Many of you will have noticed already that I’m an anorak about economics, and I’ve read a lot of books about economics, not to mention history and politics. So I started Benn Steil’s The Battle of Bretton Woods expecting to find a re-telling of a familiar story. In fact, it’s not only full of things I hadn’t already known, but also serves as a great overview of the analytical issues in international monetary arrangements. The book works as a very well-written history, with lively personalities – even though many of them, especially the protagonists John Maynard Keynes and Harry Dexter White, come across as rather unlikeable in their arrogance. It also works as an excellent introduction (for students and others) to the specific history of the era and the general economic principles of the international monetary system.
The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order (Council on Foreign Relations Books (Princeton University Press))
One prominent sub-plot is, of course, White’s spying for the Soviet Union. He was questioned by J Edgar Hoover’s HUAC, but confirmation of his espionage came late, in the 1990s with the Venona and Mitrokhin archives. I hadn’t before realised that the FBI had not informed the President of the extent of they evidence they held on White by 1946, in order not to let the spy ring know its cover had been blown. Hence White continued to play such a prominent role in the new World Bank until his death. However, the FBI did ensure he wasn’t appointed as Managing Director of the IMF, as President Truman originally planned, this being the origin of the tradition that a European holds that post.
Nor had I appreciated how badly Keynes went down with the Americans before, during and after the war. Steil makes a strong case that Britain would have done better out of both Lend-Lease and the post-war arrangements if its government had sent somebody else as the British negotiator. Most of the Americans couldn’t abide his intellectual arrogance and smartypants manner. However, nobody in Britain could bring themselves to believe that the Americans didn’t have an innate loyalty to them, whereas the reality was that many on the US side were actively determined to bring about the end of the British Empire and the role of sterling. As this became a reality after the war, Ernest Bevin said plaintively to the US Ambassador, Lew Douglas, surely Britain should not be “lumped in” as if it were “merely another European country?”
The book ends with an interesting Epilogue on China. Although a surplus country, it is not in the same position as America in 1945, as an architect facing a blank page. Chinese officials are also aware – as White was not – of Triffin’s dilemma: the issuer of a reserve currency “cannot pursue different domestic and international objectives at the same time,” as central bank governor Zhou Xiaochuan expressed it. Still, the US-China trade imbalance has brewed monetary trouble and we can’t yet be sure that monetary nationalism won’t be the consequence. How does that old Chinese proverb go?