The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order (Council on Foreign Relations Books (Princeton University Press)) by Steil Benn

Author:Steil, Benn [Steil, Benn]
Language: eng
Format: epub
Publisher: Princeton University Press
Published: 2013-02-10T23:00:00+00:00

Despite the amicable British climbdown on the location issue, Keynes erupted the very next day. Curiously, the matter was an obscure one: the future of the Bank for International Settlements (BIS)—a discrete, little-known central bankers league nestled in the small Alpine city of Basel, Switzerland.

The Norwegians, supported by other European delegations, had early on in the conference proposed the immediate liquidation of the BIS, owing to its cooperation with the Nazi regime that now controlled the member states Germany had invaded. Robbins described the Norwegian delegation leader, central bank director Wilhelm Keilhau, as “a queer, Peer Gyntish figure, with an explosive voice and absurd habits of gesticulation.”85 The Dutch, whose delegation head, J. W. Beyen, had as BIS president in 1939 controversially authorized a transfer of Czech gold to Germany following the Nazi overrun of Czechoslovakia, opposed the resolution. They were joined by the British, represented by Nigel Ronald of the Foreign Office and George Bolton of the Bank of England, who objected to the Norwegian resolution on the grounds that it bore no connection with either the IMF or the World Bank. Acheson and the State Department supported the British position, much to White’s annoyance. Brown, the banker, joined Acheson; Brown’s bank having helped establish the BIS at the request of the State and Treasury departments in 1929, he privately supported dissolution, but did not want to suffer the embarrassment of having the institution shuttered by action taken at Bretton Woods.

A comedy of confusions began on the afternoon of July 19, when Luxford and his American colleagues tried to head off an expected British point of order on the resolution by rewording it such that it made membership in the IMF and the BIS incompatible. This would provide the necessary link between BIS and the fund, and thereby neutralize the British objection. Robbins called the American initiative “political intrigue behind the scenes.”86 At this point there was as yet no official version of the resolution, but what filtered up to Keynes from his colleagues at 7:20 p.m. was that a BIS resolution had been approved by a committee operating within Commission Three, over British and Dutch objections; that the press had been briefed on its approval; and that it was about to be ratified by the commission imminently. Keynes was apoplectic, descending on Morgenthau in his suite in advance of their dinner date to vent. “[T]he man was livid over this BIS thing, and said that if this thing went through at nine o’clock he was going to get up and leave the Conference … the inference was that he had been double-crossed,” Morgenthau told White, Vinson, and Luxford just after 9:30 that night. Morgenthau’s wife Elinor, who was present at the explosion, described Keynes as “so excited about it” he was “quivering.”87 Acheson, according to Robbins, went “out of his way to repudiate all responsibility for what was happening.”88

What makes the clash particularly curious is that White and Keynes both objected to the Luxford formulation, albeit for different reasons.

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