturalists paid 678,000 francs a year in taxes on their total profits while manufacturers in the same district paid more than 60 million francs. Nationally, the state collected just 72 million francs from rural properties while reaping 3.5 billion francs through taxing industrial and commercial profits.
As a result, "as taxes got heavier and heavier, evasion has become flagrant," the New York Times wrote. "Those who do or must pay have become resentful."
Political deals creating protective tariffs added to these troubles. Facing price competition from Belgium on draft horses and from Denmark on butter, representatives of farmers from the Normandy region installed tax barriers. In reprisal, Belgium and Denmark increased taxes on French wines. The French fishing industry also received protection against Norwegian dried fish, and cheesemakers were shielded from the competition of their Dutch rivals. Retaliatory levies followed immediately, choking off export markets.
In 1933, the French government was unstable and often paralyzed. When it did act, it often aggravated the nation's problems instead of solving them.
(Philip Scranton is a Board of Governors professor of the history of industry and technology at Rutgers University, Camden, and the editor-in-chief of Enterprise and Society. He writes "This Week in the Great Depression" for the Echoes blog. The opinions expressed are his own.)
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