In 1934 the disparity between French and world prices became a key issue in policy discussion. As indicated in the preceding chapter, French policy makers preferred deflation to devaluation as the means of lowering prices. There were two main reasons for this. The currency was considered a fundamental factor in economic and social order to be kept stable at all cost, and the budget deficit was believed to be the source of French economic difficulties, its elimination the necessary first step to recovery. Until 1933, devaluations abroad had little impact on French opinion. The depreciation of sterling in 1931 immediately affected the relation between French and British prices; Sauvy's statistics show French wholesale prices roughly 12% lower than British prices through the first eight months of 1931, with the ratio then switching in Britain's favor, French prices averaging 20% higher from 1931 to 1936. French governments were certainly not unaware of the difficulties created by this price disparity, but they were interested primarily in the reasons for devaluations, rather than their effects, in order to draw lessons for defense of the franc. The results of such inquiry were encouraging; Britain had been forced off gold for reasons that France, with strong gold reserves and little foreign lending, had no need to fear (see Chapter 2).

The depreciation of the U.S. dollar raised concern that French goods would be unable to compete with those priced in depreciated currencies. Devaluation was then suggested by several economic commentators on the moderate left of French politics. It remained a fringe option, however, without serious support, until Paul Reynaud advocated devaluation in 1934.