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Forgotten Foundations of Bretton Woods

Forgotten Foundations of Bretton Woods: International Development and the Making of the Postwar Order

Eric Helleiner
Copyright Date: 2014
Published by: Cornell University Press
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  • Book Info
    Forgotten Foundations of Bretton Woods
    Book Description:

    Eric Helleiner's new book provides a powerful corrective to conventional accounts of the negotiations at Bretton Woods, New Hampshire, in 1944. These negotiations resulted in the creation of the International Monetary Fund and the World Bank-the key international financial institutions of the postwar global economic order. Critics of Bretton Woods have argued that its architects devoted little attention to international development issues or the concerns of poorer countries. On the basis of extensive historical research and access to new archival sources, Helleiner challenges these assumptions, providing a major reinterpretation that will interest all those concerned with the politics and history of the global economy, North-South relations, and international development.

    The Bretton Woods architects-who included many officials and analysts from poorer regions of the world-discussed innovative proposals that anticipated more contemporary debates about how to reconcile the existing liberal global economic order with the development aspirations of emerging powers such as India, China, and Brazil. Alongside the much-studied Anglo-American relationship was an overlooked but pioneering North-South dialogue. Helleiner's unconventional history brings to light not only these forgotten foundations of the Bretton Woods system but also their subsequent neglect after World War II.

    eISBN: 978-0-8014-7061-5
    Subjects: History, Political Science, Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-viii)
  4. List of Abbreviations
    (pp. ix-xii)
    (pp. 1-28)

    The Bretton Woods conference is justly famous for creating the foundations for the postwar international financial system. Delegates from countries around the world met at the Mount Washington Hotel in New Hampshire in July 1944 to establish a new multilateral legal framework for financial relations. They also created two institutions—the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD)—that remain at the center of global financial governance today. These arrangements, in turn, were underpinned by an innovative “embedded liberal” vision that sought to reconcile a commitment to liberal multilateralism with new interventionist economic practices...

    (pp. 29-51)

    It is widely recognized that Franklin Delano Roosevelt ushered in a new chapter in US–Latin American relations when he renounced military intervention in the region soon after coming into office in 1933. Less well known is the fact that his Good Neighbor policy expanded in the late 1930s and early 1940s to include a more active idea of an inter-American financial partnership designed to promote economic development across Latin America, which in turn pioneered new policies and ideas that prepared the ground for the construction of the international development foundations of Bretton Woods.

    The new US interest in promoting...

  7. 2 THE FIRST DRAFT: The Inter-American Bank
    (pp. 52-79)

    The negotiation of the Inter-American Bank was the most ambitious initiative undertaken by US and Latin American policymakers under the Good Neighbor financial partnership. Beginning in the fall of 1939, they set out to construct a multilateral financial institution that would help achieve their new partnership’s goals. By April 1940, they had drafted a convention and by-laws for a publicly owned multilateral financial institution to foster regional cooperation.

    Although the IAB was never established, various historians have argued that it acted as key precursor to the Bretton Woods initiative. Robert Oliver suggests that “in a sense, the Inter-American Bank plan...

    (pp. 80-98)

    Another policy innovation of the Good Neighbor financial partnership was the transformation of US financial advisory activities in Latin America. Between 1900 and 1930, American “money doctors” traveled across Latin America urging and assisting local authorities to tie local monetary systems to the gold standard.¹ In the early 1940s, a new wave of US advisory missions was launched, but with quite different advice that supported the new Latin American development priorities and embedded liberal ideological framework. These missions were explicitly designed to strengthen the development foundations of Bretton Woods.

    The origins of this transformation came in a high-profile financial advisory...

  9. 4 BUILDING FOUNDATIONS: US Postwar Planning
    (pp. 99-132)

    Serious US planning for the postwar international financial order began immediately after the United States entered World War II in December 1941. It is often suggested that the US officials involved in this planning were largely disinterested in development issues and the concerns of Southern governments. Contrary to this conventional wisdom, the officials prioritized in their plans the kinds of international development goals that had been pioneered in the context of the Good Neighbor financial partnership with Latin America since the late 1930s. Because of the centrality of the United States in the Bretton Woods negotiations, these plans played a...

    (pp. 133-155)

    An additional way in which US officials supported international development goals during the Bretton Woods negotiations—one that has been quite overlooked in histories of Bretton Woods—was the 1943–44 financial advisory mission of Robert Triffin of the Federal Reserve Board, to Paraguay whose advice echoed that of the White mission to Cuba in 1941–42. This time, however, the US advice was implemented immediately, and the Paraguayan reforms quickly came to be seen as a model to be followed by Southern policymakers with development aspirations elsewhere. United States officials saw the Triffin mission as helping to prepare the...

    (pp. 156-183)

    In their plans for the postwar international financial order, US policymakers built directly on the Good Neighbor financial partnership with Latin America and its development goals. The perspectives of officials and analysts from Latin America also helped shaped the outcomes of Bretton Woods negotiations more directly. Most accounts of the Bretton Woods negotiations focus on the US consultations with Britain and there is no question that the Anglo-American negotiations were critical in determining the final outcomes. But the United States and Britain also consulted with a wider group of countries, including many poorer countries. Latin American countries (excepting Argentina) were...

    (pp. 184-207)

    The international development provisions of the Bretton Woods agreements enjoyed backing that extended well beyond the US–Latin American partnership, including from two countries in East Asia that attended the Bretton Woods conference: China and the Philippines. These two countries were in fact the only representatives of the East Asian region at Bretton Woods. A few weeks before the start of the conference, Chinese officials had asked whether Korea could be represented or at least attend as an observer. White liked the suggestion but had to check with the State Department, after which the idea appears to have been dropped.¹...

    (pp. 208-233)

    Development issues also played a role in British plans for the postwar international financial system, though not so prominently or consistently as in the case of the United States. Conventional histories of the Bretton Woods negotiations suggest that Keynes and other British officials were largely uninterested in international development. Even their support for the IBRD is said by some analysts to have emerged only a few months before the conference and largely because the British hoped it would help fund their own country’s reconstruction.¹ However, these arguments understate the British commitment to international development during negotiations. Keynes himself included a...

    (pp. 234-257)

    Although many British officials were not terribly passionate about the incorporation of international development goals in Bretton Woods, they were certainly aware of the enthusiasm for it elsewhere in the world. Two sources of this support were particularly close to home for the British. First, a number of analysts and policymakers with links to eastern Europe who were living in Britain during the war developed detailed plans for postwar international assistance for state-led industrialization policies designed to address the low standards of living within their region.¹ Their ideas were very similar to those that had arisen in the US–Latin...

    (pp. 258-278)

    This book has called into question some common understandings of the origins and content of the Bretton Woods system. It has shown that US policymakers explicitly sought to create a postwar international financial system that was supportive, rather than neglectful, of international development goals. White and other US officials initially had quite ambitious ideas in this area, ideas that built on US–Latin American initiatives of the late 1930s and early 1940s. These ambitions were tempered somewhat by the time of the Bretton Woods conference, but the commitment to promoting international development remained core to the US vision of the...

  16. References
    (pp. 279-294)
  17. Index
    (pp. 295-304)