Blinkhorn: Bretton Woods Story
(Host) The recent discovery in Washington DC of a rare transcript of the 1944 conference at Bretton Woods, New Hampshire, at which the World Bank and International Monetary Fund were created, got commentator Tom Blinkhorn - who worked at the Bank for 30 years - thinking about the back story of that meeting and its global importance.
(Blinkhorn) War was still raging in Europe when almost 800 representatives from 44 allied nations gathered at the Mount Washington hotel in the White Mountains in July, 1944.
Why Bretton Woods? Well, the famous British economist, John Maynard Keynes, the real brains behind the meeting, suffered from asthma and refused to meet in sweltering Washington, DC. Those were the days before air conditioning. He insisted on a venue near the sea or in the mountains. New Hampshire Senator Charles Tobey, ranking Republican on the powerful senate banking committee, persuaded President Roosevelt that the Mount Washington would fit the bill provided the government came up with about one million dollars for renovations.
Special trains and fancy coaches were mobilized to transport delegates from ports in Boston and New York, since air travel was not available. The trains went through White River Junction and on to Littleton, New Hampshire, the station nearest Bretton Woods.
Delegates worked round the clock for three weeks, fortifying themselves mainly with free coco-cola. Stronger refreshments were held closely in reserve, particularly during drafting sessions.
The final agreement creating the World Bank and International Monetary Fund was signed on the final day - July 22, 1944. It was the world's first example of a fully negotiated monetary and economic system intended to govern relations among independent nation states. The goal was honorable, if sometimes elusive: To promote stable economic growth and democratic procedures that were believed to be essential for a durable peace. That goal may sound unduly idealistic these days but coming in the midst of a world war and not long after the Great Depression, Bretton Woods delegates undoubtedly felt that they had few other choices.
And sixty-eight years later, the two sister institutions, occupying large central headquarters across from each other on 19th street in Washington DC, remain major players in the world's financial and economic development. Their operational priorities and programs have changed over the years, as the world economy has changed. They have made many blunders but can point to many successes. Abject poverty in many parts of the world is being alleviated, thanks to the efforts of the Bank and the Fund although the problem is far from solved.
The political basis for the Breton Woods system stemmed from a confluence of several key conditions, some of which are relevant today: Global crises and the shared pain inflicted by the Great Depression and World War II; a high level of agreement among the powerful to avoid mistakes of the past and common belief that forms of market capitalism held promise for future growth and prosperity; plus a few persuasive, determined intellectual leaders like Keynes.
And the fact that a Republican senator and a Democrat President could work together to make it happen is also telling in these discordant political times.