Today I can finally talk publicly about a project I’ve been working on for the past three years. Next summer, Little, Brown will publish my book about the Bretton Woods conference of 1944. The working title is: The Summit: Bretton Woods and the Fight to Save the World’s Economy
Despite how grand that sounds, this is, at heart, a human story: about a group of the world’s most extraordinary people (many of whom would go on to lead their countries), how they came together to try to prevent a third world war. It is about how they fought each other, how they celebrated and socialised with each other, about how they tried to bridge their differences in the rooms and corridors of the Mount Washington Hotel in New Hampshire.
These people – everyone from Britain’s John Maynard Keynes and America’s Harry Dexter White to France’s Pierre Mendes France and China’s H.H. Kung – weren’t merely the economic titans of their generation. They were a unique set who believed that they really could change the world for the better and, crucially, could do what the delegates at Versailles a quarter of a century had failed to do: mend the global economy.
Bretton Woods can reasonably lay claim to having been one of the most significant international conferences of the past century. It may not have had heads of state such as Churchill or Stalin, and yet it was nonetheless momentous and unprecedented in ways no other summit since has managed.
For one thing, it was the first and only time in history that the world’s leading countries overhauled the structure of the international monetary system – rules about the levels of exchange rates, about the flow of trade and capital from one country to another. Every other shift in the fundamental building blocks of the international economy, from mercantilism to the Gold Standard to today’s era of floating currencies and fiat money, happened almost inadvertently. At Bretton Woods, some of the world’s leading economists came together with a blueprint for changing the way the world worked for good. Oh, and in the process they set up the International Monetary Fund and the World Bank.
For the relatively short period it was in place, the Bretton Woods system really did seem to work. It led to the longest period of strong and stable economic growth in history. There were fewer recessions; there were almost no banking crises. In fact, many of the issues that we associate with today’s global financial crisis – inequality, current account imbalances, banking’s dominance in economic policy – really only started to build up after Bretton Woods came to an end in 1971. It’s no wonder that so many politicians of all ideologies have been calling for the past decade or so for a “new Bretton Woods”.*
There have already been a few books which have covered Bretton Woods over the years, so one might reasonably ask why on earth we need another one. The first reason is that, excellent as many of the older and more recent books about the conference have been, most have been aimed not at the general reader but at economists and aficionados of economic history, published by academic publishers for a largely academic audience. I believe that Bretton Woods deserves a far wider audience, and that the drama of what happened there merits it.
What I hadn’t realised until I read the accounts of those who attended was how great was the level of tension and emotion permeating events. As one attendee remarked at the time, the whole thing had the air of a murder mystery – and yet it has mostly been covered with the air of a dry economic account.
I hadn’t realised how much on-the-ground drama there was at the conference itself: the extraordinary pressures – both emotionally and physically – on the delegates, and how they frequently exploded into the negotiations. I hadn’t realised how close the conference came to collapse (indeed, until the very final moment, it looked to many there to have been a flop). I hadn’t realised there was so much going on behind-the-scenes, the drinking, the dancing, the romancing that happened after hours even amid 18-hour days of negotiations. My book will cover all of this (and believe me it really is compelling). It will also reveal the full extent of Communist activity at the conference, which went well beyond the long-established fact that White, the head of the US delegation, was passing secret information to Soviet intelligence.
And there is still a wealth of unpublished material about what happened at the conference which even today has simply never seen the light of day.
Moreover, the events of 1944 are a reminder that the problems we face today are only modern-day echoes of many of the issues that were dealt with back then: the excessive power of the financial sector; the swollen imbalances between creditor and debtor nations; rising inequality; a currency union which imposed deflation on unwilling populations (back then it was the Gold Standard; today it is the euro).
Almost every one of the major issues I find myself discussing on Sky News on a daily basis was dealt with in one way or another at Bretton Woods: the question of how indebted countries could be resuscitated; how countries with surfeits of savings (for which, read the US in 1944, Germany and China in 2013) could be compelled to spend them; the extent to which countries receiving bail-outs cede their sovereignty to others; the importance or otherwise of free-wheeling financialism.
I believe we can learn far more from what happened in Bretton Woods than from the prognostications of today’s breed of wise men and women.
It is not merely that We Have Been Here Before: it is that the greatest minds of the 20th century actually had a rare opportunity to try to reshape the world to remedy these problems.
The book, whose release next summer will coincide with the 70th anniversary of the summit itself, will be a story of the men and women behind this experiment.
* Yes, yes I know there are plenty of valid questions about the extent to which Bretton Woods itself was responsible for post-war stability. Believe me, this will be covered in some length in the book.