Just three weeks after Allied troops stormed the beaches of Normandy on D-Day, a group of economic representatives from the Allied countries gathered in the small town of Bretton Woods, New Hampshire. Thousands of miles from the front lines, the representatives were seeking to come up with a plan for the international economy after the war. For three weeks in the shadow of Mount Washington, these individuals—many of whom had relationships going back decades—sought to create a new system for international economics.
In The Summit, Ed Conway demonstrates how complex those negotiations were and illuminates how large of an achievement the Bretton Woods system was. Four hundred delegates from 77 countries spent three weeks negotiating with one another in rural New Hampshire and created the International Monetary Fund and the International Bank for Reconstruction and Development (later the World Bank), and established the dollar as the global reserve currency.
As a financial journalist, Conway is drawn to the human dimension of the saga. He devotes as much attention to the ambience of the decaying Mount Washington Hotel and highlights the personalities of the negotiators as much as the national interests they represented. The negotiations, as Treasury Secretary Henry Morgenthau Jr. said, was “some poker game [where] we keep raising our bets,” and Conway brings out the human drama of that incredible game.
The tension at the conference between the American and British representatives was based in part on a personal animosity between the negotiators. Harry Dexter White, the American negotiator, and John Maynard Keynes, the British negotiator, disliked one another from earlier negotiations. Keynes was an academic from Kings College Cambridge whose arrogance frequently kept him from being an effective negotiator. White, by contrast, came from a working-class background and had only returned to college after serving on the front lines of World War I. The two had come to despise each other before they arrived in New Hampshire.
At a structural level, the negotiation marked an important juncture where the United States was overtaking the United Kingdom as the world’s economic superpower. Since the beginning of the war when the British came to the Americans desperate for aid, the Americans had been pressuring their British allies for economic concessions in a post-war order. In particular, the United States wanted the reduction of tariffs that gave preference to goods from British colonies. The disagreements between the American and British delegations were widespread. On the proposal for the IMF, Keynes wanted an “economic health spa” that could be used easily whereas the Americans envisioned a harsher form of lending. While the British detested the Gold Standard, which they had abandoned in 1931, the Americans wanted some form of it as the basis for the post-war order.
Whatever divisions there were between the American and British teams, the Russians were determined to scuttle the negotiations. The Russians felt no obligation to compromise for a deal. They had barely signed on to the preliminary framework that set up the negotiations and repeatedly threatened to derail the negotiations. The Russian delegation would “try to toast their rivals under the table in the bar” but refused to budge during negotiations. White went through “extreme lengths” to get the Russians to sign the agreement but they ultimately walked away from the system because of “the new terms of the international economic development.” Conway’s extensive research in the Russian archives gives the work a scholarly heft and distinguishes it from Benn Steil’s recent The Battle of Bretton Woods, which focused on the negotiations as a struggle solely between Keynes and White.
It is remarkable that despite the Anglo-American disagreements and Russian intransigence, the Bretton Woods negotiations did create a largely stable international economic system. There was a shared commitment to reaching a solution between the British and Americans. “For a short space of three weeks we were making a better world by being better people,” said Fred Vinson, one of the American negotiators. Though the conference would determine the economic future of the world, it received little attention from the public that was following the Allied push into France and the fall of Rome. This anonymity and the physical isolation of the conference, over 20 miles from the closest town and limited telephone access, provided the foundation for negotiators to reach a compromise. The negotiators had taken on roles ranging from, as Keynes said, “the economist, to the journalist, to the propagandist, to the lawyer, to the statesman—even, I think, to the prophet and to the soothsayer.” Even after the agreement was reached, the negotiators had to persuade their countries to ratify the agreement, which in the United States required fighting the international bankers that opposed the agreement.
The system created at Bretton Woods structured international economics through the early 1970s. While the European recovery was due to the Marshall Plan, the IMF and the World Bank became centerpieces of international economic development. On monetary policy, pegging currencies to the dollar rather than gold allowed for more flexibility in how nations set their currencies and they could place more of an emphasis on domestic priorities. The system wasn’t fully on its feet until the 1950s and only lasted until Richard Nixon’s decision to untie the dollar from gold in 1971. It is difficult to ascertain how much of the incredible prosperity in that period can be attributed to the Bretton Woods system but it undoubtedly played an important role. Conway is balanced in his understanding of the value of Bretton Woods, noting that the system was “imperfect, did not cover vast parts of the world and was short-lived.”
In spite of its shortcomings, the creation of the Bretton Woods system was a remarkable achievement. In the midst of World War II, the Allies came together with the objective of creating a system that would prevent another economic depression, and they were successful on the whole. While there are countless stories of heroism on the battlefields in France, Conway brings us the story of a different sort of heroism that was brought out in the halls of the Mount Washington Hotel in rural New Hampshire. The representatives were united in a heroic effort of trying to overcome personal animosities and national disagreements to create a more prosperous and peaceful world.