(Host) The recent discovery in Washington DC of a rare transcript of the
1944 conference at Bretton Woods, New Hampshire, at which the World
Bank and International Monetary Fund were created, got commentator Tom
Blinkhorn – who worked at the Bank for 30 years – thinking about the
back story of that meeting and its global importance.
(Blinkhorn)
War was still raging in Europe when almost 800 representatives from 44
allied nations gathered at the Mount Washington hotel in the White
Mountains in July, 1944.
Why Bretton Woods? Well, the famous
British economist, John Maynard Keynes, the real brains behind the
meeting, suffered from asthma and refused to meet in sweltering
Washington, DC. Those were the days before air conditioning. He insisted
on a venue near the sea or in the mountains. New Hampshire Senator
Charles Tobey, ranking Republican on the powerful senate banking
committee, persuaded President Roosevelt that the Mount Washington would
fit the bill provided the government came up with about one million
dollars for renovations.
Special trains and fancy coaches were
mobilized to transport delegates from ports in Boston and New York,
since air travel was not available. The trains went through White River
Junction and on to Littleton, New Hampshire, the station nearest Bretton
Woods.
Delegates worked round the clock for three weeks,
fortifying themselves mainly with free coco-cola. Stronger refreshments
were held closely in reserve, particularly during drafting sessions.
The
final agreement creating the World Bank and International Monetary Fund
was signed on the final day – July 22, 1944. It was the world’s first
example of a fully negotiated monetary and economic system intended to
govern relations among independent nation states. The goal was
honorable, if sometimes elusive: To promote stable economic growth and
democratic procedures that were believed to be essential for a durable
peace. That goal may sound unduly idealistic these days but coming in
the midst of a world war and not long after the Great Depression,
Bretton Woods delegates undoubtedly felt that they had few other
choices.
And sixty-eight years later, the two sister
institutions, occupying large central headquarters across from each
other on 19th street in Washington DC, remain major players in the
world’s financial and economic development. Their operational priorities
and programs have changed over the years, as the world economy has
changed. They have made many blunders but can point to many successes.
Abject poverty in many parts of the world is being alleviated, thanks to
the efforts of the Bank and the Fund although the problem is far from
solved.
The political basis for the Breton Woods system stemmed
from a confluence of several key conditions, some of which are relevant
today: Global crises and the shared pain inflicted by the Great
Depression and World War II; a high level of agreement among the
powerful to avoid mistakes of the past and common belief that forms of
market capitalism held promise for future growth and prosperity; plus a
few persuasive, determined intellectual leaders like Keynes.
And
the fact that a Republican senator and a Democrat President could work
together to make it happen is also telling in these discordant political
times.