Two pillars of today's international monetary system were not engineered in New York, London, Paris or Berlin. In 1944, the International Monetary Fund and World Bank were established in Bretton Woods, N.H., today a small skiing village less than two hours from Hanover. At a conference held in the town, more than 700 delegates from 44 nations agreed on the framework forged by Harry Dexter White, said Benn Steil, a senior fellow at the Council of Foreign Relations and director of international economics, in a lecture on Wednesday.
Steil, who authored a book on the Bretton Woods conference, provided a thorough history of the summit, describing it through the interests of Britain and the United States. At the conference, the United States managed to wrangle other major powers into accepting the dollar as the world's reserve currency, which accelerated the crumbling of Britain's sweeping colonial empire.
Steil said he was surprised to find such an interesting topic left comparatively untouched by historians.
"Financial economists are always taught that if you see 20 bucks on the ground, you are delusional, because someone would have picked it up by now," Steil said. He said the untouched "20 bucks" represented the topic.
Just three weeks after D-Day, President Franklin Delano Roosevelt arranged the international economic conference with Treasury Secretary Henry Morgenthau, who had relatively little knowledge of economics and was heavily influenced by his deputy Harry Dexter White, a virulent opponent of English colonialism, Steil said.
"[White was] literally obsessed with the relative economic position of the United States and Great Britain," Steil said.
The switch to the dollar was predicated on the United States' ownership of 80 percent of the world's gold. As the world's greatest creditor in 1944, it had economic dominance which rendered trade impossible without its dollar backing the international economic system.
After the switch to the dollar, Britain's colonial reach became unmanageable.
"At Bretton Woods, you can almost see the empire collapsing before your eyes," Steil said. "For Britain, this is a day that will live in infamy."
Britain was cognizant of the conference's ultimate ramifications, but entered the "Faustian bargain" in order to secure much-needed loans.
The Bretton Woods conference is often cited as an example of a successful economic summit, but it did not herald a "kumbaya moment" due to the political interests at play, Steil said.
Steil spoke maninly of White and John Maynard Keynes, the famed English economist. He contrasted White and Keynes' backgrounds, noting that Keynes grew up in a relatively rich household while White came from humbler circumstances. While Keynes both respected and disdained White, the latter "worshiped" Keynes so much that he would become physically ill before meetings because he feared embarrassment in front of his idol and colleagues.
Keynes, who formally supported establishing a new supranational currency, was deeply patriotic at his core and feared British dependence on American assets. Even so, Keynes prioritized solidifying his historical legacy above British interests.
Steil criticized Keynes' diplomatic tactics, labeling him an "irascible" and "condescending" negotiator.
Historians have also debated the degree of White's Soviet leanings, Steil said. White appeared before the House of Representative's Un-American Activities Committee in 1948 and died of a heart attack two days later.
Drawing a parallel between the economic climates of today and 1944, Steil said the United States and China use language similar to that of England and the United States during the conference. While the United States was the world's largest creditor in 1944, today it is its largest debtor and China is now the world's largest creditor.
Steil said that a 21st century Bretton Woods is unlikely, because China cannot afford to spark a dollar crisis.
Institute for Lifelong Education lecturer Thomas Blinkhorn, who worked at the World Bank for over 30 years, said he appreciated Steil's engaging speaking style.
"He handled a difficult subject and a subject that a lot of people are intimidated by with great flair," Blinkhorn said.
Blinkhorn enjoyed Steil's analysis of White and Keynes' efforts.
"It brought a veneer of beauty to the lecture that you normally do not get when you have a Bretton Woods kind of discussion," he said.
Tiantian Zhang '16 said she found the lecture interesting but wished Steil had discussed the conference's implications for today's economy in greater depth.
Steil was introduced by Dickey Center director Daniel Benjamin, who noted that Steil's book, "The Battle of Bretton Woods," has reviews that can "only turn a fellow writer's gills green."
