jasonfurman's review
5.0
An outstanding account of international monetary policy during the 1930s that rescues the 1936 Tripartite Agreement from obscurity and uses it both as an issue of interest in its own right and as a way to shed light on current debates about exchange rates and international monetary policy coordination.
Max Harris's research is exhaustive and authoritative turning over just about every primary source, recollection, memo or record that might shed light on the issue but the because itself is anything but exhausting--Harris writes about monetary war and peace with (almost) as much excitement that a military historian might bring to actual war and peace with thumbnail sketches of the personages (some of them major, like US Treasury Secretary Morgenthau, and others likely to have been lost to history but for this book, like Harry Siepmann, a consequential UK Treasury official).
The period is truly an exciting one for international monetary issues. All of the world's major economies were back on the gold standard by the time to the Great Depression hit. The UK effectively went off it with a large devaluation in 1931, helping its economy but raising concerns that it was hurting other countries with a competitive devaluation that would reduce imports from their countries. The United States followed in 1933, also with a large devaluation. By 1936 pressures were mounting on France which had kept its link to gold and was suffering both from its strong exchange rate and also the perception that it might not hold (and associated outflow of gold). What might have been a chaotic process was instead handled with a "Tripartite Agreement" between the UK, the United States and France all of which issued similarly worded statements simultaneously to manage and coordinate around France's change. Other economies like Belgium, the Netherlands and Switzerland followed quickly.
Critically, Harris spends as much time narrating the "peace" that followed this agreement. Some of it is a fascinating historical curiosity, like the operation of the "daily gold standard" by which the central banks managed balanced of payments and exchange rates daily. Harris goes into great and interesting detail on this (I'm not sure it has been done elsewhere) but ultimately the specifics are not very relevant to today. What is more relevant to today, however, is the different tools for managing exchange rates, providing transparency (or lack thereof) around them, and taking into account the impact on other countries.
The statement underlying the Tripartite Agreement included the language "no country will attempt to obtain an unreasonable competitive advantage" from its monetary/exchange rate policy, language that is now part of the commitment by all IMF member countries and also stronger versions of which have been agreed by the G20 and even stronger by the G7. Harris argues that the Tripartite Agreement was at the root of the modern arrangements and was an important model that simultaneous informal statements instead of a formal agreement could be sufficient, especially if backed up by strong relationships and transparency. Of course, it was easier for France, the UK and the United States to cooperate in 1936 with Hitler rising just over the border than it is for, say, the United States and China to today. But still, this timely reminder of the importance of international monetary spillovers and the different ways they can be handled is a fascinating slice of history and a great way to have broader perspective on the present as well.
Max Harris's research is exhaustive and authoritative turning over just about every primary source, recollection, memo or record that might shed light on the issue but the because itself is anything but exhausting--Harris writes about monetary war and peace with (almost) as much excitement that a military historian might bring to actual war and peace with thumbnail sketches of the personages (some of them major, like US Treasury Secretary Morgenthau, and others likely to have been lost to history but for this book, like Harry Siepmann, a consequential UK Treasury official).
The period is truly an exciting one for international monetary issues. All of the world's major economies were back on the gold standard by the time to the Great Depression hit. The UK effectively went off it with a large devaluation in 1931, helping its economy but raising concerns that it was hurting other countries with a competitive devaluation that would reduce imports from their countries. The United States followed in 1933, also with a large devaluation. By 1936 pressures were mounting on France which had kept its link to gold and was suffering both from its strong exchange rate and also the perception that it might not hold (and associated outflow of gold). What might have been a chaotic process was instead handled with a "Tripartite Agreement" between the UK, the United States and France all of which issued similarly worded statements simultaneously to manage and coordinate around France's change. Other economies like Belgium, the Netherlands and Switzerland followed quickly.
Critically, Harris spends as much time narrating the "peace" that followed this agreement. Some of it is a fascinating historical curiosity, like the operation of the "daily gold standard" by which the central banks managed balanced of payments and exchange rates daily. Harris goes into great and interesting detail on this (I'm not sure it has been done elsewhere) but ultimately the specifics are not very relevant to today. What is more relevant to today, however, is the different tools for managing exchange rates, providing transparency (or lack thereof) around them, and taking into account the impact on other countries.
The statement underlying the Tripartite Agreement included the language "no country will attempt to obtain an unreasonable competitive advantage" from its monetary/exchange rate policy, language that is now part of the commitment by all IMF member countries and also stronger versions of which have been agreed by the G20 and even stronger by the G7. Harris argues that the Tripartite Agreement was at the root of the modern arrangements and was an important model that simultaneous informal statements instead of a formal agreement could be sufficient, especially if backed up by strong relationships and transparency. Of course, it was easier for France, the UK and the United States to cooperate in 1936 with Hitler rising just over the border than it is for, say, the United States and China to today. But still, this timely reminder of the importance of international monetary spillovers and the different ways they can be handled is a fascinating slice of history and a great way to have broader perspective on the present as well.
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