part0013

LUKEWARM AND INCONSISTENT BRITAIN

Development issues also played a role in British plans for the postwar international financial system, though not so prominently or consistently as in the case of the United States. Conventional histories of the Bretton Woods negotiations suggest that Keynes and other British officials were largely uninterested in international development. Even their support for the IBRD is said by some analysts to have emerged only a few months before the conference and largely because the British hoped it would help fund their own country’s reconstruction. 1 However, these arguments understate the British commitment to international development during negotiations. Keynes himself included a commitment to international development lending in his very early thinking about the postwar international financial order, and his interest in the issue endured throughout the negotiations leading up to Bretton Woods. His support for international development was also shared more widely in British official circles.

At the same time, the interest of many British officials in these issues was much more lukewarm and inconsistent than that of the US policymakers involved in the Bretton Woods negotiations. Although British officials were interested in international development lending, they deliberately took a back seat to US officials in the initial planning of the IBRD and they ultimately contributed to watering down its public lending role. British officials also showed little interest in some of the other development issues that White addressed in his initial plans and they were much less keen on involving Southern countries in the Bretton Woods planning process than US officials. The British also thwarted the efforts of countries such as Ethiopia to pursue the kinds of development-oriented monetary reforms that Latin American countries were undertaking at this time. In addition, Southern countries holding large sterling balances resented the stance that the British adopted toward these debts at Bretton Woods, seeing it as an antidevelopment one.

Keynes’s Initial Plans

In analyzing Britain’s role in Bretton Woods planning, it is necessary first to recognize the dominance of Keynes. Although he was officially just an unpaid, part-time adviser to the British chancellor of the exchequer, he was Britain’s most famous economist at the time, with what Robert Skidelsky calls enormous “personal authority” within the UK Treasury. 2 Keynes first began developing his ideas for the postwar international financial order in late 1940 when he was asked to comment on British initiatives to counter German propaganda on this topic. In his first November 1940 draft of a proposed radio broadcast, he highlighted the need to internationalize new domestic commitments to social security: “Mr. Bevin said recently that social security must be the first object of our domestic policy after the war. And social security for the peoples of all the European countries will be our policy abroad not less than at home. Indeed the one is hardly possible without the other; for we are all members of one family.” 3 As this remark makes clear, however, Keynes’s focus at this point was on Europe rather than the wider world.

Keynes’s reference to Bevin’s ideas was interesting. Ernest Bevin had been one of the most prominent trade union leaders in Britain before becoming Minister of Labour and National Service as part of Churchill’s new coalition government in May 1940. By October, as the risk of a German invasion intensified, he had been invited to join the inner War Cabinet and he played a key role in managing labor relations in Britain’s industries whose production was key for the war effort. Like Roosevelt, Bevin believed that the masses had turned to dictatorships before the war because of the absence of “social security.” In October and November, he began making speeches about how peace in the postwar world would thus need to rest on international commitments to provide citizens with this kind of security. 4

For this, Bevin argued, a new approach to international relations was needed that gave more focus to economic and social issues of interest to the common person, and that endorsed international economic planning. Unlike Keynes, he cast this vision from the start in a wider context than just the European one. Here is the case he made in a private memo to the foreign secretary, Lord Halifax, in the fall of 1940:

It seems necessary to look for a binding form for peace not in the Customs Unions or economic groups, although these will emerge, but in those matters in which all human beings, irrespective of nationality, have a common interest. These are security against poverty, care in sickness and trouble, protection against injury, provision for old age, all of which tend to assist in the great impelling human desire to have a home, to rear a family in decent and independent circumstances and to have a life in which work and leisure are properly adjusted. In short, international policy should be based not on the increase and safeguarding of the total trade and income of individual countries, but on the provision by international cooperation of the needs of human individuals…. Britishers, Poles, Chileans, etc. being looked at together as human beings whose well-being is interdependent…. The above conception would lead to directed planning of the use of international resources and capital instead of national or international financier investments for profit, with human betterment a major objective and not merely an incidental result. 5

In a high-profile speech in late May 1941, Foreign Secretary Anthony Eden repeated Keynes’s idea that “social security will be our policy abroad no less than at home” and linked British goals to Roosevelt’s commitment to “freedom from want” which the latter had laid out in his January 1941 speech. 6 This link was then formalized and universalized when the British government endorsed the Atlantic Charter in August 1941 that committed the Anglo-American powers to the assurance “that all the men in all the lands may live out their lives in freedom from fear and want.” 7 In their initial draft of the Atlantic Charter, the British had called for “a fair and equitable distribution of essential produce…not only within their territorial boundaries but between the nations of the world.” 8 That clause did not make it into the final version, but another one initially drafted (in slightly different form) by Bevin was included that called for “the fullest collaboration between all nations in the economic field, with the object of securing for all improved labor standards, economic advancement, and social security.” 9 Bevin told an audience in April 1942 that this phrase “really means the end of exploitation as we knew it in the nineteenth century.” 10 His biographer also describes how Bevin remained throughout the war just as interested in “the need to attack the poverty and low standard of living of the underdeveloped areas outside Europe and North America” as he was in domestic reforms. 11

As historian Elizabeth Borgwardt notes, Churchill saw the charter as “for European ears only, intended to shore up Britain’s sagging morale and the hopes of the invaded countries of Europe.” 12 Roosevelt and Welles, however, insisted that its provisions applied to the whole world, as did Churchill’s deputy prime minister, Clement Attlee, as well as Bevin. 13 Keynes also embraced a wider global perspective when he developed his more specific proposals for an International Clearing Union (ICU) in the fall of 1941 and early 1942. In one draft, Keynes noted that countries accumulating credits in the ICU would be encouraged to provide “international loans for the development of backward countries” as one of four potential means to restore equilibrium. He also pointed out that his plan could be used to further “general world purposes” including an “international TVA.” He saw his ICU working alongside, and providing support for, the “International Investment or Development Corporation” that had been proposed by Alvin Hansen. 14 Drawing on his previous interest in commodity price stabilization (and his long experience in commodity speculation), Keynes also proposed that his scheme could help with “the finance of commodity agreements” by providing overdraft facilities to international bodies that could stabilize prices of key international commodities by controlling buffer stocks. 15

The Broader Interest in International Development

Around the time that Keynes’s proposals were presented to the British Cabinet in early April 1942, other British officials also expressed interested in international development lending. For example, the Cabinet Office’s Alfred Hurst asked Keynes and Richard Hopkins on April 1 to develop ideas for the War Cabinet about “the development of backward countries by investment on such terms as to repayment as will not build up an unsupportable burden of indebtedness.” 16 A few months later, Roy Harrod in the office of the War Cabinet was also lobbying for Keynes’s ICU to be complemented by an international financial body that would encourage lending from surplus countries, including to poorer countries for the purpose of “raising standards of living.” Like Berle and other US officials, Harrod argued in the summer of 1942 that private financial flows could not be relied on for this task since “investors may have scant regard for social welfare in undeveloped countries.” He also asserted that “Imperialist ‘exploitation’ should be no part of the new system.” But his conception of what international lending and technical assistance could do in promoting development was more restrictive that than of US New Dealers. Rather than supporting what he called “premature industrialization,” Harrod argued that “the most natural way of proceeding is to teach people to do better what they are used to doing already. I understand that there is no lack of scope in backward regions for improving methods of extraction.” 17

The influential Royal Institute of International Affairs (RIIA) also expressed interest in incorporating international development goals into postwar plans at this time. The institute had established a Reconstruction Committee to discuss postwar economic plans in early 1941, and its Economic Group—which included many prominent economists in government and in Keynes’s circle such as Denis Robertson, James Meade, and Hubert Henderson—was quickly engaged in some quite detailed discussions about how to operationalize the commitments made by US and British policymakers to raise standards of living worldwide. In June 1941, the group concluded that the merits of various postwar international economic plans would be judged by how well they would release all peoples from poverty and its evil consequences, primarily through provision of economic security for everyone who desires it, and secondarily through the advancement of standards of living, conditioned as (it must be recognised) such progress will always be by realist popular insistence a) that military security shall be assured, and b) that prosperity shall begin at home.” 18 When they discussed the goals in more detail in early 1943, they clarified that “the provision of minimum essential requirements postulated in the agreed objectives is called for on a world-wide basis,” and they argued that a plan would be needed “in which the provision of the essential needs of food, clothing, shelter, education and health, should have the first claim on the world’s productive resources, whether the recipients can afford to pay for what they receive or not.” 19 As we will see in the next chapter, the group—with these ends in mind—was involved in the preparation in 1943–45 of very detailed plans for the development of central and eastern Europe.

Other prominent British officials who had been associated with colonial administration were taking up the cause of raising the standard of living specifically in British colonies. As far back as 1929, the British government had introduced a Colonial Development Act that established a small fund to help finance economic development in the colonies. The primary goal at that time had been to create British jobs by boosting overseas markets for British products. In the late 1930s, British officials became more interested in how colonial economic “development” might also improve the lives of the colonized, a shift symbolized by the Cabinet’s approval (with more funding) in March 1940 of a new Colonial Development and Welfare Act. This changed British focus was supported strongly by many associated with the Labour Party and was driven primarily by the outbreak of serious political unrest in 1937–38 in several British colonies in the Caribbean, Africa, and Asia as well as by challenges to British colonial rule emanating from Germany and Japan. 20

The lead advocate of the new British policy was Lord Hailey, who had held high office in India and was a member of the Permanent Mandates Commission of the League of Nations. Appointed to head a committee investigating postwar colonial policy that began meeting in April 1941, he made a speech in October of that year that was seen as a turning point, announcing as he did “a new philosophy of colonial rule” involving concern for standards of living of colonial subjects. 21 As he put it in early 1942, the key issue for British colonial administration was now “whether our policy has been such as to secure the maximum development possible, or development of the type most conducive to raising the standard of living of the colonial population.” He argued that the new prioritization of development was driven partly by knowledge of conditions in the colonies but also by the growth of “the new conceptions regarding the function of the State as an agency for the promotion of social welfare which have forced their way from domestic into colonial policy.” He acknowledged that colonial subjects were asking, “How far has our policy secured the fullest measure of economic advance which their natural resources permit to them? How far has it contributed to a substantial improvement in their standards of social life?” 22 Indeed, many protesters in the colonies in the late 1930s were demanding policies to promote industrialization in their territories. 23

Hailey argued that new approaches to colonial economic policy were needed to serve these goals: “If our primary concern is to be the improvement of colonial standards of living, some of our older conceptions regarding the proper field for the exercise of State intervention in economic matters must be revised.” Hailey also backed international initiatives to raise commodity prices on the grounds that they would help to improve the standard of living in the colonies. In addition, unlike Harrod, Hailey saw the need to encourage some forms of industrialization in the colonies. His reasoning was similar to that of US and Latin American officials: “The creation of secondary industries in the Colonies is essential if we are to secure a more balanced economy for them, and to protect them from the worst effects of those periods of price depression which have hitherto hampered their economic development.” Hailey’s next sentence, however, showed that his support for industrialization did not go too far: “Their chief reliance must always be on agriculture.” 24

There were other limits to the Colonial Office’s embrace of new ideas. At the same time that British officials were attacking the racism of Nazi Germany, the Colonial Office refused to employ non-Europeans. 25 In 1941, however, Hailey had hired a young economist from the Caribbean colony of St. Lucia at the London School of Economics, Arthur Lewis, to study economic issues. Lewis had been actively involved in a campaign of the League of Coloured Peoples to challenge the racist hiring policy of the Colonial Office. He subsequently assumed an important role with the Colonial Economic Advisory Board in 1943–44 studying postwar plans for the colonies. But Lewis’s advocacy of industrialization and a greater state role encountered strong opposition from more conservative Colonial Office officials, leading to his resignation in late 1944. Lewis would go on to a prestigious academic career as one of the pioneers of the field of development economics and winner of the Nobel Prize in economics. 26

Finally, it is worth mentioning that British business groups also indicated their interest in raising the standard of living of poorer regions of the world at this time. In the summer of 1942, five different organizations representing British business released reports on postwar planning and all favored initiatives to promote this goal as a means of generating demand for their products after the war. The London Chamber of Commerce, for example, advocated policies “to raise the standard of living of the backward nations.” Similarly, the Federation of British Industries (FBI) called for initiatives to “to raise the purchasing power of the world,” declaring that there were “vast tracts on the globe where a small rise in the individual standard of life would have a profound effect on the world economy.” The FBI suggested that postwar international investment in poorer parts of the world should be directed not just to the provision of commodities but also toward encouraging “simpler types of local manufacture and services for the needs of the local population.” Support for industrialization, however, was once again controversial. The National Union of Manufacturers, for example, expressed concern about whether industrialization abroad might hurt British exports, and the FBI stressed that international investments in local manufacturing abroad should ensure that undue injury was not afflicted on “established interests.” 27

Toward Bretton Woods

As negotiations with the United States about the Keynes and White plans got underway in the fall of 1942, British official interest in international development lending remained. Keynes, however, decided that it would be “better for the Americans to take the initiative” in the development of specific proposals concerning international investment because the United States would be the world’s major creditor after the war. 28 Indeed, Keynes was very concerned at this time about Britain’s ability to offer postwar financial assistance. When discussing a proposal in late 1942 for the UK to offer a large postwar loan to China, Keynes commented that it had been “written in what one can only describe as an almost lunatic ignorance of the post-war prospects.” 29

As White delayed US work on the topic of international investment, Keynes became increasingly anxious. In late 1942, he asked British officials “Is Harry White giving any sign of life here?” 30 In April 1943, he asked again: “Is there any news whatever about a possible American project on the subject of international investment?” In consultations with European allies, Keynes heard similar concerns. As he told a British colleague in April 1943, “some of the European Allies are taking very strongly the line that neither C.U. [Clearing Union] nor S.F. [Stabilization Fund] is complete without an international investment organization, and they are reluctant to pass finally on the currency proposals until they know a little more about what is intended on the investment field.” 31

At this time, Keynes even suggested to the Dutch that they should consider taking the initiative on the issue. 32 In a memo written in late December 1942 (and subsequently shared with Keynes), Johan Willem Beyen, financial adviser to the Dutch government in exile (and BIS president from 1937 to 1940), had argued for an international lending institution to foster the “development of backward countries,” clarifying that “development means a rising standard of living.” 33 Like others, he was also mindful of the importance to primary exporting countries of initiatives to regulate commodity prices and to provide international short-term credits. When the Dutch finance minister sent formal comments to White on the US and British plans in May 1943, he noted that “adjustment in the case of backward countries may be found in granting long term credits on conditions not hampering but fostering the development of such countries.” 34

Keynes may also have been aware of Canadian interest in the issue. His ex-student Robert Bryce was working in the Canadian Department of Finance and had made a strong case for development lending in a December 1941 memo: “During the tempestuous twenty years between the wars we all fell far short of achieving that freedom from want which we now recognized as one of the new rights of man. We must do better after this war—if our civilization is to survive. We must achieve freedom from want, as Roosevelt said, ‘everywhere in the world.’” 35 Bryce was particularly optimistic about what long-term investment in China could achieve given the size of its population and territory, and he argued that “the challenge of developing China seems far more likely to appeal to the American imagination than the repair of Europe.” He continued:

This looks to be the opening for that New Imperialism which one hears about these days—a benevolent, liberal and far-sighted, if not actually socialist, imperialism—A TVA imperialism. The new imperialists would have as objectives not a high return on capital, but rather a flourishing trade built up on the basis that would be created by the rising standard of living in the capital importing country. More distant objectives would be the peace and strategic security for the lending country, achieved not so much through political influence as through the political stability that a prosperous trade and progressive economic and social development would ensure in the borrowing country. 36

Unlike the Dutch, the Canadian government published a formal alternative to the Keynes and White monetary plans in mid-1943. The plan focused on bridging the gap between those plans rather than on Bryce’s ideas about development lending, but it mentioned the need for “some continuing and stable arrangements regarding international long-term investment” and for action to address “the instability of primary product prices.” 37 In the same year, Bryce also published his ideas in a prominent US book where he made the following argument: “If our wartime protestations of allied solidarity and of a desire to improve the standard of living of all those who live in want are to be carried out…then we must have substantial loans from the richer states to the poorer states of the United Nations…. Billions upon billions of dollars must be invested in Asia, Polynesia, South America, and Africa, if the great masses in these lands are to be made productive and eventually brought up to minimum standards of health and decency, let alone comfort.” 38

The British were also being lobbied to prioritize development issues by the Australian high commissioner in London (and ex–prime minister) Stanley Melbourne Bruce and his close adviser Frank McDougall (who was also a member of the RIIA Economic Group). Both had emerged as high-profile advocates of improved nutrition and living standards within the League of Nations in the 1930s. 39 After the outbreak of World War II, they urged British officials to focus more on these issues in postwar planning discussions. In a speech to the RIIA in May 1940, Bruce put the case this way: “the greatest problem we have to face is the problem of poverty; the poverty of other peoples and, also, the poverty of some nations. We must have international cooperation in any attempt to raise the standard of living of the people…this is not merely, as some people seem to think, some humanitarian desire of a social reformer, it is the soundest economic commonsense. We must raise the standard of living of the people and the spending power of the general masses if we are to restore prosperity to the world.” He also made the case in strategic terms, arguing “there is the necessity for providing economic equality of opportunity for all nations” because “is not the basis of the whole unrest that has led to the present war the fact that we have not faced up in the past to this problem of the inequality of opportunity of different nations?” 40

In addition to their participation in British debates, Bruce and McDougall sought to influence US postwar planning. During a Washington visit in the summer of 1941, McDougall met with top US officials, urging them to prioritize Roosevelt’s goal of “freedom from want,” and especially the goal of providing abundant food for all. He argued that the latter would be an achievable and popular objective, and it would help the agricultural sector and stimulate international trade. But when McDougall sent Morgenthau a memo in August (co-written with Bruce) about Anglo-American cooperation to raise postwar standards of living, the treasury secretary told White that he did not want to discuss it: “I have met this fellow McDougall and he bores me to death, and I am not interested in post war at this time…. I have got too many things to do to win the war before we talk about what we are going to do afterward.” 41 One year later, in September 1942, McDougall had more luck when he found an opportunity to lobby Roosevelt directly about the issue at a dinner that Eleanor Roosevelt had arranged. When Roosevelt announced in early 1943 that the first UN conference would focus on food and agriculture issues, McDougall was delighted, and he became deeply involved in the preparatory work for the May 1943 Hot Springs conference. 42

Because of his focus on postwar monetary plans, Keynes himself was not much involved in the preparations for Hot Springs. Indeed, he was annoyed that Roosevelt had decided “to start with vitamins” rather than international monetary issues in the postwar UN plans. 43 But when Keynes published his ICU plan in April 1943, he pointed out in the preface that the postwar world would also need “investment aid, both medium and long term, for the countries whose economic development needs assistance from outside.” As in earlier drafts, countries with large credit balances in the ICU were encouraged to reestablish equilibrium through measures that included “international development loans.” The ICU was also designed to serve broader international purposes, including working with other agencies such as “a Board for International Investment” and an “International Investment or Development Corporation.” 44

When British officials unofficially received a draft of White’s IBRD dated August 4, 1943, they were appreciative that the United States had finally addressed the issue but they were critical of details of the plan. 45 Because of their government’s financial constraints, British policymakers were wary of White’s idea of a bank to which governments would commit capital. They preferred initiatives that were designed to mobilize private international investment. For example, they discussed the need for an “International Development Commission” that could help initiate, coordinate, and supervise plans for international investment projects. Private investors would be encouraged to fund these projects and the IDC could also work closely with an International Investment Corporation that would raise private funds to lend on to the IDC, by issuing securities in creditor countries whose balances in the ICU were above their quotas. 46

When the British government provided official comments on the US public IBRD plan of November 1943 in mid-April 1944, it continued to urge US officials to focus more on the Bank’s role of guaranteeing private rather than direct lending, and they suggested that countries should not be forced to subscribe capital to the Bank unless they had the capacity to pay (namely by having surpluses in their balances of payments). 47 The efforts of British policymakers to resist making substantial commitments to the Bank’s capital reflected their ongoing concerns about Britain’s finances. In mid-May 1944, Keynes wrote a forceful internal memo highlighting these concerns. He argued that various proposals of British government departments for postwar foreign loans were entirely unrealistic given Britain’s severe financial constraints and possible postwar drawing down of balances that been accumulated in London by members of the sterling area and frozen by Britain during the war. In his words, these proposals represented “the gracious activities of Lady Bountiful, all-oblivious of the bailiff’s clutch, the universal and unthinking benevolence of a family which has always felt rich and for whom charity has become not so much a sacrifice as a convention.” 48

While Britain’s financial situation led Keynes to resist expensive commitments to the Bank, it also provided an incentive for British officials to back the establishment of the IBRD as soon as possible. As Keynes put it, “failing this, there will be the strongest pressure on us to make advances far beyond what we can afford.” 49 At the Atlantic City conference, Keynes made it clear that the British government was in favor of creating the Bank, and he made some further suggestions, included limiting the size of each country’s initial capital subscription. 50 American policymakers largely accommodated the British preferences, setting the stage for the Bank’s formal discussion at Bretton Woods.

At the conference itself, Keynes chaired the commission drafting the Bank’s articles of agreement and he highlighted its development function in his opening comments. After noting that the Bank would initially focus on reconstruction, he added: “as soon as possible, and with increasing emphasis as time goes on, there is a second primary duty laid upon it, namely, to develop the resources and productive capacity of the world, with special attention to the less developed countries, to raising the standard of life and conditions of labour everywhere, to make the resources of the world more fully available to all mankind, and so to order its operations as to promote and maintain equilibrium in the international balances of payments of all member countries.” 51 As we have seen, Keynes also made an important intervention in favor of Mexico’s efforts to ensure that the Bank would give equal consideration to development and reconstruction projects. At the conference, it was also a British official—Lionel Robbins—who insisted on maintaining a reference in the purposes of the Bank to its role in “assisting in raising productivity, the standard of living, and conditions of labor in member countries.” Robbins told the other delegates that Bevin would be “very unhappy” if this language was removed. 52

While Keynes’s support for the development role of the IBRD was appreciated by Southern officials, he encountered strong Southern concerns at Bretton Woods about British policy toward sterling balances held in London. Those holding such frozen balances wanted to be able to access the funds, and they also worried that Britain might devalue sterling or not repay these debts in full after the war. 53 At Bretton Woods, the two largest holders of sterling balances—India and Egypt—urged the conference delegates to allow the IMF to help liquidate them. They cast the issue in development terms. As one Indian delegate, Ardeshir Darabshaw Shroff, put it, “our country is pulsating with hopes and aspirations of large scale industrial development to raise the standard of living of four hundred millions of our population. We cannot, therefore, be asked to wait indefinitely till the United Kingdom has reached a stage where sterling would be freely convertible into other currencies.” 54 A few days later, Shroff released a press statement that reinforced the point: “if you don’t accept our position, you are placing us in a situation which I may compare to the position of a man with a million dollar balance in the bank but not sufficient cash to pay his taxi fare…. Mr Morgenthau in his very fine opening address said ‘Poverty is a menace wherever it is found.’ Do you expect to fulfill the main objectives of the Fund if you allow large countries to be festered with this sort of poverty?” 55

British officials were very worried about the Indian and Egyptian initiative and they opposed it vigorously. 56 They were supported in this stance by the United States. Although White’s early plans had included provisions for liquidating blocked balances, the size of sterling balances had grown enormously since then and US officials were now concerned, in Goldenweiser’s words, that “the amounts involved are so great that they far exceed the entire operation of the Fund.” 57 In the end, India and Egypt withdrew their proposal after Keynes made the following public promise: “when the end is reached and we can see our way into the daylight, we will take it without any delay to settle honorably what was honorably and generously given.” 58

Keynes and International Development

Although Keynes supported the inclusion of development issues among the Bretton Woods goals, his interest in the issue did not seem to match that of many US officials. Kapur, Lewis, and Webb note perceptively that Keynes’s opening speech to Commission II at Bretton Woods quoted above made “development appear to be a means for international stabilization, rather than its end.” 59 As we have seen, this tendency had been apparent from his very early detailed plans in late 1941. Keynes’s reference in his opening speech to making the resources of the world “more fully available to all mankind” also downplayed the needs of poor countries themselves and was reminiscent of earlier British justifications of colonialism according to which Britain was developing the resources of its colonies for the world as a whole. 60 To be sure, Keynes did also speak of giving special attention to “the less developed countries” and of raising the standard of living everywhere (and we shall see in the next chapter how he favored international development schemes drawn up in Britain during the war by East Europeans). But for a man of such eloquence, it is striking that he said relatively little about the cause of addressing poverty or raising standards of living in poorer countries, either at Bretton Woods or in his earlier work in postwar planning.

Beyond his early work on Indian currency and finance, Keynes rarely seemed very drawn to the study of economic development in poorer countries throughout his career. 61 Unlike US officials such as White, Welles, Triffin, or Berle, Keynes had traveled very little in developing countries, aside from a holiday in Tunisia and Egypt. Keynes’s views of imperialism also seemed much less critical than those of many New Dealers. As Chandavarkar puts it, “Keynes’s image of British rule in India was that of a paternalistic regime which protected the Indian peasant against the grasping middleman-moneylender and the urban businessman; gave India a sound monetary system; brought moral and material progress with law and order; and, in short, introduced good government.” Chandavarkar also observes that Keynes, unlike White, was also “strangely impervious to the infant-industry argument” for tariff protection in developing countries and he was “sceptical of India’s industrialisation, and argued with almost Physiocratic fervour that ‘her future prosperity is to be sought almost entirely in the application of more skill and knowledge, and especially of more capital, to the methods of agriculture.’” 62

Keynes has also been criticized by many scholars for dismissing the potential contribution of developing countries at the Bretton Woods conference itself. After learning the details of the planning for the conference in late May 1944, Keynes wrote to two Treasury colleagues: “Twenty one countries have been invited which clearly have nothing to contribute and will merely encumber the ground, namely, Columbia, Costa Rica, Dominica, Ecuador, Salvador, Guatemala, Haiti, Honduras, Liberia, Nicaragua, Panama, Paraguay, Philippines, Venezuela, Peru, Uruguay, Ethiopia, Iceland, Iran, Iraq, Luxemburg. The most monstrous monkey-house assembled for years. To these might be perhaps added: Egypt, Chile and (in present circumstances) Yugo-slavia.” He then added some further comments about the membership of the drafting committee that would meet at Atlantic City before Bretton Woods. The United States had already nominated ten countries for the meeting—itself, the UK, Russia, China, Canada, Belgium, Czechoslovakia, France, Brazil, and Mexico—and Keynes noted that US officials had indicated that they would not object if Australia was added to the list. But he also wanted to add Greece and Holland, and US officials stated that they would only accept Holland if Belgium was dropped. When the United States also wanted Cuba included, Keynes was provoked to make the following comment: “Certainly it would seem quite outrageous and hopelessly unreal to put on to the Committee not only a pack of countries which know nothing of international finance but even Cuba whilst excluding Holland and her Empire. Of Dr. White’s Drafting Committee, Russia, China, Brazil, Mexico and Cuba, know little or nothing of international finance.” 63

Keynes was clearly wrong to dismiss the international financial knowledge of officials from many of the countries he listed and their contribution to the Bretton Woods process. But Keynes’s comments also contradicted earlier statements he himself had made. For example, in November 1943, he had told a colleague that the Chinese commentary on the Keynes and White plans was “an excellent piece of work and shows that there are some people in Chungking who thoroughly understand what the whole thing is about.” 64 Keynes had also corresponded with officials from countries such as Brazil and Mexico about the plans and was aware of their deep understanding of the issues. His comments at this time very likely reflected his long-standing broader frustration with the US approach to postwar planning. As early as 1941, Keynes had favored a planning process in which the postwar international financial order was designed through Anglo-American bilateral negotiations and in which other countries were invited to join only after the rules had been set. 65 As we have seen, US officials consistently rejected this idea, insisting on a process in which all the United and Associated Nations, large and small, would have an opportunity for input first through informal consultations and then through a multilateral conference.

Kapur, Lewis, and Webb suggest that Keynes’s resistance to the US approach may have reflected “an imperial distaste for the democratic charade of an international agreement.” 66 It is also worth noting that Keynes had a history of invoking the “monkey-house” metaphor to criticize large formal international meetings in general. As far back as World War I, he had used the phrase to describe the Inter-Ally Council he had attended starting in late 1917 whose core members included the UK, the United States, France, and Italy, and which involved other war allies as appropriate. 67 But there were also concrete national interests at stake in Keynes’s opposition to the US preference for a large-scale formal international conference. From the perspective of British officials, this format risked undermining their influence. We have seen how British officials feared that the sheer number of Latin American delegates at the Bretton Woods conference would provide the United States with allies who would hold a dominant share of votes on key issues. On the list of countries Keynes dismissed, Latin American countries were very prominent (as were various other countries with close relations to the United States at the time). When he had first seen White’s initial plans in July 1942, Keynes had also expressed deep concern that the voting scheme would allow Latin American countries to outvote Britain and Europe. 68

When invoking these passages of Keynes, contemporary analysts sometimes also cite a comment of White’s at this time as evidence of the latter’s equal insensitivity to the voices of Southern countries. One week before Keynes’s comment, the British official Redvers Opie had been negotiating the membership of the Atlantic City drafting committee with US and Soviet officials (the Chinese were also involved but did not make the meeting). After one session, Opie reported to Keynes that he and White had discussed privately some further issues, one of which was the following: “He said that he hoped you would not object strongly if someone suggested Cuba. They would be silent members and their main function would be to bring cigars.” 69 If we accept Opie’s version of this conversation, White’s comments were certainly insensitive. But to what extent was White simply playing to British prejudices as part of his effort at the time to enhance Latin American representation at the meeting to offset British influence? White was clearly very concerned at this time about how the British were trying to stack the Atlantic City meeting with their dominions and allies (he considered Greece “nothing but a British stooge” and the Dutch as “almost like Stooges”) and he later told Morgenthau that he had addressed this through an agreement with Opie. 70 More generally, as we have seen, White had deep experience with the Cubans and would have known that they had strong views about international monetary and financial issues. Indeed, at the Bretton Woods conference itself, they were far from silent about expressing these views and they acted as a key leader of the Latin American bloc that was supportive of many US goals. As we saw, White even singled them out at the end of the meeting for particular praise for the important role they had played.

One final question needs to be addressed concerning Keynes’s perspectives toward development: did he share the enthusiasm of White, Triffin, and other US officials for a new kind of development-oriented money doctoring in poorer countries? Keynes was indeed very critical in the mid-1940s of the British government’s practice of establishing currency boards in many of its colonies that guaranteed convertibility of local currencies into sterling at a fixed rate and that were backed 100 percent with sterling reserves held in London. When he was asked to comment in 1945 on Burmese currency reform after the country’s liberation from Japanese occupation, he argued that “the existing system of our Currency Boards is…so frantically out of date and, indeed, unreasonable from the point of view of anyone’s interests but our own, that there is not the smallest chance of inducing any self-governing country to hold it. The notion that a country can only expand its domestic purchasing power when it is in a position to cover the increase 100 per cent with foreign resources, belongs I am convinced, to an era of thought that can never return.” 71 In another memo, he described the 100 percent requirement as a means of “cheating the Colonies,” and declared, “whether we are justified in using our prerogative to go on taking money off the other Colonies in so indefensible a way is a question of conscience.” 72 For Burma, he suggested that the 100 percent sterling cover be reduced to create a fiduciary note issue that would provide extra resources to the Burmese government, an arrangement that he argued might also reduce the need for British financial assistance.

Keynes’s willingness to challenge colonial monetary orthodoxy had also emerged early in his career during his discussion of Indian currency and finance. In his first book in 1913, he advocated the creation of a state-owned central bank for India, an idea that was not popular in most British official circles at the time. He also argued that the framers of the new bank’s constitution should “put far from their minds all thoughts of the Bank of England,” and should look instead for a proper model in the “state banks of Europe, especially in that of Germany, or in those perhaps of Holland or Russia.” 73 Those state-owned banks, he averred, were less inclined to follow the automatic strictures of the gold standard, which allowed them to give greater priority to domestic goals. Keynes also hoped India’s central bank could be engaged in commercial banking and in encouraging the general development of banking in India. As Chandavarkar puts it, “Keynes was the first economist to present the economic rationale for a central bank as a developmental agency to promote financial intermediation and finance economic development in an emergent economy, instead of being merely a controller of the monetary system as in developed economies like England.” 74 In these ways, Keynes’s ideas were a precursor to those of US and Latin American officials in the early 1940s (although I have found no evidence that the latter drew on them).

This side of Keynes’s thinking did not, however, find an outlet during the Bretton Woods negotiations. British officialdom remained committed to backing orthodox monetary policies in developing countries within its sphere of influence at this time. Policymaking in this area was dominated by more conservative officials from the Colonial Office, the Foreign Office, and the Bank of England rather than by Keynes’s Treasury. A particularly clear example of the contrast between British and US views on this issue appeared in the case of one of the few African countries that was represented at the Bretton Woods conference: Ethiopia.

British vs. American Money Doctoring in Ethiopia

Africa had few representatives at Bretton Woods for the simple reason that most of the continent was under colonial rule in 1944. Ethiopia, together with Egypt, Liberia, and South Africa, were the only African countries invited to the meeting. South Africa’s conservative government led by Jan Smuts did not show much interest in development issues at the conference and Liberia’s delegation contributed little to the discussion (and then did not even join the IMF until 1962). Egypt’s delegation was more engaged with the development debates, joining India in demanding action on sterling balances and emphasizing the need to support Southern industrialization goals. 75

The official records of the conference do not record many contributions of the small Ethiopian delegation, but its chairman Blatta Ephrem Tewelde Medhen (the Ethiopian minister to the United States) made such a good impression on some US officials that they pushed (unsuccessfully) for his inclusion among the speakers in the final ceremonies. 76 He was also one of only a few foreign delegates featured in a special CBS radio show about the Bretton Woods conference that was broadcast on July 18, 1944. There, he took the opportunity to tell the US audience about his country’s aspirations to “raise our standard of living.” 77 It was outside of the conference, however, in the Ethiopian government’s discussions on monetary reform with U.S. and UK officials, that the clearest example of the link between development goals and Bretton Woods was brought out in the African context.

After Ethiopia had been liberated from a five-year Italian occupation in 1941, the British government recognized its independence in a January 1942 agreement but insisted—much to the frustration of Emperor Haile Selassie and other Ethiopians—on retaining final authority on some issues, including those relating to currency. 78 The question of currency reform quickly became a major source of friction between British and Ethiopian officials. At the time, the Ethiopian monetary system consisted of a chaotic mix of foreign currencies, including the silver Maria Theresa thaler that had long served as a key monetary instrument in the country. Under a plan presented to Ethiopian officials in April 1942, the British proposed the creation of a new national currency, the Ethiopian pound, whose management would be modeled on the currencies of British colonies in East and West Africa. The currency would be pegged to sterling, backed 100 percent by reserves, and managed by a London-based currency board run by two British officials and one representative of the Ethiopian government. 79 Foreign exchange earned from exports would continue to be surrendered to the British exchange control board, even though Ethiopia had not been formally admitted as a member of the sterling area. 80

The Ethiopian government refused the British plan. If a currency board was to be created, they wanted it under their full control in Addis Ababa. 81 But like their Latin American counterparts, Ethiopian officials in fact favored the creation of a central bank that would actively manage the money supply and credit creation with domestic development goals in mind. They stated that a currency board would simply generate procyclical episodes of deflation and inflation in the country according to the state of balance of payments. In addition, they argued that 100 percent backing of the currency would lock up precious foreign exchange that could be used for developmental purposes such as importing capital goods. They also objected to the constraints imposed by British exchange controls. More generally, they viewed Britain’s proposal for a sterling-based currency board as an effort to turn the country into a protectorate or colony. 82

In the face of British intransigence, the Ethiopian government chose unilaterally in August 1942 to reopen the Bank of Ethiopia that Selassie had established before the Italian occupation. 83 Although its purposes were initially described simply as offering industrial loans and acting as the government’s fiscal agent, the ultimate goal was to transform it into a modern central bank managing a new Ethiopian currency. 84 To achieve that goal, the government’s top financial official, British-educated economist Yilma Deressa, decided to reach out to the US government for backing. 85 On a trip representing Ethiopia at the Hot Springs conference between May and August 1943, Deressa met with various US officials, making the case that international financial and technical assistance for Ethiopia’s development goals was “implied in the Atlantic Charter.” 86 Ethiopia had already been made eligible for Lend-Lease in late 1942 and US officials were now very much in favor of offering assistance, with Adolf Berle taking on the task of coordinating help. 87

The United States had only some “minor” strategic and economic interests in the country at the time. 88 The primary US interest in supporting Ethiopia stemmed from the country’s broader symbolic importance. As one prominent US adviser to the Ethiopian government later put it, “Ethiopia had become the first of the states opposing Axis aggression to be freed from its domination. The United States was anxious to embark upon a program of rehabilitation there to serve as encouragement to the peoples of countries still under enemy occupation.” 89 Roosevelt was particularly concerned that British conditions at Ethiopia’s expense in the 1942 agreement were inconsistent with the Atlantic Charter and he worried that Britain was trying to impose a protectorate on the “First to be Freed.” 90 As an independent African country, Ethiopia had also long been important to many African Americans “as a symbol of Black power, pride, and possibilities.” 91 African Americans had protested very actively against Italy’s invasion of the country in the mid-1930s as well as against the US decision not to become involved in the conflict. 92 United States officials were quite conscious of the symbolic value of assisting Ethiopia in this situation; as one internal State Department memo put it in late 1942, US assistance would show “in a concrete way the interest of the United States in the stake which Negroes have in this war.” 93

As part of his requests for US assistance, Deressa met with Harry Dexter White and other Treasury officials to discuss the country’s monetary problems. Included in some of the meetings was George Blowers, an American to whom Deressa had offered the governorship of the Bank of Ethiopia in June without notifying the British or even the incumbent governor (a Canadian with British citizenship named Charles Collier). 94 Blowers was a useful ally for Deressa, and he would represent Ethiopia at the Bretton Woods meetings along with Medhen and a secretary, Helen Willard. In addition to being “strongly anti-British,” 95 Blowers had previously worked for the Bank of Monrovia (Liberia’s only bank) where he had helped the country’s government in mid-1942 to lobby the US Treasury to back a Liberian plan to replace British coin with US currency. 96 At the time, White had concluded that it might be best to avoid offending Britain and simply allow the use of US currency to grow naturally as US army spending in Liberia expanded. 97 But when Deressa presented him with plans for the Ethiopian currency reform, White was more willing to challenge British influence.

At a July 1943 meeting with Deressa and Blowers (and after consulting with the State Department), White indicated his willingness to back Ethiopia’s desire for a new currency. 98 He suggested that the currency use the decimal system (and Deressa reported at a meeting in August that Ethiopia would use the dollar as its unit 99 ); that Ethiopia should create a fiduciary issue of the currency equal to approximately 50 percent of the East African currency presently in circulation (which would be retired); and that the rest of the issue should be backed 100 percent in foreign exchange and gold. He also suggested that the US Exchange Stabilization Fund might be able to lend funds to help Ethiopia acquire reserves for the new currency, although he added that nothing could be done before the 1942 UK-Ethiopia agreement ended.

In May 1944, two months before the Bretton Woods conference, the Ethiopian government gave notice that it would terminate the 1942 agreement and by December a new treaty had been signed with Britain giving Ethiopia full sovereignty, thus clearing the way for the currency plan to be introduced. At the time of the May 1944 announcement, the country’s new notes and coins had already begun to be produced secretly in the United States. Not until December 1944 were the British finally made aware of Deressa’s and Blowers’s plan for a new Ethiopian dollar, although Medhen had made no secret in his CBS radio interview at Bretton Woods of the fact “it is our hope that after this war we will have our own medium of exchange.” 100 After the British learned of the detailed plan, British officials said they had “very little hope for the new currency” although they also acknowledged that “we cannot stop this scheme however crack brained we think it.” 101 But when the Ethiopian dollar was finally introduced on the emperor’s birthday in July 1945, British officials were forced to acknowledge that the new currency “was an immediate success.” 102

United States officials were much more welcoming of the new currency, stating that the new Ethiopian monetary legislation was “well adapted to the International Monetary Fund.” 103 Federal Reserve officials called the 1945 monetary reform “a step toward the economic emancipation of Ethiopia.” They also highlighted the broader connection between Ethiopia’s development aspirations and its participation in the Bretton Woods institutions, noting that the IMF would help support its fragile balance of payments while the IBRD would provide crucial foreign capital to “carry through a program of long-term development.” 104 Indeed, when the Ethiopian government requested US comment on the legislation it had introduced in July 1945, Treasury officials suggested modifications that might allow the monetary system to serve the country’s development goals even better. Because of the need to build confidence in the new currency, the Ethiopian government had initially backed it with a reserve fund made up of a minimum of 75 percent of gold, silver, and foreign currencies and a maximum of 25 percent in Imperial Treasury debt. 105 One of White’s staff prepared a memo that recommended lowering gold, silver, and foreign exchange share below 75 percent in order “to allow for an expansion in government financial operations or a higher level of domestic production.” The memo also suggested that Ethiopia’s legislation provide more detail about the ability of the government to sell its debt to the central bank, because deficit financing might be desirable “if the Ethiopian government intends to engage directly in the financing of the internal industrial development of the country.” In addition, the absence of any provisions for exchange controls was noted and the memo encouraged this gap to be remedied. 106

This advice was in keeping with the general tone of the recommendations that White had backed in Cuba and Honduras and that Triffin was promoting elsewhere in Latin America. White approved the ideas, but he was also very aware that they departed considerably from British views of appropriate Ethiopian currency policy. To avoid controversy with the British, he recommended that the memo be sent to Ethiopian authorities through unofficial channels. 107 The differing perspectives of American and British officials on Ethiopian reforms were indeed striking, and they reflected a deeper contrast between the two sets of policymakers in their views toward monetary policy in Southern countries. While the Americans were keen to assist in the creation of central banks with developmental missions, the British worked actively against this in Southern countries within their sphere of influence, preferring to maintain sterling-backed currency board arrangements.

The British preferences partly reflected the financial conservatism of many of the country’s officials as well as the fact that sterling-backed currency boards supported its fragile balance of payments. But British policy was also influenced by imperial attitudes. In Ethiopia, local British officials were very resentful of Blowers and other Americans who were seen, in the words of one British Foreign Office bureaucrat, to “pander to the worst Ethiopian instincts rather than advise in accordance with the British schoolmasterly tradition.” 108 Local British policymakers also described the Ethiopians in charge of financial and economic affairs as “nothing more than unqualified, incompetent and greedy amateurs.” By contrast, US officials often saw the British complaints about Ethiopian officials as “exaggerated” and simply “an attempt to disparage Ethiopia’s efforts to handle her own political and economic affairs.” 109 More generally, US officials also complained that British advisers in Ethiopia were “dominated by crude concepts of Empire” and “no effort is made to help the country develop.” 110

There is no question that the British government backed commitments to international development during the Bretton Woods negotiations, but British officials certainly did not play any kind of leadership role in this area. Keynes’s proposals for development lending in his first detailed drafts appeared largely derived from US ideas and he also deliberately left the development of the IBRD to the Americans. He was also reluctant about committing public money for development lending, thus contributing to the watering down of the IBRD’s direct lending role in favor of its function of guaranteeing private investment. British officials also showed little interest in some of the other development issues that White addressed in his initial plans, such as regulation of capital flight and debt restructuring, and they were less inclined to support import-substitution industrialization and new US-backed approaches to money doctoring. In addition, the British government’s stance toward frozen sterling balances was unpopular among important Southern countries, and British officials were much less keen than the Americans on involving Southern countries in the design of the postwar international financial order.

These British views on development were influenced by a variety of factors, such as the country’s financial constraints, imperial and conservative attitudes, the desire to maximize British influence on postwar plans, and Keynes’s own intellectual interests. To be sure, there were some British officials, particularly those on the left such as Bevin, whose enthusiasm for international development matched that of many US New Dealers. The same was true of officials from other parts of the world who sought to influence British policy, including not just Ethiopian policymakers but also individuals such as Lewis, Bryce, Bruce, and McDougall. As we shall see, the British also encountered strong backing for international development from their most important colony, India, as well as from a number of figures from eastern Europe who were living in London during the war.

1. See for example Kapur, Lewis, and Webb 1997, 58, who cite Oliver 1961a, 7. For Keynes’s alleged belated interest, see also Meier 1984a, 12.

2. Skidelsky 2000, 135.

3. Keynes to Wilson, November 25, 1940, p. 1, UKT 247/85. See also Keynes, “Proposals to counter the German “New Order,” December 1, 1940, p. 3, UKT 247/85. For others in Britain thinking along these lines, see Carr 1939, 238–39.

4. Bullock 1967, 39–42.

5. Bullock 1967, 201–2.

6. Eden quote from Broad 1955, 154. As noted in chapter 4, Roosevelt’s “Four Freedoms” speech in January 1941 may itself have been influenced by British debates on social security in the fall of 1940.

7. Quoted in Borgwardt 2005, 304. Within Britain, this commitment was then reinforced further by the publication in late 1942 of the Beveridge Report which explicitly invoked the Atlantic Charter in recommending a domestic plan for social security.

8. Quoted in Borgwardt 2005, 23.

9. Quoted in Borgwardt 2005, 27. See also p. 23 and Bullock 1967, 69.

10. Quoted in Bullock 1967, 203.

11. Bullock 1967, 278.

12. Borgwardt 2005, 34. This was rather ironic since he was the likely source of the line ”all the men in all the lands” (pp. 28–29).

13. Patrick 2009, 187; O’Sullivan 2008, 138; Borgwardt 2005, 34.

14. Keynes 1980b, 80, 94, 94, 91. See also pp. 47, 59, 91; Skidelsky 2000, 218; Harrod 1951, 527–28.

15. Keynes 1980b, 94. See also Dimand and Dimand 1990; Moggridge 1992, 680–81; Skidelsky 2000, 234–49. As noted in chapter 4, further discussions of the commodity issue took place outside of the Bretton Woods negotiations. For Britain’s involvement, see also Penrose 1953, chap. 4.

16. Alfred Hurst to R. Hopkins, April 1, 1942, p. 2, UKT 247/115.

17. Roy Harrod, “Foreign Lending, Industrialization and the Clearing Union,” p. 13, 7, 13 (n.d. but around August 1942), UKT 247/33. See also Harrod, “Three Immediate Questions,” pp. 1, 2, October 9, 1942, UKT 247/11.

18. June 1941 document quoted in A. A. Evans, “Objectives,” February 4, 1943, p. 1.

19. A. A. Evans, “Objectives,” February 4, 1943, pp. 6–7.

20. Havinden and Meredith 1993, chaps. 7, 9; Lee 1967; Alcalde 1987, 30–32, 45–49, 70–74, 117–19. The United States was also pressing the British to promote economic development in its Caribbean colonies, through a joint Anglo-American Caribbean Commission created in March 1942 (Howard 2003, Alcalde 1987, 131–34).

21. Quoted in Lee 1967, 16–17. See also Alcalde 1987, 117–19; Havinden and Meredith 1993, 215.

22. Hailey 1942, 111. See also Cowen and Shenton, 1996, 294–95; Arndt 1987, 22–29.

23. Farrell 1980, Bose 1997.

24. Hailey 1942, 112–13.

25. Hypocrisy on race issues was not limited to the British. See, for example, Welles’s views (O’Sullivan 2008, xviii, 138–39, 178).

26. Tignor 2006, chap. 2. See also Farrell 1980.

27. All quotes in (no author), “British Business Men on Post-war Reconstruction,” July 6, 1942, p. 3, RIIACR, Economic Group Paper 49.

28. Keynes 1980b, 200. See also p. 196 and Harrod 1951, 533.

29. Keynes, “Mr Harcourt Johnstone on Post-war Loans to China,” December 17, 1942, p. 1, UKT 247/3.

30. Keynes 1980b, 200. White also reported that the British were asking about the IBRD plan in late 1942. “Interdepartmental Subcommittee meeting in Mr. White’s office, December 1, 1942,” in “Memoranda: Treasury Meetings, Fund and Bank 1942–44,” BWCC, box 11/5.

31. Both quotes in Keynes 1980b, 243. As we shall see in the next chapter, Keynes was also very encouraging at this time of a Polish proposal for international TVA-like lending to east central Europe.

32. Keynes 1980b, 243.

33. J. W. Beyen, “Notes on Monetary Conditions After the War,” December 30, 1942, p. 4 (but submitted to the US Treasury in April 24, 1943), HDWP, box 8, folder 2. See also Beyen 1949, 148; Bittermann 1971, 63 n. 9. Li (2007) also notes the growing interest of the Dutch in improving standards of living in their Dutch East Indies colony (Indonesia) in the first few decades of the twentieth century.

34. J. Van Den Broek, “Remarks Concerning the American and British Plans for International Stabilization of Currencies,” May 20, 1943, p. 7, HDWP, box 8, folder 2.

35. R. B. Bryce, “Basic Issues in Post-war International Economic Relations,” December 1941, p. 2, NAC, RG19 vol. 3977 E-3-1-2.

36. Bryce, “Basic Issues,” 5.

37. Horsefield 1969b, 104.

38. Bryce 1943, 364.

39. Lee 2010, 105, 112–13, 122–24; O’Brien 2000.

40. “‘The League and Economic Reconstruction’ by Rt Honourable S. M. Bruce, Record of Meeting Held at Chatham House on Thursday May 9th, 1940,” pp. 8–9, RIIA, file 8/630. Bruce and McDougall were also aware that the international promotion of better nutrition and diets would benefit Australian agricultural exports (e.g. O’Brien 2000). Bruce’s speech was in fact reporting on a special committee of the League of Nations he had chaired in the summer of 1939 that recommended strengthened international economic and social cooperation. Although the committee’s final report did not explicitly refer to “development,” it had called attention to the aspirations for higher living standards in poorer parts of the world (League of Nations 1939, 9). Bruce’s arguments highlighted how the rationale for promoting development in League circles was shifting away from the paternalistic “civilizing mission” of the League’s covenant (see chapter 2) to a focus on world prosperity and peace (see also Zanasi 2007, 148-50; Nurkse 1944, 203; Love 1996, 116–17).

41. MD, book 437, pp. 35–36. See also White to Morgenthau, “British Empire–American Cooperation on problems of post-war reconstruction,” September 2, 1941, SMHDW, box 14; Stirling 1974, 205, 258.

42. Lee 2010, 169–70; O’Brien 2000, 173–74.

43. Quoted in Skidelsky 2000, 300.

44. Horsefield 1969b, 19, 24, 34.

45. Keynes 1980b, 338–39.

46. J. E. M., “International Investment,” September 9, 1943, UKT 247/76.

47. “Comments on the United States Proposals,” April 13, 1944, UKT 247/21.

48. Keynes, “Our Financial Problem in the Transition,” May 16, 1944, p. 22, UKT 247/55. See also W. Eady to Richard Hopkins, April 3, 1944, p. 1, UKT 247/27.

49. Keynes, “The Bank for Reconstruction and Development,” June 9, 1944, p. 1, UKT 231/354.

50. Mason and Asher 1973, 20; US State Department 1948, vi; Bernstein 1993, 196; Mikesell 1994, 40.

51. Keynes 1980c, 73.

52. Robbins quoted in Urquidi 1996, 36.

53. The latter fears were well founded; see Penrose 1953, 55.

54. Shroff in US State Department 1948, 426.

55. US State Department 1948, 1173. For Egypt, see US State Department 1948, 128, 185.

56. See for example Howson and Moggridge 1990, 172–74, 179. Their fears about sterling balances also help to explain the British resistance to the Fund having jurisdiction over capital account transactions (James 1996, 40). The British had made sure that there was no mention of the sterling balance issue in the April 1944 Joint Statement (Mikesell 1994, 24).

57. Schuler and Rosenberg 2012, 323. See also Steil 2013, 218; US State Department 1948, 1168–69. White told US delegates at the start of the conference that the United States needed to stay out of the India-UK dispute on this issue (MD, book 749, pp. 14, 19). At the conference, others also opposed the Indian and Egyptian initiative, such as China, France, Poland, and Brazil (Schuler and Rosenberg 2012, 325, 348–49; US State Department 1948, 1173–74).

58. Schuler and Rosenberg 2012, 72. Egypt also secured a British promise to invite Egypt to London “to arrive at a satisfactory solution of the problem” (Schuler and Rosenberg 2012, 572).

59. Kapur, Lewis, and Webb 1997, 62.

60. For the earlier British view, see for example Alcalde 1987, 29; Hodge 2007, 118.

61. Chandavarkar 1989, 146; Arndt 1972, 17; Johnson 1978; Alcalde 1987, 29.

62. Chandavarkar 1989, 2, 182, 136, 135.

63. Keynes, “The Monetary Conference,” to Sir D. Waley and Sir W. Eady, May 30, 1944, pp. 2, 3, UKT 247/28. The country spellings are in the original.

64. Keynes to Mr. N. E. Young, November 11, 1943, p. 2, UKT 249/3.

65. Keynes 1980b, 45, 54.

66. Kapur, Lewis, and Webb 1997, 62.

67. Steil 2013, 69. He had also used the “monkey-house” image in 1942 with White when arguing against the idea of a large conference (Penrose 1953, 49). See Steil (2013, 164) for another use in February 1943.

68. Keynes 1980b, 162.

69. Opie to Treasury, Viscount Halifax, No. 391 REMAC, May 24, 1944, p. 2, UKT 247/29.

70. Quotes from MD, book 740, p. 84; book 749, p. 145. For his insistence on greater Latin American representation at Atlantic City to offset British allies, see also the discussion in the next chapter.

71. Keynes to Rowe-Dutton, “Burma Currency,” July 10, 1945, p. 2, UKT 247/5.

72. Keynes to D. Waley, “Burma Currency,” June 7, 1945, pp. 1–2, UKT 247/5.

73. Keynes 1980a, 168.

74. Chandavarkar 1989, 138.

75. For Egyptian support for Southern industrialization, see US State Department 1948, 1194. For India’s support, see chapter 9.

76. MD, book 756, p. 273.

77. MD, book 755, p. 266.

78. Degefe 1995.

79. For the British plans, see Degefe 1995, 237, 242–23 and Deressa to White, July 21, 1943, TSF, Entry 67A245, box 2.

80. William Cole, “The Current Banking and Exchange Situation in Ethiopia,” February 28, 1944, DSFS, Ethiopia, Classified and Unclassified General Records 1943–1955, box 3.

81. Deressa to White, July 21, 1943, TSF, Entry 67A245, box 2.

82. Degefe 1995.

83. Schaefer 1992.

84. For the bank’s initial purpose, see Degefe 1995, 236–38; Mauri 2010.

85. His British education is mentioned in Norberg (1977, 83 n. 39) but I have found no other details.

86. Deressa to US Secretary of State, June 24, 1943, p. 3, DSFS, Ethiopia, Classified and Unclassified General Records 1943–1955, box 1; MD, book 654, pp. 170ff.

87. “Proposed Export-Import Bank Loan to Ethiopia,” July 19 1943, DSDF, 884.51/7-2944. For Berle’s role, see for example Berle to Mr. Pierson, August 4, 1943, and Morgenthau to Berle, August 6, 1943, DSDF, 884.51/66.

88. Quote from “Memorandum of Conversation: Monetary Problems involved in American Supplies to Ethiopia,” June 6, 1944, pp. 6–7, DS, Lot File No. 56 D 418 Office of African Affairs, Subject File, 1943–55, file: Middle East-Financial Pool-1944 Ethiopia. The US war effort in Europe and the Middle East benefited from cereal purchased from Ethiopia as well as from machinery and radio communications facilities in the country. Some US firms were interested in oil concessions and civil aircraft rights in the country (Spencer 1984, 104, 113; Marcus 1983).

89. Spencer 1984, 103; see also Marcus 1983.

90. Spencer 1984, 104.

91. Gramby-Sobukwe 2005, 784.

92. Scott 1993.

93. Quoted in Spencer 1984, 103–4. When prominent financial officials from many countries attended a conference in Savannah, Georgia in 1946 to establish the IMF, local crowds showed almost as much interest in the arrival of the Ethiopian delegation as they did in that of the famous Keynes. The fact that the country was represented by George Blowers, a white American head of the Bank of Ethiopia, however, created what one US official called “a big letdown for everybody” (McKinzie 1972, 45).

94. (Illegible name) to Secretary of State in Washington, December 28, 1943 and Caldwell to Secretary of State, October 22, 1943 and (Illegible name) to John K. Caldwell, December 6, 1943, DSFS, Ethiopia, Classified and Unclassified General Records 1943–1955, box 1. For the initial offer of employment, see also “Memorandum of Conservation: Governor of the State Bank of Ethiopia,” June 22, 1943, DSDF, 884.516/15. Blowers formally assumed the position in mid-November.

95. Source 1067, “Anglo-Ethiopian Relations.” August 20, 1945, p. 1, DSFS, Ethiopia, Classified and Unclassified General Records 1943–1955, box 6.

96. Before joining the Bank of Monrovia in 1937, Blowers had worked in Singapore and China for National City Bank (which perhaps not coincidently was printing the new Ethiopian notes). Source 1067, ”American Advisers with the Ethiopian Government,” August 20, 1945, DSFS, Ethiopia, Classified and Unclassified General Records 1943–1955, box 6. For National City Bank’s printing of the notes, see W. Doll to Lord De La Warr, December 15, 1944, FO 921/358.

97. See for example Southard, “Liberian Currency Problem,” July 13, 1942, CFHDW, box 8, Chron. 37; White to Bell, April 23, 1942, CFHDW, box 7, Chron. 34. For White’s involvement in this Liberian episode, see also Boughton 2009, 15. The Liberian government did finally make the US dollar sole legal tender on January 1, 1944.

98. “Memorandum of a Meeting in Mr. White’s Office, July 9, 1943,” ITM, box 21; Glendinning to White, July 16, 1943, TSF, Entry 67A245, box 2. See also J. W. Gunter to Mr. White, “Meeting in Mr. White’s Office with Representatives of Ethiopia on May 15, 1943,” May 22, 1943, CFHDW, box 9, Chron. 47.

99. C. D. Glendinning, “Meeting in Mr. White’s Office, August 12, 1943, with the Ethiopian Minister of Finance,” ITM, box 21.

100. MD, book 755, p. 266.

101. Quotes from W. Doll to De La Warr, December 15, 1944, p. 3, FO 921/358; and Miss Evans, December 22, 1944, p. 1, FO 921/358.

102. “Economic Report,” p. 5, J2264/210/1, FO 371/53461. See also Spencer 1984, 166. Although the government had also hoped to eliminate the Maria Theresa thaler from circulation immediately, the thaler’s use persisted for a number of years afterward (e.g. H. D. Jellinek to Knoke, February 11, 1947, ISF, box 114).

103. Wasserman 1946, 361.

104. H. D. Jellinek to Knoke, May 17, 1946, p. 1, 5, ISF, box 114.

105. Wasserman 1946, 360.

106. REH, “Ethiopia’s Plan for a new monetary system,” October15, 1945, pp. 1, 2, TSF, Entry 67A245, box 2.

107. It is unclear whether the memo was ever sent. See Frank Coe to Glendinning, November 23, 1945; Coe to White, December 10, 1945, Coe to Gunter, December 13, 1945; TSF, Entry 67A245, box 2.

108. D. Riche, January 20, 1945, p. 1, FO 371/46049.

109. Glendinning to Glasser, July 9, 1946, p. 1, TSF, Entry 67A245, box 2. British quote from W. Doll to De La Warr, November 6, 1944, p. 1, FO 921/358. See also Scrivener, “Ethiopia,” memorandum to Secretary of State, August 9, 1945, FO 371/46053.

110. James Landes, “American Policy in the Middle East,” (n.d., but stamped October 11, 1944), Annex E, p. 1, DSFS, Ethiopia, Classified and Unclassified General Records 1943–1955, box 2.