What Have We Learned about Bretton Woods from Recent Research?
Eric Helleiner1
Eric Rauchway2
Kurt Schuler3
September 2, 2014
The 70th anniversary year of the 1944 Bretton Woods conference provides an important moment toreflect on what actually took place at that famous meeting. Historical understanding of the origins of the
Bretton Woods system has in fact been greatly enhanced in the last few years. Detailed transcripts fromthe 1944 conference have recently been discovered and issued by the Center for Financial Stability.4
Three new books have also recently been published about the conference and another will soon
appear.5 What have we learned about Bretton Woods from this new research?
The Long Historical Roots of Bretton Woods
To begin with, it is clear that the ideas and policies that characterized the Bretton Woods agreements
have a longer history and a wider scope than is often appreciated. They go back before World War I, andthey derive largely from the practical considerations of implementing monetary policy under various
real-world constraints, rather than from elegant theoretical considerations.
So far as the theoretical basis of the Bretton Woods system goes, it is right to credit John Maynard
Keynes with arriving at the essential elements of modern monetary management. But he arrived atthese ideas long before writing his plan for an International Currency Union, and he came to them notby trying to solve theoretical problems, but by observing and trying to improve actual policies.
In 1913, Keynes observed Indian monetary officials maintaining a stable but potentially adjustableexchange rate with the pound sterling by guaranteeing sterling’s convertibility to rupees, but not theother way around, thus relieving themselves of the expense of keeping enormous amounts of gold on
hand. He argued that this practice was the future of monetary management. In Indian Currency and
Finance, Keynes observed that the strict gold standard scarcely existed even in advanced European
1

Faculty of Arts Chair in International Political Economy and Professor, Department of Political Science, Universityof Waterloo, Canada.
2
Professor of History, University of California, Davis.
3
Senior Fellow in Financial History, Center for Financial Stability.
4
Kurt Schuler and Andrew Rosenberg, eds., The Bretton Woods Transcripts (New York: Center for Financial
Stability, 2012).
5
Ed Conway, The Summit (London: Little, Brown, 2014); Eric Helleiner, Forgotten Foundations of Bretton Woods:
International Development and the Making of the Postwar Order (Ithaca, NY: Cornell University Press, 2014); Eric
Rauchway, The Money-Makers: The Invention of Prosperity, from Bullion to Bretton Woods (forthcoming); Benn
Steil, The Battle of Bretton Woods (Princeton, NJ: Princeton University, 2013).

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countries, and that money could be managed for domestic and international purposes perfectly wellwithout it. Keynes concluded his little volume abruptly, saying his government service on a commission
to evaluate the Indian currency prevented him elaborating further on his ideas.6
At the Versailles conference in 1919, Keynes proposed a system of international lending for the
purposes of reconstruction and development in the aftermath of World War I. Hoping to provide relief
both to belligerent nations damaged by the war and to new nations that had no credit history, Keynes
proposed that the defeated and newly established powers issue debt to be bought by victorious
countries, with the resulting cash to be put into funds for reconstruction and economic development.
This “grand scheme for the rehabilitation of Europe,” as he called it, failed because the U.S. delegation
declared that Congress would never back it.7
In 1923, Keynes first systematized his understanding of monetary management in the Tract on Monetary
Reform. Here he observed that while inflation was indeed an evil inasmuch as it robbed creditors of
their profits, deflation was a greater evil because widespread expectation of falling prices could bring anentire economy to a halt. As between inflation and deflation, Keynes wrote, deflation was therefore far
worse.
Because expectations played such an important role, monetary authorities could dampen the businesscycle by preventing “confident expectation” of either inflation or deflation. He argued that nations
should do so by establishing fixed, but adjustable, values of their currencies and cooperating throughinternational arrangements to assure that no one nation could dominate the global economy.
Keynes envisioned these global arrangements preserving gold in a largely symbolic role — as“constitutional monarch,” he said, but removing its ability to tie policymakers’ hands. He thought thegold standard required immoral policies — attempts “to bring back equilibrium by deliberately causing a‘consequent slackening of employment’.” Overall, he placed the employment of workers above stabilityof currency values: “it is worse, in an impoverished world, to provoke unemployment than to disappoint
the rentier,” he wrote.8
In his 1930 Treatise on Money, Keynes rehearsed much of the same argument he had alreadydeveloped, but at greater length and in greater detail. In particular, he now described the need for“management of the value of gold” by a “Supernational Bank” which would, again, retain gold as a“constitutional monarch” — keeping it for symbolic value but robbing it of actual authority. This
6

Collected Writings of John Maynard Keynes, 31 vols. (London: Macmillan, St. Martin’s Press, for the Royal
Economic Society, 1971-1989), vol. 1. Hereafter cited as CW.
7“Scheme for the Rehabilitation of European Credit and for Financing Relief and Reconstruction,” marked secretand dated April 1919, John Maynard Keynes Papers, Kings College Cambridge, RT/16; also accompanying
memorandum and correspondence in the same folder.
8
CW, vol. 4: “confident expectation,” p. 35; “constitutional monarch,” p. 138; “consequent slackening,” p. 153;
“impoverished world,” p. 36.
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Supernational Bank would define an international currency, Supernational Bank Money, which would be
defined as a sum of gold but regulated in value with respect to national currencies, with a view to“abolishing the credit cycle.”9Thus by the start of the Great Depression, Keynes had arrived at what became the major elements of
Bretton Woods: (1) an international system of monetary management that pegged currencies in value
one to another but with (2) allowance for adjustment to permit domestic policies to promote prosperityon the assumption that (3) expectations must be managed to prevent deflation and (4) all backed by aprogram of international lending for reconstruction and development.
When Franklin Roosevelt became president in 1933, he pursued a monetary policy along lines similar to
those of Keynes, beginning with his inauguration and extended up through the creation of Bretton
Woods. Indeed, Roosevelt’s own role in establishing Bretton Woods is underappreciated.
Like no other president before or since, Roosevelt enjoyed the authority to manage the value of the U.S.
dollar himself. He took the dollar off gold immediately on taking office, and secured for himself thepower to regulate the value of the currency in the Thomas Amendment of the Agricultural Adjustment
Act, which allowed him to change the gold value of the dollar or issue paper currency at will. This law
remained in effect until the adoption of the Bretton Woods agreements by Congress.
Roosevelt told reporters on March 8, 1933, that his first moves in suspending convertibility were part ofa deliberate program. “[W]hat you are coming to now really is a managed currency, the adequateness ofwhich will depend on the conditions of the moment. It may expand one week and it may contract
another week.… It ought to be part of the permanent system … so we don’t run into this thing again.”10
The president understood Keynes's concerns about runaway expectations, and tried to prevent a
confident expectation of his movements from developing. He made his remarks about a permanentsystem off the record. He expressed concern about creating too much inflation too quickly, saying “Ihope the stock market will not go up too fast.”11
Like Keynes, Roosevelt also hoped to see the establishment of an international currency expressed interms of gold — an “imaginary coin that would not be coined,” he said, regulated in terms of its
purchasing power. He scuttled the World Economic Conference because he believed it was aiming at the9

CW, vol. 6, pp. 348-363.
Press Conference #1, 3/8/33, Complete Presidential Press Conferences of Franklin D. Roosevelt, introduced by
Jonathan Daniels, 25 vols. (New York: Da Capo, 1972), vol. 1, pp. 1-13. Hereafter cited as CPPC.
11Henry Morgenthau, Jr., Diaries. Book 00, p. 37, for 5/29/33; microfilm series 1, reel 1.
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re-establishment of the gold standard, rather than the creation of a new and cooperative system ofmoney management.12
Both Roosevelt and Keynes would have to wait until recovery from the Depression was well under way
before their ambitions would begin to see realization, but the three-party exchange agreement of 1936,
in which France, the United States, and the United Kingdom agreed to fixed-but-adjustable (at a day’s
notice) exchange rates provided the first instance of these policies’ international implementation.13
Nevertheless, the essential elements of what became Bretton Woods had already been developed on
paper, by Keynes, and implemented in practice, by Roosevelt, long before World War II, and indeed
Roosevelt had articulated them by the summer of 1933.
While Keynes would lead the British planning for Bretton Woods in the early 1940s, the lead U.S. official
was Harry Dexter White in the U.S. Treasury. Interestingly, his first plans for Bretton Woods in early
1942 also built directly on some other historical roots that have often been neglected.
These roots can be found in the inter-American context, where White had pioneered a number of
institutional innovations in U.S. financial relations with Latin America. These innovations arose from
Roosevelt’s Good Neighbor Policy towards the region, a policy that increasingly focused in the late 1930s
on the goal of supporting Latin American initiatives to boosting local living standards.
To serve this goal, White and other U.S. officials began after the mid-1930s to extend official bilateralloans to Latin American countries for the first time to cover short-term balance of payments problems
and to promote long-term development projects. White drew directly on this experience when drafting
his initial ideas about lending functions of the International Monetary Fund (IMF) and International Bankfor Reconstruction and Development (IBRD) in early 1942.14
Even more important was the experience he gained in drafting the convention and by-laws of a
proposed Inter-American Bank (IAB) with Latin American officials during 1939-40. In negotiations with
Latin American officials, White developed a blueprint for an institution that would place the new U.S.
official bilateral lending program in a novel public multilateral framework.
Many of the IAB’s functions and features in fact foreshadowed directly those of the International
Monetary Fund and International Bank for Reconstruction and Development. The IAB proposal was

12

Press Conference #27, 6/7/33, CPPC, vol. 1, pp. 353-354; Celeste Jedel Diary, 6/28/33, Raymond Moley Papers,
Hoover Institution Archives.
13
See Stephen V. O. Clarke, Exchange-Rate Stabilization in the Mid-1930s: Negotiating the Tripartite Agreement(Princeton Studies in International Finance no. 41, 1977).
14
Helleiner, Forgotten Foundations, ch. 1-4.
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never approved by the U.S. Congress, but it is properly seen as a kind of first draft of White’s later
Bretton Woods proposals that so heavily shaped the 1944 conference outcome.15
The Bretton Woods agreements were thus not just the product of a unique historical moment. They had
long historical roots dating back many years before the negotiations ever began and emerged out ofpractical considerations and policy experimentation. This history provides a useful reminder thatsignificant global financial reform takes time and long preparation.
Appreciating the earlier origins of the policies that became international law at Bretton Woods also
reminds us of the priorities the policymakers had long held. Domestic prosperity — economic growth,high employment, rising standards of living — came first, ahead of currency stability. Indeed, as theyinterpreted the lessons of the decades before World War II, unless there was prosperity, there could be
no stability.
The Political Savvy of the Bretton Woods Architects
Recent research also highlights well the political savvy of the Bretton Woods architects. This
characteristic is evident in a number of ways that have perhaps not hitherto been appreciated as muchas they should have been.
From an early stage in the negotiations that would lead to the Bretton Woods conference, the UnitedStates, which would host the conference, understood the need to secure wide international support for
the agreements on the IMF and the IBRD. Much attention has been paid to the Anglo-American bilateral
discussions that took place in 1943-44 in advance of the conference in an effort to recognize the initial
White and Keynes plans that were released publically in the spring of 1943. Recent research highlights
how U.S. officials also made extensive efforts to solicit the opinions of other countries.
They worked particularly hard to cultivate the support of Latin American governments. White first
discussed his postwar plans with Latin American officials — not British ones — at an inter-American
conference in January 1942 where he secured the passage of a resolution calling on Latin American
governments to attend a “special conference” to be held “for the purpose of considering theestablishment of an international stabilization fund”.16 This was the first official commitment that any
government made to attending what would become the Bretton Woods conference.
After detailed internal U.S. discussions refining the content of White’s initial plans, U.S. Secretary of theTreasury Henry Morgenthau, Jr. then sent a letter with a draft U.S. proposal for the IMF to financeministers of 37 countries in 1943 and invited their input. U.S. officials subsequently hosted a three-day
multilateral consultation session in Washington in June 1943 with many of these countries to discuss the
U.S. proposals. White and other U.S. officials also held a large number of bilateral meetings to hear the
15
16

Ibid.
Ibid., p. 107.
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concerns and perspectives of officials from many countries between the spring of 1943 and the final
conference in July 1944.
The British also recognized the need to solicit support from a wider group of governments. After the
publication of Keynes’ plan in the spring of 1943, the British government sent a copy to all Latin
American officials traveling to the U.S. consultations in Washington and some British officials also
traveled across Latin America to promote Keynes’ ideas. The British government also held extensive
consultations throughout 1943-44 with officials from the British Dominions (Canada, Australia, New
Zealand, and South Africa), the Government of India (still a colony at this time), and a number ofEuropean countries.17
In these various consultations with American and British policymakers, officials from other countries
were far from passive. They expressed strong views about the design of the postwar international
financial system. In the archives, one can also find their detailed written commentaries on Keynes andWhite plans. Some governments even presented full-fledged alternative plans, such as Canada, France,
Norway and China.18
U.S. officials also made sure that the 1944 conference itself was a very inclusive meeting. Forty-four
governments were invited to send delegations to Bretton Woods (plus Denmark, an observer). They
included almost all independent countries not part of the Axis or firmly neutral. Even though the war
was still raging and victory for the Allies was not yet assured, remarks at the conference indicate thatthe delegates were thinking ahead to the eventual inclusion of the Axis countries after they had been
pacified.
The various committees were carefully balanced to include the countries with the greatest financial orother stakes in various issues as well as representatives from various regions or important countries.
While Keynes and White served as the chairs of the two of the main bodies (or “commissions”) of theconference, the Mexican finance minister, Eduardo Suárez, was the chair of the third. Delegates fromwhat we would now call emerging market countries were active as committee chairmen, othercommittee officers, and proposers of amendments. The Soviet, Chinese and Indian delegations wereactive across a wide range of issues.19
Latin American countries were also very strongly involved. Of the 44 governments represented at theconference, 19 were from Latin American and their delegates were quite willing to remind otherdelegates that they represented “practically one-half of the nations here assembled.”20 They worked

17

Ibid., pp. 158, 243-4.
For the Canadian and French plans, see J. Keith Horsefield, ed., The International Monetary Fund 1945–1965:
Vol. 3 (Washington, DC: IMF, 1969). For the Chinese plan, see Helleiner, Forgotten Foundations, pp.186-200.
19
Schuler and Rosenberg, The Bretton Woods Transcripts.
20
Ibid., p. 228.
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quite cohesively as a bloc at the meeting, often in close cooperation with U.S. officials. Indeed, theBritish sought to avoid formal votes at the meeting because, as one official put it privately, “if the issue
comes to the vote every country will count for one with the result that Latin America is almost sufficient
to settle any issue in a way the United States wishes.”21
Building on their experience with the Good Neighbor Policy and the negotiation of the stillborn IAB,
Latin American officials pushed successfully for the IBRD’s development mandate to be strengthened.
Delegates from other poorer regions of the world also sought to strengthen the “development” content
of Bretton Woods agreements, such as Indians who made up half of the Government of India’sdelegation (the other half was British). The Chinese delegation (which was the second largest at theconference after that of the U.S.) also strongly supported the IBRD’s creation, seeing it as the realizationof Sun Yat-sen’s 1918 proposal for the creation of an “international development organization.”22
The largest economies generally had the largest and best-staffed delegations, but it was possible forcapable delegates from small countries to have outsized influence through the force of their intellects,
as the conference transcripts indicate.23 Among those who did were Luis Machado from Cuba, Ervin
Hexner from Czechoslovakia, and Wilhelm Keilhau from Norway. Hexner and Keilhau were in a sense noteven representing real countries; they were members of governments in exile whose homelands were
occupied by German forces until the last days of the war.
The delegates to the conference were a mixture of experienced politicians and technocrats (sometimes
both in the same skin), who were able to balance national political goals with the vision required toestablish international financial institutions. Two delegations included past prime ministers. Many otherdelegations included current or former members of parliament. And, of course, they were chockablockwith finance ministers and other officials whose work stretched across politics and finance. Sevendelegates would go on to become presidents or prime ministers of their countries, and dozens of others
would later become ministers of finance, central bank governors, or other top politically appointed
officials dealing with international financial issues.24
Bretton Woods was a closed-door conference, so for the most part it was free of the posturing for public
consumption that takes place in an open forum. It was understood, however, that certain positions
required a public airing for the benefit of a domestic audience. The conference organizers gave the press
what at the time was an unusually high degree of access to delegates, and informed journalists off therecord about the direction of conference proceedings. Delegates had ample opportunity to talk to thepress. They also had the ability to issue statements for the press, which could consist either of the textof the speeches at conference meetings or of fresh material prepared only for the press. Only in a few
21

Helleiner, Forgotten Foundations, p. 159.
Ibid., ch. 6, 7, and 9.
23
Schuler and Rosenberg, The Bretton Woods Transcripts.
24
Ibid, pp. 588-610.
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instances did delegates tax the patience of their fellows with long speeches intended for later
publication as press releases.
As a negotiation, Bretton Woods continues to elicit interest today because it was so successful: twomajor international agreements in only three weeks (preceded, as we have seen, by years of
preparatory work). The conference was only half the story for the agreements, though. Signing theBretton Woods agreements only meant that countries would bring them before their legislatures forconsideration; it did not guarantee ratification.
In a few countries the Bretton Woods proposals were hotly debated. In the United States, New York
money-center banks, some other commercial interests, and people worried about U.S. entanglement in
the affairs of other countries were critical of the agreements. The Roosevelt Administration recognizedfrom the start the possibility of opposition, and it was one reason why the conference was held in
Bretton Woods. The ranking Republican on the Senate Committee on Banking and Currency, which
would hold hearings about ratifying the agreements, was from New Hampshire. Holding the conferencein his state was a way to seek his favor.
The Roosevelt Administration also was active in explaining to the public, through publications, press
statements, and engagement with civic groups, the case for ratifying the Bretton Woods agreements. It
tried to cover all the bases and ultimately succeeded. By the time the enabling legislation for Bretton
Woods came to the floor of the U.S. House of Representatives, opinion polls showed that respondents
who had an opinion about Bretton Woods — slightly more than half those surveyed — favored theagreements by about three to one.25
The main failure regarding ratification was the Soviet Union. It signed at Bretton Woods, after some lastminute brinksmanship, but never gave a reason for its failure to ratify the agreements. Possibly it was
related to the requirement that members of the IMF disclose a great deal of economic information that
Soviet officials wished to keep from the rest of the world, although as U.S. Treasury official RaymondMikesell noted, “in the light of the Soviet Government’s well-known ability to manipulate its statistics,”
these disclosure requirements need have presented no very great impediment to Moscow’s
participation. Documents discovered in the 1990s indicate Stalin’s officials may have hoped to get a loan
from the United States (on the model of the Anglo-American loan) in exchange for ratifying Bretton
Woods.26 After the collapse of the Soviet Union, its successor states quickly joined the IMF and World
Bank, making them institutions with nearly universal participation by independent countries.
Lessons of Bretton Woods?
25

Gallup Poll (AIPO), Jun, 1945. Retrieved 9/28/14 from the iPOLL Databank, The Roper Center for Public Opinion
Research, University of Connecticut. http://www.ropercenter.uconn.edu/data_access/ipoll/ipoll.html
26
Harold and Marzenna James, “The Origins of the Cold War: Some New Documents,” The Historical Journal, vol.
37, no. 3 (September 1994), pp. 615-622.
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Seventy years later, Bretton Woods conference continues to fascinate. It has come to symbolize how
global financial governance can be reformed in ambitious and creative ways. After almost every recent
global financial crisis, experts and policymakers still invoke the 1944 meeting as a precedent, calling for a“new Bretton Woods.”
The reputation of Bretton Woods is certainly well deserved. At the same time, it is worth rememberingthat its success in establishing a new multilateral institutional foundation for the postwar international
financial order drew on long historical roots. In addition, the success of the Bretton Woods architects
reflected not just their ambitious and creative vision but also their great political savvy. These
dimensions of the Bretton Woods story contain important lessons for global financial reformers today.

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