Charles Rist and the French missions in Romania 1929-1933. Why the 'Money Doctors' failed?

The paper reexamines and discusses the causes of the failure of the French economic missions to implement a sound monetary and financial system in Romania between 1928 and 1933. Banque de France Deputy Governor Charles Rist, also professor of Economics at La Sorbonne University, was the leading personality of the delegation which included, among others, Roger Auboin as permanent Conseiller Technique (adviser) at the National Bank of Romania. We recall the objective of the missions and the economic and political context of Romania in 1928-1929. Then, from the study of official documents and correspondence between the members of the French mission, we propose a first set of reasons explaining the failure: (i) the French side underestimated the difficulty of reaching stability by implementing monetary measures only, (ii) the Romanian Central Bankers and Public Officers found it difficult to admit at the time the necessity of applying stricter discipline in Public Finance in order to restore Leu's credibility. This statement meets the immediate analysis of Rist: the reasons of the monetary failure of the French mission are not to be found in the strict monetary management of the Romanian situation but in the financial component of the policy mix. Then, we present a second-level diagnosis, more in line with what we have learnt since Rist about the successful rules for a relevant monetary policy. Despite its delayed effects, the Great Depression deeply affected the Romanian economy and its financial system. This is one cause of the failure of the Romanian authorities to stabilize the economy and this cause was underestimated by the French Money Doctors. Last, we consider the obstacles to a successful introduction of a soft peg in a country like Romania, without a developed financial market and an adjusted policy mix. We discuss briefly the alternative options that more modern Money Doctors than Rist and the Banque de France advisers would have considered.