This chapter narrates the twists and turns in monetary relations that culminated in the Tripartite Agreement. After discussing the franc's deteriorating position from the spring of 1935 and the implications for Britain's management of the pound, it turns to the pivotal Anglo-American relationship. Distrust was pervasive, but the two sides eventually came to an understanding, assuring each other that they would not further depreciate their currencies in response to a fall in the franc. With London and Washington talking again, there was now space for an agreement to facilitate French devaluation. The resulting Tripartite Agreement, announced on September 26, 1936, set forth revolutionary principles for monetary cooperation, including the rejection of competitive depreciation and exchange controls. With time, the Agreement--informal and vague, unconventional and pathbreaking--would turn the page on the chaos of earlier years and redefine the international monetary landscape.

This chapter examines the problems of the franc during the Tripartite years. The Big Three generally shared the following hierarchy of priorities (in decreasing order of importance): maintain solidarity, uphold the Tripartite Agreement, forestall exchange control, and prevent excessive depreciation. They succeeded in achieving their top three priorities, a signal accomplishment. Yet confidence in the franc plummeted at times, and with French requests for financial support refused and capital fleeing at an unsustainable rate, depreciation seemed the only way out. The ensuing falls in the franc were larger than Britain or America wished, but both agreed that it was much better to manage them within the club than to eject France. It was far more important for the general framework of the Agreement to survive than to risk all that had been gained over too strict an interpretation of its guidelines.