POLI 342 Lecture Notes - Lecture 19: Harry Dexter White, Bretton Woods Conference, Free Trade
11 May 2018
School
Department
Course
Professor
Bretton woods
Founding the monetary regime
The goals of the new regime
• Establish capital flows
o Monetary regime is the bases through which international exchanges take place
o Wanted to support trade liberalization and investment
• Make currencies convertible again
• Create stable exchange rates
Lessons form the 1930s
• Embedded liberalism
o Author: Ruggie
o You do’t at the sae restraits that the GS iposed o outries here ou a't
control domestic monetary policy
• Translates into a bureaucratic struggle in the US
o In 1930s Roosevelt administration
o Autonomy is taken away from Federal bank due failures during the Great Depression
o Autonomy is given to Treasury department
• Controls fiscal policy (Keynesians believe that government spending will
increase economic growth)
• And monetary policy (freedom to have domestic interest rates)
• The Treasury uses these tools to recover from recession
• Treasury vs State Department (SD)
o SD organizes Bretton Woods conference
• SD has closer ties to the NYC/Wall street banks (that were carrying on their own
diplomacy)
o SD want the dollar to be at the center of the monetary regime (convince people to hold
dollars)
o Treasury want to put interest rates down to have more freedom
o Tension between two interests
• Treasury wins
o President FDR chooses Treasury to represent US
• Assistant Secretary of Treasury Harry Dexter White named chief architect of plan
o Had far-left beliefs
o Supported USSR
The White plan
• IMF to advise and assist government on macroeconomic policies
o Support Keynesian policies in foreign countries
o Wall street banks did not like this
• Veto power over exchange rate changes
o Wanted US, GB, France, China and Russia to be key contributors
o Can not have predatory exchange rates
o IMF must approve exchange rates
o Very specific formula according to the credit countries contribute
• Coordination of efforts to reflate economies
o IMF helps coordinate
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