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With WWII still unresolved, intellectual battles were raging over how to create an enduring global monetary order. To settle the issue, world leaders convened in 1944 in Bretton Woods, New Hampshire. On Wednesday at AEI, three of AEI's financial experts met with author Benn Steil to discuss his new book "The Battle of Bretton Woods," which tells the story of this monumental intellectual, political, and economic showdown.
Steil stressed that Keynes had been rather "willfully naïve" during negotiations with the US because he had a personal stake in the outcome of the Bretton Woods conference. Steil continued that despite parallels between creditor-debtor relationships between the US and the UK in the 1940s and those between China and the US today, we are unlikely to have a "new Bretton Woods."
AEI's Desmond Lachman agreed with Steil, claiming that a new Bretton Woods agreement is fanciful because there are more geopolitically significant players than in the past. The limitations of monetary policy have led Lachman to strongly favor a floating exchange rate to maintain open capital accounts and sovereign monetary policy, rather than the fixed exchange-rate regime designed at Bretton Woods.
AEI's Alex Pollock discussed the collapse of Bretton Woods in 1971. He concluded that it is hard to imagine international leaders coming together to design a new monetary system with more success than they had in 1944, and he commended Steil's book for forcing readers to ponder such topics.
Benn Steil’s new book, “The Battle of Bretton Woods,” a winner of Spear’s Financial History Book of the Year award, analyzes the remarkable drama surrounding the 1944 efforts at Bretton Woods to create an enduring new global monetary order in the midst of the destruction of World War II. The battle was, Steil shows, actually two battles.
First, it was an intense intellectual battle between the world-famous John Maynard Keynes and the little-known Harry Dexter White of the US Department of the Treasury (who also turned out to be a spy for the Soviets). White won, and the portrait of Keynes that emerges is eye-opening. Second, it was a political battle between the ascendant United States and the declining and broke Great Britain. In 1971, the Bretton Woods system collapsed because of its overdependence on a depreciating US dollar. Steil tells a great tale of the intertwined conflicts of ideas and power, which he will summarize and AEI’s Desmond Lachman and Alex J. Pollock will discuss.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
Peter J. Wallison, AEI
Benn Steil, Council on Foreign Relations
Desmond Lachman, AEI
Alex J. Pollock, AEI
Peter J. Wallison, AEI
Book Signing and Wine and Cheese Reception
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Desmond Lachman joined AEI after serving as a managing director and chief emerging market economic strategist at Salomon Smith Barney. He previously served as deputy director in the International Monetary Fund's (IMF) Policy Development and Review Department and was active in staff formulation of IMF policies. Lachman has written extensively on the global economic crisis, the US housing market bust, the US dollar, and the strains in the euro area. At AEI, Lachman focuses on the global macroeconomy, global currency issues, and multilateral lending agencies.
Alex J. Pollock joined AEI in 2004 after 35 years in banking. He was formerly president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. He is also the author of numerous articles on financial systems and the organizer of the Living in the Post–Bubble World series of AEI conferences. In 2007, he developed a one-page mortgage form to help borrowers understand their mortgage obligations. At AEI, he focuses on financial policy issues, including housing finance, government-sponsored enterprises, retirement finance, corporate governance, accounting standards, and the banking system. He is the lead director of CME Group, a director of Great Lakes Higher Education Corporation and the International Union for Housing Finance, and chairman of the board of the Great Books Foundation.
Benn Steil is senior fellow and director of international economics at the Council on Foreign Relations in New York. He is also the founding editor of International Finance, a top scholarly economics journal; cowriter of the council’s Geo-Graphics economics blog; and cofounder of Efficient Frontiers LLC, a markets consultancy. From 2002 to 2006, he was also a nonexecutive director of the virt-x securities exchange in London (now part of the Swiss Exchange). Before joining the council in 1999, he was director of the International Economics Programme at the Royal Institute of International Affairs in London. Steil has written and spoken widely on international finance, monetary policy, financial markets, and economic history. He is a columnist for Dow Jones’s Financial News and a regular op-ed contributor at The Wall Street Journal, the Financial Times, and Forbes. His latest book, “The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order” (Princeton University Press, 2013), winner of the 2013 Spear’s Book Award in Financial History, was called “a triumph of economic and diplomatic history” by the Financial Times, “a superb history” by The Wall Street Journal, “the gold standard on its subject” by The New York Times, and “the publishing event of the season” by Bloomberg’s Tom Keene. His previous book, “Money, Markets and Sovereignty” (Yale University Press, 2010), was awarded the 2010 Hayek Book Prize. His book “Financial Statecraft: The Role of Financial Markets in American Foreign Policy” (Yale University Press, 2006) was named one of the Best Business Books of 2006 by Library Journal and an Outstanding Academic Title of 2006 by Choice.
Peter J. Wallison holds the Arthur F. Burns Chair in Financial Policy Studies at AEI, where he codirects the program on financial market studies. He was also a cochair of the Pew Financial Reform Task Force and a member of the congressionally authorized Financial Crisis Inquiry Commission. Wallison previously practiced banking, corporate, and financial law at Gibson, Dunn & Crutcher LLP in New York and Washington, DC. In 1986 and 1987, Wallison was White House counsel to former president Ronald Reagan. From 1981 to 1985, he was general counsel of the US Department of the Treasury, where he played a significant role in the development of the Reagan administration's proposals for deregulation in the financial services industry. He also served as general counsel to the Depository Institutions Deregulation Committee and participated in the US Department of the Treasury’s efforts to deal with the debt held by less-developed countries. Between 1972 and 1976, Wallison was special assistant to former New York governor Nelson A. Rockefeller and, subsequently, counsel to Rockefeller when he was vice president of the US.