Managing the Franc in Belgium and France: The Economic Consequences of the Exchange Rate Policies 1925-1936

In Belgium as in France, the period between the wars was marked by a monetary stabilization in 1926 and a devaluation in the middle of the 1930s. This article compares the context and the consequences of these apparently similar exchange rate policies. The economic consequences of the stabilization were similar : the return to a fixed exchange rate, far from stimulating exports, heralded difficulties in the international sector and led to a shift in resources toward the domestic activity. This sectoral analysis calls into question the traditional interpretation of the prosperity of the late 1920’s. The great depression struck Belgian and France in much the same way, but from 1935 their experiences diverged sharply. Two main factors were crucial : first, the differing weights of the international and domestic sectors and second, the different socio-political contexts of devaluation.