Wielding finance as a weapon of diplomacy : France and Britain in the 1920s

France has long conceived of finance as a weapon of diplomacy. The role of French finance in sealing the Franco-Russian Alliance in 1892 is well known; the Quai d'Orsay's use of access to the Paris financial markets and the Paris Bourse as an instrument of foreign policy before the First World War was the subject of much research in the early 1970s. However, the use of currency and credit manipulation as a diplomatic weapon and a lever of power has received less attention. After the First World War the opportunity for such manipulation became more widespread. Following the outbreak of War many currencies came off the gold standard and were slow to return to it in the post-war era giving rise to considerable financial instability through the 1920s. The German, French and British currencies were all buffeted at some stage during the 1920s. The problem was that inter-war economic policy-makers were less committed to defending the gold reserve and gold parity when confronted with competing domestic variables such as unemployment. This encouraged a splintering of international collective effort into competing national monetary systems each pursuing its own monetary policy and interests.The ensuing instability of the interwar years offered opportunistic advantage for a government wishing to seize it. Currency vulnerability and the ramifications it had for national economic policies became all too obvious. Friends and foe alike could not ignore how short term concerted action by banks and financial institutions to manipulate a currency by heavy selling or buying, possibly at the behest of state authorities, could undermine governments and their policies while conferring political leverage on others. It was not long before certain governments would view currency manipulation as an additional weapon in their diplomatic arsenal. The question of stabilising the French franc in the 1920s and returning it to a fixed parity against gold has been studied primarily from economic and political perspectives; the diplomatic has been under-researched.This article will analyse first how France perceived herself to be the object of currency manipulation for political aims by Germany and Britain in the early 1920s; and then how during the stabilisation of the franc after 1926 under Premier and Finance Minister Raymond Poincaré she was able to turn the tables and use short term financial advantage as leverage against Britain on important policy matters