As a response to the Great Depression in 1931 Germany
adopted a policy of exchange control where the
movement of foreign currency was subject to
government control. This regime served as a defense
measure against currency devaluation but it
inhibbited international payments among exchange
control countries.Trade between them was organized on
the basis of bilateral clearing agreements, which
centralized both foreign trade and payments at the
The book analyzes the clearing system in the case of
Germany''s relations with Bulgaria, which developed
the highest trade dependence on Germany in the 1930s.
An almost complete opposition of free trade,
bilateral clearing is seen as a mechanism of
political power maximization and resource allocation
from the periphery to its core. Using Jonathan
Kirshner''s framework of monetary power the work
offers a detailed analysis of the link between
international monetary relations and political power.
The shift of international trade regime from a Gold
Standard and free trade to exchange control and
bilateral clearing provided an opportunity for the
German government to covertly finance its expenditure
in the 1930''s and during WWII.