“Theoretically, Bretton Woods is an international pool of the goodwill of nations subscribing to the agreement.”

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Which translates roughly as, “Nobody on the news desk here knows what the hell it is.”

For an oldie (from four years ago! the Internet is no longer young!) on what Bretton Woods was about, see below, originally from here.

Elizabeth Borgwardt, A New Deal for the World: America’s Vision for Human Rights. Cambridge,
Mass.: Belknap Press of Harvard University Press, 2005. vi+437 pp., illustrations, notes, and index. USD 35.00, cloth.

Reviewed by Eric Rauchway

Regular readers know that we at Altercation love us some Bretton Woods, or at least, we love those books that say something useful about Bretton Woods. Why? well, to the extent that the world did not fall into chaos after 1945 the way it did after 1918, it’s owing largely to the successful imposition of an international order paid for by the Bretton Woods system. You wouldn’t know it, of course, to pick up a textbook on U.S. history. They barely mention it — because, let’s be honest here, there’s more than a whiff of castor oil about Bretton Woods. It happens in the middle of 1944, and there’s no shootin’ in it. You could be talking about the aftermath of D-Day, the battle for Guam, or at least the Port Chicago explosion, and instead you want to talk about piddling stuff like the management of international economic relations? Please. We prefer the clash of armies to the vaporings of economists and diplomats.

Yet, of course, it’s Bretton Woods that rules after 1945 (or, really, 1947: but more on that below), it’s Bretton Woods that makes for an era of speedy and widely distributed economic growth in the world. It would be stretching only a little to say that it’s Bretton Woods that wins the Cold War. And Elizabeth Borgwardt wants you to know that, and to know why the U.S. backed Bretton Woods, why there was something immensely moral about that choice, and what it means that we don’t want to do things like that anymore.

Borgwardt’s book runs through the key elements of the 1944-45 effort to establish a postwar system — the Bretton Woods agreements, the United Nations agreement, and the Nuremberg trials — all of which built on the 1941 Atlantic Charter. She makes an effective and clear case that the U.S. was trying to create in these institutions a New Deal for the world. It’s a great little study, and another reason to agree with Grover Norquist that the people who beat back the Depression and the Nazis and the Commies were pursuing a single project. Of course, to Norquist that project was “un-American.” But as Borgwardt notes, it’s what most of the rest of the world understood, till recently, as The American Way. To the extent that you like that, along with its usual side-helpings of truth and justice, not to mention peace and prosperity, you may find Norquist’s pronouncements and Borgwardt’s story usefully alarming.1

1. The Atlantic Charter

When FDR met Churchill aboard ship in mid-Atlantic in the summer of 1941, the U.S. was not yet an ally, only an arms dealer, in the war against Nazism. Yet FDR knew generally where the conflict must lead. He had already told an aide “the world is getting so small” it was impossible for the U.S. to make its way without regard for what even “the people in Java” think. As Borgwardt writes, “The Atlantic Charter was part of an effort on Roosevelt’s part to ‘prepare’ the hearts of the American public for an increasingly activist, multilateralist foreign policy.” (43) Americans needed to build more and more reliable connections between nations, and diminish the ability of any one nation to do as it pleased.

Hence the importance of the Charter’s key, sixth clause:

… after the final destruction of the Nazi tyranny, they [i.e., FDR and Churchill] hope to see established a peace which will afford to all nations the means of dwelling in safety within their own boundaries, and which will afford assurance that all the men in all the lands may live out their lives in freedom from fear and want.

Have a look at that, carefully: the guarantee was made to “all the men in all the lands,” not to all the governments or all the peoples or nations, but to all the men, whatever boundaries surrounded them.

Borgwardt is very good on the extent to which the Charter was a bit of theater: there was no actual Charter, per se; there was a telegram, signed on behalf of both men by FDR. It cost the Americans less than it did the British, who by signing on were committing to an ideal which meant the dissolution of the Empire, but it didn’t cost either of them much. The Charter wasn’t, Churchill insisted, a law.

And yet: it was a powerfully corrosive ideal, subscribed to by the two men most nearly empowered to speak on behalf of resistance to tyranny. Nelson Mandela and Mohandas Gandhi seized on the implications of the Charter for the subject peoples of the British empire; likewise W. E. B. DuBois on its implications for African Americans. Suddenly the power of the U.S. and the British Empire stood behind the rights of all the men in all the lands — even the men in the U.S. and the British Empire. This is what happens when you stick up for human rights — at least, this is what happens if you’ve any integrity, or shame — you’ve got to recognize how far you fall short of the ideal yourself.

The idea of the war against Nazism as a war for freedom from fear and want resonated throughout the world and echoed in the later treaties and charters the Allies signed. These echoes of the Atlantic Charter heralded the modern concept of human rights that would find fuller expression in the UN charter and the briefs at Nuremberg. They became rights you had no matter where you lived, and the people who had the power were prepared, at least in principle, to guarantee them.

2. New Deal foreign policy

But the New Deal as we know it wasn’t about human rights, it was about solving the problems of the Great Depression. So how was the Atlantic Charter a New Deal for the world? A few ways:

  1. In its caution. Freedom from want and freedom from fear are, on their face, minimum guarantees. They say nothing about rights to privacy, representation, or other goodies.

  2. In its unreflective confidence that where the relationship between citizen and state has failed, a supra- or extra-state authority can reassert the rights of citizens. That’s what happened to launch the New Deal — the various states were unable to deal with the Depression, so the federal government interposed itself, asserting a right to speak on behalf of and to render aid to the citizens of the various states. Likewise around the world nation- states were unable to preserve their citizens from the advance of fascism, and the U.S. and Britain were constituting themselves the kernel of a new enterprise, asserting their right to speak on behalf of and to render aid to the citizens of the various nation-states of the world.

  3. In its reliance on a typically New Deal model for footing the bill.

As to that second point, we should emphasize “unreflective” because like the New Deal, the Atlantic Charter and its descendants enjoyed a vigorous disregard for intellectual consistency. Where do these human rights come from? You can say religion, you can say human empathy; Roosevelt didn’t care much what people said, so long as they were willing to sign up.

Which is one reason why, when ideals got reduced to policies, as in the United Nations charter, the ideals took a back seat to power: despite the bluster emanating from white supremacists and our ambassador to the UN, the United Nations was (and remains) self-evidently and essentially a creature of the victors in WWII, whose Security Council authority trumps anything Kofi Annan and the General Assembly can say or do. Same goes for the Nuremberg idea of “crimes against humanity” — it only meant anything with the victors of WWII behind it.

But the lineage stretching from the Atlantic Charter to the UN and Nuremberg isn’t the most interesting part of Borgwardt’s narrative, though it’s smart and well-written. The most interesting part is the effort to address point (3) above. The statesmen of the 1940s realized you couldn’t just have armies and ideals and wars; you needed a plan to preserve and pay for the peace. The victors of WWII had to stand behind that plan, too. And that plan was called, of course, Bretton Woods.

3. Footing the bill

In Bretton Woods, New Hampshire, in the summer of 1944, some 700 delegates from 44 countries met to establish the new economic order for the world. Their guiding principle was simply, don’t let the 1920s happen again. After World War I, the U.S. was the world’s great creditor. Rather than invest its resources in restoring something like the global open markets of the nineteenth century — instead, that is, of acting as Great Britain had in the Victorian era — the U.S. raised its tariffs, restricted immigration, and in the end failed to direct sufficient investment overseas. Other countries raised their tariffs; internal migration slowed; reconstruction occurred slowly if at all. Eventually this unworkable system of immovably locked parts sheared off enough gear-teeth to kick off the Great Depression.

The disasters of the previous peace ensured greater attention this time around. As John Maynard Keynes, the principal British participant at Bretton Woods, said, “after World War I, everyone had wanted to get back to the simpler, idyllic world of 1913. But in the wake of World War II, ‘no one wants to go back to the world of the 1930s.'” (133) You couldn’t let countries all by themselves decide what their economic relations to the world would be. You needed a system, with rules. Otherwise economic struggle would lead again to military struggle. The complex system of currency stabilization (see, I told you it was hard to make this more exciting than the battle for Guam) that emerged at Bretton Woods was the major instrument for keeping the peace.

The way to do it was to make provisions for reconstruction and for keeping economic channels open between countries. Two international institutions came of this: for reconstruction, the International Bank for Reconstruction and Development (better known as the World Bank), and for managing temporary hiccups in the international accounts, the International Monetary Fund (IMF).

Like the Atlantic Charter, these ideas dated to the late summer of 1941. And like the Atlantic Charter, they were understood differently by their British and American proponents. The British, under Keynes, wanted the IMF to create emergency money out of nothing, rather as central banks do today; the Americans, under Harry Dexter White, saw themselves having to accept this funny money for debts to the U.S. and instead proposed that the IMF operate exclusively on contributed capital.

They struggled over these concepts through the next few years, and the Americans won. Like the New Deal’s crown jewel, the Social Security system, the IMF was a contributory insurance program. And as with Social Security, the IMF was a contributory insurance program not because anyone thought it would function better that way, but because people in the FDR White House thought Congress wouldn’t go for any program that was more generous with U.S. resources.

As Borgwardt notes, the result of American triumphs at Bretton Woods was a typical New Deal system inasmuch as it used government power for recovery from economic disaster (the World Bank) and reform to ensure such disasters did not occur again (the IMF).

It was also a typical New Deal system inasmuch as it was “manifestly unequal to its paper mandate”. (127) The New Deal at home was never really big enough — never Keynesian enough — to do its job. Assessing what Southern Democrats and Republicans would allow them to do, rather than what the economy actually needed, the Roosevelt administration fell repeatedly short of a spending program adequate to lift the country out of the Depression. Only the scale of wartime spending was finally Keynesian enough to do the trick.2

The same went for Bretton Woods: the system was too small and straitened to do its job, and the U.S. wouldn’t go for more. Until, that is, in 1947 the pressures of the Cold War made greater spending seem a good idea. Then the dollars flowed out, the system became more Keynesian, and began at last to function. Americans had to spend their resources on the improvement of other peoples in their own interest, and only the advance of Communism made them realize it.

The extent to which Bretton Woods looked like the New Deal defined the extent to which, like the New Deal, it was not quite up to the job. That it later worked showed how much, in the name of its own security, the U.S. was willing to give up its unilateralist desires, and embed itself in a multinational network of rules. Standing behind those rules, the U.S. was the guarantor of orderly liberty, or the nearest thing to it, for a generation.

4. What now?

Borgwardt is quite candid, as it happens I think historians should be, about the present-day relevance of her work. She concludes by arguing that it was an “expanding conception of the national interest” that underwrote the postwar systems of international rules. Americans became multilateralists because in an increasingly interconnected world there was no way for them to protect themselves otherwise.

This is the truly conservative argument to make on behalf of revising the present foreign policy. We know that arguments made on behalf of rights will go nowhere. We know they went nowhere even when FDR was president. But arguments made on behalf of national interest might at least stand a chance of working.

Our world is an interconnected one, and our effort to disconnect ourselves from it in the 1920s led to utter disaster in the 1930s. Just as in the 1940s, we need a renewed internationalist effort to preserve our interconnected world and our place in it. “Just as even the boldest policies of the New Deal were on some level fundamentally conservative, serving as the ‘savior of capitalism,’ so too might the international economic institutions that grew out of the Atlantic Charter yet save globalization — if they are bold enough.” (261) Preserving American capitalism in the 1930s meant setting rules that even the most powerful had to obey. Preserving global capitalism today is also going to mean setting rules that even the most powerful must obey.

The only way our interconnected world can survive is if everyone sees the benefit of staying in the game. Sticking up for our rights means sticking up for everyone’s rights; preserving our prosperity means pointing a way toward everyone’s prosperity. Preserving our credibility means playing by the rules. Respect for the rule of law is a political choice, and one that we should again make synonymous with The American Way, in our own interest.


¹For a non-Norquist statement about the unity of this project, see David M. Kennedy, Freedom from Fear: The American People in Depression and War, 1929-1945 (New York: Oxford University Press, 1999).

²“Fiscal policy, then, seems to have been an unsuccessful recovery device in the ’thirties—not because it did not work, but because it was not tried…. [I]t took the massive expenditures forced on the nation by the second world war to realize the full potentialities of fiscal policy.” E. Cary Brown, “Fiscal Policy in the ’Thirties: A Reappraisal,” American Economic Review 46, no. 5 (December 1956): 857-79; 863-66, 869.