4

BUILDING FOUNDATIONS

US Postwar Planning

Serious US planning for the postwar international financial order began immediately after the United States entered World War II in December 1941. It is often suggested that the US officials involved in this planning were largely disinterested in development issues and the concerns of Southern governments. Contrary to this conventional wisdom, the officials prioritized in their plans the kinds of international development goals that had been pioneered in the context of the Good Neighbor financial partnership with Latin America since the late 1930s. Because of the centrality of the United States in the Bretton Woods negotiations, these plans played a key role in building the development foundations of the eventual agreements.

These international development goals were particularly prominent and ambitious in the initial US plans developed by White in consultation with other Treasury officials in early 1942. Because existing literature usually overlooks this point, it is necessary to analyze in depth the development provisions of these early plans and their direct relationship to White’s previous experience in US–Latin American financial relations. Indeed, these provisions were aimed directly at Latin American governments who were seen by US policymakers as important players in the postwar planning process. Some of White’s more ambitious development ideas were subsequently watered down when the US plans were refined during the lead-up to the Bretton Woods conference. But the commitment to promote development in poorer countries remained central to US goals for the postwar international financial system. This commitment was strongly endorsed by Roosevelt and others within his administration—as well as by many influential Americans outside of the government—for the same kind of reasons as had been prominent in driving the Good Neighbor financial partnership.

The Development Content of White’s Initial Plans

Although some US discussions about the postwar international financial system took place in the State Department in late 1939 and 1940, the most influential and important postwar planning began in the Treasury after the attack on Pearl Harbor on December 7, 1941. 1 On Sunday morning of December 14, 1941, Morgenthau telephoned White—whom he had just placed in charge of all foreign affairs for the Treasury—to ask him to prepare a plan for an “Inter-Allied Stabilization Fund.” 2 White had apparently already been working, in his spare time, on postwar plans earlier in the year and had shown some of his colleagues one draft (likely of just the Fund) in the late summer or early fall. 3 These early drafts have not resurfaced for scholars to examine. What remains in the historical record are various drafts that White produced, often in consultation with other officials, after Morgenthau’s initial request, culminating in one that Morgenthau presented to Roosevelt in mid-May 1942. White outlined two separate institutions in these plans—a fund and a bank—because he believed that their respective tasks were “sufficiently specialized to require different resources, different responsibilities, and different procedures and criteria for action.” 4 Building on the IAB precedent, these were to be government-run institutions with provisions relating to international development that drew directly on the experience of US–Latin American financial partnership.

Was “Development” Overlooked in the Early Drafts of the Bank?

The development content of White’s early proposal needs to be highlighted because it has been downplayed in much of the scholarly literature about White’s role in the Bretton Woods negotiations. For example, the most recent detailed history of the World Bank asserts:

HARRY WHITE’S first draft of a proposal for an international bank, written in early 1942, made no mention of development. This original proposal referred simply to a Bank for Reconstruction, designed “chiefly to supply the huge volume of capital…that will be needed for reconstruction, for relief, and for economic recovery.” An April 1942 draft called for a “Bank for Reconstruction of the United and Associated Nations” and did include, at the end of a long list of other objectives, a reference to development, stating that the Bank would also “raise the productivity and hence the standard of living of the peoples of the member countries,” but this draft failed to mention specifically the poorer or less developed countries. 5

This argument that White’s early drafts had no development focus is difficult to accept when we look closer at the archival record. In order to back up their claim about White’s first draft, the historians of the Bank cite Richard Gardner’s analysis of the Bretton Woods negotiations that was first published in 1956. In that work, Gardner stated the following in a footnote: “In the title of the original Bank draft the word ‘development’ did not even appear.” But Gardner then noted that “it was added in the later drafts of Mar. and Apr. 1942”—a point that the Bank’s historians cited above neglect to mention. 6 Gardner also qualified his claim even about the absence of the word “development” in the title of first draft. As he pointed out, his argument was based on a description of one of three drafts he found in the White Papers held at Princeton University’s Seeley G. Mudd Manuscript Library. The draft—which is well over a hundred pages—is titled “Suggested Plan for a United Nations Stabilization Fund and a Bank for Reconstruction of the United and Associated Nations.” 7 Gardner noted that this draft was in fact undated and argued only tentatively that it “appears to be the first.” 8

While this draft in the White Papers is undated on its cover, there are number of inserted pages that do have dates of April 27, 28, 29, and 30. 9 The archives of the Treasury for this period—which were not yet available when Gardner first wrote his book—also contain a very similar document with the same title to the one cited by Gardner with a date of April 29, 1942. 10 Given these dates, it seems quite clear that the draft Gardner was referring to was written in late April and thus was not White’s first draft. As Gardner stated, there is a March 1942 draft that is also over 100 pages in length. And that draft does include “development” in its title: “Preliminary Draft: United Nations Stabilization Fund and A Bank for Reconstruction and Development of the United and Associated Nations.” 11

Even more important is the fact that there are earlier drafts from January 1942 in the Treasury archives that show how development goals were present in White’s initial thinking. For example, one such draft is a short (seven page double-spaced) outline of a “Stabilization Fund of the United and Associated Nations” dated January 6, 1942. The plan was shared with Welles and Berle (for reasons outlined below) and had been discussed with Viner and Bernstein, but had not yet received Morgenthau’s approval. 12 In a short cover note to this draft, White wrote that his proposed fund “is only one of the instrumentalities which will be needed in the field of international money and banking. Some form of international bank may also be needed to provide the capital necessary for post-war reconstruction and development.” 13

The Treasury archives also contain a much more detailed draft (forty-seven pages double-spaced) dated January 1942. Its cover page includes a handwritten statement that this is the “first mimeographed draft” and it describes in considerable detail White’s plans for a “United Nations Stabilization Fund and a United Nations Bank.” 14 The Bank’s name in this first substantial draft did not include a reference to either development or reconstruction, but its purposes included the development goal that the Bank’s historians quote: to “raise the productivity and hence the standard of living of the peoples of the United Nations.” 15

As those scholars correctly observed, this latter phrase does not make a specific reference to poorer or less developed countries. But elsewhere in this January 1942 draft (as well as in the late April draft), White went out of his way to emphasize explicitly the dangers of ignoring the interests of “poorer” countries in postwar plans:

It is true that rich and powerful countries can for long periods safely and easily ignore the interests of poorer or weaker neighbors or competitors, but by doing so they only imperil the future and reduce the potential of their own level of prosperity. The lesson that must be learned is that prosperous neighbors are the best neighbors; that a higher standard of living in one country begets higher standards in others, and that a high level of trade and business is most easily attained when generously and widely shared. 16

The references to “neighbors”—and the broader content of this passage—invoke the Good Neighbor financial partnership. In this draft, White also discussed the importance of encouraging the movement of capital from “capital-rich to capital-poor countries.” 17 As noted below, he also clearly had Latin American countries in mind as an audience for this draft, and he included a number of provisions that were of special interest to them that had arisen in the course of his Latin American work.

Why then did White briefly omit “development” from the name of the Bank in his late April draft? Interestingly, it was not uncommon for White to switch names throughout March and April. While the overall title of his March draft referred to the “Bank for Reconstruction and Development,” one part of the table of contents (but not others) listed the Bank as simply the “Bank of Reconstruction” and the start of the subsection outlining the detailed provisions for the Bank was also simply titled “Bank of Reconstruction.” In the introduction to the draft as a whole, White also shifted back and forth within several pages, referring to the Bank sometimes as the “Bank for Reconstruction” and elsewhere as the “Bank for Reconstruction and Development.” 18 Similar inconsistencies appear in the April draft in the White Papers. 19

These inconsistencies were even present in the material sent to Roosevelt in mid-May that is reproduced in the State Department’s 1942 Foreign Relations of the United States volume. This material is the source from which the Bank’s historians quote when suggesting that an April draft referred to a “Bank of Reconstruction.” It does include a short (undated) summary of the proposal that in two places uses that name 20 But the Bank’s historians neglect to mention that the same summary also refers to the “Bank of Reconstruction and Development” in its title as well as in the text. 21 Moreover, the April draft of the Fund and the Bank included in the material sent to Roosevelt used only the name “Bank for Reconstruction and Development” throughout. 22

In some instances, White appears to have used the phrase “Bank for Reconstruction” simply as an easy shorthand for the longer name. It is also possible that his inconsistent switching of names reflected an ambiguity surrounding the meaning of the word “reconstruction” at this time. In his detailed history of US development policy, David Ekbladh points out that the word had a wider meaning before World War II that was inclusive of the concept of development. He notes, for example, that US initiatives before the war to promote rising living standards in countries such as the Philippines and Puerto Rico had been described as “reconstruction” initiatives. In the latter case, a new body created in 1935 with the goal of promoting economic modernization and higher incomes via planning was called the Puerto Rico Reconstruction Administration. As Ekbladh puts it, the term was widely used at this time to describe “diverse efforts to effect change within societies through reform based on ‘scientific’ and ‘rational’ methods.” 23 This broader meaning of the phrase was common in policy circles in many other parts of the world too, including China and India. 24

In advance of his early 1942 Bretton Woods drafts, White himself had used the term “reconstruction” in this wider sense that was inclusive of development concerns. For example, he wrote a memo to Morgenthau in September 1941 that was titled “British Empire–American Cooperation on problems of postwar reconstruction,” summarizing Australian proposals to raise living standards across the world. 25 White’s staff members, such as Simon Hanson, had also talked of the need for the “economic reconstruction” of Latin America in the context of 1939 discussions to address “economic instability and low living standards” in the region. 26

Ekbladh notes that it was during World War II that the term “reconstruction” became “increasingly confused with ‘recovery.’” 27 In White’s early drafts, however, the wider meaning was clearly present. For example, in the late April 1942 draft employing the narrower title of “Bank of Reconstruction,” the Bank still had the wider development goal that its historians quote: to “raise the productivity and hence the standard of living of the peoples of the United Nations.” 28 The same provisions of special interest to poorer countries that were in the January draft—outlined below—were also in this draft. 29 The absence of the word “development” from the title, in other words, did not reflect missing “development” content.

There is one further piece of evidence to support the view that White had a wider understanding of the meaning of reconstruction at this time. When sending White’s plan to Roosevelt in May 1942, Morgenthau included a document proposing a conference to discuss the proposed Fund and Bank, and even a draft agenda, program, and invitations. White had in fact developed incredibly detailed plans for this proposed conference that was to take place over twenty-two days (ironically, the exact length of eventual Bretton Woods conference two years later). 30 He prepared drafts of the agendas for many subcommittees and even speeches for Morgenthau as well as for British, Mexican, and Brazilian officials. For our purposes, the content of the anticipated Brazilian speech was particularly interesting. It was titled “Statement of the representative of the United States of Brazil on the need for a Bank for Post-war Reconstruction.” The speech used the name “Bank for Post-war Reconstruction” throughout and yet its content was focused primarily on development issues. It referred, for example, to the “necessity for a steady flow of capital for developmental purposes” and to the role the Bank could play in helping Brazil realize its “extensive potentialities for industrial development.” 31

In sum, it seems clear that White’s occasional use of the shorter name “Bank of Reconstruction” was not very significant in terms of the development focus of his plans. Indeed, White’s assistant Bernstein later recalled that it was his idea—not White’s—to insert “development” into the title of the Bank. 32 This decision appears to have contributed considerably to the narrowing of the meaning of the term “reconstruction” by the time of the Bretton Woods conference. As we shall see, delegates at the 1944 conference argued fiercely over whether “reconstruction” or “development” should be prioritized in the Bank’s lending. But at this earlier moment, White did not seem to see the two terms as mutually exclusive. And from his first January draft onward, he anticipated the Bank having a development role regardless of its precise title.

The Latin American Audience

It is also worth noting that White and other US policymakers saw poorer countries—particularly those in Latin America—as an important part of the intended audience for their postwar plans from the very start. When Roosevelt had met Keynes in the summer of 1941 to discuss his initial postwar plans, one British official reported that Roosevelt “felt that the terms of reference are too exclusively European. He attaches great importance to the South American countries being remembered in any world statement.” 33 When Keynes and White met in the late summer of 1942 to discuss the details of postwar planning for the first time, White also rejected Keynes’s preference for bilateral British-American negotiations, arguing that it would create the impression of an Anglo-American “gang-up.” He wanted more countries involved, including Latin American countries. 34 Indeed, in the draft conference schedule White had developed a few months before, he planned for many countries to attend and with keynote speeches in plenary sessions to be given by Mexico and Brazil alongside the United States, Britain, the USSR, China, and the Netherlands. 35

It is also often forgotten that White intended his initial Fund plan to be presented first at an inter-American meeting of foreign ministers in Rio on January 15–28, 1942. The meeting was organized in the wake of the US entry into the war, and the United States intended to use the occasion to offer additional economic assistance to the region in return for security cooperation and the severing of diplomatic ties to the Axis powers. One of the motivations for Morgenthau to ask White in December to begin to develop plans was very likely this upcoming meeting that White was to attend along with Welles (as head of the US delegation). 36 As part of the preparations for the Rio meeting, White showed his initial draft for the Fund to Welles and Berle on January 6, a draft that included a call for a conference to be held to discuss the creation of such a fund. White suggested that the draft could be presented at Rio and shared simultaneously with other allies. 37

Welles and Berle liked the draft, but both wondered if it might be better to discuss the idea orally with Latin American governments rather than to present the formal document. If Latin American officials were in favor, a resolution could then be drafted in general terms to be adopted at the conference. 38 White liked this idea since he preferred to have more time to develop the proposal. At the conference itself, a resolution was indeed drafted and approved that called on finance ministers (or their representatives) of the American republics to attend a “special conference” to be held “for the purpose of considering the establishment of an international stabilization fund.” 39 Morgenthau insisted that the resolution make no mention of the United Nations because of the absence of prior consultation with key UN members such as Britain, the Soviet Union, and China. 40 But at the conference, White clarified for the delegates that it was not meant to be “exclusively an inter-American fund” but rather one that would have “a much broader scope than the American currencies.” 41

The preamble to the resolution stated that the fund would “contribute to the realization of the economic objectives set forth at the First and Second Meetings of the Ministers of Foreign Affairs of the American Republics at Panama and Habana.” 42 This wording provided a very clear confirmation to Latin American delegates of the link between postwar planning and the Good Neighbor financial partnership. The goals of the latter were also obvious in other resolutions passed at Rio that backed various initiatives to support economic development and bolster standards of living in the region. The conference also passed a resolution urging governments to study the IAB proposal if they had not yet ratified it. Indeed, at this time, White clearly saw the IAB working alongside his newly proposed Fund and Bank in Latin America, supplementing both of their activities in the region. 43 Supporters of the IAB within the United States also made a renewed (unsuccessful) effort at this time to convince Senator Glass to allow the proposal to be voted upon in the Senate as a whole. 44

White had a Latin American audience in mind when developing not just the Fund draft but also the Bank proposal. As noted above, he chose a Brazilian official to deliver an imaginary speech on the virtues of the Bank at his proposed 1942 conference. When the Bank proposal began to be refined internally in September 1943 (it was not released publicly until November of that year), White and his colleagues also made special reference to “our neighbors in Latin America” in describing the Bank’s development function in a memo to Roosevelt. 45

The importance of the Latin American audience for the early US Bretton Woods drafts was also apparent in the frequent references to the “United and Associated Nations” in the proposals. The United Nations were the twenty-six countries that had initially signed the Declaration of the United Nations on January 1, 1942. 46 But the phrase “Associated Nations” was included to refer to countries that were neutral in the war but had broken diplomatic relations with the Axis powers. As Berle explained to a puzzled Canadian official, the phrase had been developed with Latin American countries in mind: “a number of South American countries are in this category and it is desired that these should be included in the scheme.” 47

Specific Development Provisions

The final piece of evidence that White had Latin American countries in mind when developing his early Fund and Bank drafts comes from the fact that they contain a number of specific provisions designed to serve the needs of poorer countries, provisions that drew directly on his experience in US–Latin American relations in the previous few years. The first such “development” provision has already been mentioned: the Bank’s role in mobilizing international development finance. White stated in his first detailed January 1942 draft that the chief operations of the Bank were to involve the “provision of long-term capital for desirable productive projects” that served “directly or indirectly to permanently raise the standard of living of the borrowing country.” 48 In a draft memorandum for Roosevelt prepared in May, White also stressed that one of the purposes of his plans was “to supply the huge volume of capital that will be needed abroad for relief, for reconstruction, and economic development essential for the attainment of world prosperity and higher standards of living.” 49

According to White’s initial detailed draft of January 1942, the Bank was empowered to make direct loans to governments as well as to political subdivisions and private businesses (provided that the loan’s servicing was guaranteed by the national government). It could also guarantee private loans, although subject to certain conditions: (1) the interest rate of such loans could not be excessive; (2) no more than 80 percent of principal and 50 percent of the interest could be guaranteed; and (3) a loan could not be “for the purpose of repayment of an old loan.” White prioritized the Bank’s guaranteeing role over its direct lending role, noting that “wherever possible the Bank should guarantee loans made by private investors, instead of making the loans directly.” Perhaps with the memory of the opposition of US banks to the IAB proposal in mind, White also went out of his way to note that the Bank’s direct loans could be made “only when it is reasonably certain that the funds cannot be borrowed from private investors except at high rates of interest.” 50

The second provision of relevance to poorer countries was the proposed Fund’s capacity to provide short-term loans to support a country’s balance of payments. In providing a rationale for this kind of compensatory balance of payments finance in his first plans, White did not explicitly mention the needs of Southern countries. But years later, Bernstein emphasized that White had built directly on his Latin American experience in developing his first draft of the Fund; the IMF simply multilateralized the bilateral stabilization loans of the US Exchange Stabilization Fund that White had pioneered in the region. 51 The Latin American precedent was also highlighted later by the IMF’s key legal expert Joseph Gold, who noted that the IMF’s initial lending after the war used the US ESF line of credit to Mexico in November 1941 as a model. 52 When White’s initial drafts began to circulate in US policymaking circles in early 1942, other US officials who had worked on Latin American issues also emphasized that the Fund’s lending would be particularly useful for commodity exporting countries. In a March 1942 memo discussing White’s initial drafts, Henry Wallich of the FRBNY remarked that “owing to the seasonal nature of many Latin American exports, there are regular fluctuations in the exchange reserves of some countries which the Fund could smooth out. Even somewhat larger disturbances might perhaps be taken care of in this manner.” 53

Third, as he had done during the IAB discussions and the Cuban mission, White called attention to the need to curtail capital flight from poorer countries. After discussing the disruptive nature of speculative financial flows in his March 1942 draft, White highlighted the special problems faced by these countries: “Less hectic and less dramatic yet in the case of some countries during some stages of their development capable in the long run of even greater harm, is the steady drain of capital from a country that needs the capital but is unable for one reason or another to offer sufficient monetary return to keep its capital at home.” 54 The wording here was remarkably similar to a memo one of White’s staff had sent him a few months earlier during the Cuban mission describing how exchange controls could help curtail the “steady drain” of capital from Cuba. 55

Neither White’s proposed Bank nor the Fund was designed to recycle flight capital by accepting private deposits as the IAB had been intended to do. Instead, White proposed to address capital flight in the same way that the American Technical Mission to Cuba did in its April 1942 report: with controls at the border on international financial flows. White’s January 1942 plan included a provision that all member countries of the Fund would be required “to abandon, not later than 6 months after joining the Fund, all restrictions and controls over foreign exchange transactions with member countries, except with the approval of the Fund.” But in his detailed explanation of this provision, he made clear that the Fund was expected to approve many such controls, including capital controls, and he went out of his way to argue that critics of such controls held views that were “both unrealistic and unsound.” 56

To highlight his support for capital controls, White went even further to propose a new kind of international cooperation that would help reinforce their effectiveness. He proposed that all members of the Fund would have to agree “(a) not to accept or permit deposits or investments from any member country except with the permission of that country, and (b) to make available to the government of any member country at its request all property in form of deposits, investments, securities, safety deposit vault contents, of the nationals of member countries.” 57 This provision introduced a new kind of international obligation to enforce the national capital controls of other countries. In the case of capital flight, poorer countries having difficulty tracking illegal financial outflows could now request assistance from the countries receiving the funds. As White put it later in mid-1943, the Fund “provides for control of capital movements from both ends. Perhaps this double control will do the job.” 58

Fourth, White empowered both the Fund and the Bank to facilitate international debt restructuring. In his detailed January 1942 draft, one of the purposes of the Fund was “to facilitate the settlement and servicing of international debts—both public and private.” Its role in settling debts stemmed from a provision that member countries were “not to permit any defaults on foreign obligations of the government, Central Bank or government agency without the approval of the Fund.” White argued that this provision would allow more orderly and fair resolution of debt crises than that experienced in the 1930s. As he put it, “it can hardly be expected that objective decisions on defaults can be made by the defaulting country or by the country gaining most by continued servicing of a debt. To make approval a feasible instrument, the approval must be that of a large group of nations, the majority of whom are not directly and immediately affected by the decision. Approval of the Fund would seem to promise that kind of objectivity or fairness.” 59 This provision remained in the subsequent drafts in early 1942, including in his March 1942 draft where he referred the Fund’s ability to conduct “compulsory arbitration in debt adjustment.” 60

In the same January 1942 draft, White also prohibited the Bank from lending to countries whose national government had defaulted on a foreign loan unless “the defaulted government has agreed to renew service of the defaulted debt on a basis worked out by a special committee appointed by the Bank for that purpose.” 61 This provision was very similar to the one White had discussed in December 1939 during the IAB discussions. In justifying this provision in his March 1942 draft, he highlighted how the Bank-appointed committee could do a “a splendid job” in “facilitating debt adjustments” because it “could approach the problem with a great deal more objectivity than could be true of a bondholders’ committee representing the creditors and working with a committee representing the debtors.” As he put it, the committee could “take a broader point of view and one that might well leave both the debtor and creditor nations better off than would be the case if a debt adjustment were to be obtained either as result of political pressure of one kind or another, or because of an inducement offered to the defaulted government in the shape of a new loan to be made, in effect, only if the bondholders give their approval to the terms of adjustment.” 62

These provisions revived the Latin American proposals of 1933 as well as Hanson’s 1939 ideas, and they revealed how White was willing to go further on this issue than he had when drafting the IAB. Indeed, in defending the Bank provisions in his March draft, White even openly aired his frustrations with the fact that US bondholders had often blocked initiatives to boost public lending to Latin America in the late 1930s. After emphasizing that Bank loans would be made if the defaulting country accepted the recommendations of the Bank-appointed committee “irrespective of whether the bondholders did or did not,” he stated: “As it is now the bondholders are in a position frequently to prevent the government from extending any credits on the grounds that they are not satisfied with the terms of adjustment offered by the defaulting government.” 63

White also mentioned two other nonfinancial issues that had arisen prominently in the US–Latin American discussions of the late 1930s and early 1940s. The first was international commodity price stabilization. In an echo of Roosevelt’s plans of mid-1940, White’s March 1942 draft stated that the Bank would “organize and finance an International Commodity Stabilization Corporation for the purpose of stabilizing the price of important commodities.” 64 In his detailed Fund proposal from January 1942, White also included a discussion of trade policy that included a very strong defense of infant industry tariff protection in poorer countries. The belief that trade liberalization will yield a higher standard of living, he argued, assumed “that a country chiefly agricultural in its economy has as many economic, political and social advantages as a country whose economy is chiefly industrial, or a country which has a balanced economy.” He added: “It assumes that there are no gains to be achieved by diversification of output. It grossly underestimates the extent to which a country can virtually lift itself by its bootstraps in one generation if it is willing to pay the price. The view further overlooks the very important fact that political relationships among countries being what they are vital considerations exist in the shaping of the economic structure of a country other than that of producing goods with the least labor.” 65 White’s March 1942 draft reiterated the point, adding that the assumptions that underlie free trade theory were “not valid” and “unreal and unsound.” 66

In a letter to Vice President Henry Wallace in early December 1941, White had made clear that this perspective on trade policy had been shaped by the Latin American context. Commenting on a draft article that Wallace had written, White wrote: “I agree with the general objective of increasing industrialization and the necessity of doing so if the standard of living of many countries is to be increased.” He then foreshadowed the case he would make the next month in his Fund draft:

Any attempt to expand the industrial element in the economies of the least industrialized countries would be very difficult without the aid of a tariff schedule which would protect such industries during their infancy. It is hard to see how any of the Latin American countries, for example, could have any significant expansion of most industries unless they pursue a policy of protection for those industries. Most of them, I believe, are already pursuing such a policy. The industrialized countries, England, United States, Germany, Japan, etc., have so great an advantage in the production of numerous industrial commodities that it would be very difficulty for non-industrialized countries to build up competing industries without tariff protection or subsidy. 67

Toward the Bretton Woods Conference

In these ways, we can see how White’s initial drafts reflected commitments to development issues that had already emerged in the context of the Good Neighbor financial partnership. After initially circulating just among Treasury colleagues, White’s plans began to be discussed from May 1942 onward by an interdepartmental “technical committee,” chaired by White. Its membership changed over time, but active members included—among others—a number of figures who had been involved in US–Latin American financial relations such as Berle, Bernstein, Collado, Clayton, Gardner, Goldenweiser, and John Parke Young. 68

White initially focused the attention of the technical committee on the Fund proposal. It is important to note that this choice did not reflect a sentiment that the Bank was unimportant (as is sometimes suggested by scholars). When asked by an interviewer for the World Bank oral history project why US officials had devoted more attention to the Fund than the Bank, Ansel Luxford—a Treasury lawyer who was closely involved with the US technical committee and delegation at Bretton Woods—explained the decision this way: “The Fund, as a technical problem, was obviously a far more challenging problem than the Bank…. And we were satisfied in our own hearts that we would have no problem selling the Bank internationally.” Later in the interview, he emphasized the point (using words that directly contradict Richard Peet’s argument mentioned in the introduction): “The Bank was not an afterthought. It was started from the word go, the first White document…they were always treated as one package. But the complexities of the Bank were not the same as those of the Fund.” 69 In one meeting in early April 1944, White himself told his colleagues that he was not worried about the slower progress on the Bank proposal because “the technical difficulties were comparatively small” and “could be easily ironed out.” 70

The decision to focus work initially on the Fund may also have been a tactical decision. If US officials presented the Bank proposal to the British too early, the British could have offered to accept it in return for US backing of Keynes’s International Clearing Union proposal. Since White and other US officials had serious concerns about the latter, this was a scenario to avoid. 71 Luxford also noted later that US officials were very aware that the Bank would be more popular with the British and other countries than the Fund’s exchange rate commitments. He recalls how US officials insisted that membership in the Bank be conditional on membership in the Fund for this reason: “basically we wanted to force countries to agree to standards in the monetary field as a condition to get the benefits of the Bank.” 72 Given this strategy, the ordering of the negotiations of the two proposals also made sense.

After detailed discussions in the US technical committee, White’s proposed “international stabilization fund” was released publicly in April 1943 at the same time as Keynes’s International Clearing Union proposal. Only after White had completed extensive consultations on this draft with foreign governments in the summer of 1943 did US officials announce that they were ready to begin to refine the Bank proposal. 73 Beginning with a meeting of the US technical committee on August 31, internal US discussions on the Bank then proceeded very quickly because the committee was in general agreement on the need for the institution and on its main features. 74 In November 1943, a US draft of the Bank was released publicly.

Evolution of the US Plans

In the process of refining White’s initial plans, some of his specific development provisions did not survive. One was the discussion of infant industry protection, which fell out of the plans for the simple reason that it pertained more to postwar international trade rules that were to be negotiated separately. 75 Another provision that disappeared was White’s idea that the Bank could assist an international body mandated to stabilize commodity prices. In an early June 1943 meeting of the technical committee, White acknowledged that his proposal for a Commodity Stabilization Corporation was “controversial” and that he was anxious to give it “only an incidental place” in the future conference he planned. 76 When US officials began to discuss White’s Bank draft in detail in the fall of 1943, Will Clayton also argued that the Bank’s role in financing an international commodity corporation was not “politically feasible” and the provision was dropped. 77 After the gains made by the Republicans in the fall 1942 election, it was also clear that some of White’s ambitions would need to be scaled back to gain Congressional approval. 78

White’s proposals for an international debt-restructuring role for the Fund and Bank were also eliminated. The Fund’s role in this area disappeared some time between a November 25, 1942 draft and one written on December 11. 79 I have found no explanation in US archives for the change at this specific time, but the documents reveal that the issue had already been controversial earlier in the year. When the proposal to create an international stabilization fund had first been put forward at the inter-American meeting in Rio in January 1942, the preamble of the original draft resolution had suggested that the fund could “facilitate the settlement of public and private international debts.” 80 Morgenthau had insisted, however, that White remove this clause before the resolution was presented to the conference. Morgenthau’s reasoning was the same as that of US officials at Montevideo in 1933. According to Southard, the treasury secretary stated that “he did not wish to be a party to any debt-collecting arrangement smacking as clearly of dollar diplomacy.” 81 Although White had complied with this instruction at Rio, he had then reinserted the provision in his first drafts of the IMF, but appears to have been forced to withdraw it again later in the year.

When discussions of White’s Bank proposal began in earnest in the fall of 1943, US officials also quickly deleted both the clause that prohibited the Bank from lending to countries in default and the provision that the Bank could help settle defaulted debt as a precondition for lending. 82 Both Luxford and the State Department’s John Parke Young worried that countries in default, particularly in Latin America, would be less keen to support the Bank if they could not borrow without first reaching a debt settlement. 83 Somewhat differently, Collado argued that the Bank’s role in fostering debt restructuring might encourage countries to default because the Bank would then assist in the adjustment of their debts. 84

White’s provisions relating to capital controls were both weakened and strengthened. On the weakening side, the proposal for mandatory international cooperation to control flight capital was eventually dropped (although countries were still permitted to cooperate in making their exchange control regulations more effective). The New York financial community strongly objected to the idea that the United States, as a country receiving flight capital, would be required to help foreign governments’ efforts to curtail these capital flows. At the same time, the right of every member country to control capital flows on its own was strengthened. White’s initial drafts had required IMF approval for such controls, but later drafts and the final Fund charter permitted all members the unambiguous right to control all capital movements without needing Fund approval. Many US bankers objected to this provision, but they were unable to dilute it. 85

US policymakers also remained committed to the IBRD’s role in mobilizing international development finance. As White put it in a September 1943 draft of the Bank, “large investment sums will be needed to help raise the very low productive level of countries in the Far East, South America, in the Balkans, and the Near East.” 86 The priority of the Bank’s development role is also clear from Morgenthau’s statement when the Bank proposal was first released publicly in November 1943. He observed that “one great contribution that the United Nations can make to sustained peace and world-wide prosperity is to make certain that adequate capital is available on reasonable terms for productive uses in capital-poor countries.” He had also gone out of his way to emphasize the importance to wealthy countries of international development finance: “It is imperative that we recognize that the investment of productive capital in undeveloped and capital-needy countries means not only that those countries will be able to supply at lower costs more of the goods the world needs but that they will at the same time become better markets for the world’s goods.” 87 In his September 1943 draft of the Bank, White had made very similar arguments and had added that rising standards of living worldwide would help generate future “political stability and friendly international collaboration.” 88

A US Treasury summary of the Bank proposal provided in June 1944 to delegates and journalists attending the upcoming Bretton Woods meeting also highlighted the importance of development lending. The document noted the urgent requirement in the postwar world for capital “for the development of economically backward regions.” It also signaled the ongoing US support for loans that promoted economic diversification in commodity exporting countries: “One of the most difficult problems of some debtor countries has been the great fluctuation of foreign exchange receipts resulting from excessive dependence on one crop. Loans which would diversify their output and their exports would clearly be helpful in maintaining a greater equilibrium in their balance of payments.” 89

When invitations were issued in May 1944 to the Bretton Woods conference, it is true that the US government stated that the meeting was “for the purpose of formulating definite proposals for an International Monetary Fund, and possibly a Bank for Reconstruction and Development.” The word “possibly” has raised some questions about the degree of US commitment to the Bank. But it was included simply because US officials were uncertain at the time of the invitation whether international negotiations on the Bank’s content were sufficiently far along to reach agreement at the conference. 90 It did not reflect any lack of interest in the Bank.

The smaller amount of time devoted to the Bank at the conference also did not reflect an absence of enthusiasm for the institution. As Collado (who played a lead role in final drafting of the Bank’s content at the conference) later put it, US officials “saw a great need” for the Bank despite the limited time spent on it. 91 After interviewing a number of attendees of the conference in 1957, one Bank staff summarized their collective reminiscences as follows: “The emphasis on the Fund did not mean that the Bank was considered less important. It was rather that the role for which the Fund was designed, to police the world’s monetary systems, gave it the quality of spinach in the international diet, while the Bank had rather more the character of dessert. The drafters at Bretton Woods firmly believed in first things first, and as everyone knows, spinach comes before dessert.” 92 Halfway through the conference, White also explained to his US colleagues why he had encouraged the conference to focus initially on the Fund: “the Fund was the thing to get out of the way first; it was more complicated, involved more work, and there were more differences of opinion.” 93

If US officials were very supportive of international development lending, why was a role specifically for a public institution seen as necessary in this sector? It was partly because White and other US officials anticipated that private investors were likely to be deterred by currency instability, foreign exchange controls, political uncertainty, “anti-foreign-capital” sentiments, and the risk of defaults. 94 The Bank’s ability to guarantee loans was designed to help encourage a revival of private lending. Even if private investors were willing to lend, however, US officials still saw an important role for the Bank in direct lending because of their distrust of the ability of private markets to finance development goals adequately. For example, Harvard economics professor Alvin Hansen (a member of the technical committee and subsequent participant at Bretton Woods) noted that the Bank could fund projects that might not provide a good return but “without which private investment, industrialization and agricultural diversification would be impossible, and without which there could not be the increase in productivity and standard of living which these basic development projects make possible.” 95 Federal Reserve Board official Arthur Bloomfield also argued that private lenders often showed little interest in “many necessary socio-economic developmental projects, such as public sanitation, conservation of natural resources, eradication of diseases, etc” whereas the Bank could be “guided by much broader considerations than the strict profit and market calculations.” 96

This still left the question of why it was necessary for the public role to be channeled through an international institution. The arguments for this arrangement were similar to those advanced at the time of the IAB proposal. For example, Gardner argued that “such an agency would not serve the political ambitions of any country. It could not be accused of dollar diplomacy.” 97 Hansen suggested that “an International Bank would promote self-discipline among the members and would relieve the United States from alone carrying the onus of securing enforcement of contract.” 98 In addition, Bloomfield argued that “by extending long-term loans through an impersonal international organization, the dangers of political clashes between debtor and creditor countries, or between creditor countries themselves would be greatly narrowed.” 99

Roosevelt and New Deal Values

The breadth of the US official interest in promoting economic development in poorer countries at this time also deserves to be underlined. Roosevelt himself had prioritized development goals for the postwar world even before the United States entered the war. One of the “Four Freedoms” that Roosevelt proclaimed in his January 1941 State of the Union address after winning his third term in office was “freedom from want—which translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants—everywhere in the world.” 100

This ambitious goal was reiterated in the Atlantic Charter that Roosevelt and Churchill issued in August 14, 1941 and which historians recognize as the “first official statement…outlining the war’s aims and the shape of the postwar world to come” (and whose purposes and principles were then affirmed in the January 1942 Declaration of the United Nations). 101 One of the charter’s eight principles committed to the assurance “that all the men in all the lands may live out their lives in freedom from fear and want.” Historian Elizabeth Borgwardt has pointed out how Roosevelt’s commitment to the principle of “freedom from want” at this time was part of his bold attempt to “internationalize the New Deal.” New Dealers had already linked the provision of economic security for individuals to the broader stability of the American polity. Roosevelt now saw the bolstering of standards of living throughout the world as a crucial foundation for postwar global political stability. He saw this and the other principles of the Atlantic Charter in very ambitious terms. As Borgwardt remarks, “in several of his press conferences, FDR compared the aspirations articulated in the Atlantic Charter to those of the US Constitution, the British Magna Carta, and even the Ten Commandments.” 102

After Roosevelt dictated his “Four Freedoms” speech (which he wrote entirely himself), one of his officials asked whether he really wanted “freedom from want” to apply “everywhere,” since Americans might not be interested in the people of Java. Roosevelt apparently responded: “I’m afraid they’ll have to be some day…. The world is getting so small that even the people in Java are getting to be our neighbors now.” 103 The invocation of “neighbors” was not accidental. Kimball notes that Roosevelt “believed that his Good Neighbor Policy provided a paradigm for the postwar world.” 104 As we have seen, Roosevelt’s important 1936 speech in Buenos Aires had already highlighted the link between living standards and international political stability in the context of cultivating an inter-American antifascist alliance. 105

Gerald Meier has argued that the Bretton Woods negotiations “remained largely immune” from the aspirations of Roosevelt’s “Four Freedoms” speech, the Atlantic Charter, and the UN Charter. 106 This view is very difficult to accept. White made clear reference to these loftier goals in initial drafts of the Fund and the Bank. His January 6 1942 memo stated explicitly that his proposed Stabilization Fund was designed to facilitate “the attainment of the economic objectives of the Atlantic charter,” and that membership would be open only to countries that subscribed to the objectives of the charter. 107 In his more detailed January 1942 draft, White also stated that members of the Bank would be required to “subscribe publicly to the “Magna Carta of the United Nations.” 108 The same provision existed in his March draft where he explained that this Magna Carta would constitute “a bill of rights of the peoples of the United Nations” that set forth “the ideal of freedom for which most of the peoples are fighting the aggressor nations and hope they will be able to attain and believe they are defending.” 109 White even went so far as to append a draft of such a Magna Carta to his proposals (although this appears to have been lost to the historical record). White justified this requirement of Bank members in the following way: “The inclusion of that provision would make clear to the peoples everywhere that these new instrumentalities which are being developed go far beyond usual commercial considerations and considerations of economic self-interest. They would be evidence of the beginning of a truly new order in the realm where it has hitherto been most lacking—international finance.” 110

The link between the early White drafts and Roosevelt’s broader thinking was also highlighted by Morgenthau, who described White’s plans to Roosevelt in May 1942 as a “New Deal in international economics.” 111 One of the New Deal values Morgenthau had in mind was apparent in his final speech at Bretton Woods when he applauded how the new international institutions being proposed by the conference would “limit the control which certain private bankers have in the past exercised over international finance.” 112 Morgenthau’s desire to also curtail the influence of central bankers—so apparent in the IAB discussions—was also clear in his advocacy of a Norwegian resolution at Bretton Woods calling for the abolition of the BIS “at the earliest possible moment.” 113 But an equally important New Deal value was the commitment to address poverty. In his opening statement to the 1944 conference, he spoke of the goal of establishing “a satisfactory standard of living for all the people of all the countries on this earth.” 114 He also argued that “Prosperity, like peace, is indivisible. We cannot afford to have it scattered here or there among the fortunate or to enjoy it at the expense of others. Poverty, wherever it exists, is menacing to us all and undermines the well-being of each of us.” 115

That last sentence of Morgenthau’s was quite similar to a statement endorsed at an important conference of the International Labour Organization two months earlier: “poverty anywhere constitutes a danger to prosperity everywhere.” 116 When Roosevelt received the ILO delegates to the White House at the end of the conference, he went out of his way to quote this line approvingly and added:

This principle is a guide to all of our international economic deliberations…it is perfectly true that poverty anywhere constitutes a danger to prosperity everywhere. I think of a little colony, a little piece of the earth’s surface, Gambia, where I happened to have landed from Brazil. Nice, peaceful people, and as the saying goes, poor as church mice…. Well, when I was there, I wasn’t thinking in terms of who should do it, but if they had a little less poverty, that would bring prosperity to a lot more people outside of Gambia. They are kept down because of exploitation. I think that is going to be a new word in the next meeting of the I.L.O., something that I have had in the back of my head a long time, something that says something against exploitation of the poor by the rich—by Governments, as well as individuals. I think we can get somewhere if we keep that idea of being “agin”—as we say in Irish-American—against exploitation everywhere. It will be an awfully good thing for all of us. 117

Roosevelt’s interest in promoting higher living standards in poorer parts of the world was apparent in other contexts as well. 118 Before the Bretton Woods conference was held, he invited countries to attend another meeting—the first of the United Nations—in Hot Springs, Virginia between May and June 1943 to address what one official called “freedom from want of food.” 119 There was much discussion of the nutritional needs and the standards of living of people in poor countries at the meeting, which created an Interim Commission on Food and Agriculture (that commission then drafted the constitution for the Food and Agriculture Organization, which met for the first time in October 1945). In the spring of 1943, Roosevelt also asked an interdepartmental committee to develop a memo showing “that helping others raise their living standards is ‘good for our own pocket-book and our own security.’” 120 The Latin American situation was clearly central in his mind. In a note to Rockefeller in June 1943, he wrote “I do want to get across the idea…that the economy and social welfare of Jesus Fernandez in Brazil does affect the economy and social welfare of Johnny Jones in Terre Haute, Indiana.” 121 The resulting “living standards abroad” report—written by an interdepartmental committee that included Acheson, Clayton, Collado, and Rockefeller—argued that less industrialized countries could use an influx of between $3 and $3.5 billion in foreign funds over the following ten years, a considerable portion of which would need to come in the form of public loans with low interest rates and long amortization periods.

Wider US Interest in International Development

Roosevelt’s vice president, Henry Wallace, was also keen to assist international development. After a 1940 trip to Mexico, he had become particularly supportive of Latin American industrialization, agrarian reform, the development of small farms, and improved literacy and nutrition in the region. 122 During the war, Wallace thought freedom from want was the most important of Roosevelt’s “Four Freedoms,” and he urged that postwar plans improve “conditions of life among the common people of the world.” 123 In his view, higher living standards in poorer parts of the world would provide new markets for US exports, stave off fascism and communism, and provide a foundation for postwar peace and democracy. To assist development in poorer regions, he called for “an international bank and an international TVA” as well as an international agency to stabilize commodity prices. 124

Wallace chaired the Board of Economic Warfare, which was represented on White’s technical committee and which had initially been created (under the name Economic Defense Board) in July 1941 to strengthen ties with Latin America. Soon after its creation, the board began to discuss the need for an international institution that could promote development. Building on these discussions, Winfield Riefler—who had been involved in the IAB discussions—had written up a seventy-page plan for an “International Development Authority” in October 1941. The goal of his plan was “to demonstrate, concretely, a means by which the democracies can implement now the Peace Aim, ‘Freedom from Want.’” His proposed institution was to be created by the United States and the United Kingdom in order to “provide particularly for the economic development of underdeveloped regions, e.g., the Caribbean, the Danube Valley, China, the Dutch East Indies, Latin America.” 125 It would grant charters to international enterprises (public, private, or mixed) pursuing development projects approved by local governments. Private investors in the enterprises would be reassured by the fact that they could trade their shares for bonds of the International Development Authority, which would be backed by capital from the US and British governments.

Riefler’s proposal immediately attracted the attention of Jacob Viner, who was a special assistant to Morgenthau and who would advise White on his Bretton Woods drafts just a few months later in early January 1942. In October 1941, Viner also recommended the proposal to Alvin Hansen who had been discussing with Viner his own latest plans for Anglo-American financial cooperation. 126 Since late 1939, Hansen had co-chaired with Viner a study group (of which Riefler was also a member) of the influential Council on Foreign Relations (CFR) that focused on “economic and financial problems” of postwar planning. 127 In May 1941, Hansen proposed an “international RFC” that would support not just the “rehabilitation and reconstruction of England and the Continent” but also “investment in Latin America and China.” 128 His ideas likely informed a July 1941 CFR memo that recommended the creation of worldwide financial institutions for “stabilizing currencies and facilitating programs of capital investment for constructive undertakings in backward and underdeveloped regions.” 129

In September 1941, Hansen traveled to Britain where he discussed his ideas in numerous conferences with Keynes, other British economists and government officials, and even British Cabinet ministers. 130 He even drafted a one-page “Joint Declaration by the Governments of the United States and Great Britain” in which the two governments would—among other things—contribute capital to an “International Finance Corporation” that would invest in “development projects throughout the world.” 131 It is noteworthy that Viner, when commenting on Hansen’s ideas (which he liked and thought were similar to Riefler’s) in early November 1941, stressed the importance of including small countries in the management of international lending institutions in order to avoid the appearance of what he called an Anglo-American “financial monopoly.” As he put it in, “to be successful the proposed body must avoid the odium of two-power imperialism.” 132 In January 1942, Hansen returned to London accompanied by Luther Gulick, a US expert on the TVA, on a trip sponsored by the State Department. They advanced a number of proposals that were presented to the British War Cabinet in late January, including an idea for an “international development corporation” whose stock would be held by governments. 133 Keynes drew directly on these ideas when developing his own plans.

Throughout the Bretton Woods negotiations, Hansen continued to see the promotion of international development as a key priority, backing White’s Bank proposal (as well as commodity price stabilization schemes) even though the institution was weaker than he favored. 134 As he put it in an article co-written with Charles Kindleberger (who was working at the Federal Reserve Board) and published in Foreign Affairs in April 1942, “increases in the productivity of the Balkan peasant, of the Hindu and Moslem in India, of the Chinese may seem of remote interest to many Americans; but they will contribute in the long run to both the economic and the political security of the United States.” 135 After Kindleberger moved to become chief economist of the Office of Strategic Services later in 1942, he too continued to promote “large-scale intergovernmental development loans” to boost living standards in “underdeveloped countries.” 136 He was particularly keen to assist industrialization in poorer countries because of the vulnerability of primary producers and because the terms of trade were moving against those producers over time given the low income elasticity of demand for their products. 137 In a September 1942 paper that attracted the attention of White and Bernstein, Kindleberger was also more explicit than many other US officials about some of the political imperatives driving the new interest in international development:

It may be doubted, however, whether wide inequalities in incomes received by like factors of production can endure for long today without some conscious effort to narrow them. While the physical mobility of the overwhelming majority of the world remains limited, there is great mobility of ideas, including the idea of what constitutes an adequate standard of living. Ease of communication of thought is a twentieth-century commonplace; but the consequence that like factors of production are beginning to insist upon a greater approach to equality of real income in spite of lack of mobility is barely beginning to be realized. The desire for greater equality in standards of living and its continued frustration lie close to the basis of the international disequilibrium of the twentieth century. 138

This political point was made even more sharply by Peter Drucker in a 1943 article discussing the Keynes and White plans in Harper’s Magazine . He argued that “the spread of the will to industrialize is perhaps the most important recent event in international economics.” He noted that “every raw-material-producing country is firmly convinced that in this present world only industrial countries enjoy full citizenship. And it is equally convinced that in a world of tanks and planes a country is lost unless it can produce its own basic mechanized equipment.” Drucker argued that, in the absence of inflows of foreign capital, these countries would “be forced to obtain it by cutting down on the standard of living of their own—pitifully poor—populations, and they could do this only by setting up a totalitarian economic system similar to a war economy.” To prevent growing economic nationalism of this kind, he urged White and other US officials to support industrialization in poorer countries through international development lending. 139

Another prominent US supporter of international development in this period was the economist Eugene Staley, who was also a member of Viner’s and Hansen’s study group. As early as 1939, he had published a CFR book calling for an “international long-term investment bank” to support an “international development” program around the world. 140 His support for international development stemmed from a combination of humanitarian motives and the desire to offset the communist and fascist ideological challenges to liberal values worldwide. 141 Heinz Arndt argues that Staley was “the man who more than any other brought the theme of economic development into the American discussion.” 142 But Staley himself acknowledged in 1939 that his ideas simply built on initiatives that US officials were already “getting under way in the Americas.” 143

One other member of the CFR’s economic and financial group, Benjamin Cohen, deserves mention because he participated in White’s technical committee as a representative of the White House and was a legal adviser to the US delegation at Bretton Woods. 144 At a CFR meeting in late January 1942 that Hansen also attended, Cohen (who was then with the Federal Power Commission) called for a “World Reconstruction Finance and Development Agency.” He pointed out that there was a “growing consensus of opinion that one of the most important and promising functions of international co-operation after the war lies in the direction of investment into developmental projects in the relatively underdeveloped regions of the world such as Latin America, China and southeastern Europe.” 145 He also thought that an international body to stabilize commodity prices might be needed after the war.

A number of other individuals who had helped develop the Good Neighbor financial partnership favored the role of international development in US postwar plans in this period. In the State Department, Welles helped write the wording of the Atlantic Charter, and between July 1942 and June 1943 he chaired a committee that drafted an influential blueprint for the postwar United Nations that included proposals for an economic commission to promote international commodity price stabilization, global investment, and economic development. 146 Berle also backed White’s plans from the start and was very involved in discussions of them in 1942 and throughout much of 1943. 147 He particularly approved the Bank’s development role; indeed, Morgenthau told Keynes in September 1943 that Berle “deserved the credit for pushing this Bank.” 148 As noted above, Collado also played a key role in the final drafting of the IBRD. 149 In mid-1944, he also wrote a detailed memo for an interdepartmental committee on the importance of assisting postwar Latin American development and industrialization more generally. 150 And as we shall see in the next chapter, the Federal Reserve Board’s interest in development issues was also well demonstrated through its advisory missions to Latin American countries from 1943 onward.

Some of White’s development ideas even found favor with John Williams, the Harvard economics professor and vice president of the FRBNY who became known as a leading critic of White’s Bretton Woods plans and ally of the conservative New York banking community. It is sometimes forgotten that his “key currency” plan—developed as an alternative to the Keynes and White plans—was explicitly designed to emphasize the importance of recognizing the distinct needs of countries at different stages of development. 151 In the 1930s, he had emerged as a supporter of more flexible exchange rates for poorer countries as tools to help them insulate their domestic economies from external influences. 152 By mid-1944, he had come to the conclusion that exchange controls might be even more useful than exchange rate adjustments for these countries. 153 In a speech to a largely Latin American audience in May 1944 (where he shared the platform with Burgess), Williams even combined his advocacy of exchange controls with a strong critique of the theory of free trade which he argued was “designed to maintain the status quo—that is, to keep the raw material countries producing raw materials and nothing else. It gave them a colonial status…. In order to industrialize, protection was needed against the established enterprises of the big industrial countries. The modern and most comprehensive form of protection was exchange control.” After Williams’s comments, Gardner reported that “an electric wave of sympathy ran through the room. Delegates turned in their seats and nodded approvingly to one another.” Villaseñor, who had been one of the lead Mexican advocates of the IAB, even stood up and complimented him. 154

Some prominent members of the US business community had also become believers in international efforts to assist Southern industrialization. For example, the president of the US Chamber of Commerce, Eric Johnston, explained in May 1944 how Brazilian industrialization would generate larger markets for US products because “you can increase the purchasing power of a people better through industrialization than through any other means.” 155 Important policy groups associated with large US manufacturing firms also backed efforts to promote Latin American industrialization during the war. 156 It is worth noting that White highlighted how the IMF’s articles of agreement would benefit US businesses seeking to establish branch plants in Latin America and elsewhere because the withdrawal of dividends from earnings would be treated as a current account transaction (which could not be restricted by exchange controls). Here is the case he made to US delegates in a private meeting on the second day of the Bretton Woods conference: “Let’s say the General Motors Company establishes a plant in Brazil. As it has been in the past, they have earned local currency. Now, they weren’t at all certain that they could withdraw those currencies…. But under the Fund arrangement, these current earnings on investments must be treated just like payment for exports and imports, and are not subject to exchange controls…. That would mean that you would have a considerable stimulus for the kind of investment which is best for the country and best for us.” 157

Not everyone in the United States was entirely enthusiastic about supporting Southern industrialization. After the United States published its IBRD plan in November 1943, the American International Labor Conference on International Affairs published a commentary by Albert Halasi that advocated “the industrialization of young and backward countries” but noted that attention would need to be given “to the adverse effects it may have on particular industries in the old industrial countries and to seek to facilitate the adjustment of these difficulties.” 158 This concern was also remarked on by one of the members of the US delegation at the Bretton Woods conference, Jesse Wolcott, a Republican member of the House of Representatives from Michigan. After participating in some of the conference sessions developing the IBRD’s articles of agreement, he told his US colleagues: “I sense in our conversations with all of these countries that they have a vision of their country being just covered with smokestacks. They are all going to want to industrialize.” He noted that there was debate about “whether we should encourage with American capital the other countries to become manufacturing countries to the possible prejudice of the American market.” White acknowledged the opposition but argued that it could be answered. When Wolcott asked “What is going to happen when the Arabian desert is covered with factories?” White responded with his own quip: “some of us are going to be dead a long time.” 159

From the very start of the Bretton Woods planning process, US officials set out to design a postwar international financial order that gave prominence to the kinds of development issues that had already arisen in the context of US–Latin American financial relations. Far from being an afterthought, development concerns were prioritized. White’s initial plans were particularly ambitious in this respect, covering commodity price stabilization, infant industry trade protection, debt restructuring, capital flight, compensatory balance of payments financing, and long-term international development finance. This agenda for international economic reform anticipated many of the demands made by Southern countries in the New International Economic Order discussions of the 1970s.

It is also worth noting White’s commitment to wide consultation on postwar plans with all United and Associated Nations, of which we will see more evidence in subsequent chapters. This commitment gave Southern countries an opportunity for considerable voice in international financial policymaking, and it contrasted with British policymakers’ preference for an exclusively bilateral Anglo-American process. Other US officials also placed a high value on this inclusive process. As Berle noted in his diary after opening a Washington consultation session in mid-June 1943 involving eighteen countries, “the significance of the meeting was not what it said, but that it was the first more or less democratic procedure for dealing with this sort of thing.” 160 While Keynes initially proposed an international financial institution run by the United States and Britain, White had favored a multilateral institution from the start, in which both small and large countries were represented. Indeed, in his initial short draft of the Fund on January 6, 1942, White had even gone out of his way to state that although voting would be roughly in line with contributions, “the distribution of votes among the members might well be modified by giving the smaller countries a share of voting power greatly in excess of their share of subscription to the assets of the Fund.” 161

As the US plans evolved, some of White’s initial “development” proposals fell off the agenda, and later we shall see how Southern countries sought unsuccessfully to bring some of them back. But in the final agreements, the core US commitment to international development remained. The support for it by US officials reflected a similar mix of strategic, economic, and ideational motivations that had been prominent in driving the Good Neighbor financial partnership. In a strategic sense, the promise to improve living standards helped to solidify wartime alliances, accommodate rising development aspirations, and invest in peace for the future. Economically, international development was seen to create new investment opportunities, to generate lower-cost imports by improving productivity abroad, and especially to boost markets for US products. Alongside these strategic and economic interests, New Deal values were also significant, such as a concern for social justice and the poor, sympathy for a more active state role in the economy, antipathy toward the New York financial elite and dollar diplomacy, and an association between economic security and political stability.

It was not just US officials who carried the experience of the Good Neighbor financial partnership into the Bretton Woods negotiations. United States opponents of that earlier policy did so too. Despite the watering down of the ambitious features of White’s initial drafts in many areas, the final Bretton Woods Agreements were still opposed by various economic conservatives and isolationists, as well as by New York bankers. 162 The latter were led once again by Burgess in his role as president of the American Bankers Association. Congressional opponents of Bretton Woods also included figures such as Robert Taft and Arthur Vandenberg who had been strong opponents of the IAB and lending to Latin America before the US entry into the war. In the eyes of many opponents, the Fund’s provisions represented too radical a break from the market-based principles and discipline of the international gold standard. Burgess and other critics also complained that the United States would end up being “soaked,” as foreign countries, such as Russia, China and some Latin American countries, borrowed from the Fund. 163 Critics also questioned the need for public long-term international lending, while others preferred to see such lending channeled through the US-controlled Export-Import Bank, a suggestion that had also been raised by opponents of the IAB. 164

Despite these various criticisms, the United States became the first country to ratify the Bretton Woods agreements after they were approved in both houses of Congress with very healthy majorities in June and July of 1945—a striking contrast with the IAB experience. This outcome was fostered by a Treasury-organized public relations campaign that resonated with wider domestic support for internationalism as the war wound down. It is worth noting that the development mandate of Bretton Woods was featured in this campaign. In one cartoon booklet produced for the public in May 1945, Bretton Woods delegates told representatives from poor countries: “If we help you to become prosperous, you will be able to buy more things from us! ’” 165 In a Foreign Affairs article in early 1945, Morgenthau also stressed that “the Bretton Woods approach is based on the realization that it is to the economic and political advantage of countries such as India and China, and also of countries such as England and the United States, that the industrialization and betterment of living conditions in the former be achieved with the aid and encouragement of the latter.” Investment in poor countries would, he argued, not just boost US exports but also raise labor standards abroad and discourage those countries from industrializing on their own by “ruthlessly exploiting their own cheap labor, and undercutting countries with higher labor standards in the process.” Prophetically, Morgenthau also noted the political need to accommodate Southern development goals in order to minimize future conflict between rich and poor countries: “Unless some framework which will make the desires of both sets of countries mutually compatible is established, economic and monetary conflicts between the less and more developed countries will almost certainly ensue. Nothing would be more menacing to world security than to have the less developed countries, comprising more than half the population of the world, ranged in economic battle against the less populous but industrially more advanced nations of the west.” 166

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1.  For the State Department’s discussions, see Young 1950.

2.  “Note for the Secretary’s Record,” December 15, 1941, CFHDW, box 6, Chron. 30.

3.  Oliver 1975, 110; 1985, 19 n. 1; Horsefield 1969a, 11–12.

4.  White, “Suggested Plan for a United Nations Stabilization Fund and a United Nations Bank,” January 1942, p. 4, BWA, box 44.

5.  Kapur, Lewis, and Webb 1997, 57. For similar assessments, see Meier 1984a, 12; Eckes 1975, 46; Benjamin 2007, 12–13; Urquidi 1996, 38.

6.  Gardner 1980, 85 n. 6.

7.  White, “Suggested Plan for a United Nations Stabilization Fund and a Bank of Reconstruction of the United and Associated Nations” (undated), HDWP, box 6, folder 9. Pages are missing from this draft and it ends abruptly in midsentence on p. 130.

8.  Gardner 1980, 74 n. 1.

9.  White, “Suggested Plan” (undated).

10.  White, “Suggested Plan for a United Nations Stabilization Fund and a Bank for Reconstruction of the United and Associated Nations,” April 29, 1942, BWA, box 44. Like the draft in the White Papers, this draft has a number of page insertions (including ones dated April 28 and 30) and pencil corrections.

11.  White, ‘ “Preliminary Draft: United Nations Stabilization Fund and A Bank for Reconstruction and Development of the United and Associated Nations,” March 1942, HDWP, box 6, folder 6. Van Dormael (1978, 45) argues that this draft was “obviously antedated” because it is “almost identical” to the polished “April 1942” draft in the White archives. He does not provide further evidence for this claim; even if it is accurate, it is not very significant for the core argument of this chapter since White’s first drafts in January referred to the development role of the Bank, as noted below.

12.  “Memorandum on a Projected Stabilization Fund of the United and Associated Nations,” January 6, 1942, CFHDW, box 6, Chron. 31. See Black 1991, 36; Southard to Undersecretary Bell, January 15, 1942, JVP, box 49, folder 7; “Meeting of American Delegates to Rio, State Department—Mr. Welles’ Office, January 7, 1942,” BWCC, box 11/5; White to Welles, January 6, 1942, CFHDW, box 6, Chron. 31.

13.  White, “Proposal for a Stabilization Fund of the United and Associated Nations,” January 6, 1942, p. 2, CFHDW, box 6, Chron. 31.

14.  White, “Suggested Plan” (January 1942). Although this document is quite detailed, it is missing the more in-depth justification of the Bank’s provisions that appears in the March and later drafts.

15.  White, “Suggested Plan” (January 1942), 17. There is also a two-and-a-half-page document by White from December 30, 1941 that calls for an “Inter-Allied Bank” and an “Inter-Allied Stabilization Fund.” The former is meant to be “an agency with means and powers adequate to provide capital necessary (a) to aid in the economic reconstruction of the Allied countries; (b) to facilitate a rapid and smooth transition from a war-time economy to a peace-time economy in the Allied countries; (c) to supply short-term capital necessary to increase the volume of foreign trade—where such capital is not available at reasonable rates from private sources” (p. 1). White, “A Suggested Program for Inter-Allied Monetary and Banking Action” December 30, 1941, ALP, box 8/8, file: “International Stabilization Fund, Preliminary Draft Outline.” Because of the ambiguities surrounding the meaning of the term “economic reconstruction” discussed below, White’s precise thinking around the Bank’s role in “development” at the time of this memo is difficult to discern. But as noted above, the proposal he drafted a few days later on January 6 is clear about the development function of the Bank. The short December 30 memo was given only to several staff in White’s Division of Monetary Research (Mikesell 1994, 6).

16.  White, “Suggested Plan” (January 1942), p. 33.

17.  White, “Suggested Plan” (January 1942), p. 26.

18.  For inconsistencies, see White, “Preliminary Draft” (March 1942). pp. 5, 6, 10.

19.  White, “Preliminary Draft: Proposal for United Nations Stabilization Fund and a Bank for Reconstruction and Development of the United and Associated Nations,” April 1942, HDWP, box 6, folder 7.

20.  US State Department 1963a, 175, 177.

21.  The title is: “Suggested Plan for a United and Associated Nations Stabilization Fund and a Bank for Reconstruction and Development of the United and Associated Nations.” US State Department 1942a, 172–77.

22.  US State Department 1963a, 178–90.

23.  Ekbladh 2010, 17. See also pp. 19, 22–25, and Alcalde 1987, 63.

24.  See for example Anstey 1943, 339; Zanasi 2006, 15–17; Young 1963, 389–90. The British discussions (in government and think tanks) about postwar international economic plans going well beyond wartime recovery issues were also referred to as focusing on “reconstruction” (see chapter 8).

25.  White to Morgenthau, “British Empire–American Cooperation on problems of post-war reconstruction,” September 2, 1941, SMHDW, box 14.

26.  Hanson to White, June 5, 1939, p. 1, TSF, Entry 67A1804, box 65.

27. Ekbladh 2010, 75.

28.  White, “Suggested Plan” (April 29), p. 100.

29.  In its broader discussion, this draft also included the same line quoted above from the January draft about the need for richer countries to help poorer countries. White, “Suggested Plan” (April 29), p. 19.

30.  The 1944 conference was initially scheduled for just nineteen days but was extended to allow completion of the negotiations (De Vries 1986, 10).

31.  “Statement of the representative of the United States of Brazil on the need for a Bank for Post-war Reconstruction,” pp. 2, 1, in “Conference on Agencies for International Monetary and Financial Cooperation,” BWA, box 47. This document is in a file ““Conference of Finance Ministries of United and Associated Nations, 1942” but otherwise undated; its content suggests approximately March–April 1942. Van Dormael (1978, 51) states that White presented a folder to Morgenthau on May 8, 1942 that was titled “Conference of Finance Ministries of the United and Associated Nations.”

32.  Eckes 1975, 292 n. 35. See also Meier 1984a, 12; Kapur, Lewis, and Webb 1997, 57.

33.  Viscount Halifax to Mr. Eden, May 28, 1941, p. 1, UKT 247/85.

34.  Quote from Penrose 1953, 48. See also Oliver 1975, 126; 1971, 44.

35. “Conference on Agencies.”

36.  Horsefield 1969a, 12; Mikesell 1994, 6.

37.  White to Welles, January 6, 1942.

38.  “Meeting of American Delegates to Rio, State Department—Mr. Welles’ Office, January 7, 1942,” BWCC, box 11/5; White to Morgenthau, January 14, 1942, JVP, box 49, folder 7.

39.  Director General of the Pan American Union 1942, 44.

40.  Southard, “Further consideration of the resolution on exchange stabilization for the Rio Conference,” January 19, 1942, TSF, 450/81/20/07, box 29.

41.  “Observations Made by Mr. H. D. White at the V Subcommittee of II Commission—Meeting Held Jan. 21, 1942,” p. 1, TSF, 450/81/20/07, box 29.

42.  Director General of the Pan American Union 1942, 43–44.

43.  See for example “Observations,” p. 1; “Meeting on Proposal for an International Stabilization Fund and a World Bank,” May 26, 1942, p. 2, ITM, box 20; White, “Preliminary Draft” (March 1942), II-36.

44. Green 1971, 70–73.

45.  “Proposal for a United Nations Bank for Reconstruction and Development,” p. 1 (undated but context suggests September 1943), HDWP, box 8, folder 3.

46.  The signatories included nine Latin American countries (Costa Rica, Cuba, the Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama) as well as Australia, Belgium, Canada, China, Czechoslovakia, Greece, India, Luxembourg, the Netherlands, New Zealand, Norway, Poland, South Africa, the United Kingdom, the United States, the USSR, and Yugoslavia. Later in 1942, Brazil and Mexico joined the United Nations as did Ethiopia and the Philippines. In 1943, Bolivia and Colombia joined as did Iran and Iraq. By the time of the Bretton Woods conference, the following Latin American countries had not joined: Argentina, Chile, Ecuador, Paraguay, Peru, Uruguay, and Venezuela.

47.  (No author), “Canada–United States Discussion of Stabilization Fund Proposals, US Treasury April 21–26, 1943,” p. 2. NAC, RG19, v. 3981.

48.  White, “Suggested Plan” (January 1942), p. 22, 23.

49.  “Memorandum for the President,” May 14, 1942, SMHDW, box 14. The same wording was in the cover letter Morgenthau wrote to Roosevelt (US State Department 1963a, 172).

50.  White, “Suggested Plan” (January 1942), pp. 23, 22.

51.  Black 1991, 35. Two weeks before the start of the Bretton Woods conference, Bernstein made a similar point in an internal memo designed to help Morgenthau draft an opening speech for the meeting (in which he also invoked the history of the 1936 Tripartite Accord with France and Britain): E. M. Bernstein to Mr. Smith, June 12, 1944, MD, book 748, p. 170.

52.  Gold 1988. See also Bordo and Schwartz 2001; Schwartz 1997, 152. Boughton (2004, 189–90) argues that the ESF lending to Mexico in 1936 was an earlier precedent than the 1941 agreement.

53.  Wallich to Knoke, March 10, 1942, p. 6, ISF, box 247.

54.  White, “Preliminary Draft” (March 1942), p. II-49. See also Horsefield 1969b, 67.

55.  Spiegel, “Factors relating to Cuban proposals,” September 30, 1941, p. 2, CFHDW, box 5, Chron. 27.

56.  White, “Suggested Plan” (January 1942), pp. 10, 34.

57.  White, “Suggested Plan” (January 1942), p. 10. Very similar wording appears in subsequent early drafts, e.g. White, ‘Preliminary Plan” (March 1942), p. II-48.

58.  John Deutsch, “International Stabilization of Currencies—Informal expert discussions, US Treasury, June 15–17, 1943,” p. 10, NAC, RG19, v. 3981. White had advocated restrictions on speculative capital inflows to the United States in the late 1930s (e.g. Acksay 200, 126).

59.  White, “Suggested Plan” (January 1942), p. 9, 11, 45.

60.  White, “Preliminary Draft” {March 1942), p. II-59. See also Horsefield 1969, 71.

61.  White, “Suggested Plan” (January 1942), p. 23. Two other exceptions were if “the defaulted loan was made between two Allies in a common war” and if “ninety percent of member votes approve the loan” (p. 23).

62.  White, “Preliminary Draft” (March 1942), pp. III-12–13. See also Oliver 1975, 303.

63.  White, “Preliminary Draft” (March 1942), p. III-13. See also Oliver 1975, 303.

64.  White, “Preliminary Draft” (March 1942), p. I-15.

65.  White, “Suggested Plan” (January 1942), pp. 43–44.

66.  White, “Preliminary Draft” (March 1942), p. II-56. See also Horsefield 1969b, 70.

67.  White, “Memorandum for Vice-President Wallace,” December 1, 1941, pp. 3–4. SMHDW, box 14.

68.  Young 1950, 779 n. 2; Mikesell 1994, 7.

69.  Oliver 1961a, 6, 8. See also Mikesell (2000, 25) who also worked closely with White at the time.

70.  E. M. Bernstein, “Memorandum of Meeting at State Department, April 1, 1944,” p. 1, BWCC, box 6/9.

71.  Oliver 1957, 388; Harrod 1951, 541.

72.  Oliver 1961a, 7. See also Collado’s comments in McKinzie 1974, 13–14.

73. Oliver 1957, 397.

74.  White to Morgenthau, September 22, 1943, SMHDW, box 14.

75.  For the State Department’s objection to the discussion of commodity price stabilization on this ground, see Oliver 1975, 158.

76.  “Minutes of Meeting Held in Mr. White’s Office,” June 3, 1942, p. 3, ITM, box 20.

77.  “Meeting in Mr. White’s Office, Aug 31, 1943,” p. 2, ITM, box 21. See also “Minutes of Meeting Held in Mr. White’s Office,” May 28, 1942, p. 4, ITM, box 20.

78.  See for example Oliver 1961a, 4. A number of other aspects of his plans—such as the Bank’s issuing of notes, extending of gold loans, and short-term financing of international trade—were also dropped for this reason (Oliver, 1975, 157–8).

79.  “Bretton Woods Institutions, IMF, Plans, US Treasury (White), 1942,” ISF, box 55.

80.  “Resolution on the Stabilization Fund of the United and Associated Nations,” TSF, 450/81/20/07, box 29. This phrase was also in White’s initial January 6, 1942 outline of the Fund that he presented to Welles (White, “Proposal for a United Nations Bank,” p. 1).

81.  Southard, “Further Consideration of the resolution on exchange stabilization for the Rio Conference,” January 19, 1942, p. 2, CFHDW, box 6, Chron. 31.

82.  The latter was deleted first between the September 3 and September 8 drafts, while the former disappeared by the draft of September 24. See ISF, box 55. In December, Walter Louchheim, assistant director of the Securities and Exchange Commission (and member of the technical committee), lobbied White unsuccessfully to reinsert into the purposes of the Bank that it could further the settlement of international debts; Louchheim to White, p. 1, December 8, 1943, HDWP, box 8, folder 3.

83.  Luxford to White, September 4, 1943, HDWP, box 8, folder 3; J. P. Young, “Some Points of Possible Difficulty in Proposal for a United Nations Bank for Reconstruction and Development, Sept. 14, 1943,” p. 1, ISF, box 55.

84.  “Meeting in Mr. White’s Office, Sept 22, 1943,” p. 2, ITM, box 21.

85.  Helleiner 1994, chap. 2. The exemption from needing IMF approval for using capital controls was included already in the public White Plan of the spring of 1943 (Horsefield 1969b, 95).

86.  White, “Proposal for a Bank for Reconstruction and Development of the United and Associated Nations,” September 3, 1943, p. 1, ISF, box 55.

87.  US State Department 1948, 1618.

88.  White, “Proposal” (September 3, 1943), pp. 4–5.

89.  Schuler and Schuler 2013, 8, 26.

90.  See for example Bernstein’s comments in Black 1991, 42. See also Mason and Asher 1973, 19; Fuchs 1974b, 17.

91. McKinzie 1974, 17.

92. Boskey 1957, 2.

93.  MD, book 753, p. 150. See also comments of a Belgian delegate in Kapur, Lewis, and Webb 1997, 59 n. 9.

94.  White, “Proposal” (September 3, 1943), pp. 4–5. Quote from Viner in Norman Wait Harris Memorial Foundation 1941, 95.

95.  Alvin Hansen, “International Development and Investment Bank,” p. 2, November 13, 1943, CFR, box 300, folder 3.

96.  Arthur Bloomfield, “The Proposed United Nations Bank for Reconstruction and Development,” p. 4, ISF, box 57.

97.  Walter Gardner to Szymczak, “The International Investment Bank Proposed by the Treasury, Feb 15, 1944,” p. 3, ISF, box 56. See also Division of Economic Studies, State Department, “Proposal for an International Investment Agency,” September 28, 1943, p. 4, ISF, box 55.

98.  Hansen 1944, 33–34. See also Bernstein’s comments reported in Wallich to Knoke, January 20, 1944, ISF, box 56.

99.  Arthur Bloomfield, “The Proposed United Nations Bank,” pp. 5–6.

100. Quoted in http://docs.fdrlibrary.marist.edu/od4frees.html .

101. Borgwardt 2005, 33.

102.  Borgwardt 2005, 3, 5. For the Atlantic Charter quote, see p. 304.

103.  Quoted in Rosenman 1952, 264.

104.  Kimball 1991, 107. See also Pike 1995, 22–23, 223, 226.

105.  Roosevelt’s concept of “freedom from want” may also have been influenced by discussions in the British press in the fall of 1940 about the need to defeat Hitlerism with commitments to minimum standards for housing, food, education, and medical care (Rosenman 1952, 265). White was also closely following British political developments at this time; see White to Morgenthau, “Recent Social Changes in England—Summary,” December 11, 1940, CFHDW, box 4, Chron.18.

106. Meier 1984a, 11.

107.  White, “Proposal” (January 6, 1942), p. 1.

108.  White, “Suggested Plan” (January 1942), p. 20.

109.  Quotes from White, “Preliminary Draft” (March 1942), pp. III-4, III-40. See also Oliver 1975, 319.

110.  White, “Preliminary Draft” (March 1942), p. III-41. See also Oliver 1975, 319.

111.  US State Department 1963a, 172. White had in fact penned these words: “Memorandum for the President,” May 14, 1942, SMHDW, box 14, file: D1-No. 3.

112.  Morgenthau continued: “It would by no means restrict the investment sphere in which bankers could engage. On the contrary, it would greatly expand this sphere by enlarging the volume of international investment and would act as an enormously effective stabilizer and guarantor of loans which they might make. The chief purpose of the Bank for International Reconstruction and Development is to guarantee private loans made through the usual investment channels. It would make loans only when these could not be floated through the normal channels at reasonable rates. The effect would be to provide capital for those who need it at lower interest rates than in the past and to drive only the usurious money lenders from the temple of international finance” (US State Department 1948, 1118–19). The last line seemed to invoke Roosevelt’s first inauguration address from 1933 when the president had noted that “the money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit” (Roosevelt 1933). In one of the drafts of Morgenthau’s speech that can be found in the Morgenthau Diaries (MD, book 757, p. 97), it is interesting to see that someone (presumably Morgenthau himself) had initially strengthened the phrase “to drive only the usurious money lenders from the temple of international finance” by crossing out the word “only.” But the word was then reinserted in pencil and it appeared in the final speech.

113.  See especially MD, book 755, pp. 174–86, 211–13; book 756, pp. 119–22, 134–36.

114.  US State Department 1948, 82.

115.  US State Department 1948, 81. The phrase “prosperity, like peace, is indivisible” was also included in a short summary of White’s plan sent to Roosevelt in mid-May 1942 (US State Department 1963a, 174).

116.  Quoted in Alcalde 1987, 141.

117. Roosevelt 1944, 1.

118.  See also Pruessen 2009.

119.  This phrase comes from Frank L. McDougall, “Draft Memorandum on a United Nations Program for Freedom From Want of Food,” February 11, 1943, RIIACR, Economic Group Paper 75, Group Papers 9/22d.

120.  Roosevelt’s words quoted in Rivas 2002, 58. See also Green 1971, 123–29.

121.  Quoted in Green 1971, 129.

122.  Walker 1976; Gellman 1979, 167–71; Woods 1979, 66–67; Cullather 2010, chap. 2; Rivas 2002, 54–57.

123.  Quoted in Walker 1976, 83.

124.  Wallace quoted in Ekbladh 2010, 85. See also Walker 1976, chap. 7; Rivas 2002, 56.

125.  Winfield Riefler, “A Program to Stimulate International Investment,” p. 1, October 4, 1941, JVP, box 109, folder 4. See also Oliver 1975, 360–61 n. 21. Riefler noted that he was not discussing publicly financed investment in his paper, but was working on that idea.

126.  Viner to Hansen, October 24, 1941 and Hansen to Viner, October 28, 1941, JVP, box 13, folder 9.

127.  For the influence of this group, see Nerozzi 2009; Shoup and Minter 1977, chap. 4; Ikenberry 1992, 201–4.

128.  Quoted in Mehrling 1997, 122.

129.  Quoted in Shoup and Minter 1977, 166. See also Nerozzi 2009, 29–30.

130.  Hansen to Viner, p. 1, October 20, 1941, JVP, box 13, folder 9. See also Mehrling 1997, 122.

131.  Quote from “Tentative Draft of Joint Declaration by the Governments of the United States and Great Britain,” p. 1 (undated, but initially drafted when Hansen was in London and revised some time before October 20, 1941), JVP, box 13, folder 9.

132.  Quoted in Nerozzi 2009, 59 n. 46 from a November 1, 1941 CFR document. See also Viner to Hansen, October 24, 1941, JVP, box 13, folder 9. In an April 1942 memo for the Council on Foreign Relations, Viner called for an international financial institution that could channel capital to “foster the development of backward areas.” Like White, he was also interested in whether the institution could help settle international debts (Oliver 1975, 106–7). See also Shoup and Minter 1977, 167.

133. Horsefield 1969a, 13.

134.  Mehrling 1997, 123; Nerozzi 2009, 47. For his support of commodity price stabilization, see “Minutes of Meeting Held in Mr. White’s Office,” May 28, 1942, ITM, box 20; Hansen, “International Monetary and Financial Programs,” December 11, 1943, JVP, box 45, folder 5.

135.  Hansen and Kindleberger 1942, 474. See also Mehrling 1997, 121–22.

136.  Kindleberger 1943a, 353–54. See also Kindleberger 1943b; “C. P. Kindleberger’s Proposed International Development Authority,” September 16, 1942, BWA, box 27.

137.  Kindleberger 1943a. Love (1996, 118, 136) points out that his ideas were an important precursor to the Prebisch-Singer hypothesis and that Prebisch was citing Kindleberger’s work in 1944.

138.  Kindleberger, “International Monetary Stabilization,” September 4, 1942, p. 15, EBP, box 3/1, file: Miscellaneous Loose Materials. See Bernstein to White, October 3, 1942, in same location.

139.  Quotes from Drucker 1943, 179, 180.

140.  Staley 1939, 278, 282.

141. Ekbladh 2010.

142.  Arndt 1972, 26. See also Ekbladh 2010; Alcalde 1987, 66–70.

143. Staley 1939, 283.

144.  Given the prominence of CFR members among those advocating international development initiatives, it is worth mentioning that White was not a member.

145.  “Second Special Meeting of the Economic and Financial Group, Council on Foreign Relations, January 24, 1942,” p. 17, RIIACR, Economic Group Paper 46.

146.  O’Sullivan 2008, 68–72. For Welles’s broader support for the Four Freedoms, see also 75–78.

147.  Schwartz 1987, 213; Black 1991, 38; Keynes 1980b, 344; Harrod 1951, 340.

148.  MD, book 664, p. 30. For his support for a development-oriented Bank in October 1942, see Berle and Jacobs 1973, 422.

149.  McKinzie 1974, 12–13, 15–17.

150.  US State Department 1967a, 45.

151.  Asso and Fiorito 2009.

152.  See for example Williams 1947 (1943). See also Asso and Fiorito (2009). Some of his analysis of core-periphery dynamics and criticisms of classical trade theory and the gold standard were similar to Prebisch’s.

153.  Williams 1947 (1944), xlvii–xlviii.

154.  Gardner summarizing Williams’s comments in Gardner to Goldenweiser, May 15, 1944, p. 1, ISF, box 247, pp. 1, 1–2. See also the defense of Latin American exchange controls by Hansen, “Latin America and Exchange Control,” May 27, 1944, p. 1, ISF, box 156.

155.  Quoted in Green 1971, 129–30.

156.  Maxfield and Nolt 1990, 56.

157.  MD, book 749, p. 181.

158.  Albert Halasi, “The United Nations Bank for Reconstruction and Development: Comments on the Guiding Principles,” pp. 11, 13, EBP, box 3/1, file: Miscellaneous Loose Materials.

159.  MD, book 756, pp. 20–21.

160.  Berle and Jacobs 1943, 437. For this consultation, see chapter 7.

161.  White, “Memorandum” (January 6, 1942), pp. 5–6.

162.  See for example Gardner 1980, 129–43; Eckes 1975, chap. 7; Van Dormael 1978, chaps. 18–19; Blum 1967, 427–36.

163.  Burgess quoted in meeting with British officials; untitled and unauthored document from October 23, 1944 in UKT 247/63.

164.  Washington to FO, Viscount Halifax, No. 441 REMAC, June 9, 1944, UKT 247/29; Oliver 1975, 213–14, 218–19; Casey 2001, 46; Patterson 1972, 292–93; Kemmerer 1944.

165.  “The Story of Bretton Woods” (undated, but May 1945), p. 15–16, MP, container 293. Emphasis in the original.

166.  Morgenthau 1945, 188, 190.