Paul Baudouin was born into a wealthy family in Paris, and served as an artillery officer during The Great War in the French Army. In 1930 he became the Deputy Director and General Manager of the Bank of Indo-China. A "convinced Catholic", like many Catholics of the time he considered himself "non-political" although he had been a committed member of the militant nationalist movement Action Française. He had also been a Catholic Scout leader in the years just prior to World War II, and had written a notable exhortation to young Christians for the Revue de jeunes. He called for "the renaissance, in the humbler form of a layman's Order, of the chivalry of old times" to defend the spiritual patrimony of the Christian West.
Following the fall of the troubled French Government of Édouard Daladier, on 20 March 1940, his Finance Minister Paul Reynaud was asked by President Albert Lebrun to form a new government, even though he only had a majority of one. Daladier remained as Minister of Defence. One of those civilian members appointed to the new Cabinet was Paul Baudouin, a known opponent of France's declaration of war against Germany, as Under-Secretary of State to the Prime Minister Soon, this young technocrat, attentive to the rising generation, would be the centre of a Catholic/Action Française cohort set on re-educating French young people, inspired by a host of new programs of Pétain's later Cabinet and entourage, drawing upon his Catholic scout or Revue des jeunes contacts.
The German Army invaded France on 14 May 1940 and Baudouin was present at the French Cabinet conference with Churchill on the night of May 16 when Churchill was told of the hopelessness of the French military situation. On the 18th a cabinet reshuffle took place and Marshal Philippe Pétain was invited by Paul Reynaud to become Deputy Premier of France. Baudouin was present on the morning of 24 May when General Weygand reported to Reynaud and Pétain that "the situation is very grave". On the 26 May Weygand told Baudouin that he "wished to avoid internal troubles, and above all anarchy". On the same day Pétain came to see Baudouin when he said "I cannot allow the errors of the politicians to be blamed on the army" and blamed Daladier and the 'Front Populaire'. Baudouin reported this conversation to Reynaud the following day. That night the King of Belgium announced the capitulation of the Belgian army.
The military situation now drastically deteriorated: on 5 June Dunkirk fell, and Reynard again reshuffled his Cabinet, sacking Daladier, and giving Paul Baudouin another appointment as Under-Secretary of State for Foreign Affairs. General Charles de Gaulle was appointed Under-Secretary of State for War. Pétain, furious at de Gaulle's appointment, complained to Baudouin and asked him to use his influence with the Prime Minister to prevent de Gaulle attending the morning meetings, describing de Gaulle as "proud, ungrateful and embittered." Baudouin suggested he should see Reynaud himself. On 8 June Baudouin dined with Camille Chautemps and both agreed that the war must end. On 10 June the government left Paris for Tours. Maxime Weygand, the Commander-in-Chief, now declared that "the fighting had become meaningless" and he told Baudouin, and several members of the government, that he thought an armistice was essential. Baudouin agreed.
On 11 June Churchill flew to the Chateau du Muguet, at Briare, near Orléans, where he put forward first his idea of a Breton redoubt, to which Weygand replied that it was "just a fantasy". The following day the cabinet met, and Weygand again called for an armistice. He referred to the danger of military and civil disorder and the possibility of a Communist uprising in Paris. Pétain and Minister of Information Jean Prouvost urged the Cabinet to hear Weygand out because "he was the only one really to know what was happening". Churchill returned on the 13th. Baudouin met his plane and immediately spoke to him of the hopelessness of the French army's resistance.