5 - Negotiating Peace, 1935–1936

Summary

This chapter narrates the twists and turns in monetary relations that culminated in the Tripartite Agreement. After discussing the franc's deteriorating position from the spring of 1935 and the implications for Britain's management of the pound, it turns to the pivotal Anglo-American relationship. Distrust was pervasive, but the two sides eventually came to an understanding, assuring each other that they would not further depreciate their currencies in response to a fall in the franc. With London and Washington talking again, there was now space for an agreement to facilitate French devaluation. The resulting Tripartite Agreement, announced on September 26, 1936, set forth revolutionary principles for monetary cooperation, including the rejection of competitive depreciation and exchange controls. With time, the Agreement--informal and vague, unconventional and pathbreaking--would turn the page on the chaos of earlier years and redefine the international monetary landscape.