Tripartite Agreement of 1936
Tripartite agreement or treaty is not a new thing in the world. Numerous tripartite agreements have been made between nations. The tripartite agreement of 1936 is one of the widely discussed pacts as it had great impact not only to the involved parties but also the entire world. The tripartite agreement was an acknowledged international monetary agreement entered into by France, the United States and Great Britain. It took place in September 1939 and helped stabilize their nations’ currencies both at the domestic levels and in the international exchange market platform.
After the suspension of the gold standard by the Great Britain in 1931 and the United states in 1933, a severe imbalance was created between their currencies and nations within their gold bloc were affected. When this imbalance in currencies was experienced, France was the most hit country followed by Netherlands, Belgium, Italy, Luxembourg, Switzerland and Poland. These countries had kept the gold standard since 1929 to 1933 and many abandoned it afterwards.
Depreciation of the dollar as the common trading currency and the pound sterling raised import prices and led to low export prices in the United States and Great Britain respectively. In United States and Great Britain; who are known as sound currency advocates have been differing on who favors reforms to stabilize the dollar or pound sterling with those who advocate for eradication of the gold standard and any managed currency. Following this conflict, the tripartite became formal or short-term. The subscribing nations agreed to cease from competitive devaluation in order to maintain currency worth at the existing levels as long as that specific attempt does not interfere with internal success of the currency.
France utilized this opportunity and devalued its currency as part of the deal. Other countries in the gold bloc that agreed into the tripartite agreement are Belgium, Netherlands and Switzerland. The contributing nations agreed to sell each other gold in the seller’s currency at the pries agreed on and in advance. This agreement many it easy to trade and stabilized exchange rates within the countries. Hence, this agreement ended a great currency battle of 1931 to 1936. Unfortunately, it did not have any impact of the world trade as there was no immediate recovery. There were a number of issues stated in the tripartite agreement of 1936 and they include;
- The government of U.S after consultation with the British government and the French government, joins with the in affirming a common desire to foster those condition which safeguard peace and incredible contribution in restoration if international economic relations and to pursue a policy that will promote world prosperity.
- The government of the U.S should in its policy towards international monetary relation take full account of the needs of internal prosperity and take into account consideration made by the government of France and Great Britain.
- The French government also informs the U.S that, the desired stability of the principal currencies cannot be insured on a solid basis except after reestablishment of a lasting balance between various economic systems and it has decided with this object to suggest to its parliament the alteration of its currency.
- The government of U.S is convince as the governments of France and Great Britain that the success of the policy set above is based on the development on the international trade.
- The government of U.S with the governments of Great Britain and France invite the cooperation of other nation to realize and achieve the policy laid down in the present declaration. Hence, it trusts that no other nation will try to obtain unreasonable exchange advantage and make it hand to stabilize economic relations.
Signing of the tripartite agreement of 1936 is an important step towards stable monetary arrangement and strengthening international exchange relationships.
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