The two key figures in Bretton Woods, N.H., during three summer weeks in 1944 came from opposite ends of the social scale. On the one hand, British economist John Maynard Keynes has been described as the ‘servant-reared scion of Cambridge academics.’ U.S. Treasury official Harry Dexter White, on the other hand, was‘ a brash, dogged technocrat raised in working-class Boston by Lithuanian Jewish immigrants.’
One was a Soviet spy.
The 22-day Bretton Woods Conference increased government power over markets and ended shortages of gold and U.S. dollars. It established the International Monetary Fund (IMF) to prevent the manipulation of exchange rates and to restrain dictators from economic aggression. It also created a predecessor to the World Bank.
Some people credit the economic reforms that emerged from Bretton Woods for the robust economic recovery after World War II. Others blame the World Bank and IMF for increasing poverty around the world.
The conference got off to a chaotic start at exactly 3 pm on July 1, 1944. The Mount Washington Hotel had been closed for two years, and its president needed to be persuaded to reopen it. The staff had only a month to get the hotel ready for the sudden influx of guests, and there were shortages of everything from beds to hot water.
Bit there was a political reason to hold the conference at the Mt. Washington Hotel: the Republican senator from New Hampshire, Charles Tobey.
Treasury Secretary Harry Morgenthau wanted an Eastern resort away from the heat and crowding of Washington, D.C. Charles Tobey faced a tough primary opponent. He was also likely to vote against the formation of a new international organization. President Roosevelt figured the conference would help Tobey win his primary, and he’d be more likely to vote for the Bretton Woods agreement when it came to the Senate for approval.
Harry Dexter White
Harry Dexter White was born on Oct. 9, 1892, the seventh son of recently arrived immigrants. He enlisted in the U.S. Army and served in France. It wasn’t until he was 30 that he entered college. He graduated from Stanford and earned a PhD at Harvard at 38.
After teaching for a few years, White accepted a job at the U.S. Treasury in 1934. Long fascinated by the Soviet Union, and in Washington, D.C., he met men working for the Soviet Underground, including Soviet spy Whittaker Chambers.
Officially, Harry Dexter White was a New Deal Democrat. Unofficially, he supported Soviet-style socialism. He believed it worked.
At Bretton Woods he served as the senior U.S. negotiator. He dominated the conference and prevailed over Keynes, who sought a central world bank and a reserve currency other than the U.S. dollar. White was solicitous of the difficult Soviets at the conference, but biographers say that didn’t affect his negotiations on behalf of U.S. interests.
On Jan. 23, 1946, President Truman nominated Harry Dexter White as U.S. director of the International Monetary Fund. The Senate approved him two weeks later, unaware the FBI had White under investigation.
On June 19, 1947, Harry Dexter White abruptly resigned from the IMF and cleared out his office that day. The U.S. attorney general had just ordered a federal grand jury investigation into charges he had passed documents to the Soviet Union during World War II.
White testified that he was not a Communist before the House Un-American Activities Committee on Aug. 13, 1948. Three days later he died of a heart attack at his home in Fitzwilliam, N.H. He was 55 years old.
Aftermath of Bretton Woods
The World Bank and IMF have come under heavy criticism. Nobel Prize winner Joseph Stiglitz argued their free-market reforms harm developing countries.
The Washington Consensus, reached in the 1990s by the two organizations in the 1990s, also has a growing chorus of detractors. The Consensus preaches deregulation, privatization and shrinking of government. Critics call those “failed neoliberal policies” and charge they have exacerbated poverty.
With thanks to The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order by Benn Steil. This story was updated in 2022.
Images: Mt. Washington Hotel By rickpilot_2000 from Hooksett, USA – Mt. Washington HotelUploaded by jbarta, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=26447136.