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Monetary War and Peace: London, Washington, Paris, and the Tripartite Agreement of 1936

Author(s):Harris, Max
Reviewer(s):Otte, T.G.

Published by EH.Net (November 2021).

Author: Max Harris

Reviewer: T.G. Otte

Max Harris. Monetary War and Peace: London, Washington, Paris, and the Tripartite Agreement of 1936. Cambridge: Cambridge University Press, 2021. Xiii + 279 pp. £85 (hardcover), ISBN 978-1-108-48495-4.

Reviewed for EH.Net by T.G. Otte, Professor of Diplomatic History, University of East Anglia.


The history of interwar international finance presents something of a paradox. In many respects, it is a well-known story; and yet, it is not known well enough. Max Harris’ study of the Tripartite Agreement of 26 September 1936, which provided for informal consultation and cooperation on managing their respective currencies between the governments of between France, Great Britain and the United States and their central banks, throws this peculiarity into sharper relief.

In his seminal study The World in Depression, 1929-1939 (1973), Charles Kindleberger called the agreement a “milestone,” though he immediately qualified this statement. Above all, he gave no indication along which particular road this way-marker was to be found, and in which direction it might have pointed. Harris offers an answer of sorts. Monetary War and Peace is an exercise in macroeconomic history. Its chief concern is with the efforts, conceptual and practical, of central bankers and finance ministry officials to grapple with the financial and broader politico-strategic consequences of the collapse of international finances after the First World War and then the global financial crisis of 1929-31.

The inner workings of the international economy during the “golden age” before 1914, of course, are well known and well understood, as are the attempts by various Western governments to adjust their economic and financial arrangements to the altered landscape of the post-war years. Harris offers a succinct and sure-footed account of this and of the decision of Britain’s National Government, an emergency coalition formed to deal with the financial crisis, to go “off” the gold standard. Thereafter, for the first time in almost two hundred years, there was no precedent to guide policymaking. Senior officials at the Bank of England and the Treasury had to feel their way forward and refine what instruments were to hand and proved useful. In Britain’s case the Exchange Equalisation Account, established in 1932, turned out to be the chief monetary innovation. Endowed with sufficient reserves, it allowed the British authorities to intervene on the currency exchange to prop up Sterling. The Americans followed suit, two years later, with the Exchange Stabilization Fund. The EEA and ESF were the principal instruments for currency intervention. Their actions, in turn, as Harris shows with admirable lucidity and fine sense for relevant detail, were the source of considerable transatlantic friction in the mid-1930s.

Harris’ treatment is enriched by vignettes of key central bank and treasury personnel, primarily in Washington and London. In his telling, Bank of England economists such as Harry Siepmann and George Bolton or David Whaley (né Sigismund Schloss) emerge as perhaps unlikely heroes of this story. So does Henry Morgenthau, the slow-speaking, apple-farmer-turned-Treasury-Secretary and Roosevelt confidante. These men had a shrewd appreciation of the disruptive effect of competitive currency interventions and the mutual suspicions they sowed and then entrenched on both sides of the Atlantic. Above all, they understood that cooperation between the democratic nations in the field of finance might counterbalance the increasingly disruptive actions of the revisionist powers on the continent of Europe.

To no small extent, the Tripartite Agreement obscured fundamental differences between Paris, London, and Washington. And yet, it established in the place of the now defunct gold bloc a system of gold clearing, and this helped to stabilise the currency system, gold convertibility remaining the glue that held the whole edifice together. It was informal but transparent; it was focused on day-to-day transactions, but it helped to engrain habits of constant exchanges between the three sides (Belgium, the Netherlands and Switzerland joined the agreement in November 1936). “Ni accord, ni entente, uniquement coopération journalière,” it worked well enough. The absence of carefully coordinated action, for instance during the gold scare in April 1937, however, meant that it did not work as well as it might have.

In the face of the exigencies of war the arrangements of September 1936 did not survive. Both Britain and France, for instance, introduced exchange controls. But as the war progressed and policymakers began to contemplate post-war international arrangements, they drew on the experiences of the Tripartite Agreement and the spirit of 1936. In Harris’ reading, the agreement, then, was a milestone on the road to Bretton Woods and the post-1945 international financial system.

In examining the Tripartite Agreement in detail Max Harris has done a considerable service to scholars of economic and international history alike. His analysis is forensic, and his judgment is shrewd. Similarly, his tentative conclusions as to the possible lessons of 1936 for present-day, post-hegemonic international politics are sensible. There is much to praise in Monetary War and Peace. If it has a defect, it is that is essentially an Anglo-American story, based on British and American archives. French decision-making is reconstructed largely with the aid of Anglo-American sources, and although Belgian, Dutch, French and Swiss archival materials are listed in the bibliography, these offer no more than a decorative sprinkling. As with other works of macroeconomic history, there is sometimes a lack of granularity with regard to government decision-making. Much of the reconstruction of it is refracted here through Bank of England and Treasury lenses. The concerns of other departments, especially the foreign ministries, are given little consideration, even though most took a strong interest in finance; and Harris’ grasp of government decision-making is occasionally less surefooted. Some of the material which used to support conclusions about Treasury thinking, for example, consists of copies of Foreign Office despatches forwarded to the Treasury for information and kept in that department’s files. Further, it would have been interesting and useful to examine whether Neville Chamberlain, a confirmed America-sceptic as Chancellor of the Exchequer, was influenced by experiences of the Tripartite Agreement after his move from No. 11 to No. 10 Downing Street in May 1937 (just after the gold scare).

None of this, however, should detract from the merits of this work, which are considerable.


T.G. Otte is Professor of Diplomatic History at the University of East Anglia. His works include Statesman of Europe: A Life of Sir Edward Grey (Allen Lane (Penguin), 2020) and July Crisis: The World’s Descent into War, Summer 1914 (Cambridge University Press, 2014).


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Subject(s):Financial Markets, Financial Institutions, and Monetary History
Government, Law and Regulation, Public Finance
Macroeconomics and Fluctuations
Geographic Area(s):Europe
North America
Time Period(s):20th Century: Pre WWII