Hostname: page-component-848d4c4894-x24gv Total loading time: 0 Render date: 2024-06-02T15:51:02.929Z Has data issue: false hasContentIssue false
  • English
  • Français

BRITAIN AND GLOBALISATION SINCE 1850: III. CREATING THE WORLD OF BRETTON WOODS, 1939–1958

Published online by Cambridge University Press:  10 November 2008

Martin Daunton
Get access Rights & Permissions [Opens in a new window]

Abstract

During the Second World War, attention turned to reconstructing the world economy by moving away from competitive devaluations, protectionism and economic nationalism that had marred the 1930s. The Americans had considerable economic and political power, and they wished to restore multilateral trade, fixed exchanges and convertibility of currencies. The British government was in a difficult position, for it faced a serious balance of payments deficit and large accumulations of sterling in the Commonwealth and other countries. Multilateralism and convertibility posed serious difficulties. This address considers whether the American government had economic and financial hegemony after the war, or whether it was constrained; and asks how the British government was able to manoeuvre between America, Europe and the sterling area. The result was a new trade-off between international monetary policy, free trade, capital controls and domestic economic policy that was somewhat different from the ambitions of the American government and from British commitments made during and at the end of the war.

Type
Presidential Address
Information
Transactions of the Royal Historical Society , Volume 18 , December 2008 , pp. 1 - 42
Copyright
Copyright © Royal Historical Society 2008

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 United Nations Monetary and Financial Conference, Proceedings and Documents (US Department of State, International Organizations and Conference Series, Washington, DC, 1948), i, 81.

2 Blum, J. M., From the Morgenthau Diaries: Years of Crisis, 1923–38 (Boston, MA, 1959), 452–3Google Scholar; H. L. Ickes, The Secret Dairy of Harold L. Ickes, ii: The Inside Struggle, 1936–39 (New York, 1953), 211, and iii: The Lowering Clouds, 1939–41 (New York, 1954), 218–19.

3 L. Robbins, Economic Planning and the International Order (1937), 232–7; and idem, The Economic Consequences of the War (1939), 80–5, 88–94, 99; Harrod quoted in Skidelsky, R., John Maynard Keynes: Fighting for Britain, 1937–46 (2000), 213, 220Google Scholar; Henderson, H. D., ‘International Economic History of the Interwar Period’, in his The Interwar Years and Other Papers: A Selection from the Writings of Herbert Douglas Henderson (Oxford, 1955), 290, 291, 294Google Scholar. On Keynes's changing position, see Skidelsky, Fighting for Britain.

4 Ikenberry, G. J., ‘A World Economy Restored: Expert Consensus and the Anglo-American Postwar Settlement’, International Organisation, 46 (1992), 298–321CrossRefGoogle Scholar.

5 League of Nations [R. Nurske], International Currency Experience: Lessons from the Interwar Period (Geneva, 1944), 230.

6 See J. K. Horsefield, The International Monetary Fund, 1945–1965, iii: Documents (Washington, DC, 1969), 187.

7 The Collected Writings of John Maynard Keynes, xxvi: Activities, 1943–46: Shaping the Post-War World: Bretton Woods and Reparations, ed. D. Moggridge (1980), 16–17; Helleiner, E., States and the Emergence of Global Finance from Bretton Woods to the 1990s (Ithaca, 1994), 34, 37Google Scholar; Horsefield, International Monetary Fund, iii, 194.

8 For a good account, see Skidelsky, Fighting for Britain, Part Two. Details of discussions between Britain and the USA over currency and trade are to be found in Foreign Relations of the United States, Diplomatic Papers, 1942, i: General. The British Commonwealth, the Far East (Washington, DC, 1960), 163–242; Foreign Relations of the United States, Diplomatic Papers, 1943, i: General (Washington, DC, 1963), 1054–126; Foreign Relations of the United States, Diplomatic Papers, 1943, iii: The British Commonwealth, Eastern Europe, the Far East (Washington, DC, 1963), 1–110; Foreign Relations of the United States, Diplomatic Papers, 1944, i: GeneraI: Economic and Social Matters (Washington, DC, 1967), 1–135.

9 Volcker, P. and Gyohten, T., Changing Fortunes: The World's Money and the Threat to American Leadership (New York, 1992), 8Google Scholar.

10 Ibid., 20.

11 See for example A. Cairncross, Years of Recovery: British Economic Policy, 1945–51 (1985), ch. 6.

12 See Hogan, M. J., The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952 (Cambridge, 1987)CrossRefGoogle Scholar.

13 Skidelsky, Fighting for Britain, 126–31, 133; D. Acheson, Present at the Creation: My Years in the State Department (1970), 29–30. Details of the discussions over Article vii are in Foreign Relations of the United States, Diplomatic Papers, 1941, iii: The British Commonwealth, the Near East and Africa (Washington, DC, 1959), 1–53; and Foreign Relations of the United States, Diplomatic Papers, 1942, i: General. The British Commonwealth, the Far East (Washington, DC, 1960), 525–37.

14 Cordell Hull, Memoirs of Cordell Hull, i (1948), 81–2.

15 Quoted in R. Skidelsky, John Maynard Keynes: The Economist as Saviour, 1920–1937 (1992), 476–8; and idem, Fighting for Britain, 179.

16 ‘A proposal for an International Commercial Union’, in The Collected Papers of James Meade, iii: International Economics, ed. S. Howson (1988), 27–35.

17 The Wartime Diaries of Lionel Robbins and James Meade, ed. S. Howson and D. Moggridge (Basingstoke, 1990), entries for 2 Oct, 1943, 124–5, and 13 Oct. 1943, 136–7

18 Keynes to D. H. Robertson and W. Eady, ‘Monetary and Commercial Bilateralism’, 31 May 1944, in The Collected Writings of John Maynard Keynes, xxvi: Activities, 1941–46: Shaping the Post-War World. Bretton Woods and Reparations, ed. D. E. Moggridge (1980), 25–6.

19 Collected Writings of John Maynard Keynes, xxvi, ed. Moggridge, Keynes to White, 24 May 1944, 27; Keynes to L. Pasvolsky, 24 May 1944, 28–9.

20 Documents on British Policy Overseas, Series I, iii, ed. R. Bullen and M. E. Pelly (1986), Mr Bevin to the earl of Halifax, 8 Oct. 1945, 200, and earl of Halifax to Bevin, 12 Oct. 1945, 216–17. For the details of discussions with the USA at the end of the war, see Foreign Relations of the United States, Diplomatic Papers, 1945, vi: The British Commonwealth, the Far East (Washington, DC, 1969), 1–204.

21 Parliamentary Debates, 5th series, 1945–46, vol. 416, House of Commons, C. Attlee, 6 Dec. 1945, col. 2664.

22 Parliamentary Papers [hereafter PP] 1945–6 xxvi, Proposals for Consideration by an International Conference of Trade and Employment as Transmitted by the Secretary of State of the United States of America to His Majesty's Ambassador at Washington, 6 Dec. 1945.

23 Attlee, Parliamentary Debates 5th series, vol. 416, 6 Dec. 1945 cols. 2662–70.

24 Lancashire and Whitehall: The Diary of Sir Raymond Street, ii: 1939–1957, ed. M. Dupree (Manchester, 1987), 316, entry for 8 Jan. 1946.

25 Toye, R., ‘The Labour Party's External Economic Policy in the 1940s’, Historical Journal, 43 (2000), 190CrossRefGoogle Scholar, 195, 204, 215.

26 Lancashire and Whitehall, ed. Dupree, 408–9, 414; The National Archives [hereafter TNA], BT11/3646, record of conversation between Cripps and Clayton, 12 July 1947, FO371/62305, discussion between president of the Board of Trade and Mr Clayton, 16 July 1947. For American papers on Geneva, see Foreign Relations of the United States, 1947, i: General: The United Nations (Washington, DC, 1973), 909–1025

27 See the oral interview with Winthrop G. Brown on 25 May 1973 in the Harry S. Truman Library.

28 TNA, BT11/5206, minutes of third plenary meeting, 26 Nov. 1947.

29 TNA, PREM8/1416, prime minister, Havana Trade Conference, memorandum by the chancellor of the Exchequer and the president of the Board of Trade, EPC(48)16, 10 Mar. 1948.

30 TNA, BT64/484, TN(48)5, Trade Negotiations Committee, Havana Trade Conference, i: Report on the Havana Conference; Documents on Canadian External Relations, xiv, 581, secretary of state for external affairs to heads of post abroad, 4 June 1948 and 582, chief delegate, delegation to the United Nations Conference on Trade and Employment to secretary of state for external affairs, 13 July 1948, at http://www.international.gc.ca/department/history/dcer/details-en.asp?intRefid=10321 and http://www.international.gc.ca/department/history/dv=cer/details-en.asp?intRefid=10322, last accessed 5 Apr. 2008. For American papers on Havana, see Foreign Relations of the United States, 1948, i: Part 2, General: The United Nations (Washington, DC, 1976), 802–900.

31 TNA, BT11/5206, seventh plenary meeting, 29 Nov. 1947.

32 TNA, PREM8/1416, CP(48)84, cabinet, Havana Trade Conference, memorandum by the president of the Board of Trade, H. Wilson, 12 Mar. 1948; Documents on Canadian External Relations, xiv, 581 and 582.

33 TNA, PREM8/1416, CP(48)84, cabinet, Havana Trade Conference, memorandum by the Board of Trade, H. Wilson, 12 Mar. 1948; CAB134/217/16, Cabinet Economic Policy Committee, Havana Trade Conference, memorandum by the chancellor of the Exchequer and the president of the Board of Trade, EPC(48)16, 8 Mar. 1948.

34 TNA, PREM8/1416, EPC(48)16, prime minister, Havana Trade Conference, memorandum by the chancellor of the Exchequer and president of the Board of Trade, 10 Mar. 1948; CP(48)84, cabinet, Havana Trade Conference, memorandum by the Board of Trade, H. Wilson, 12 Mar. 1948; CP(49)114, cabinet, Havana Charter for an International Trade Organisation, memorandum by the president of the Board of Trade, 10 May 1949.

35 Aaronson, S. A., Trade and the American Dream: A Social History of Postwar Trade Policy (Lexington, KY, 1996), 115Google Scholar; Diebold, W., ‘The End of the ITO’, Essays in International Finance, 16 (1952), 16–24Google Scholar.

36 The best account of the genesis of the EPU is Kaplan, J. J. and Schleiminger, G., The European Payments Union: Financial Diplomacy in the 1950s (Oxford, 1989)Google Scholar; for British perceptions and negotiations, see the files in TNA, FO371/87110-32, FO371/121925-8; CAB134/225; PREM11/1807 and T232/328-9.

37 Letter from H. Ansiaux to P. van Zeeland, Brussels, 27 Mar. 1950, Archives historiques des Communautés européenes, Florence, Depots, DEP. Organisation de cooperation et de développement économiqes. OECD. European Payments Union/European Monetary Agreement, EPU/EMA. EPU/EMA 8 accessed 19 June 2008 at http://www.ena.lu/mce.swf?doc=10265&lang=2.

38 Kaplan and Schleiminger, European Payments Union, 35–7, 49–53, 63–79; TNA, CAB134/225, Cabinet Economic Policy Committee, a new scheme for intra-European payments, memorandum by the chancellor of the Exchequer, 7 Jan. 1950; FO37/8110, ‘European payments scheme’, R. M. K. Slater, 5 Apr. 1950; FO37/87110, No. 79 Intel, ‘European Payments Union’, 22 Apr. 1950; FO37/87113, ‘EPU’, E. A. Berthoud, 16 May 1950; FO371/87113, ‘Proposals by the UK delegation in regard to the establishment of a European Payments Union’, Paris, 19 May 1950; FO371/87114, ER(P)(50)9, Organisation for European Economic Co-operation UK delegation, European Payments Union, E. L. Hall-Patch, 4 June 1950.

39 TNA, T232/199, telegram, 23 June 1950

40 A. Milward, The Reconstruction of Western Europe, 1945–51 (1984), 333–4, 472–3; and idem, The European Rescue of the Nation State, 2nd edn (2000). See also Kelly, S., The Myth of Mr Butskell: The Politics of British Economic Policy, 1950–55 (Aldershot, 2002), 116–23Google Scholar.

41 Maier, C. S., ‘The Making of “Pax Americana”: Formative Moments of United States Ascendancy’, in The Quest for Stability, ed. Ahmann, R., Birke, A. and Howard, M. (Oxford, 1994), 417–18Google Scholar.

42 See Eichengreen, B., Global Imbalances and the Lessons of Bretton Woods (Cambridge, MA, 2007), ch. 4Google Scholar.

43 Kaplan and Schleiminger, European Payments Union, 61, 68–71; TNA, T236/2400, ‘Currency Union with the US’, Nov. 1949; The Diary of Hugh Gaitskell 1945–1956, ed. P. M. Williams (1983), 181.

44 Kaplan and Schleiminger, European Payments Union, 61, ch. 4.

45 R. Toye and T. Geiger, ‘Britain, America and the Origins of the European Payments Union: A Reassessment’, available at http://eric.exeter.ac.uk/exeter/handle/10036/31032 last accessed 18 July 2008.

46 National Archives and Record Administration, 841.00/12–2651, ‘The Long-Run Economic Problem of the United Kingdom’, Dec. 1951; Broadberry, S. N. and Crafts, N. R. F., ‘British Economic Policy and Industrial Performance in the Early Post-War Period’, Business History, 38 (1996), 65–91CrossRefGoogle Scholar.

47 TNA, T236/3240, ‘Septuagesima plus’, 12 Feb. 1952.

48 For an accessible account of the scheme and its politics, see P. Hennessy, Having It So Good: Britain in the 1950s (2006), 199–217.

49 Cairncross, Years of Recovery, ch. 9; quotation is on 270.

50 For example, TNA, T236/3241, ‘ESP: causes and consequences’, R. W. B. Clarke, 26 Feb. 1952; T236/3241, W. Eady to E. Bridges, 26 Feb. 1952. These views were expressed in the various drafts of a memorandum for the chancellor in T236/3241.

51 Procter, S. J., ‘Floating Convertibility: The Emergence of the Robot Plan, 1951–52’, Contemporary Record, 7 (1993), 25CrossRefGoogle Scholar.

52 Bulpitt, J. and Burnham, P., ‘Operation Robot and the British Political Economy in the Early 1950s: The Politics of Market Strategies’, Contemporary British History, 13 (1991), 2–3Google Scholar.

53 N. Lawson, ‘Robot and the Fork in the Road’, Times Literary Supplement, 21 Jan. 2005, 11–13; a similar view was taken by Brittan, S., The Treasury under the Tories, 1951–1964 (Harmondsworth, 1964), 177Google Scholar.

54 TNA, T236/3240, ‘Inconvertible sterling’, G. Bolton, 16 Feb. 1952 and ‘Plan for “overseas sterling”’, Bolton, 16 Feb. 1952; [?] at Bank of England to chancellor of the Exchequer, 13 Feb. 1952; T236/3241, ‘The plan and Europe’, 27 Feb. 1952; ‘Europe – payments: note by the Bank of England’, 29 Feb. 1952.

55 TNA, T236/3240, [?] at Bank of England to chancellor of the Exchequer, 24 Feb. 1952.

56 TNA, T236/3240, RWBC/4872, ‘Convertibility’, R. W. B. Clarke, 25 Jan. 1952; T236/3241, ‘ESP: causes and consequences’, R. W. B. Clarke, 26 Feb. 1952.

57 TNA, T236/3240, R. Hall to E. Plowden, 22 Feb 1952; ‘External action’, R. Hall, 23 Feb. 1952; see the comment on Hall in T236/3240, E. Bridges to E. Plowden, 22 Feb. 1952; Hall to chancellor, ‘Exchange rate etc.’, n.d.

58 TNA, T236/3240 ‘Septuagesima plus – or Greek Kalends’, 13 Feb. 1952.

59 TNA, T236/3243, ‘Robot’, W. Eady [?] to L. Rowan, 17 Apr. 1952.

60 TNA, T236/3241, third draft of memorandum by chancellor of the Exchequer: this was probably drafted by Clarke given the similarity of the phrasing to some of his own memoranda; T236/3241, notes of a meeting of ministers, 27 Feb. 1952.

61 TNA, T236/3240, E. Bridges to E. Plowden, 22 Feb. 1952; Lawson, ‘Robot’; Hennessy, Having It So Good, 204–8, 212–13 explains the political divergences within the cabinet. On the international impact, see P. Burnham, ‘Britain's External Economic Policy in the Early 1950s: The Historical Significance of Operation Robot’, Twentieth Century British History, 11 (2000), 379–408.

62 B. Eichengreen and J. Braga de Macedo, ‘The European Payments Union: History and Implications for the Evolution of the International Financial Architecture’, OECD Development Centre, Paris, Mar. 2001 at http://docentes.fe.unl.pt/~jbmacedo/oecd/triffin.html last accessed 20 Nov. 2007.

63 TNA, T229/601, memorandum to the United States administration: the collective approach to freer trade and currencies, draft, 13 Jan. 1953.

64 Quoted in Muirhead, B. W., ‘Britain, Canada and the Collective Approach to Freer Trade and Payments, 1952–57’, Journal of Imperial and Commonwealth History, 20 (1992), 114CrossRefGoogle Scholar.

65 See Kaplan and Schleiminger, European Payments Union, 168–84; Report of the Commission on Foreign Economic Policy (Washington, DC, Jan. 1954), 73, cited in C. Schenk, Britain and the Sterling Area: From Devaluation to Convertibility in the 1950s (1994), 122.

66 Cited in Eckes, A., A Search for Solvency: Bretton Woods and the International Monetary System, 1941–1971 (Austin, 1975), 162Google Scholar.

67 J. M. Keynes, The General Theory of Employment, Interest and Money (1936), 159–60.

68 J. M. Keynes, ‘National Self-Sufficiency’, New Statesman and Nation, 8 and 15 July 1933, reprinted in The Collected Writings of John Maynard Keynes, xxi: Activities, 1931–39. World Crisis and Polities in Britain and America, ed. D. Moggridge (1982), 233–46, quote on 236.

69 Tomlinson, J., ‘Attlee's Inheritance and the Financial System: Whatever Happened to the National Investment Board?’, Financial History Review, 1 (1994), 139–55CrossRefGoogle Scholar.

70 TNA, T236/2639, ‘Sterling balances and south-east Asia: memorandum submitted jointly by the working parties on the sterling area and on development in south and south-east Asia’, 18 Mar. 1950. See also Tomlinson, J., ‘The Commonwealth, the Balance of Payments and the Politics of International Poverty: British Aid Policy, 1958–1971’, Contemporary European History, 12 (2003), 413–29CrossRefGoogle Scholar.

71 Rao, V. K. R. V., ‘The Colombo Plan for Economic Development’, Lloyd's Bank Review, 21 (1951), 12–32Google Scholar; ‘The Sterling Area: I, History and Mechanism’, Planning, 18 (1951), 65; Krozewski, G., Money and the End of Empire: British Economic Policy and the Colonies, 1947–58 (Basingstoke, 2001), 65CrossRefGoogle Scholar.

72 TNA, T229/543, R. Maulding to E. Bridges, 1 Jan. 1953.

73 TNA, T229/543, RWBC/55527, ‘Overseas investment’, R. W. B. Clarke, undated.

74 TNA, T229/543, ‘Overseas investment: economic secretary's minute of 1st Jan. 1953’, R. L. Hall, 29 Jan. 1953; ‘Overseas investment’, D. A. V. Allen, 3 Feb. 1953; E. N. Plowden, ‘Overseas investment’, 5 Feb. 1953; the debates were presented to the economic secretary in ‘Overseas investment’, 24 Feb. 1953; T230/226, ‘Capital available for overseas investment’, MFWH, 6 Jan. 1953; ‘Mr Clarke's paper on “Overseas investment”’, 2 Feb. 1953.

75 TNA, BT213/96, ‘Direct outward investment (excluding oil) in the non-sterling area’, EAS (57)1, 6 May 1957.

76 TNA, CAB47/68, ‘Overseas investment’, B. Reading, 17 Nov. 1964; T. Balogh, ‘Foreign investment and liquidity’, 15 Dec. 1964; T. Balogh, ‘Foreign investment policy’, 22 Dec. 1964; F. Stewart, ‘Investment overseas and exports’, n.d.

77 G. Jones, ‘Bolton, Sir George Lewis French, 1900–1982, banker’, www.oxforddnb.com/view/article/46639 last accessed 2 Apr. 2008.

78 Robert Triffin, ‘Statement to the Joint Economic Committee of the 87th Congress’, Washington, 28 Oct. 1959, in his Gold and the Dollar Crisis (New Haven, 1960).

79 Memorandum from the assistant director of the Office of Management and Budget (Schlesinger) to the president's assistant for international economic affairs (Peterson), 20 July 1971, Foreign Relations, 1969–1976, iii: Foreign Economic Policy, 1969–1972: International Monetary Policy, 1969–1972, document 161, http://www.state.gov/r/pa/ho/frus/nixon/iii/5348.htm last accessed 26 July 2004.

80 Some of Rueff's writings were translated: see The Age of Inflation (Chicago, 1964), and Balance of Payments: Proposals for the Solution of the Most Pressing World Economic Problem of Our Time (New York, 1967); Civvis, C. S., ‘Charles de Gaulle, Jacques Rueff and French International Monetary Policy under Bretton Woods’, Journal of Contemporary History, 41 (2006), 701–20CrossRefGoogle Scholar.

81 Council-Commission of the European Communities, Report to the Council and the Commission on the Realisation by Stages of Economic and Monetary Union in the Community, 8 Oct. 1970 [Werner Report], Supplement to Bulletin 11 – 1970 of the European Communities.

82 N. Lawson, The New Conservatism: Lecture to the Bow Group (1980).