A beggar became a banker: Financial relations between Switzerland and France and the implications for foreign policy, from the Belle Epoque to the Phoney war

Abstract

This paper aims to analyse the changing course of financial relations between France and Switzerland and their political repercussions from the Belle Epoque to the beginning of the Second World War. During this period, a decisive shift occurred: while France was the main lender of the Swiss Confederation and had clear monetary ascendency over this country before the war, the latter, because of its neutrality and the rise of its offshore financial centre, became an important creditor of the former. This transition started during the hostility and continued until the 1930s. For instance, the Swiss banking centre played a crucial role in the stabilisation of the French franc (FF) in 1926, as well as during the financial preparation for the Second World War. While a few case studies have dealt with this historical issue, this paper is the first to examine the impact of this changing course of financial relations over the long term. It demonstrates that, paradoxically, the French government did not profit from its financial ascendency over Switzerland during the Belle Epoque, whereas the small Swiss Confederation was able to reinforce its political and economic position over France because of credits during the interwar period. The monetary environment, the internal political situation, and the general goals of both countries’ foreign policy explain this difference.