Benn Steil


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by Benn Steil
September 4, 2014

J. M. Keynes, flanked by Soviet delegation head M. S. Stepanov (left) and U.S. delegation head Henry Morgenthau, Jr. (right), addressing delegates at the Bretton Woods conference, July 1944 (Bettmann/CORBIS). J. M. Keynes, flanked by Soviet delegation head M. S. Stepanov (left) and U.S. delegation head Henry Morgenthau, Jr. (right), addressing delegates at the Bretton Woods conference, July 1944 (Bettmann/CORBIS).

“The various currencies, which were all maintained on a stable basis in relation to gold and to one another, facilitated the easy flow of capital and of trade to an extent the full value of which we only realize now, when we are deprived of its advantages.”
- Keynes on the classical gold standard (72)

“[T]he gold standard is already a barbarous relic, . . . the reinstatement of [which] means . . . that we surrender the regulation of our price level and the handling of the credit cycle to the hands of the Federal Reserve Board, . . . [which had set up] a dollar standard . . . on the pedestal of the Golden Calf.”
- Keynes (75-76)

“In another year’s time we shall have forfeited the claim we had staked out in the New World and in exchange this country will be mortgaged to America.”
- Keynes to his mother, after his mission to the United States, December 1917 (70)

“[Keynes is] too offensive for words. . . . [He is] a Don and . . . also a young man of talent. . . . I presume the rule for such nowadays is to show his immense superiority by crushing the contemptible insignificance of the unworthy outside.”
- British ambassador to the United States Cecil Spring Rice to his wife, during Keynes’s mission to seek U.S. government aid, September 1917 (69)

“Excluded nations [outside of the ‘imperial preference’ trading system] cannot be expected to accept the fiction of empire . . . in justification of their exclusion from extensive areas of the earth’s surface.”
- American diplomat William Culbertson (115)

“[T]he United Kingdom had placed the final stone upon the grave of . . . liberal trade policies [through the 1932 Ottawa Agreements, which]. . . were designed to force every component part of the British Empire, covering a quarter of the globe, to trade solely within that area.”
- State Department undersecretary Sumner Welles, 1946 (119-120)

“We [the United States] have our politicians and our public and our future to think of. We are not going to invest $65,000,000 and you tie your money to sterling. . . . We feel that it is best for both countries to have the yuan quoted in terms of dollars instead of in terms of sterling.”
- U.S. Treasury Secretary Henry Morgenthau, Jr., to Chinese ambassador Alfred Sze, in negotiations over the sale of Chinese silver bullion, November 1935 (48)

“I have assumed that we [British] will continue our existing exchange controls after the war, and that we do not propose to return to laissez-faire currency arrangements on pre-war lines by which goods were freely bought and sold internationally in terms of gold or its equivalent. Since we ourselves have very little gold left and will owe great quantities of sterling to overseas creditors, this seems only commonsense.”
- Keynes, “Proposals to Counter the German ‘New Order’ ” memo circulated to Foreign Ministry, specifying ideas for post-war financial arrangements, December 1940 (141)

“Keynes’s advice was in the first instance always English advice, born of English problems.”
- Joseph Schumpeter, 1952 (140)

“[Morgenthau is] stripping us of our liquid assets to the greatest extent possible before the Lend Lease Bill comes into operation, so as to leave us with the minimum in hand to meet during the rest of the war the numerous obligations which will not be covered by the Lend Lease Bill. . . . [He is] treat[ing] us worse than we have ever ourselves thought it proper to treat the humblest and least responsible Balkan country.”
- Keynes to counselor to foreign secretary Nigel Roland, reacting to terms of Lend-Lease aid, March 1941 (110)

“[Treasury] envisage[ed] a victory where both enemies and allies were prostrate—enemies by military action, allies by bankruptcy.”
- Dean Acheson, 1969 (117)

“Congress was spontaneously more generous toward China than toward England, perhaps because no one envisaged China as a postwar rival for power or commerce.”
- John Morton Blum, 1967 (109)

“We can always count on the Americans to do the right thing, after they have exhausted all the other possibilities.”
- Winston Churchill, date unknown (7)

“The method of depreciation is a bad method which one is driven to adopt failing something better.”
- Keynes to Foreign Office, while drafting his postwar monetary plan, April 1941 (140)

“[After the war, the United States will be compelled to] mitigate her task [of reducing global imbalances] by making large presents for the reconstruction of Europe.”
- Keynes to British diplomat Frank Ashton-Gwatkin, anticipating the 1947 Marshall Plan, April 1941 (142)

FDR adviser and Lend-Lease administrator Harry Hopkins: “I don’t like his [Keynes’s] style and approach. My own opinion is that except from the point of view of the British Treasury, he’d just be well off at home.”
Morgenthau: “You and me, both.”
- During Keynes’s official mission to Washington to revisit terms of Lend-Lease aid, June 1941 (113)

“[Keynes] wholly fails to see that after the sacrifices the American people are being called upon to make to help Great Britain in the present emergency . . . , our public opinion simply would not tolerate discrimination against our products in Great Britain and, at Great Britain’s insistence, in other countries.”
- State Department division of commercial policy head Harry Hawkins to assistant secretary of state Dean Acheson, during Keynes’s mission to Washington, August 1941 (117)

“That man [Keynes] is a menace to international relations.”
- UK war cabinet economic adviser James Meade, diary entry following discussions over Joint Statement, October 1943 (4)

“[T]he atmosphere of settled exchange rates seems to me to be an important ingredient in achieving postwar stability. If money wage rates in a particular country have got thoroughly out of gear, there is nothing to be done but to alter the exchanges. In other contingencies the possible benefit to be gained is, I am sure, greatly exaggerated, and it would be exceedingly easy to do more harm than good. This is the lesson of nearly all the depreciations which took place after the last war.”
- Keynes to permanent secretary to the UK Treasury Richard Hopkins, responding to comments on Keynes’s clearing bank plan, January 1942 (140)

“[I]f an attempt were made to recommend the use of the dollar as the international unit of account, there would unquestionably be some opposition on the part of those countries who, out of reasons of national prestige or anticipated monetary loss, would prefer not to promote a broader use in international use of a currency of some other country.”
- White, “United Nations Stabilization Fund,” March 1942 (148)

“[White was] an ardent nationalist in his monetary thinking . . . who sought openly, with the Secretary’s approval, to make the dollar the dominant currency in the postwar world.”
- John Morton Blum, 1967 (108)

“[W]ere all important countries to adopt a completely totalitarian form of government and barter their exports for imports so that there would be no balance due either of the trading countries, gold could be dispensed with. . . . When the day comes when one nation will have conquered all others (or all others except one or two) and will impose restrictions on the monetary behavior of the conquered countries—then gold is doomed. But when that catastrophe occurs many other institutions infinitely more valuable than monetary instruments will likewise be doomed.”
- White, “The Future of Gold,” unpublished manuscript, August 1942 (130-131)

“There are some who believe that a universally accepted currency not redeemable in gold . . . is compatible with the existence of national sovereignties. . . . A little thought should, however, reveal the impracticability of any such notion. Any foreign country is willing to accept dollars in payment of goods or services today because it is certain that it could convert those dollars in terms of gold at a fixed price.”
- White, “The Future of Gold,” unpublished manuscript, August 1942 (131)

“One of the factors that contributes to the great confidence in the United States dollar which exists the world over is undoubtedly our large gold holdings. . . . [I]nternational agreement is not a substitute for gold.”
- White, “The Future of Gold,” unpublished manuscript, August 1942 (131)

“[B]efore committing ourselves definitely to a major monkey-house [a formal conference], I should like to get the preliminary reactions of those monkeys who will be optional guests.”
- Keynes to UK Treasury staff, during early discussions about a postwar monetary planning conference, February 1943 (164)

“It is not necessary to invent elaborate technical devices to secure monetary stability. The nineteenth century developed them through the gold standard.”
- New York Times editorial, responding to leaked accounts of plans for the postwar monetary system, March 1943 (167)

“[T]he kid who owns the ball is usually captain and decides when and where the game will be played and who will be in the team. While international monetary stabilization is not baseball, it is a game. Gold is as necessary to that game as the ball and bat are to baseball. Since the U.S. now owns some twenty-two billions of the world’s reported twenty-eight billions of gold, we think Uncle Sam is going to be the captain of the team or there will be no game . . . the idea of ‘supplanting gold as the governing factor’ and apportioning the voting power on the basis of pre-war trade, which would give Britain about fifty per cent more voting power than the U.S., not only is not good baseball—it is not even cricket.”
- New York World-Telegram editorial, 1943 (167)

“The plan puts gold in its right place . . . [it] puts decisive control over vital external operations in the hands of the Government . . . [it] aims at setting up an international authority which is responsible to Governments instead of private banking interests. It provides the control through which alone we can avoid the disastrous recurrence of trade slumps and booms.”
- Daily Herald (UK) editorial, on the Keynes Plan, April1943 (167)

“It is derogatory to sterling to count dollars only as equivalent to gold.”
- British ambassador to the United States Lord Halifax to London, reacting to White’s Plan for the postwar monetary system, June 1943 (172)

“[Numerous changes to the American plan are necessary] unless we are to lose face altogether and appear to capitulate completely to dollar diplomacy.”
- Keynes to Foreign Office staff, July 1943 (172)

“The greatest objection to [the American plan] in its revised version is that a creditor country can go on absorbing great quantities of gold as heretofore.”
- Keynes to Foreign Office staff, July 1943 (172)

“The expectation that the U.S. will be alone or almost alone as a creditor is plausible for the first period, . . . [but] [o]ver the long pull . . . I think the U.S. is as likely to be short as to be long of foreign short-term funds. . . . I put no stock in a ‘chronic scarcity of dollars.’”
- U.S. Treasury adviser Jacob Viner to Keynes, warning of dangers in the preliminary plans, July 1943 (151)

“[I] got White round to see me. I started off by telling him frankly and crudely exactly what I thought about him. . . . Any reserves we may have about him are a pale reflection of what his colleagues feel. He is over-bearing, a bad colleague, always trying to bounce you, with harsh rasping voice, aesthetically oppressive in mind and manner; he has not the faintest conception how to behave or observe the rules of civilised intercourse.”
- Keynes to UK Treasury official Sir Wilfrid Eady, during meetings to reconcile differences between Keynes and White Plans, October 1943 (173-174)

“[White’s Reconstruction Bank scheme is] the work of a lunatic, or . . . some sort of a bad joke.”
- Keynes to UK Treasury official Sir Wilfrid Eady, during meetings to reconcile differences between Keynes and White Plans, October 1943 (174)

Keynes: “This [American draft] is intolerable.It is yet another Talmud. We had better simply break off negotiations.”
White: “We will try to produce something which Your Highness can understand.”
- During discussions over Keynes and White Plans, October 1943 (175)

“What absolute Bedlam these discussions are! Keynes and White sit next [to] each other, each flanked by a long row of his own supporters. Without any agenda or any prepared idea of what is going to be discussed they go for each other in a strident duet of discord, which after a crescendo of abuse on either side leads up to a chaotic adjournment.”
- British participant in discussions over Keynes and White Plans, October 1943 (174)

“[Keynes’s and White’s] modes of debate were diametrically opposed. White was full of vigour and manful thrust. He could be wrathful and rude. His earnestness carried him forward in a torrent of words, which sometimes outstripped his grammatical powers. Keynes, we know, was different; he detected any inconsistency in the opposition, even in the most abstruse matter, with lightning celerity, and pointed it out with seeming gentleness in barbed and sometimes offensive sentences. . . . His rudeness was sometimes carried to an indefensible length and feelings were ruffled; there might even be hot resentment. It was the old story; he was too ready to assume that his adversaries in debate would take all as fair. . . . ‘Do not let that clever fellow [Keynes] throw dust in your eyes,’ White used to tell his American associates, hinting that he, White, was quite capable of seeing through it.”
- Roy Harrod, 1951 (173)

“[White was] quick-tempered, overly ambitious, and power went to his head.”
- Morgenthau, reflecting years after White’s appointment as assistant secretary of the Treasury in 1944 (34)

“Sometimes it appears to us (perhaps unjustly) that the United States Treasury would prefer us to end the war with exiguous gold and dollar reserves so that they will be in a position to force [solutions] on us.”
- Keynes, “The Problem of our External Finance in the Transition” memo circulated to ministers and departments, June 1944 (180)

“[T]he Keynes-Morgenthau plan . . . is nothing less than a . . . British plot to seize control of United States gold.”
- Committee on Banking and Currency member Congressman Frederick C. Smith (R-OH) to U.S. House, November 1943 (177)

“[T]he British formula [the Keynes Plan], so far as we are concerned, is out.”
- White, public announcement during discussions over Joint Statement, August 1943 (172)

“I look with horror on the alternative Plan [as outlined in the Joint Statement] because it destroys the Sterling Area. This is all to be done at the compulsion of a Fund in Washington.”
- War cabinet member Lord Beaverbrook to the war cabinet, during debate over the Joint Statement, 1944 (178)

“It is only by the fullest use of the bargaining power of our splendid consumers’ market, whether within the Empire or with foreign countries, in order to secure special terms for ourselves, as well as by the firm control of our imports, that we can possibly hope to survive. We must be free to take whatever measures we think necessary to the safeguard of our own production, to develop Imperial Preference, to use our bargaining power with foreign countries, and to strengthen that wonderful monetary instrument the sterling system. We must enter into no international commitments which in any way limit that freedom.”
- British secretary of state for India Leo Amery to the war cabinet, during debate over the Joint Statement, 1944 (178-179)

“We shall end the war owing to all our friends and close associates far more money than we can pay. We are in no position, therefore, to set up as international bankers . . . unless we can secure a general settlement on the basis of temporary American assistance followed by an international scheme. [British freedom to engineer new postwar social and economic policies is] impossible without further American assistance . . . the Americans are strong enough to offer inducements to many or most of our friends to walk out on us, if we ostentatiously set out to start up an independent shop.”
- Keynes to UK Chancellor John Anderson, during debate over the Joint Statement, February 1944 (180)

“[W]ith our own resources so greatly impaired and encumbered, it is only if sterling is firmly placed in an international setting that the necessary confidence in it can be sustained. . . . Do the critics think it preferable, if the winds of the trade cycle blow, to diminish our demand for imports by increasing unemployment at home, rather than meet the emergency out of this Fund which will be expressly provided for such temporary purposes?”
- Keynes to House of Lords, during debate over the Joint Statement, May 1944 (186)

“[The Conference will be] the most monstrous monkey-house assembled for years. [The American press] indicated that ‘the Conference beginning on July 1 may last several weeks.’ Unless this is a misprint for several days, it is not easy to see how the main monkey-house is going to occupy itself. It would seem probable that acute alcoholic poisoning would set in before the end.”
- Keynes to UK Treasury undersecretary David Waley, reacting to White’s plan for the Bretton Woods conference, May 1944 (190)

“[O]ur real trouble is that we do not know whether in 1945 co-operation with Mr. Morgenthau and Dr. White or co-operation with the New York bankers will be most likely to produce the practical results we wish.”
- UK Treasury undersecretary Sir David Waley to Keynes, reacting to a loan offered by New York bankers in exchange for abandoning the Bretton Woods conference, May 1944 (153-154)

“[I]t would have a bad effect in banking and business circles here [in New York], and also in Congress if Lord Keynes were a member of the United Kingdom delegation [to the Bretton Woods conference].”
- NY Fed officer Randolph Burgess to British Embassy economic adviser Redvers Opie, May 1944 (189)

“[T]he terms and the consequences of losing our financial independence . . . should deeply concern us. . . . We must reduce our requirements for American aid to the least possible.”
- Keynes, “The Problem of our External Finance in the Transition” memo, distributed to ministers and departments before Keynes left for pre-conference drafting sessions in Atlantic City, June 1944 (191)

“Recent discussion in the United States and evidence given before Congress make it quite clear that there are quarters in the United States intending to use the grant of post-war credits to us as an opportunity for imposing the American conception of the international economic system.”
- Keynes, “The Problem of our External Finance in the Transition” memo, distributed to ministers and departments before Keynes left for pre-conference drafting sessions in Atlantic City, June 1944 (191)

“[Keynes’s views express] the philosophy of deficit spending over again—the use of credit as a cure-all.”
- NY Fed officer Randolph Burgess to Morgenthau, expressing New York bankers’ objections to the preliminary plans for the Fund, June 1944 (189)

“The staging of the vast monkey-house at Bretton Woods is, of course, in order that the President can say that 44 nations have agreed on the Fund and the Bank.”
- Keynes to permanent secretary to the UK Treasury Sir Richard Hopkins, June 1944 (194)

“[T]he British want to increase the flexibility and ease of alterations of exchange rates. We think we should not budge one bit.”
- White to Morgenthau, pre-Bretton Woods drafting sessions in Atlantic City, June 1944 (196)

“Bretton Woods proves to be an extraordinarily beautiful spot, . . . [yet] everything is in a state of glorious confusion.”
- UK delegation member Lionel Robbins, diary entry during Bretton Woods conference, July 1944 (9)

“The majestic beauty of the surroundings was in striking contrast to the temporary bedlam which broke out on this plateau in the shadow of Mount Washington.”
- New York Times, July 1944 (9)

“[The new International Monetary Fund’s] author, John Maynard Keynes . . . is an ardent inflationist. He was never able to get his government before the war to accept his theories, because it was a creditor nation, and it would have been idiocy to water the pound to let the other nations pay their British debts in depreciated money. Now England is a debtor nation. As Keynes put it in his speech in the house of lords in May, ‘We have burdened ourselves with a weight of deferred indebtedness to other countries beneath which we shall stagger.’ Keynes proposes to ease the burden by the fantastic scheme now under consideration. The American people will want to help the busted British nation to rehabilitate itself, but no American except a White, a Morgenthau, or a Roosevelt, completely dominated by the British, will approve of giving this help at the expense of our own solvency.”
- Chicago Tribune editorial, July 1944 (204)

“[T]he average American doesn’t need to be told that most of the world’s monetary gold is buried safely away in Kentucky. . . . When experts from other lands come to talk about money and loans and trade and repayments it gives the uninitiated the uncomfortable feeling that there may be thieves in the pantry.”
- Christian Science Monitor editorial, July 1944 (209)

“We’re chin deep in foreigners trying to arrange a polygamous marriage between Miss America, aged 168 last Tuesday, and the united nations, assorted ages. Can’t say they’re really in love with the lady but she’s got quite a dowry, and business is business. No telling what the outcome will be—or the outgo, for that matter. Some folks remember a ceremony, some years back, when a lot of these gents wearing morning coats and striped pants promised to love, honor, and repay.”
- Chicago Tribune, July 1944 (213)

“What the plan [at Bretton Woods] amounts to, then, is a scheme by which our good neighbors in Europe and Asia will obtain our goods and pay for them with our money, taken from the international stabilization fund. Out of the fund will go the gold that everybody wants and into the fund will go the paper moneys that nobody wants. Before long, there will be no more dollars and no more gold in the fund, and we shall be pressed to ante up again, and so on, ad infinitum, or at least until we are as busted as the rest.”
- Chicago Tribune editorial, July 1944 (231)

“Defeat of the fund and the bank would oblige the United States either to undertake the duties and accept the risks of both institutions, or to watch the progressive decline of its export trade in a world turning more and more to Government controls and barter arrangements.”
- The Times (London) editorial, July 1944 (210)

“[The British] wanted Keynes to nominate me [as conference president], [but] I did not want it. I vetoed it.”
- Morgenthau to the American delegation, July 1944 (12)

“[O]ther countries feel that in the [coming years] . . . the United States will be . . . putting pressure on the monetary systems of the rest of the world . . . by virtue of the fact that the United States will be cornering a larger proportion of the world markets and will be in a position to develop what we call an export surplus. . . . [They will want the United States] to be subject to some pressure through the Fund . . . to adopt a policy which will put less pressure on their exchange and enable them to sell more goods here. We have been perfectly adamant on that point. We have taken the position of absolutely no, on that.”
- White, instructing the American delegation at Bretton Woods, July 1944 (208)

White: “The importance of why we need somebody [White himself] to chairman this, who knows the complete matter is that he should prevent coming to a vote on matters which he doesn’t wish to come to a vote on, and in general arranging the discussion in such a way that we are never caught with an agreement among the Commission on something we don’t want, because then it is too late.”
Morgenthau: “I don’t know anybody more competent.”
- Bretton Woods conference, July 1944 (212)

“[Gold in Fort Knox] is why the United States is in an enviable position . . . why we are in a powerful position in this Conference . . . why we dominate practically the financial world, because we have the where-with-all to buy any currency we want. If only England was in that position, or any of the other countries, it would be a very different story.”
- White, instructing the American delegation at Bretton Woods, July 1944 (208)

“With all their virtues as technicians—and these are very great—the Americans are not good organisers of international conferences. The administration here is quite incredibly bad. . . . [T]he different committees waste a great deal of time arguing whether questions . . . are or are not being dealt with in some other part of the conference. . . . [I]f there is to be a Peace Conference. . . . it will be very considerably worse than Versailles.”
- UK delegation member Lionel Robbins, diary entry during Bretton Woods conference, July 1944 (221)

“[Most of the delegates] just sit listlessly about and only come to life when it is a question of easier terms for the drawing of quotas or special concessions for the liberated areas. . . . [T]he Europeans . . . hate the U.S. and lose no opportunity . . . to express these feelings on the assumption that we [fellow Europeans], as men of superior quality, must adopt the same point of view, even if, for political reasons, we have to pretend the contrary.”
- UK delegation member Lionel Robbins, diary entry during Bretton Woods conference, July 1944 (229)

“[H]owever much we [British] resent it, . . . in the American mind, Article VII and lend-lease are intimately associated; and it would be a fatal thing for us to proceed to formulate our policy in regard to long-term commercial arrangements without knowing how the Americans will react to our proposals for dealing with the short-term financial situation. We need the cash and we shan’t get it if we go back on our written obligations.”
- UK delegation member Lionel Robbins, diary entry during Bretton Woods conference, July 1944 (225)

“There were a great many . . . varieties of unintelligible English spoken [at Bretton Woods]. . . . [The Russians] didn’t speak English; neither did their translators . . . they were struggling between the firing squad on the one hand and the English language on the other.”
- Fed research director and U.S. delegation member Emanuel Goldenweiser, Bretton Woods conference, July 1944 (211)

“How [will] it look when I come back to my people, and explain to them, ‘I went some months ago to Bretton Woods, and explained our position. I told them we want to ask this, this, and this, and in all these questions I have to tell you I come with zero’?”
- Head of French delegation Pierre Mendès-France to Morgenthau and the American delegation, Bretton Woods conference, July 1944 (233)

“It is a disgrace. The Americans give way to the Russians every time. And you too, you British, are just as bad. You are on your knees to them.”
- Belgian delegation head Georges Theunis to UK delegation member Lionel Robbins at Bretton Woods conference, July 1944 (243)

White: “There is no confusion as far as the Fund is concerned. All the important problems have been settled.”
Dean Acheson: “I am sure they have been settled, but I don’t think the delegates know that.”
- Bretton Woods conference, July 1944 (220)

“We may have to get the President to get out an order to seize the hotel as of Wednesday night, and put troops in here to run it. . . . [W]e may have to carry the manager of the hotel out with two soldiers! If that is necessary, Judge Vinson will give the orders.”
- Morgenthau to American personnel and heads of major delegations, discussion of extending the Bretton Woods conference, July 1944 (242)

“If they [the British] don’t like it, it is too bad. . . . We are putting in twice as much money as anybody else, three times as much. . . . it is preposterous that the [Fund] head office should be any place else [besides the United States]. We can vote it anyplace we want.”
- White to Morgenthau and members of the American delegation, Bretton Woods conference, July 1944 (222)

“Now, to me it boils down to this—and I will be willing to face this thing—these groups—once and for all—that the financial center of the world is going to be New York and we don’t want to postpone this thing until another day where we may not be in as advantageous a position and maybe have them to get in a horse-trading position and maybe end up by having it in London.”
- Morgenthau to White and Acheson, following British concessions on the Fund’s location during Bretton Woods conference, July 1944 (224)

Morgenthau: “Now the advantage is ours here, and I personally think we should take it.”
White: “If the advantage was theirs, they would take it.”
- Following British concessions on the Fund’s location during Bretton Woods conference, July 1944 (226)

“We know we will be beaten and we hope to avoid being humiliated.”
- UK delegation member Lionel Robbins to American delegation vice-chairman Fred Vinson, as reported by Vinson to Morgenthau, regarding discussions about the location of the Fund during Bretton Woods conference, July 1944 (224)

“[Keynes was] the outstanding personality at Bretton Woods. . . . He shone in two respects: . . . in the fact that he is, of course, one of the brightest lights of mankind in both thinking and expression and in his ability to influence people, and he shone also by being the world’s worst chairman.”
- Fed research director and U.S. delegation member Emanuel Goldenweiser, Bretton Woods conference, July 1944 (219)

“We, all of us [delegates], had to sign, of course, before we had had a chance of reading through a clean and consecutive copy of the [Bretton Woods Articles of Agreement] document. All we had seen of it was the dotted line. Our only excuse is the knowledge that our hosts had made final arrangements to throw us out of the hotel, unhouselled, disappointed, unaneled, within a few hours.”
- Keynes to Foreign Office, paraphrasing Shakespeare, explaining the rushed signing of the Bretton Woods Agreement, December 1944 (251)

“White has been more than a match for people like Lord Keynes.”
- Morgenthau to President Roosevelt, recommending White’s promotion to assistant secretary of the Treasury, December 1944 (253)

“We cannot be expected to sign an instrument which is either self-contradictory or hopelessly obscure.”
- Keynes to UK Chancellor John Anderson, regarding the final text of the Bretton Woods Agreement, December 1944 (252)

Morgenthau: “It is up to the Government to take the risk on the interest rates and not up to the individuals. . . . [Will we] have five banks in New York dictate foreign exchange rates . . . having London lead us around by the nose, which they have done in the last hundred years?”
White: “We might distort it, and say the speculators are against it.”
- Discussions among Morgenthau and his staff, after the American Bankers Association and U.S. Chamber of Commerce issued reports rejecting the Fund, February 1945 (254)

“Harry, your plan is so darned complicated. I asked our people to put [it] down briefly in layman’s language so I could understand the darned thing, just what it means.”
- Fed board chairman Marriner Eccles to White, during Bretton Woods ratification debate, 1945 (255)

“[T]he United States delegation was there [at Bretton Woods] for one purpose: to protect its interests.”
- White to the House Committee on Banking and Currency, during Bretton Woods ratification debate, March 1945 (256)

“[T]o us, and to the world, the United States dollar and gold are synonymous. . . . It is a mere matter of convenience of expression rather than significance other than reiteration of the fact that dollars and gold are virtually synonymous.”
- White to the House Committee on Banking and Currency, during Bretton Woods ratification debate, March 1945 (257-258)

“[T]here is no likelihood that . . . the United States will, at any time, be faced with the difficulty of buying and selling gold at a fixed price freely.”
- White to the House Committee on Banking and Currency, during Bretton Woods ratification debate, March 1945 (258)

“In Washington Lord Halifax once whispered to Lord Keynes, it’s true they have the money bags but we have all the brains.”
- Found written on a piece of paper following the Anglo-American loan negotiations of 1945 (4)

“You cannot treat a great nation as if it were a bankrupt company.”
- Keynes to Fed board chairman Marriner Eccles, Anglo-American loan negotiations, November 1945 (281)

“No wonder that man [Fed board chairman Marriner Eccles] is a Mormon. No single woman could stand him.”
- Keynes, privately, after the Anglo-American loan negotiations, November 1945 (281)

“We [British] fought at Dunkirk, but to-day we are surrendering what I conceive to be our just rights. We are surrendering them to the power of the dollar, because those responsible for the affairs of this country do not dare to retreat on the economic fastnesses of the Empire.”
- Lord Woolton to House of Lords, during debate over ratification of Bretton Woods and the Anglo-American loan, December 1945 (285)

“It is not easy to have patience with those who pretend that some of us who were very early in the field to attack and denounce the false premises and false conclusions of unrestricted laissez-faire and its particular manifestations in the former gold standard . . . are now spending their later years in the service of the State to walk backwards and resurrect and re-erect the idols which they had played some part in throwing out of the market place.”
- Keynes to House of Lords, during Bretton Woods ratification debate, December 1945 (287)

“The simplest plan, which had much to commend it . . . but for which nobody could have persuaded Keynes, was to abandon the concept of a ‘Grand Design’ [and negotiate smaller loans from the Export-Import Bank, Canada, and elsewhere.] We could easily have said [to the Americans] ‘We are willing to sign the Bretton Woods Agreement . . . but we are not willing to accept any prior commitments at all until we see how the new world develops. . . . In fact events by 1947 showed that the multilateral theologians’ concepts of the course of events had been utterly wrong. . . . [Therefore] postponing the ‘Grand Design’ negotiation, and borrowing relatively small amounts if necessary expensively, would have been well justified by events.”
- UK Treasury official Sir Richard (“Otto”) Clarke, 1982 (289)

“[N]owhere in Washington had the hopes entertained for postwar collaboration with Russia been more elaborate, more naive, or more tenaciously (one might say almost ferociously) pursued than in the Treasury Department.”
- Deputy Chief of the U.S. Mission in Moscow George Kennan, 1967 (317)

“Russia is the first instance of a socialist economy in action. And it works!”
- White, “Political Economic Int. of Future,” undated (6)

“It is known that the Americans made credits to Britain conditional on joining the Fund. . . . [A]s the government of the USA did not offer the USSR a credit . . . our membership in these organizations could be read as our weakness, as a forced step taken under the pressure of the USA Our negative attitude toward membership in the Fund and the Bank would show our independent position in this matter.”
- Soviet Foreign Ministry, memorandum, December 1945 (290)

“The Americans have no idea how to make these institutions into operating international concerns, . . . and in almost every direction their ideas are bad. Yet they plainly intend to force their own conceptions on the rest of us. The result is that the institutions look like becoming American concerns, run by gigantic American staffs, with the rest of us very much on the side-lines.”
- Keynes to British economist and former student Richard Kahn, IMF inaugural conference in Savannah, March 1946 (302)

“[U.S. Treasury Secretary Fred Vinson] rail-road[ed] this decision [locating the Fund and Bank in DC] through the Conference, vocally supported by a pathetic procession of stooges, of which Ethiopia (represented by an American banker), Salvador, Guatemala, Mexico and China were prominent, with most of the rest discreetly silent.”
- Keynes to UK Chancellor Hugh Dalton, IMF inaugural conference in Savannah, March 1946 (301)

“We [the British] lost on every issue, not by the process of rational argument in debate but by the solid massing of the cohorts which voted automatically with America, [particularly the Latin Americans,] whose representatives could be depended on to read sometimes with considerable difficulty the speeches prepared for them by the Secretariat of the United States delegation.”
- Member of British Treasury 1945-1946 delegation to Washington Paul Bareau, lecture delivered at London School of Economics, 1951 (303)

“The lobbying for votes, the mobilisation of supporters, the politics of the lunch and the dinner table were not arts in which Keynes excelled. All the more reason for his bitter disappointment at the manner in which a trip he had anticipated as a pleasant interlude . . . should have turned out as it did. ‘I went to Savannah to meet the world,’ [Keynes] said, ‘and all I met was a tyrant.’ ”
- Member of British Treasury 1945-1946 delegation to Washington Paul Bareau, lecture delivered at London School of Economics, 1951 (303)

“[A] candid appraisal of the contributions which [the Fund and the Bank] have so far made toward the stated objectives would force us to the conclusion that achievement has been much less than anticipated. . . . [This] would be much less disturbing if there were any substantial hopes that in the next few years the situation would change. But there is no such hope.”
- White, draft statement introducing amendment to the IMF articles (never published or presented), May 1948 (317)

“I doubt if any responsible official of the member governments [of the IMF] in the spring of 1944 believed that by 1948—only three years after the cessation of hostilities—the tensions between certain of the major powers would have been so pronounced and that the world, instead of drawing together during these years, would have moved so precipitously toward a split.”
- White, draft statement introducing amendment to the IMF articles (never published or presented), May 1948 (317)

“As regards the technique of further work with us [White] said that his wife was . . . ready for any self-sacrifice; he himself did not think about his personal security, but a compromise . . . would lead to a political scandal and . . . the discredit of all supporters of the new course, therefore he would have to be very cautious.”
- Soviet intelligence agent KOL’TsOV (likely Bretton Woods delegate Nikolai Fedorovich Chechulin) to Moscow, August 1944 (328)

“[White] proposes infrequent conversations lasting up to half an hour while driving in his automobile.”
- Soviet intelligence agent KOL’TsOV (likely Bretton Woods delegate Nikolai Fedorovich Chechulin) to Moscow, August 1944 (328)

“Harry Dexter White was a Russian spy. He smuggled secret documents to Russian agents for transmission to Moscow.”
- Attorney General Herbert Brownell, Jr., to a meeting of the Executive Club of Chicago, November 1953 (324)

“It was originally planned that the United States would support Mr. White for election to the top managerial position in the International Monetary Fund—that of managing director—a more important post than that of a member of the board of executive directors. But following the receipt of the FBI report and the consultations with members of my Cabinet, it was decided that he would be limited to membership on the board of directors. With his duties thus restricted, he would be subject to the supervision of the Secretary of State, and his position would be less important and much less sensitive—if it were sensitive at all—than the position then held by him as Assistant Secretary of the Treasury.”
- Statement of former President Harry S. Truman on Harry Dexter White, November 1953 (352-353)

“[White’s] role as a Soviet agent was second in importance only to that of Alger Hiss—if, indeed, it was second.”
- Whittaker Chambers, December 1953 (328)

“The complicity of Alger Hiss of the State Department seems settled. As does that of Harry Dexter White of the Treasury Department.”
- Report of the U.S. Senate Commission on Protecting and Reducing Government Secrecy(“Moynihan Commission”), 1997 (329)

“[D]ependence on bilateral trade and inconvertible currencies is far greater now than before the war.”
- IMF Annual Report, 1949 (331)

“[T]here has been little secure or sustained progress toward the Fund objectives of unimpeded multilateral trade and the general convertibility of currencies.”
- IMF Annual Report, 1952 (331)

“[There are] absurdities associated with the use of national currencies as international reserves.”
- Economist Robert Triffin to the Congressional Joint Economic Committee, October 1959 (333)

“[The dollar] is our currency, but your problem.”
- U.S. Treasury Secretary John Connally to European officials, following President Nixon’s closing of the gold window, August 1971 (337)

“China, by maintaining its exchange rate policy, has been an important island of stability in a turbulent region.”
- U.S. Treasury Secretary Robert Rubin, Remarks for Opening Plenary of the China-U.S. Joint Economic Committee, May 1998 (342)

“The collapse of the Bretton Woods system, which was based on the White approach, indicates that the Keynesian approach may have been more farsighted.”
- People’s Bank of China Governor Zhou Xiaochuan, statement on reforming the international monetary system, March 2009 (344)

“The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone. . . . China, the sole superpower’s largest creditor, now has every right to demand that America address its structural debt problem and ensure the security of China’s dollar denominated assets.”
- Xinhua News Agency editorial, following the S&P’s decision to downgrade the U.S. sovereign credit rating, August 2011 (343)

“[H]istory suggests that a new cooperative monetary architecture will not emerge until the United States and China each comes to the conclusion that the consequences of muddling on, without the prospect of correcting the endemic imbalances between them, are too great.”
- Author of The Battle of Bretton Woods (348)

CFR: The Battle of Bretton Woods
Financial Times: Indispensable Nation
New York Review of Books: Inventing the World’s Money
Wall Street Journal: A Fateful Meeting that Shaped the World
C-SPAN: Benn Steil’s Talk on Bretton Woods Conference and Harry Dexter White


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