- Reviewed by
This book on the birth of the international monetary system during World War II does much very well. It especially provides a readable account of a very important period and highly significant negotiation between two figures who represented the fortunes, both rising and waning, of their respective nations. Benn Steil of the Council on Foreign Relations has a knack for the dramatic storyline, regardless of what readers might presume to be dry subjects of financial arcana, such as gold reserves, deflation, and drawing rights. In his adept hands, his weaving together personal backgrounds and relations, high and low politics, and bureaucratic maneuverings is actually the stuff of theater. The riveting show focuses on how the respected but relatively unknown Harry Dexter White of the United States Treasury managed to overwhelm the esteemed John Maynard Keynes of the [End Page 628] British government. It is a very important story, not least because White’s American system served as the postwar foundation for global capitalism. Even though it collapsed in the early 1970s, echoes of the Bretton Woods multilateral market regime remains in practice and was partly to blame for the 2008 world financial debacle.
Steil’s contribution to the scholarship arises from the treatment of White, although even this is not a new story (claims in the book to the contrary). Unlike the patrician Keynes, whose economic theories had been institutionalized in Britain and in Franklin Roosevelt’s New Deal, White was an obscure figure. Not for long, however. A child of Jewish immigrants, he scrabbled his way through the Treasury Department bureaucracy by stints as a researcher and government official in World War II, when he authored the Morgenthau Plan that, had it been instituted, would have imposed a harsh peace on Germany. White was a staunch internationalist, even a leftist with sympathies for the Soviet Union—not so much a problem during the war as afterward, when anticommunism reared up in America. In 1944, he confronted Keynes, though not necessarily Keynesianism. Keynes pursued the preservation of the British empire, and British economic dominance through a world currency and central bank that would have propped up large deficit countries (like Britain, which then could have financed the empire through the bank). The White plan, conservative and reflecting sheer American power, led to the creation of what were later known as the International Monetary Fund and the World Bank. These mechanisms called on those suffering deficits to correct trade imbalances through austerity measures. This regime is with us today, of course, though the irony is that White was more liberal than Keynes.
This story is well told. It is also well known. It was first investigated by Richard Gardner, in Sterling-Dollar Diplomacy (1956) decades ago, and then superbly reconstructed by Randall Woods’s A Changing of the Guard (1990) over twenty years ago. Steil cites Gardner, but not Woods, who digested the same archives, understood the drama of the tale, and, to boot, corrected the notion (that Steil [End Page 629] seems to think is his novel contribution) that the Anglo-American negotiation at Bretton Woods was a cooperative endeavor full of unity and good cheer. They were not, as Woods argued. Furthermore, the point that White beat the hell out of Keynes is also not new; Bradford Delong, Daniel Yergin, and others (including, again, Randall Woods) recognized the confrontation years ago. It is also not earth-shattering news that White was suspected of communist leanings; he paid the price by being forced to step down from the IMF and was expelled from U.S. government service. Steil is targeting a broader audience than scholars, however, and in that sense, this book is a success at recasting a surprisingly exciting story.
Thomas W. Zeiler teaches history and international affairs at the University of Colorado, Boulder. He is the author of Free Trade, Free World: America and the Advent of GATT (1998) and Globalization and...