On the Bretton Woods transcripts

by Eric on October 26, 2012

In the New York Times today you can read about the newly available transcripts from the Bretton Woods conference of 1944, as edited by Kurt Schuler and Andrew Rosenberg. I have a few things to say about them in the NYT – and why not a few more here?

Historians of Bretton Woods might well have said, eh, a transcript – no big deal; what happened at the conference was largely theater, and the real business was done before and afterward. There is some truth in this – and the transcript amusingly shows that – but it also shows some of the ways in which it is not true.First, the amusingly true part. We know from other documents that both the Americans and the British wanted to avoid votes at the conference, partly because the Latin American nations by themselves represented almost half the countries present, and could with a few European votes have commanded a majority.

In the sessions on the Fund chaired by the US Treasury representative Harry Dexter White, there are very few votes, and of the ones taken, only one has an actual vote tally recorded in the transcript. White’s method of avoiding votes was to check for consensus.

The British also wanted to avoid votes, and in the sessions on the Bank chaired by John Maynard Keynes there are no recorded votes (though the transcript is incomplete as to the Bank sessions). Keynes’s method of avoiding votes was to pause for objections, and sometimes very briefly indeed, avoiding the hazard of debate. Here’s an interaction between the US State representative Dean Acheson and Keynes:

ACHESON: Mr. Chairman, have you passed Article VI, Section 3?
KEYNES: I was about to pass it.
ACHESON: Are you going to send that to Drafting?

ACHESON: That is a pretty important section.
KEYNES: It is very important, but I heard no opposition to it.

Second, the ways in which it isn’t true. The transcript seems to me to verify what I have found in other sources – that contrary to much of what we read in the literature and what indeed we might expect, the Soviets took Bretton Woods very seriously. The US tried to accommodate the USSR without rendering the agreements unpassable by the US Congress.

You can also see smaller countries pressing for their interests – specifically, that the Fund make room for their need to improve their own economies before stabilizing their exchange rates – which is in part why the Fund is officially devoted to “the promotion and maintenance of high levels of employment and real income.” At the conference, one delegate pointed out that the Fund really needed to be devoted not only to the maintenance of high levels of real income in some countries, but to the attainment of high levels of real income in all. It is only cheap historical irony that this delegate was from Greece.



J. Otto Pohl 10.26.12 at 4:11 pm

In all honesty I fail to understand the last lines. Greece had attained a high level of real income especially when you compare it to for instance the salaries of people living in the Global South. It has not been able to maintain its income at its peak level, but most Greeks regardless of education are still making a lot more money than me and my colleagues with Phds here in Ghana. The purchasing parity power of Greece is shown at $26,600 for 2011. For Ghana in 2012 we have $3,100. My salary in dollars is considerably below the Greek average. If their had been a significantly more equitable distribution of global wealth the Greek standard of living would probably have been lower. But, really what is moral the justification for the average person in Greece with no education to make more money than an African PhD working at a university? Is not the division of global wealth into rich white countries like Greece and poor black countries in Africa not a greater moral problem than the fact that the Greeks are now only eight times richer per person than the wealthiest West African state? What should they be 100 wealthier?


Scott P. 10.26.12 at 4:17 pm

Unless the Ghanaians are heavily invested in German banks, I don’t think Greek impoverishment is helping them any.


J. Otto Pohl 10.26.12 at 4:21 pm

Ghana has a pretty big banking industry for an African country of its size. It also has quite good commercial and other relations with Germany. So while I have no hard evidence it is a possibility that there are from the Ghanaian point of view significant investments in German banks.


Mao Cheng Ji 10.26.12 at 5:57 pm

“Is not the division of global wealth into rich white countries like Greece and poor black countries in Africa not a greater moral problem than the fact that the Greeks are now only eight times richer per person than the wealthiest West African state? ”

It would only be a moral problem if the Greeks were exploiting Ghanians, in some ways. Are they?

Otherwise your attitude would appear to be similar to Joe Stalin’s towards the kulaks.


J. Otto Pohl 10.26.12 at 6:06 pm

Well Nkrumah did refer to the policies of the European Community as “Collective Imperialism” and Greece is an EU member. I do not have exact economic data. But, Nkrumah’s 1965 book Neo-Colonialism: The Last Stage of Imperialism has a lot of flow charts and lists of various companies and their activities in Africa that purport to show that Europe as a whole (EC back then) was exploiting Africa including Ghana. Trust me I have no desire to deport the entire population of Greece to the Arctic without any food and housing. I just really don’t care that they are slightly poorer, but still very rich relatively, than they were.


Aaron 10.26.12 at 6:13 pm

It does seem like an interesting puzzle: you are crafting an important and consensual economic agenda, but you’re afraid that if things are actually voted on it will get superceded by countries’ interests. In this case, it looks like the US/Britain/others succeeded by controlling moderating positions and controlling the debates.

This seems like a weird position to take. A Marxist might point out that you are essentializing money, since it seems likely that a Ghanan professor (and even a worker in a good job) will live “better” than an unemployed greek worker. The low wages in Ghana compared to elsewhere are a reflection of their peripheral location in the world economy, but don’t necessarily determine the happiness and well-being of the populace aside from their ability to purchase items internationally.


J. Otto Pohl 10.26.12 at 6:28 pm

We have to import lots of items internationally. The main reason the local currency loses 15% of its value every year versus the dollar is that we have to import lots of stuff that must be paid for in foreign currency. As a result plane tickets, electronics, and other imported goods are often considerably more expensive here than in the US or Europe. In some cases such as pharmaceuticals you can sometimes find much cheaper locally produced items. For electronics it is impossible. Even the one computer manufactured in Ghana is just as expensive as the imported ones. I buy locally produced goods whenever possible. But, except for food, clothes, books, and sometimes pharmaceuticals there is not a enough local manufacturing to provide import substitutes. However, salaries are also positional goods and one of the reasons aside from race that people do not take people at African universities as seriously as they do people in universities in white countries is the level of pay. I would just assume give all my extra money to my partner and children. But, I would like to have the same level of international respect that people at similar institutions in white countries get.


Mao Cheng Ji 10.26.12 at 6:36 pm

There is no doubt that various companies exploit Africa, but it’s equally obvious that various companies also exploit Europe. Including Greece. You need to demonstrate that the avg Greek exploits the avg Ghanian.


MPAVictoria 10.26.12 at 6:48 pm

“I would like to have the same level of international respect that people at similar institutions in white countries get.”
I respect you J. Otto Pohl.
Now can we get back to the subject of the post?


J. Otto Pohl 10.26.12 at 6:48 pm


Well I have neither the time, sources, or math skills to show that the average Greek exploits the average Ghanaian. But, I do not think it matters. If there is no doubt that Europe of which Greece is a part has exploited Africa including Ghana. Then all that needs to be demonstrated is that Greece has become much wealthier as a result of that exploitation. We know Greece has become much wealthier since it threw its lot in with the EU. I would be very surprised if none of that wealth was a result of European exploitation of Africa. But, I don’t have any recent proof and our library is too poor to afford many new books. So I am stuck mainly with texts from the 1960s and 1970s. All of which insist that there is a net flow of resources out of Africa including Ghana to Europe. However, even if the wealth was not from Africa why should an uneducated Greek earn eight times an African PhD? What is the moral basis for such economic inequality?


J. Otto Pohl 10.26.12 at 6:52 pm

OOps that last part came out wrong. It should be more than an African PhD. The eight times figure is just the comparison of ppp. So the average Greek earns eight times the average Ghanaian. But, it is less than double what the average PhD holder earns. Although it is still significantly higher.


Wonks Anonymous 10.26.12 at 7:33 pm

Pohl, how about creating a Ghana vs Greece post at your own blog and people can discuss that there, while discussing Bretton Woods here?

I believe Kurt Schuler is the person behind http://www.freebanking.org/ but checking the site I don’t see any posts about the book.


dbk 10.27.12 at 7:10 am

J. Otto, I respect you too, and always read your comments. I understand your frustration and sense of inequity re: Ghana vs. Greece – but the Troika will be fixing that, already is in fact, so in a few months university lecturers will be earning ca. $15,000 pa, which iirc is below your own salary (university teachers earned significantly less than their EU peers in any case). Primary and secondary teachers will earn around $11,000 pa, union workers around $9000. Currently, 40%+ of 18-year-olds enter higher education (not counting in that statistic the 50,000 or so who leave to study abroad on scholarships each year). The average 18-year-old preparing for university entrance has acquired 2-3 foreign languages to proficiency level (thus, their decision to study abroad). I might also note that in the 1980s-1990s, Greece admitted tens of thousands of African students to its university system (free of charge), helping to educate doctors, engineers, and economics students, many of whom returned to their native countries.

Now to the subject at hand. I don’t find the behind-the-scenes at Bretton Woods surprising, nor was the intervention by the Greek delegate without foundation. Greece continued under German and Bulgarian occupation until fall 1944, and had by that time been occupied for over three years. Its economy was non-existent, its existing infrastructure (built largely in the late 19th century) destroyed, its urban population starving. War-time inflation had destroyed the currency system, which collapsed in late 1944 with devastating results for the man in the street.


John S 10.27.12 at 7:11 am


You are correct, it is the same person.

May I ask what you think of free banking?
(A good summary from George Selgin: http://www.richmondfed.org/publications/research/region_focus/2009/winter/full_interview.cfm )


J. Otto Pohl 10.27.12 at 8:33 am


Because nobody reads my blog. It is basically just a private journal of notes in cyberspace where I can not lose it like I have all the hard copy journals I started. If I were to put up such a post I can guarantee it would get zero comments.


sanbikinoraion 10.27.12 at 10:18 am

JOP — then start your own academic group blog with leading lights from African universities. I for one would be interested to read it. As it is, you’re hijacking this thread with concern trolling.


Kaleberg 10.28.12 at 3:07 am

“Bargain No. 1 was the fund. It was in view of the U.S.’s abandonment of a rather orthodox gold position that Britain showed its willingness to step up its decontrol of the pound until the time when – after a transitional period of some three to five years – the pound returned to its traditional freedom of exchange. Furthermore, in return for the generous automatic credit privileges made possible principally by the U.S.’s contribution of about a third of the fund’s $8,800,000,000 assets, the delegates agreed to try to eliminate some Schachtian exchange controls. In Latin America especially, this would be a boon to the U.S. In the final plan the U.S. had 28 per cent of the votes, and Great Britain, India, and the dominions 25.3 per cent. Yet most of the advantages of the fund lay with foreign nations and most of the disadvantages with the U.S. From the viewpoint of the U.S. the White Mountains would have labored to bring forth a monetary mouse had it not been for Bargain No. 2.

“This was the creation of the World Bank. The U.S. advantage there was that, though the U.S. was to finance the bank heavily, the member nations were to cover the bank’s loans with generous guarantees. In other words, the bank was the long-term collateral offered to the U.S. in return for the liquidity that the U.S. was introducing into the money markets of the world through the fund.”

from Fortune Magazine, July 1945


I’m not sure if the report actually attended the conference or had access to the transcript, but the above quote was part of an interesting analysis. Everyone, particularly in the U.S., was well aware that they were creating a new world order and that any agreement would have long-term consequences. Given the wide spread destruction and collapse of ordinary world trade, a lot of this planning for the post-war era was extremely important, and a lot of it very effective.


LFC 10.29.12 at 2:38 am

From the OP:
You can also see smaller countries pressing for their interests – specifically, that the Fund make room for their need to improve their own economies before stabilizing their exchange rates – which is in part why the Fund is officially devoted to “the promotion and maintenance of high levels of employment and real income.”

Speaking of irony, there may well be some irony right here, given some of the effects of the Fund’s ‘structural adjustment’ loans/programs in more recent years.

Re Pohl:
yes, but you are
1) ignoring countries in continents besides Europe and Africa (eg Latin America, Asia)
2) focusing only on inter-country inequality and ignoring other types of inequality, i.e., (a) intra-country and (b) inequalities among individuals, ie a small number of v rich people having more wealth/income than some 40 percent of the world’s total pop.
To bring it back to the OP, why not direct your fire at the Bretton Woods institutions, esp the IMF, rather than Greece?


James Wimberley 10.30.12 at 2:11 pm

The Soviets,you write took BrettonWoods seriously. Did you spot any sign of this is the positions or chairmanship of their agent (in some non-trivial sense) Harry Dexter White?


chris9059 10.30.12 at 5:07 pm

“what is moral the justification for the average person in Greece with no education to make more money than an African PhD working at a university?”

Are you suggesting that the fact that one has been fortunate enough to receive an advanced education gives one a MORAL entitlement to a greater standard of living than that of someone who has not been fortunate enough to get an advanced education?
One might make efficiency arguments for such an outcome but I don’t see the moral argument.


Ben 10.30.12 at 9:40 pm


Thanks for introducing this vital distinction. Speaking as Ghanaian who happens to spend a little time shining the seat of his pants a few blocks from the White House and in the village of my native Accra, I believe there is merit in the economies of West Africa (and beyond) looking to foreign direct investment and reciprocal trade as the most practical hope for reconciling the current inequalities between and among nations. The post-financial crisis analysis of folks like Michael Kumhof and that of Michael’s contemporraries holds some promise that we are beginning to acknowledge the importance of more balanced capital/income distribution to the preservation of global financial stability and sustainable economic growth.

All the hand-wringing by well-intentioned types (mostly light-skinned professional enjoying the comfort of casual lives) does precious little for the citizens of Ghana, West Africa or the Continent. Yet, we shouldn’t expect much from the star-gazers. The future of Africa remains largely in the hands of Africans such as my good family and friends. And that, thank the good Lord, is precisely how it should be. As we are reminded, the road to hell is paved with the very best of intentions.

Keep up the good work all you servant-leaders who show you care not by what you say, but by the sweat of your brow in service to others. As papa was always quick to offer: “aon, your actions speak so loud, I can’t hear what you’re saying.”

Respectfully, Ben

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