Tripartite Agreement of 1936
Encyclopedia
The Tripartite Agreement was an international monetary agreement entered into by the United States
, France
, and Great Britain
in September 1936 to stabilize their nations' currencies both at home and in the exchange.
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 there was a division between "sound money" advocates with some favoring reforms to stabilize the currency and others calling for an end to the gold standard
and a managed currency
.
, Switzerland
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. The agreement stabilized exchange rates, ending the Currency war
of 1931 - 1936,
but failed to help the recovery of world trade.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
, and Great Britain
Great Britain
Great Britain or Britain is an island situated to the northwest of Continental Europe. It is the ninth largest island in the world, and the largest European island, as well as the largest of the British Isles...
in September 1936 to stabilize their nations' currencies both at home and in the exchange.
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 blocGold bloc
The term gold bloc was applied to seven nations, France, Belgium, Luxembourg, the Netherlands, Italy, Poland, and Switzerland, that kept the gold standard during the world economic crisis of 1929 to 1933, even as many other nations abandoned it.-History:...
countries, particularly France. The devaluation of the dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
and the pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
raised import prices and lowered export prices in the United States and Great Britain.
In the United States and Great Britain there was a division between "sound money" advocates with some favoring reforms to stabilize the currency and others calling for an end to the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
and a managed currency
.
Agreement
The agreement was informal and provisional. Subscribing nations agreed to refrain from competitive depreciation and 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, BelgiumBelgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...
, Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
and the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
, also subscribed to the agreement.
Subscribing nations agreed to sell each other gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
in the seller's currency at a price agreed in advance. The agreement stabilized exchange rates, ending the Currency war
Currency war
Currency war, also known as competitive devaluation, is a condition in international affairs where countries compete against each other to achieve a relatively low exchange rate for their own currency. As the price to buy a particular currency falls, so to does the real price of exports from the...
of 1931 - 1936,
but failed to help the recovery of world trade.