H-Diplo Roundtable XVI, 29 on Forgotten Foundations of Bretton Woods: International Development and the Making of the Postwar Order [29 June 2015]

George Fujii Discussion

H-Diplo Roundtable Review
Volume XVI, No. 29 (2015)
29 June 2015

Roundtable Editors:  Thomas Maddux and Diane Labrosse
Roundtable and Web Production Editor:  George Fujii
Commissioned for H-Diplo by Thomas R. Maddux
Introduction by Thomas Maddux

Eric Helleiner.  Forgotten Foundations of Bretton Woods:  International Development and the Making of the Postwar OrderIthaca: Cornell University Press, 2014.  ISBN:  978-0-8014-5275-8 (hardcover, $39.95).

URL:  http://www.tiny.cc/Roundtable-XVI-29

Contents

 
© 2015 The Authors.

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 United States License.

The Bretton Woods Conference of 1944 is almost always associated with an effort by the Allied Powers led by the U.S. and Great Britain to create a new economic system in the aftermath of the Great Depression of the 1930s and the destruction and dislocation generated by World War II.  Two of the major institutions that emerged from the conference, the International Bank for Reconstruction and Development (the World Bank) and the International Monetary Fund (IMF) remain active and important international institutions participating at a global level in various issues such as the current economic and financial situation involving Greece and the Eurozone countries.

Eric Helleiner’s study does not dispute the importance of these institutions and their activities, but the author does suggest that an important dimension with respect to the origins of ideas advanced at Bretton Woods, the international dimensions of these sources, and the importance placed on the promotion of development as critical to global stability, has been missing in previous studies.[1]

 

Helleiner reiterates in his response to the reviews the significant new arguments in his book. First, that the “Bretton Woods agreements emerged from a wider geographical context than just the Anglo-American negotiations” between the British economist John Maynard Keynes and Harry Dexter White of the U.S. Treasury Department and that “inter-American initiatives” and interactions extending back to 1900 played a significant role in the emergence of “new ideas and institutional frameworks for Bretton Woods.”  Helleiner also points to the influence of Keynes in reviving proposals on development from the Versailles conference at the end of World War I as well as Chinese officials at Bretton Woods who advanced a development plan from Sun Yat-sen, the leader of the Chinese Republic during the Versailles conference.  Second, Hellenier emphasizes that international development goals influenced the design of the World Bank and the IMF’s stated mission to “support state-led development policies in poorer countries”.  Third, Helleiner discusses why “so many historians did neglect this history” of development at Bretton Woods, noting the absence of archival sources now available, the preoccupation of historians with the Cold War and the issue of White’s involvement with the Soviet Union, and, as Emily Rosenberg points out in her review, the fact that historians of Latin America have not focused on Bretton Woods and U.S. historians on Bretton Woods have ignored Latin America’s direct and indirect involvement in the conference.

 

The reviewers are very enthusiastic about Helleiner’s contribution to the literature on Bretton Woods and development.  As David Ekbladh emphasizes, “Helleiner has shown us that something was missing” in the studies of the conference and its agreements.  Ekbladh applauds Helleiner for recovering the “needs, desires, and demands of certain developing nations,” especially in bilateral discussions between the U.S. and Latin American leaders.  Edgar Dosman agrees with Ekbladh that Helleiner “has generated a major and coherent re-interpretation anchored in new primary sources.”  Dosman also expands on Helleiner inclusion of Latin Americans in the development process, most notably through an evaluation of Raul Prebisch, a leading Latin American economist from Argentina, who was involved in the discussions.  Eric Rauchway concludes that Helleiner has produced an “extraordinarily valuable and well researched monograph” that recovers a “rich and intriguing history” of Latin American leaders working with the Roosevelt administration to extend the Good Neighbor policy into a broader focus on development.  Emily Rosenberg agrees with the other reviewers’ assessments and emphasizes Hellenier’s contribution in putting aside the Cold-War framework and replacing it with “a fresh and more historically embedded perspective that focuses on the economic crisis of the 1930s and the ‘new liberal vision’ of U.S. reformers who developed it in the ‘Good Neighbor’ approach with Latin America “and then take it global.”

 

The reviewers raise some issues with the book, but for the most part add new insights to support and extend Helleiner’s major interpretations. Ekbladh, for example, notes the absence of sustained investigation about how “this [Bretton Woods’] thinking, and the policies it generated, agitated or motivated broader public and political discussions.”

Did “politicians, parties, and publics in a variety of places and at different times” accept the Bretton Woods’ assumptions and accords?  Furthermore, Ekbladh would have appreciated movement beyond the financial issues to an engagement with “an emerging literature that sees more extensive sort of development (or modernization) taking form in these same years.”  Rosenberg expands on Helleiner’s account of why the development focus of Bretton Woods has been ignored by suggesting that an “additional answer to this puzzle may lie in the compartmentalized structure of the profession of history itself.”  Since scholars focused on the European context and issues that emerged out of World War II and the Cold War, they did not integrate the U.S. focus on Latin America after 1900. Also, the experiences of officials “with issues related to currency, lending, and exchange rates” and their role as financial advisers to Latin American states before the Good Neighbor policies of the 1930s brought a shift away from earlier ‘Dollar Diplomacy.’

 

The reviewers agree with Rosenberg’s conclusion that Helleiner’s excellent study has many strengths but the “most enduring contribution is to help cast the international conference at Bretton Woods within the context of truly international history—not a history in which U.S. and European practices radiate into the world but one in which circulations of expertise travel in many directions.”

 

Participants:

 

Eric Helleiner is Faculty of Arts Chair in International Political Economy in the Department of Political Science and the Balsillie School of International Affairs at the University of Waterloo. He received his Ph.D. from the Department of International Relations at the London School of Economics and he is author/editor of number of other books, including most recently The Status Quo Crisis: Global Financial Governance After the 2008 Meltdown (Oxford University Press, 2014) and (with co-editor Jonathan Kirshner) The Great Wall of Money: Power and Politics in China’s International Monetary Relations (Cornell University Press, 2014). He is currently researching a global intellectual history of political economy.

 

Edgar J. Dosman (Ph.D. Harvard) is Professor Emeritus, Department of Political Science, York University (Toronto).  His most recent major publication is The Life and Times of Raul Prebisch, 1901-1986 (McGill-Queen’s University Press, 2008), with Spanish (Marcial Pons, 2010) and Portuguese editions (A construcao da America Latina e do Terceiro Mundo (Contraponto, 2011).  His current project is titled Doubt, Distance and Desire: Understanding the Strange Evolution of Canadian-Latin American Relations in the 21st Century.

 

David Ekbladh is Associate Professor of History and core faculty in international relations at Tufts University.  He is currently at work on a book entitled, Look at the World: The Birth of an American Globalism in the 1930s. His first book, The Great American Mission: Modernization and the Construction of an American World Order (Princeton University Press, 2010), won the Stuart L. Bernath Prize of the Society of American Historians as well as the Phi Alpha Theta Best First Book Award.

 

Eric Rauchway is Professor of History at the University of California, Davis, and the author of four books on US history including The Great Depression and the New Deal: A Very Short Introduction and Murdering McKinley: The Making of Theodore Roosevelt's America. His book on Franklin Roosevelt's monetary policy, The Money-makers: The Invention of Prosperity, from Bullion to Bretton Woods, is due out next year.

 

Emily S. Rosenberg, Chair of History at the University of California, Irvine, is author of Transnational Currents in a Shrinking World, 1870-1945, a book published from her edited volume, A World Connecting: 1870-1945 (Harvard, 2012) and co-editor, with Shanon Fitzpatrick, of Body and Nation: The Global Realm of U.S. Body Politics (Duke University Press, 2014). Other books include Spreading the American Dream: American Economic and Cultural Expansion, 1890-1945, Financial Missionaries to the World: The Politics and Culture of Dollar Diplomacy, 1900-1930, and A Date Which Will Live: Pearl Harbor in American Memory. She has served as president of the Society for Historians of American Foreign Relations and co-edits the “American Encounters, Global Interactions” series for Duke University Press.

 

 

Eric Helleiner’s Forgotten Foundations of Bretton Woods is a remarkable contribution which establishes a new point of departure for research and thinking on international development in the emerging international economic system after the Second Word War.  Like other ground-breaking books, it challenges previous work, uniting disparate insights into an original analytic framework.  While previous scholars have questioned aspects of the prevailing and long-standing narrative on Bretton Woods, Helleiner has generated a major and coherent re-interpretation anchored in new primary sources on this neglected period.

 

The book re-examines the background and evolution of the post-war multilateral framework for financial relations negotiated at Bretton Woods in July 1944.  Helleiner argues that international development goals were for the first time incorporated into a liberal governance architecture. Or, as he puts it,  the Bretton Woods negotiations “should be recognized for their pioneering role,” rather than as an Anglo-American dominated process in which “southern voices were largely absent,” and which “privileged the narrow interests and perspectives of the rich ‘North’ over those of the South” (2).     

           

The Bretton Woods achievement, according to the author, was the incorporation of a true North-South dialogue, “the first of its kind,” as negotiators constructed a new global financial order of embedded liberalism.  Officials from the South, mainly Latin American but also from China, Africa Eastern Europe, and Asia, were not mere spectators, but major participants – decision-making partners rather than mere corridor wallflowers - at Bretton Woods. And so far from excluding the global dimension, “US negotiators saw international development as a priority issue on the agenda of postwar international financial planning,” with the aim of “pioneering a new model for both North-North and North-South financial relations…a multilateral framework that favored Southern governments’ development priorities” (11).

 

But alas, these foundations were submerged in the euphoria of victory and Pax Americana as the Second World War wound down and the main U.S. negotiators departed or were marginalized after the death of President Franklin D. Roosevelt on 12 April 1945. This aftermath has resulted in a tragic ‘forgetting’ of the actual negotiations at Bretton Woods and their original powerful vision foreshadowing later rounds of North-South diplomacy including UNCTAD (UN Conference on Trade and Development) and the NIEO (New International Economic Order). For this reason, Helleiner argues, the uncovering of these ‘forgotten foundations’ of the Bretton Woods system has more than historical or scholarly significance, providing support and perspective for experts and governments around the world seeking a long overdue overhaul of the current governance structure in international finance. But of course it does also have important implications for international development studies.  It is a courageous and insightful text, not hesitating to take on venerable sacred cows in the literature, and both richly documented and persuasively written. In short, Professor Helleiner’s book offers a fascinating study of decision-making and bureaucratic politics in the central task of crafting a post-war international economic order after the disasters of the Great Depression and the Second World War.

 

Nevertheless, the research gap bridged in this book raises the question of why such an important area was not adequately identified in earlier scholarship.  This neglect of the Good Neighbor/Bretton Woods financial partnership in the literature does not square with its policy salience after 1945. Latin Americans never tired of reminding an irritated Washington of its failure to honor development commitments made during the Roosevelt period, and these grievances, particularly the creation of an inter-American bank and commodity stabilization, remained the driving themes of post-war Latin American economic diplomacy.[2]

 

The text is enriched with new archival material, particularly on the role of agency in the Bretton Woods process, and this emphasis on policy leadership safeguards the text against the sometimes turgid tendencies of the international finance literature.  The term ‘Bretton Woods’ can be occasionally confusing, appearing variously as a broad process (including Good Neighbor precursors and banking missions); as a specific international negotiation and text; or the IMF and IBRD as the resulting real existing institutional outcomes (183).

 

The most compelling chapters of the book re-frame inter-American relations during the late 1930s and war years, emphasizing the significance of the U.S.-Latin American financial partnership during President Roosevelt’s Good Neighbor policy for setting the stage for the Bretton Woods proposals and the important Latin role once the formal negotiations got underway. “The support of both US and Latin American officials for the development content of Bretton Woods,” Helleiner claims, “built directly on the Good Neighbor financial partnership”[3] (271). As part of the re-orientation of U.S. political and diplomatic relations toward Latin America in 1938-39, senior New Deal officials including Henry Morgenthau (Treasury Secretary), Cordell Hull (Secretary of State), Sumner Welles (Undersecretary of State) and particularly Harry Dexter White supported short and long-term lending to countries in the region.  As war engulfed Europe these early initiatives accelerated into new fields.  White, as Undersecretary to Morgenthau, was the key driver of the new policy, but he, the author claims, had “very wide support within US official circles” (42). White’s mission to Cuba 1941-42, U.S.-Latin American planning for an inter-American development bank, and Robert Triffin’s 1943-45 financial advisory or ‘money-doctoring’ missions to Paraguay and other countries were particularly significant in expanding a development agenda in the Americas. White’s Cuba mission was a key U.S. policy innovation, and Triffin’s Paraguay work “was linked to the Bretton Woods plans from very early on…[and] complementary to the drafting of White’s proposed Fund” (144).  Helleiner concludes that “the Paraguayan mission linked the new Bretton Woods framework very directly to Latin American development aspirations”… [and]… “served as the model for subsequent Fed missions to Latin America that were one of the most prominent and popular aspects of the Good Neighbor policy in this period” (183).

 

Helleiner maintains that Harry Dexter White’s early plans in 1942 for the postwar international financial order had a “direct relationship to White’s experience in US-Latin American financial relations” (99).  The financial partnership which emerged “pioneered new policies and ideas that prepared the ground for the construction of the international development foundations of Bretton Woods” (29).  International development concerns were prioritized from the outset, and the Good Neighbor/Bretton Woods agenda would prove enduring, reappearing in successive rounds long after 1945: facilitating international payments, autonomous monetary policy, commodity price stabilization, infant industry protection, debt restructuring, capital flight protection, compensatory balance of payments financing, and long-term international development finance.[4]

 

But Latin Americans also brought development insights into the Good Neighbor/Bretton Woods process beyond the experience of the Americans. The clearest example was Raul Prebisch, selected as consultant by Robert Triffin in his money-doctoring work. Triffin was thirty-three when he met Prebisch in early 1944, and had arrived at the Federal Reserve two years earlier with no previous experience in Latin America. Prebisch was the best-known economist in Latin America, and General Manager of the Argentine Central Bank from 1935 until he was dismissed by the military government in October 1943 for his pro-allied views. He came, therefore, with formidable experience and an established reputation.  He had successfully overseen Argentine monetary policy and defended its economy through the Great Depression, and he had a strong international network in the private banking world as well as the US Federal Reserve. More important for Triffin, however, was that Prebisch had pioneered development banking in this wealthy but nevertheless trade-vulnerable country in Latin America. Evolving by force of circumstance to cope with depression and the outbreak of war, his 1940 National Recovery Plan was a breakthrough model for an autonomous and activist Central Bank role for national growth[5] (177). Emanuel Goldenweiser of the Federal Reserve described him as “without any doubt, the most outstanding man in his field in Latin America and one of the outstanding ones in the world” (151). Prebisch and Triffin immediately liked and respected one another, with their collaboration becoming an important demonstration of mutuality in shaping the Bretton Woods negotiations – “learning from Latin America,” in Helleiner’s words (149).
 

However, the book has a much broader scope than the inter-American engagement.  It includes an assessment of the U.S.-British connection and the Keynes-White relationship;  it also examines the roles of  leaders from other regions – Chinese officials building on the earlier thought of Sun Yat-Sen, Paul Rosenstein-Rodan’s expertise on Eastern Europe, C. Desmukh  (India) or Blatta E. T. Medhen from Ethiopia - in the Bretton Woods negotiations. Helleiner explains how some of the early ambitious ideas were diluted during the Conference, but that the underlying commitment to development in the IMF Articles of Agreement and development provisions of the IBRD (International Bank for Reconstruction and Development) was retained, along with a commitment to create an ITO (International Trade Organization) as a companion institution to the IMF and IBRD.  According to the author, international development remained “core to the US vision of the Bretton Woods system” (258). The final all-too-short chapter addresses the “forgetting” of its international development content so completely by scholars in the post-war years that many have claimed its origins in President Truman’s inauguration speech in 1949 (258; 259).

 

The late 30s witnessed a sharp acceleration of U.S. interest in Latin America after Adolf Hitler’s arrival to power and the consequent deepening Nazi strategic threat.  The outbreak of war in Europe in September 1939 deepened the strategic value of the Western Hemisphere for the US.  Overall military control of the Western Hemisphere had to be secured and guarded; the outbreak of World War required U.S. access to Latin American resources and markets, along with unqualified support to curtail enemy influence. That Latin America became a priority in Washington, that public awareness of things Latin American in the U.S. would blossom, and that this factor would form the backdrop to President Roosevelt’s Good Neighbor policy is readily evident.  Similarly, for Latin America the rising tension in Europe and then the progressive closing of European markets after September 1939 magnified the salience of U.S. security and commercial cooperation. While the interests of Latin countries varied, from the highly vulnerable Caribbean to South America with its more diversified trade and diplomacy with Europe (and with Argentina still very much in the declining British orbit) all were worried, and all could agree on the urgency of improved dialogue with Washington.  The Good Neighbor policy, therefore, found a ready Latin American audience—although many critics remained in Washington, along with considerable skepticism of U.S. long-term commitment to the South (including Eduardo Suarez, Mexican Finance Minister who chaired one of the three commissions at Bretton Woods along with Keynes and White). (39)

 

But while the strategic factor alone would have accelerated U.S.-Latin American cooperation during the late 1930s (and deflated after 1945 when the Nazi threat was removed), the Good Neighbor policy was based on more than security alone. The author sees a “mix of strategic, economic and ideational motivations…” (130).  “Development,” Professor Helleiner concludes, “was not a mere afterthought,” citing the contribution of numerous officials beyond department heads in Treasury and State such as Adolf Berle, Assistant Secretary of State, senior advisors Emilio Collado (State) and EM Bernstein (Treasury), Robert Triffin (Federal Reserve) and others (including outside allies like Nelson Rockefeller).[6] (130-131).  The values of Roosevelt and his engaged key officials in Washington converged with those of Latin counterparts, offering a greater openness than previous administrations to state-led initiatives for economic reactivation, poverty reduction, and human security in general.

 

The development commitment of U.S. New-Deal officials underpinning the Good Neighbor policy, therefore, opened the possibility of forming “transnational expert coalitions” with Latin counterparts during the precursor activities and subsequent negotiations for Bretton Woods.[7] In effect, they formed nascent epistemic communities seeking to consolidate the development momentum of the Good Neighbor policy within a permanent international framework. All the participating Latin governments signed the accords on 22 July 1944 and all except Haiti followed the U.S. in ratifying them without delay. (Argentina was excluded from the Bretton Woods Conference, joining the IMF in 1956.) Latin Americans were optimistic. The text was a compromise, but was considered a big step forward, together with the commitment on early action to design the ITO. White was considered the obvious choice for the position of new IMF founding Managing Director.

 

In fact the U.S.-Latin American ‘transnational expert coalitions’ of the Good Neighbor/Bretton Woods period rapidly dissolved after Roosevelt’s death in 1945.  Political change explains part of their fragility: the transition to President Harry Truman’s administration removed key supporters at the top, including Morgenthau and White in Washington, while strengthening the role of critics like Ambassador Spruille Braden and the New York banking community, which had never been supportive of the Good Neighbor policy in any case. White, who had driven the policy during the war, was in fact not appointed as IMF Managing Director. Worse, he was already under suspicion and ill, dying of a heart attack in 1947 (260-261). While the commitment of individual New Deal officials to Good Neighbor values had been deep, their range of influence proved limited, and the transnational expert coalitions failed to graduate into epistemic communities.

 

Helleiner points out other factors which help explain the curiously rapid deflation in U.S.-Latin American rapport. The new Cold War and Soviet threat focused U.S. attention on Europe and Asia; far away in the Western Hemisphere Latin America was relatively safe and of secondary importance for U.S. security. The ideological side of the Cold War in Washington demanded market orthodoxy in which the New Deal values of state-led development were suspect; the related anti-communist crusade after 1945 deepened suspicions of potentially subversive policies and their authors, and sent a chill over the future of the IMF and IBRD even before they opened operations. The ITO failed Congressional ratification. U.S. attention lay outside Latin America; Truman’s Point Four technical assistance initiative in 1949 was a modest affair. Senator Joseph McCarthy, George Humphrey in Treasury, and IBRD President Eugene Black became the face of the 1950s in Washington. 

 

In retrospect, the Good Neighbor vision of partnership was incompatible with the dynamic of the post-war Pax Americana. The asymmetry in U.S. – Latin American relations after so total a US victory and its overwhelming and global role in every sphere – military, diplomatic, and economic – reduced Latin America to the minor league in Washington’s enormously expanded agenda. A quiet and secure anti-communist bastion, open for business, sufficed; a hub-and-spoke diplomacy with special friends (like Brazil) and special antagonists (like Argentina) replaced the multilateral and regional development focus of the earlier Good Neighbor/Bretton Woods years.  Prior to the Second World War, Latin America’s more diversified economic linkages with Europe and Asia helped  balance U.S. primacy, but now Washington was the undisputed leader—the center of the inter-American solar system around which, big and small, Latin American economies revolved.

 

The post-war re-ordering of the Americas presented the Latin American countries with a dilemma. Relations with the U.S. were not underpinned by the long-standing civil societal linkages which characterized U.S.-Canadian or U.S.-European relations. Latin American business was too weak and the U.S. private sector too divided or dismissive.  Old cultural stereotypes quickly replaced the public warmth of wartime collaboration;  U.S. ‘thought leadership’ throughout Latin America intensified, as America’s dominant universities, lead journals, and research centers captivated the region and nursed a culture of imitation in economic teaching, theory, and policy.   

 

The Forgotten Foundations could be read, correctly, as a narrative of lost memory and failure after 1945. But a more positive interpretation would focus on lessons learned as well as achievements forgotten, on gains as well as costs, and continuity rather than rupture. For some participants the experience of the Good Neighbor/Bretton Woods process proved valuable for shaping their post-war development strategies, with Raul Prebisch offering an interesting example. This ‘education of Don Raul,’ so to speak, evolved in stages.

 

First, Prebisch’s experience with the New Deal, particularly his extended November-December 1940 visit to the U.S., was formative in his political and policy orientation. Prebisch’s first person acquaintance with Washington had been in 1926, in the midst of the Dollar-Diplomacy era. Then, in 1933 as a participant in the World Economic Conference in London, he shared the general disappointment with President Roosevelt’s unhelpful role. During the 1930s, Argentina and the U.S. remained at odds in trade relations. But now, in 1940, he saw a changed country of the future, with New Deal values offering a vision of the good society which he would champion all his life. From his long interview with the President, followed by discussions with White and other senior officials in the U.S. Treasury and State Department, he recognized a startling convergence between this openness to embedded liberalism – to a state-led policy within a liberal multilateral framework - and his conception of markets and the state which had evolved independently since the onset of the Great Depression. Prebisch established close relations with the Federal Reserve, Treasury and State Department officials, but also U.S. bankers, business executives, and academics. A successful trilateral training program was negotiated with Harvard (courses) and the Federal Reserve (experience) for his young Central-Bank economists. After the Good Neighbor policy he never stopped believing in the potential of embedded liberalism and closer ties with the U.S.[8] Long-standing bilateral trade irritants were settled and the media trumpeted the dawn of a ‘special relationship’ – alas one of short duration, with acute tension over war policy after Pearl Harbor and the Rio Conference in January 1942. 

 

Second, Prebisch’s Bretton Woods work in 1944-46 with Robert Triffin proved of lasting value in expanding his development optic beyond Argentina to encompass Latin America as a whole.  If his expertise enriched the Federal Reserve’s money-doctoring and regional monetary advisory services, it broadened Prebisch’s knowledge and experience of the region and built ties with economists and bankers throughout Latin America. When Triffin left the Federal Reserve for the IMF in 1946, Prebisch continued money-doctoring missions on request in Latin America, but the two continued working together into the 1950s.

 

Third, the Good Neighbor/Bretton Woods negotiations mapped out a surprisingly comprehensive development agenda which the Economic Commission for Latin America inherited and pursued under Prebisch’s leadership. To the familiar agenda items, Prebisch conditionality added Latin American structural reform as a quid pro quo of U.S. financial and trade cooperation.[9]

 

Fourth, the failures and successes of the Good Neighbor/Bretton Woods process helped Prebisch design organizational strategies.  That experience had demonstrated the need for innovation in governance in which Latin American countries could leverage the goals and commitments of Bretton Woods. But the new IMF and IBRD quickly proved disappointing, with little development content, and the ITO had died. Instead, they turned to the United Nations system, a weaker international arena after 1945 but in which their strength in numbers yielded considerable influence.  In 1947 they were successful in the creation of ECLA (Economic Commission for Latin America) against considerable opposition; in 1950 Prebisch became its Executive Director and transformed it into an autonomous center for development thought and training behind an original conceptual framework.  Its development cooperation program reflected the inherited agenda from Bretton Woods, including the nascent regional integration vision of the Good Neighbor policy.[10]

 

Finally Prebisch’s money-doctoring and other Good Neighbor experience carried important lessons for negotiations with Washington. He was a realist; relations with the U.S. during the anti-communist surge of the 1950s were difficult, requiring tough choices, but he had learned that Washington was not monolithic. Even during the worst years he had supporters scattered throughout the Eisenhower administration. Success required coalition-building within and outside Washington using all available allies for countervailing balance. Latin Americans had worked together at Bretton Woods; they would have to work together in ECLA as well. And at UNCTAD he broadened this continuing pursuit of countervailing balance by enhancing South-South cooperation in the G77.

 

With each new crisis the case for recasting global financial governance has become more evident; Helleiner’s book expands and enlivens this debate on the future of the system and the international development agenda. His Forgotten Foundations of Bretton Woods demonstrates that agency counts – in both North and South.  Structures of power and international coalitions are not immutable, and systemic challenges, including the emergence of new dynamic global economies and changing obstacles to sustainable human development, require urgent attention. Professor Helleiner has succeeded in rescuing the memory of Bretton Woods with a provocative challenge for new thinking; both North and South should reflect on the real history of the post-1945 order and maintain the spirit and development commitment of the Bretton Woods’ pioneers.

 

 

The Long Romance

If you have never been there, Bretton Woods is a lovely spot.  The Mount Washington Hotel has glimmering views of the White Mountains that frame a truly picturesque part of the world.  It is somewhat incongruous that a rather rustic spot, a ‘wood,’ was the site for a crucial meeting that reframed the complex centers of the modern industrial international economy.

 

The legacies of the Bretton Woods conference of July1944 have overshadowed many of the other conferences that were meant to settle World War II.  The San Francisco Conference in April 1945, by certain rights, should loom larger in our memory.  It was, comparatively, a sprawling event, centered on the creation of a mechanism to maintain world order after the conflict—the United Nations Organization.  Focus on the goings on in the city by the bay seem all the more sensible considering that the two institutions that emerged from Bretton Woods, the International Bank for Reconstruction and Development (the World Bank) and the International Monetary Fund (IMF) are officially specialized agencies of the UN.  Even the meeting to create the two bodies was officially called the United Nations Monetary and Financial Conference (admittedly that UN was the alliance against the Axis whose name would be tacked onto the postwar organization). 

 

But then the Bretton Woods Conference dealt with stabilizing the world economy, the collapse of which many delegates saw as unleashing the forces that had led the conflagration that was still burning around them.  Many presumed that any settlement had to clear up the structural problems in international economic relations which the disasters of the Depression had revealed.

 

For this reason, it has been more compelling to scholars of many stripes.  For a financial and monetary conference its story has been well and often told.  This is perhaps why the recent discovery of a transcript of the conference proceedings was international news.[11] It appears as a tale of genius.  The conference stands as a moment where John Maynard Keynes’s influence and brilliance were on display.[12]  Or the story can be one of relationships, particularly the sometimes impassioned interactions between Keynes and his American interlocutor, Harry Dexter White (and their respective delegations) during their New Hampshire getaway.[13]

 

Great powers have loomed over much analysis.  Bretton Woods becomes not just a story of the foundations of crucial components of the international economic order, but a statement how the U.S. formally grabbed the reins of global economic power, structurally surpassing and bypassing an exhausted Great Britain.

 

For all the historical narratives generated by the meeting, Eric Helleiner has shown us that something was missing.  He has added a new genre to the tales from the New England woods.  He not only sees a longer linage to some of the decisions and institutions fabricated in 1944, but views it through a different prism.  The question of economic stability and the reestablishment and guarantee of a global system based on liberal capitalist free trade has dominated the literature, but Helleiner has brought back to the conference table something many in the era saw as critical to world stability: international development.

 

Many have seen the international development mission inscribed on the Bretton Woods institutions, particularly the Bank, as last-minute additions—essentially afterthoughts. Helleiner dismantles this view.  He rightly sees the developmental orientations in the Bank and the IMF as coming out not just of a discourse on how to manage the evolution of industrial society but also as part of a changing discussion about international economics in the years leading up to World War II.  He effectively ties together a broader discussion of how improving standards of living became tied to questions of development and questions of global stability.

 

Here he brings in a set of voices that have not been heard in many discussions of the meeting.  The needs, desires, and the demands of certain developing nations do not merely appear to be heard, but become crucial parts of understanding how new conceptions of development emerged during the decade and a half before the meeting.

 

The dialogue that Helleiner recounts is largely seen through bilateral negotiations between the U.S. and a number of Latin American partners.  He sees a sort of ‘Good Neighbor’ ethos pervading these interactions in the 1930s.  Many New Dealers were uncomfortable with the legacies of private U.S. ‘dollar diplomacy’ in the region.  They were, for a variety of reasons, willing to see intergovernmental agreements take the place of private banks and capital markets.  What is more, their Latin American interlocutors were often eager to work with the goliath to the North as they saw development as crucial, albeit on the basis of their own interests and terms.  In this Helleiner makes a case that developing nations had some agency in the transmission of development ideas into the Bretton Woods institutions.

 

Here Helleiner notes something that is often missed in some stories.  The move to greater state involvement in economic matters, particularly in the case of the United States, opened options for greater cooperation by conglomerations of states, i.e. international organizations, on questions like international development carried out on the basis of (at least claimed) equal sovereignty.   Although he never makes the point, there is a suggestion that this was a legacy that helped to inscribe this into the concept and practice of international development that benefitted the raft of ‘new nations’ seeking aid in the postwar period. 

 

He is also effectively traces how failures can ultimately become victories.  The never- activated Inter-American Bank becomes an important template for some of the ideas eventually brought into reality by Bretton Woods.  These sorts of discussions also reveal how decisive voices in the postwar development epoch were already hard at the issue in the interwar years.  For example, the Argentine economist, Raul Prebisch, who is remembered for raising awkward points about underdevelopment and dependency during development’s postwar heyday, makes an appearance.  During the war he was already tugging at assumptions by Keynes and other leading European and American economists for failing to see the importance of development to less industrialized parts of the world and the difficulties they faced in achieving it (150).

 

He also recaptures a few overshadowed figures on the U.S. side.  Figures like Jacob Viner and Winfield Riefler (a member of President Franklin D. Roosevelt’s ‘brain trust’ who came up with the idea for federally-backed mortgages) demonstrate how thinking on the shape of the global economy by the end of the 1930s came to see some sort of international development as crucial to holding the whole contraption together (124-125).

 

What is missing, however, is how this thinking, and the policies it generated, agitated or motivated broader public and political discussions.  There is a technocratic air to the book, and the question of what was thought about the plans and agendas being hammered out is sometimes hazy.  Were these assumptions acceptable to politicians, parties, and publics in a variety of places and at different times?  Even if diplomatic pinstripes were replacing Wall Street bespoke, did apprehension about U.S. motives remain?  Were the seeds of some of the sincere frustrations with the development regime that prevailed following the war planted in the Bretton Woods agreement even before the delegates convened? 

 

The book has a tendency to orbit financial questions, which is a reasonable posture since many policymakers and economists had a default tendency to see investment as the mechanism to create modern, industrial societies.  But this means that parts of the book do not segue well with an emerging literature that sees a more extensive sort of development (or modernization) taking form in these same years.  Latin America was seen as one incubator for a broader and deeper view about the transformation of the economy and society that embraced the village, the school, and the farm as a means to get a grip on the perceived demands of development.[14]

 

That the 1944 agreements grew out of a general set of precedents and assumptions they themselves helped to structure makes the assent to Bretton Wood by many less industrialized states comprehensible.  Indeed, Helleiner shows that Eastern European and Asian (particularly Nationalist China—which had its own extended tradition of international development advocacy) governments supported the developmentist proposals at Bretton Woods as they segued with their interests.

 

Helleiner did not set out to answer all the questions about development but he has written a book that has recovered its importance in the interwar period, the critical debates over political economy, and in the settlement of World War II.  Rather than some sort of accident produced by a brief New Hampshire dalliance, Helleiner attests to the lineage of the Bretton Woods institutions and places their conception in the longer romance of international development.

 

 

Ordinarily, discussions of the July 1944 Bretton Woods Conference do a better or worse job of explaining the difference between the British plan, authored chiefly by John Maynard Keynes, and the American plan, authored chiefly by Harry Dexter White. They generally go on to note that the version of the International Monetary Fund ultimately established looked a lot more like White’s than Keynes’s. If the author goes on to offer an opinion as to whether this outcome was for better or for worse, the final judgment usually owes to nationality (British authors generally consider it a tragedy that Keynes’s plan didn’t see adoption) or to politics (conservatives generally consider it a fine thing that Keynes’s plan didn’t see adoption) and leave the discussion at that. These standard discussions all leave out the much larger story of why Bretton Woods occurred at all, and why participants from so many and such various countries considered it a great success. Eric Helleiner does an excellent job with both.

 

Helleiner roots his discussion of Bretton Woods in the concept of international development, which, as he notes, has a much deeper history than writers frequently suppose. Indeed, when Keynes proposed a plan at Versailles to relieve the belligerent nations of their debts in 1919, he included a plan to provide financial support and international credit for new nations – that is to say, he provided for both reconstruction and development, and a quarter century later, his version of the Bank included both concepts.

 

The idea of development was also central to President Franklin Roosevelt’s foreign policy from the beginning. As Helleiner notes, Roosevelt proposed the ‘good neighbor’ policy in his first inaugural, on March 4, 1933, and afterward pursued a “creative financial partnership” with the officials of Latin American nations. The push for international development came from the global South, as well as the North. (24)

 

Roosevelt’s officials, like Adolf Berle, argued for a new “system” in which “finance is the servant of exchange and development … in direct contrast to the older system, which insisted that the development and the commerce must serve finance, or it could not go forward.” International financial arrangements ought to be subject to the test of whether they encouraged “a general rise in standards of living everywhere.” (50)

 

Under the Roosevelt administration, U.S. Treasury officials, like the Spanish-fluent Robert Triffin, traveled to Latin American nations – and, in contrast to the old American ‘money doctors’ like Edwin Kemmerer, told Central and South Americans that they need not aspire to the gold standard. Indeed, Triffin believed that a wish among poorer countries to hew to the gold standard was responsible for the persistence of poverty there. “[T]he domestic disruptions implicit in this mechanism … were especially drastic in undeveloped economies[.]” (141)

 

This approach to international finance incurred opposition from U.S. bankers, including particularly W. Randolph Burgess of National City Bank, later president of the American Bankers Association and principal opponent of the Bretton Woods agreements. Burgess especially opposed the Inter-American Bank (IAB), an institution designed largely by Harry Dexter White in cooperation with treasury officials from Latin American countries – indeed, as U.S. Treasury official Emilio Collado noted, “the Latin Americans, on the whole, have thought more deeply about this than the American experts[.]” Indeed, they supported a stronger bank than even the eventual International Monetary Fund (IMF), “able to issue its own credit expressed in its own money-of-account,” as Peru’s Pedro Larrañaga Montero suggested. (63) The IAB was not established, owing in some measure to banker opposition. But the ideas behind it survived and were written into the World Bank and IMF, which White also discussed with Latin American officials well before the Bretton Woods conference of 1944. (107)

 

As Helleiner notes, the focus on the poorer nations’ interest continued only so long as Roosevelt was president. Harry Truman appointed conservatives to the World Bank – Eugene Meyer, who had supported the gold standard against Roosevelt’s monetary policy since 1933, and then John McCloy, who sought to involve former president Herbert Hoover with the Bank and blocked development loans. (261)

 

This is an extraordinarily valuable and well researched monograph, with pressing contemporary relevance. The debate over the Bretton Woods institutions is, both inside and outside the academy, too stale. Within the scholarly realm, it focuses too much on White versus Keynes; outside, it focuses too much on a critique of development-as-hegemony. Both streams ignore the rich and intriguing history that Helleiner has unearthed, in which Latin American nations worked cooperatively with the Roosevelt administration to secure the development policies they wanted. If development has not worked as well as it should have, it is not because there is a problem with the concept, but rather with the sincerity of the people implementing it as a policy.

 

Eric Helleiner’s book upends much of the scholarship both on the July 1944 Bretton Woods Conference and on the policies of ‘development’ by bringing the two together.  Bretton Woods, as he shows, has been generally seen as a story of Anglo-American leadership and rivalry—Britain’s John Maynard Keynes versus America’s Harry Dexter White--focused fairly narrowly on monetary policy and on Europe. (For the latest reworking of this focus see the award-winning book by Benn Steil, The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order.[15])  Moreover, much of the scholarship on economic development assumes that ideas about stimulating industrialization and growth in what later became called the global South did not emerge until after World War II.  Helleiner’s research, by contrast, shows a much wider cast of significant actors and a much longer history to developmentalist ideas.  He argues that a major objective of American delegates to Bretton Woods, working together with prominent economists from Latin America and Asia, involved forging a structure in which nations throughout the globe could pursue policies aimed at state-led economic development and diversification (‘embedded liberalism’).

 

Having deeply researched in official documents, memoirs, and private papers, Helleiner carefully and systematically lays out his argument. The “forgotten foundations” of the Bretton Woods structure rested on New Deal objectives with roots especially in the Franklin Roosevelt administration’s Good Neighbor Policy of the 1930s.  New Dealers such as Harry Dexter White and others pioneered a new economics, which would in time take the name of Keynesianism, that sought to use state power to augment the flexibility of exchange rates and the availability of capital in order to release governments from the grip of private bankers, many of whom had abetted the exploitation of poorer countries under the “dollar diplomacy” of the first two decades of the twentieth century. Monetary policy, which most studies have assumed to be the primary concern of Bretton Woods, was actually a subset of a larger vision promoting state-assisted developmental strategies.

 

Helleiner shows that countries and economists from the global South (a term that he usefully employs even as he explains that it dated from the 1970s) played a major role in promoting the broad vision of international cooperation and advancement that helped motivate U.S. delegates to Bretton Woods. The structures of Bretton Woods (at least in their initial conception) rested on very specific previous experiences by its New Deal architects: proposals for Cuban monetary reform, a financial mission to Paraguay in 1945 that became the model for similar missions elsewhere in Latin America, embedded liberal experiments in the U.S. such as the Tennessee Valley Authority, nationalist proposals dating from well-known 1918 proposals for China written  by Sun Yat Sen and widely accepted among Chinese leaders across the political spectrum.  In successive chapters Helleiner convincingly demonstrates the relevance of each of these, showing how the circulation of economic ideas about global development informed the world of the delegates and provided the “forgotten foundations” of the conference. He also discusses British policy (and especially enthusiasm shown by delegates from India) as being supportive of this developmentalist agenda, although Keynes and others played a decidedly secondary role to the Americans in this regard.

 

Helleiner’s analysis thus removes the primary focus from Keynes and shifts it onto the less-famous Harry Dexter White.  White, of course, has been a controversial character in U.S. historiography because of his apparent conviction that the U.S. should remain allied with the Soviet Union in the postwar period. White’s cooperation with the Soviets, which included passing classified information to Soviet officials during the war, has tainted his reputation as an economist and as a public servant. But Helleiner rightly acknowledges the critical literature on White while setting it aside as a major focus. He is interested in the ideas that grew out of the economic crisis of the 1930s, the new liberal vision that was pioneered by many U.S. economists, including White, as they reconceptualized how to foster global prosperity, and the record of American reformers who tried to forge a new cooperative formula as a “good neighbor” to Latin America and then take it global. The intense historiographical focus on Cold War-era debates and on White’s role vis-à-vis the Soviets has, in many ways, been part of the screen that explains why the “foundations” of Bretton Woods have been “forgotten.” Helleiner is both brave and correct to set the Cold War frameworks aside; his book’s importance stems from its fresh and more historically embedded perspective.

 

There are many other reasons that may help explain why the picture that Helleiner draws of Bretton Woods has been forgotten.  He suggests, for example, that the Bretton Woods system became rather quickly co-opted by the very banking interests that White and others had hoped to trump with internationalist structures. By the 1970s the World Bank and the International Monetary Fund had become the very symbols of the economic hegemony against which nations in the global South attempted to struggle. Fights over the ‘New International Economic Order’ (NIEO) of the 1970s effectively obscured the fact that America’s initial architects of the Bretton Woods structures had once been allied with NIEO objectives. He also contends that President Harry Truman’s Point Four Program, far from being the beginning of developmentalist ideas, as it is often portrayed, stepped sharply away from the Bretton Woods concerns and represented the end of the kind of developmentalist formulas that New Dealers had championed.  The ideas that initially shaped Bretton Woods might still inspire internationalism and a less exploitative economic order, he suggests, if only they can be uncovered and not remain obscured by later turns. Various other reasons why the foundations of Bretton Woods may have been forgotten are explored in some depth in the final chapter of the book.

 

It may be interesting, however, to speculate even more broadly on the question of how the truly significant story that Helleiner tells has been so long ignored.  One additional answer to this puzzle may lie in the compartmentalized structure of the profession of history itself.  Bretton Woods has largely been studied retrospectively in the context of European policy and of the strategic and economic concerns that manifested themselves in the Second World War and the Cold War.  But Latin America had, before the war, been the United States’ major sphere of interest and had provided its most intensive experience with issues related to currency, lending, and exchange rates.

 

Patterns of American international financial advising shortly after the turn of the century had been developed in dealings with those Latin American states whose economic instability American policymakers deemed a strategic threat to the Panama Canal and other major economic interests. In the period of classic ‘dollar diplomacy’—roughly the two decades from 1900 to 1930—U.S. financial missions provided advice and often helped force loan-for-supervision arrangements on Latin American states.[16] The forms and personnel of these missions also were involved globally:  many financial advisers got their start in the colony of the Philippines, and missions then went not only to Latin America but also to China, Poland, Liberia, Germany, Persia, and elsewhere. Latin American countries, however, were the primary incubators of forms of financial advising that aimed to apply U.S. economic expertise to solve problems of currency instability and insolvency elsewhere. Dollar diplomacy did not end well, and in the 1930s New Dealers rethought its practices and its economic priorities. Even before U.S. entry into World War II, the U.S. Good Neighbor Policy, as shaped through the new Office for Inter-American Affairs (OIAA), tried to ward off strategic threats in the hemisphere by pioneering new economic and informational policies that moved away from dollar diplomacy.

 

Given this history, it should not be at all surprising that missions to places such as Cuba and Paraguay, together with cooperation with Latin American elites and economists, provided some of the most important background experiences that U.S. economists brought to Bretton Woods. The ideas and proposals of White, Robert Triffin, and the others who had been involved in Latin American missions in the 1930s and early 1940s (working against the background of resentments and failures arising from dollar diplomacy) morphed into larger proposals for an international lending agency for ‘reconstruction and development’ and for a new international monetary system that would provide convertibility yet flexibility. These ideas that inspired the Bretton Woods agreements were neither new nor especially ‘Keynesian.’ They came, as Helleiner shows, directly out of priorities associated with the Good Neighbor Policy and interchange with Latin Americans themselves, especially but not exclusively the influential economist Raúl Prebisch. Specifically, they involved policies that recognized the need that poorer countries had for international commodity price stabilization, development lending, and the ability to contain capital flight. Moreover, these ideas continued to be championed in the global south, even as both the Bretton Woods institutions and U.S. policy turned sharply more conservative in the late 1940s by again (as under dollar diplomacy) giving greater priority to private markets and lenders.

 

Despite Latin America’s importance in shaping U.S. economic policy before World War II, however, its comparatively peripheral role during that war has obscured its earlier role: historians of Latin America have not dealt centrally with big wartime conferences such as Bretton Woods; while historians of Bretton Woods have hardly thought about giving Latin America much consideration in the formulation of postwar aspirations.  In this sense, Helleiner’s most enduring contribution is to help cast the international conference at Bretton Woods within the context of truly international history—not a history in which U.S. and European practices radiate into the world, but one in which circulations of expertise travel in many directions.

 

Let me begin by expressing my deep gratitude to the editors of H-Diplo for commissioning this roundtable and to the four reviewers for their very thoughtful comments and close reading of my book. Because of my enormous respect for the work of each of these scholars, it was a great pleasure and honor to read their reactions to the book. I have learned much from the various ways that the reviewers summarized and interpreted my arguments as well as added new insights to them.

 

One key argument of Forgotten Foundations is that the 1944 Bretton Woods agreements emerged from a wider geographical context than just the Anglo-American negotiations between John Maynard Keynes and Harry Dexter White that have received so much attention. As the reviewers note, I devote particular attention to the inter-American context, showing how U.S. policymakers built directly on inter-American initiatives in their Bretton Woods plans and how, during the negotiations, they prioritized Latin American participation and development issues of Latin American concern. I have been intrigued that these arguments sometimes generate surprise and skepticism from historians wedded to a more North Atlantic-centric perspective on Bretton Woods.

 

For this reason, I found it particularly helpful to read Emily Rosenberg’s comments about the significance of the “compartmentalized structure of the profession of history” in which “Bretton Woods has largely been studied retrospectively in the context of European policy and of the strategic and economic concerns that manifested themselves in the Second World War and the Cold War.” As Rosenberg highlights, once that focus is shed, the role of inter-American relations in the origins of Bretton Woods should not be at all surprising to historians, given that so many U.S. policymakers (including White) acquired much of their initial experience with international financial issues in Latin America, the major sphere of U.S. influence before the war. Drawing on her seminal book Financial Missionaries to the World, Rosenberg recalls how Latin American countries had already been the “primary incubators” for the kinds of U.S. international financial advising that emerged in the 1900-30 period.[17] During the late 1930s and early 1940s, the U.S.-Latin American relations once again played a pioneering role in helping to generate new ideas and institutional frameworks for Bretton Woods.

 

Once the significance of the inter-American context is recognized, it also becomes clear that the historical roots of Bretton Woods are deeper than often depicted. The U.S. plans for Bretton Woods emerged gradually from various institutional innovations associated with the Good Neighbor policy of the late 1930s, well before the negotiations between Keynes and White had even begun. Although the Bretton Woods agreements are sometimes depicted as a product solely of a unique and dramatic historical moment, this long pre-history of the negotiations reinforces the insights of historical institutionalist scholarship about the prevalence of incremental institutional change in global governance.[18] David Ekbladh also calls attention to the interesting fact that the most important of these incremental innovations – the stillborn Inter-American Bank (IAB) proposal of 1939-40 – had been a policy failure. As he points out, the episode shows nicely how even “failures can ultimately become victories.”

 

Eric Rauchway reinforces this point from the British side of the equation. He notes that Keynes’ plans for an international bank during the Bretton Woods negotiations also drew on an earlier failed initiative: in this case, the British economist’s proposals at the 1919 Versailles conference for a system of international lending for the purposes of reconstruction and development. Keynes was not the only Bretton Woods architect to draw on proposals from the era of Versailles. In supporting the creation of the International Bank for Reconstruction and Development (IBRD), the large Chinese delegation at Bretton Woods invoked a 1918 plan for an “International Development Organization” that Sun Yat-sen, the famous political leader and first president of the Republic of China, had sent to the Versailles conference (187-92). The importance of Sun’s pioneering ideas about international development lending was recognized not just by Chinese officials but also by others who commented after the Bretton Woods conference that the IBRD seemed to “follow the lines laid down by the Father of the Chinese Republic” (198).

 

Another core argument of Forgotten Foundations is that the international development goals of the Bretton Woods negotiations have not been fully appreciated - and are sometimes even denied entirely - by scholars writing about Bretton Woods. These goals infused not just the design of the IBRD but also provisions in the International Monetary Fund’s (IMF) Articles of Agreement that aimed to support state-led development policies in poorer countries, provisions that were reinforced by unorthodox U.S. financial advising to many poorer countries at the time. In discussing this argument, Ekbladh raises the interesting issue of how the Bretton Woods development vision related to other development thinking and initiatives at the time that went beyond the financial issues to include “a broader and deeper view about the transformation of the economy and society that embraced the village, the school, and the farm as a means to get a grip on the perceived demands of development.” He cites work that highlights the origins of these broader conceptions of development well before the New Deal in various contexts, including in U.S. colonies such as the Philippines.

 

This important point allows me to clarify the distinctiveness of the U.S. support for the Bretton Woods development foundations within this larger universe of emerging international development thought and practice. In a fascinating analysis, Ekbladh has demonstrated how development ideas and initiatives promoted by the U.S. during the Cold War were pioneered much earlier in the twentieth century, suggesting considerable continuity in this area of U.S. policy across this whole time period.[19] The story of the financially-focused Bretton Woods development foundations, however, is characterized more by discontinuity than continuity. The New Dealers who helped build these foundations saw them explicitly as a repudiation of pre-Depression U.S. financial advisory practices and dollar diplomacy vis-à-vis poorer countries. The political influence of their creative and ambitious ideas was thus short-lived, as they became quickly marginalized after Roosevelt’s death and the onset of the Cold War. Far from echoing both Cold War and pre-New Deal ideas and practices, the development foundations of Bretton Woods contrasted with the past and future, thus representing a rather unique and singular episode in U.S. international development policy

 

If support for the Bretton Woods development vision flourished only briefly in U.S. policymaking circles, both Edgar Dosman and Emily Rosenberg remind us that it remained attractive to policymakers from many poorer countries in the postwar years. Its popularity should not have been surprising given that officials and thinkers from these countries had been actively involved in its creation. Beginning with Sun Yat-sen’s ideas and carrying through the Latin American contributions to the Good Neighbor financial partnership in the late 1930s and early 1940s, their role culminated in the wide participation of delegates from poorer countries (and even Indian nationalists from British colonial India) in the Bretton Woods negotiations. Dosman highlights very effectively how Raúl Prebisch, a leading Southern figure in postwar North-South dialogues, was in fact deeply affected by his involvement in some of this history. For this reason, Dosman is right to point out that the development foundations of Bretton Woods were not entirely forgotten and that they left at least some political legacy.

 

Striking to me, however, is how rarely the development foundations of Bretton Woods were explicitly invoked during the North-South dialogues of the 1960s and 1970s. Southern reformers were more inclined to critique the ‘actually-existing Bretton Woods system’ for its perceived development-unfriendly nature than to cite these original foundations as a source of inspiration. There may have been important political reasons for that approach, but the fact that scholarly histories of Bretton Woods available at the time had devoted little attention to those foundations may also help to explain their relative absence from these international policy debates. If this aspect of the history of the Bretton Woods had been more widely known, those seeking to create a more development-friendly international economic order at that time might have been more inclined to invoke it in support of their cause.[20]

 

This leaves the question of why so many historians did neglect this history. I found myself asking this question frequently while working on Forgotten Foundations. One answer may simply be that the scholars who established the conventional wisdom did not have access to the range of archival sources that I was able to consult. In the book, I also suggest that academic attention may have been steered away from development foundations of Bretton Woods by the fact that they were “submerged” – to use Dosman’s apt term – so quickly after the end of World War Two. But Rosenberg very usefully offers further explanations relating to the discipline of history itself that may be equally, if not more, important. One is the “intense historiographical focus on Cold War-era debates and on White’s role vis-à-vis the Soviets”. Another relates to the fact that “historians of Latin America have not dealt centrally with big wartime conferences such as Bretton Woods; while historians of Bretton Woods have hardly thought about giving Latin America much consideration in the formulation of postwar aspirations.”

 

Whatever the precise reason for the hole in the literature, I hope that Forgotten Foundations has helped to begin to fill it (and in manner that aspires to provide what Rosenberg eloquently describes as “truly international history—not a history in which U.S. and European practices radiate into the world, but one in which circulations of expertise travel in many directions”). There is, however, still much more work for others to do. Some is already being done, such as the work of scholars using new Chinese sources on the Bretton Woods negotiations and Christy Thornton’s detailed forthcoming work on Mexico’s important economic diplomacy in this period.[21] Dosman also notes that the newly available Urquidi Papers will contribute further to our understanding of the Latin American role in the creation of Bretton Woods. Ekbladh suggests the need to explore in more detail how the thinking described in Forgotten Foundations and the policies it generated “agitated, or motivated broader public and political discussions.” I look forward with great anticipation to reading future scholarship on these and other important topics that can help shed further light on the development foundations of Bretton Woods.

 

Notes


[1] For Helleiner’s review of what he describes as the “conventional wisdom” on Bretton Woods and its downplaying and dismissal of the importance of development in the origins and nature of the agreements of the conference, see Eric Helleiner, Forgotten Foundations of Bretton Woods: International Development and the Making of the Postwar Order (Ithaca: Cornell University Press, 2014), 4-7.

[2] Newly released primary material, such as the Urquidi Papers, will prove useful in future work on the period. See Joseph Hodara, Obras Escogidas de Victor L. Urquidi:  Perspectiva Economica y Social. Mexico: El Colegio de Mexico, 2014.

[3] The author chastises Prebisch for using the final definition when he writes that “the Bretton Woods/GATT system was based on a failure to recognize the fundamental differences between the industrial centers and the periphery of the world economy.” In fact, Prebisch never forgot his work with Triffin and the development vocation of the Bretton Woods architects.

[4] The US delay in honoring its commitment to an inter-American Economic Conference was a particularly deep grievance. 

[5]  Edgar J. Dosman, The Life and Times of Raul Prebisch, 124-26.

[6] This section includes valuable notes on the range of contributors to the evolution of the Good Neighbor policy, including Cordell Hull, Sumner Welles and Nelson Rockefeller.

[7] See Helleiner, 18-19 for a fuller discussion.

[8] Dosman, 128-33.

[9] Dosman, 291-295.

[10] Some US officials during the Good Neighbor policy had welcomed the concept of a Latin American “bloc”.  See Helleiner, 45, and 119-123 for his discussion of Roosevelt and New Deal values.  It would take another external threat to re-focus U.S. attention on international development – this time at the regional level in the Americas.  More than a decade after the onset of the Cold War, Washington again changed course with the fear of a Soviet lead in space followed by the Cuban Revolution.  Good-Neighbor style partnership returned, along with a Bretton-Woods type approach, as President John F. Kennedy adopted the ECLA agenda wholesale for his 1961 Alliance for Progress.

[11] Anne Lowrey, “Transcript of 1944 Bretton Woods Conference Found at Treasury,” New York Times, October 25, 2012.

[12] Robert Skidelsky, John Maynard Keynes, 1883-1946: Economist, Philosopher, Statesman (New York: Penguin Books, 2005).

[13] Benn Steil, The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order (Princeton: Princeton University Press, 2013).

[14] Take, for example, Nick Cullather, The Hungry World: America’s Cold War Battle against Poverty in Asia (Cambridge, MA: Harvard University Press, 2010), 43-71 , who shows how rural Mexico in the 1930s and 1940s came to represent many of the problems facing underdeveloped countries and became a launching pad for the sort of agricultural development of the later “Green Revolution.”  See Nicole Sackley, “The Village as Cold War Site: Experts, Development, and the History of Rural Reconstruction.” Journal of Global History 6 (November 2011): 481–504, for a discussion of how the “village” emerged as a crucial site of development knowledge and action in the decades before the Cold War.

[15] Benn Steil, The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order (Princeton: Princeton University Press, 2013). See the H-Diplo roundtable on the book at http://issforum.org/ISSF/PDF/ISSF-Roundtable-6-7.pdf .

[16] Emily S. Rosenberg, Financial Missionaries to the World:  The Politics and Culture of Dollar Diplomacy, 1900-1930 (Durham: Duke University Press, 2003).

[17] Emily Rosenberg, Financial Missionaries to the World: The Politics and Culture of Dollar Diplomacy, 1900-1930 (Durham, NC: Duke University Press, 2003).

[18] For further discussion of this theoretical point, see Eric Helleiner, “Incremental Origins of Bretton Woods,” in The Oxford Handbook of Historical Institutionalism, edited by Orfeo Fioretos, Tulia G. Falleti, and Adam Sheingate (Oxford and New York: Oxford University Press, forthcoming 2015). 

[19] David Ekbladh, The Great American Mission: Modernization and the Construction of an American World Order (Princeton: Princeton University Press, 2010). See also Nick Cullather, The Hungry World: America’s Cold War Battle Against Poverty in Asia (Cambridge: Harvard University Press, 2010).

[20] This possibility has been made more real for me recently by the fact that some advocates of global economic reforms today have already invoked the history outlined in Forgotten Foundations. See, for example, UNCTAD, Trade and Development Report, 2014: Global Governance and Policy Space for Development (Geneva: United Nations, 2014), especially ch.4

[21] Christy Thornton, “Mexico at Bretton Woods” presented to the conference “The UN and the Post-War Global Order: Bretton Woods in Perspective”, Roosevelt Study Center, Middelburg, Netherlands, September 17-18, 2014. For China, see http://mp.weixin.qq.com/s?__biz=MjM5NzExMTE5OA==&mid=200483122&idx=1&sn=f0d85a4bdf0e2338ebc2e86f370fc3ff&scene=2&from=timeline&isappinstalled=0#rd).