The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order
Luther, William J., Independent Review
* The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order By Benn Steil Princeton, N.J.: Princeton University Press, 2013. Pp. ix, 449. $29.95 cloth.
On July 1, 1944, less than a month after Allied forces stormed the beaches of Normandy, 730 delegates from forty-four nations gathered at the Mount Washington Hotel in Carroll, New Hampshire--an area more commonly known as Bretton Woods. With the White Mountains serving as a backdrop, the participants spent three weeks designing multilateral institutions to facilitate international economic cooperation after the war. To paraphrase Vassar economist and American delegate Mabel Newcomer, there was little time for hiking. Two of these institutions, the International Monetary Fund and the International Bank for Reconstruction and Development (the first of two institutions that compose the World Bank), continue to play significant roles in the global economy nearly seventy years later.
In his new book The Battle of Bretton Woods, Benn Steil provides a well- researched and interesting account of the historic monetary conference. Steil is currently a senior fellow and director of international economics at the Council on Foreign Relations. He draws heavily on archival evidence and clearly explains the motivations underlying the complex interactions leading up to, during, and immediately following the Bretton Woods meeting. His efforts make for an enjoyable read.
At its core, Steil's book is a story of two men battling in the midst of a power transfer from Britain to the United States. An aging but nonetheless quick-witted John Maynard Keynes attended the conference as a British delegate. He was easily the most famous participant, a celebrity economist with ballerina wife in tow. Indeed, the U.S. Treasury feared he might steal the show. "[T]hey could not let the man near the podium on opening day" (p. 202). And although Keynes was an important figure at the conference, Steil writes that he was ultimately "shunted off to head a commission dealing with the bank," widespread agreement over which had made it a mere "peripheral" concern (p. 197).
Keynes comes across as more of a pundit than an economist in Steil's book, an advocate of "anti-Bolshevist Middle Way-ism" (p. 76). "Though he was a deep skeptic on the benefits of trying to engineer social change," Steil writes, "he had almost unbounded faith in the ability of experts to engineer the proper fixes for whatever economic ailments might afflict the nation at any point in time" (pp. 78-79). Many members of Congress viewed him as nothing more than "a slick-tongued, aristocratic bamboozler" (p. 202). And they were arguably justified in doing so: Keynes was "firmly entrenched within the British political establishment" (p. 96). He would do everything in his power to ease the plight of the fading empire.
Unfortunately for Britain, Keynes did not have much power. War debts had left the British delegation in a poor bargaining position. And Keynes's condescending tone only made matters worse. His idea for an international reserve asset, known as "bancor," was scrapped well before the July meeting. He could not get the bank or the fund located in London--or, once it was clear both would be based in the United States, in New York. After the war, he failed to secure an interest-flee loan for Britain. Indeed, his negotiating was so poor in this instance that on December 6, 1945, Britain settled for a worse deal than had been offered two months earlier. Yet, with every defeat, Keynes managed to spin a more favorable account of events. As such, Steil concludes, "Keynes was at least as concerned with maintaining his standing in the process as he was with molding the actual terms" (p. 187).
Opposite Keynes at Bretton Woods was Harry Dexter White. White had joined the U.S. Treasury on invitation of University of Chicago economist Jacob Viner in 1934 to assist with a study on the U. …