The Tripartite Agreement was an international monetary agreement entered into by the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

France France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...

, and

Great Britain Great Britain is an island in the North Atlantic Ocean off the northwest coast of continental Europe. With an area of , it is the largest of the British Isles, the largest European island and the ninth-largest island in the world. It is ...

in September 1936. The purpose of the agreement was to stabilize their nations' currencies both at home and in the international exchange markets after the collapse of the international monetary system during the

Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...

History

During the Great Depression, international monetary cooperation collapsed among liberal states. Following suspension of the

gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the la ...

by Great Britain in 1931 and the United States in 1933, a serious imbalance developed between their currencies and those of the

gold bloc The gold bloc were seven countries led by France that stuck to the gold standard monetary policy during the Great Depression, even though many other countries abandoned it. In addition to France, the gold bloc included Belgium, Luxembourg, the Nethe ...

countries, particularly France. The devaluation of the

dollar Dollar is the name of more than 20 currencies. They include the Australian dollar, Brunei dollar, Canadian dollar, Hong Kong dollar, Jamaican dollar, Liberian dollar, Namibian dollar, New Taiwan dollar, New Zealand dollar, Singapore dollar, U ...

and the

pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound ( sign: £) is the main unit of sterling, and t ...

raised import prices and lowered export prices in the United States and Great Britain. In the United States and Great Britain

sound money In macroeconomics, hard currency, safe-haven currency, or strong currency is any globally traded currency that serves as a reliable and stable store of value. Factors contributing to a currency's ''hard'' status might include the stability and r ...

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.

Agreement

The Tripartite Agreement was informal and provisional. Subscribing nations agreed to refrain from competitive depreciation 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,

Belgium Belgium, ; french: Belgique ; german: Belgien officially the Kingdom of Belgium, is a country in Northwestern Europe. The country is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to th ...

Switzerland ). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...

, and the

Netherlands ) , anthem = ( en, "William of Nassau") , image_map = , map_caption = , subdivision_type = Sovereign state , subdivision_name = Kingdom of the Netherlands , established_title = Before independence , established_date = Spanish Netherl ...

, also subscribed to the agreement. Subscribing nations agreed to sell one another

gold Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile met ...

in the seller's currency at a price agreed in advance. The agreement stabilized exchange rates, ending the

currency war Currency war, also known as competitive devaluations, is a condition in international affairs where countries seek to gain a trade advantage over other countries by causing the exchange rate of their currency to fall in relation to other currenci ...

of 1931 to 1936, but it failed to help the recovery of world trade.

References

{{DEFAULTSORT:Tripartite Agreement Of 1936 Foreign exchange market Gold standard 1936 in economics

History

Agreement

See also

References