Tripartite Agreement September 1936

The Tripartite Agreement was an international monetary agreement entered into by the United StatesFrance, and Great Britain in September 1936 to stabilize their nations’ currencies both at home and in the international exchange markets.[1]

History

Following suspension of the gold standard by Great Britain in 1931 and the United States in 1933, a serious imbalance developed between their currencies and those of the gold bloc countries, particularly France. The devaluation of the dollar and the pound sterling raised import prices and lowered export prices in the United States and Great Britain.

In the United States and Great Britain sound money advocates were divided between those favoring reforms to stabilize the currency and others who called for an end to the gold standard and a managed currency.[2][3][4]

Agreement

The Tripartite Agreement was informal and provisional.[5] Subscribing nations agreed to refrain from competitive depreciation[6] to maintain currency values at existing levels, as long as that attempt did not interfere seriously with internal prosperity. France devalued its currency as part of the agreement. The remaining gold bloc nations, BelgiumSwitzerland and the Netherlands, also subscribed to the agreement.

Subscribing nations agreed to sell each other gold in the seller’s currency at a price agreed in advance.[7][8] The agreement stabilized exchange rates, ending the currency war of 1931 – 1936,[9] but failed to help the recovery of world trade.

 

Brian Twomey

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