The Deal That Put The Dollar At The Centre Of The World The Story Of Money

TITLE: The deal that put the dollar at the centre of the world | The Story of Money CHANNEL: The Story of Money Podcast | Financial Times DATE: 2026-05-20 ---TRANSCRIPT--- He has this big argument with the American delegation. It was actually [music] over whether the Bank for International Settlements should be shut down. And part of what the Americans wanted, they thought it was semi-corrupt and they kind of wanted to it to be shut down immediately. Keynes did not want it to be shut down immediately and they were fighting over that. Keynes got very angry about it. He’s running upstairs for a meeting and then has a heart attack.

[music] Today on the story of money, the origin story of what is perhaps the most important monetary agreement in modern history. And yet, ironically, it was birthed in a remote and dilapidated New England hotel with a leaky roof, broken furniture, and really bad paint job. Ah, well, then I think I know which agreement you’re talking about, Gillian. It’s the one that arguably provided the foundations for three decades of booming trade, economic growth, all that good stuff at the end of World War II. And yes, this agreement actually came out of three weeks of rushed negotiations among hundreds of delegates who I gather, frankly, spent more time drinking than sleeping. Absolutely. But the point is, it formally enshrined the US dollar as a new global reserve currency, knocking the pound out. And at the same time though, the talks were so chaotic that Britain’s lead negotiator didn’t even grasp this fact until he already signed it. Although he was supposed to be one of the most brilliant economists in the world. It also produced two of the world’s most important financial institutions and we still have them today, the International Monetary Fund and the World Bank. And yet, neither of these institutions actually ended up serving the purposes for which they’re originally set up. And here’s the crowning irony. At the time, John Maynard Keynes, the British economist who was at the college which I oversee today, King’s College, Cambridge, and his US counterpart, Harry Dexter White, thought this was the crowning achievement of their careers. And yet, they would soon be dead, and in fact, it would contribute to the undoing of both of their reputations subsequently. So, if you hadn’t guessed it already, we’re obviously going to be talking about the Bretton Woods Agreement, which was signed on the 22nd of July in 1944. So, stand by, it’s coming up here on the story of money from the Financial Times with me, Gillian Tett. And me, Robin Wigglesworth. What happens next in the story of money? Nuveen has spent over 125 years helping clients answer this question. By investing in the growth of businesses, real estate, infrastructure, natural capital, we continue to deepen our expertise across income and alternatives, so investors can confidently write the next chapter of their own portfolio stories. Nuveen, invest like the future is watching. Visit nuveen.com/future to learn more. Investing involves risk. Principal loss is possible. So, Gillian, I think it’s fair to say that most people these days, if they think about Bretton Woods, the words Bretton Woods really, uh what comes to mind is the architecture of the entire post-war financial system, right? Absolutely. In fact, it’s a bit of a modern monetary meme, if you like, because it’s used as a shorthand for the system it fixed exchange rates that the agreement ushered in for the first 25 years after the end of World War II. And even today, people use that meme to talk about the IMF and World Bank, calling them the Bretton Woods institutions because they came out of that conference in 1944. Yeah, but what people don’t always realize or appreciate is that Bretton Woods, the conference, was possibly one of the maddest episodes in all monetary history. Uh Keynes called it the most monstrous monkey house assembled for years. I mean, it had everything. Uh drunkenness, debauchery, espionage, a heart attack, famous economists, and you know I like famous economists in all my good stories. Uh and it was set in the final month of the Second World War in this remote decaying hotel that sounds frankly a little bit like the hotel in The Shining where with Jack Nicholson. As luck would have it, we have the perfect person to tell us that story who actually came up to Cambridge, Keynes’s stamping ground, recently to talk about his book, Ed Conway. Ed, welcome to the show. It’s an honor to be here. So, Ed, before we dive into things, I just have to stress to to viewers that we have not kidnapped you. Uh because it looks like we’re holding you hostage in some horrible dingy room. I I know it probably is one of those soundproof booths that you have at Sky News, but it does kind of look like a prison cell or something, right? My panic room. Now, Ed, you’re a long-time business journalist currently working as the economics editor at Sky News. So, many of our listeners will have seen you on television. But, you’ve also got a reputation as an author of some really important books about how the modern global economy works, including the one about Bretton Woods conference, which gave birth to all this, which is called The Summit. Sounds a bit like a John Grisham novel. Well, I should say thank you, Gillian, that’s kind. And yeah, I mean, I I was drawn to this partly because this is like a really good story that as as you both laying out, it’s kind of got the drama, it’s got the mise-en-scène of this extraordinary hotel in the middle of nowhere, and and the stakes were so high. So, the stakes both both in wartime when the British delegation and the European delegation left left Europe, it was as D-Day was happening. So, you have all of the drama lining up, and the stakes for the global economy again are extraordinary. And as you say, it Bretton Woods has become this kind of meme that every time people have some sort of gripe about the structure of the the global international monetary system. “We need a new Bretton Woods” is the is the phrase that always comes up. And so so when I kind of went to it, it was partly to try and understand what you know, what what would that actually mean in practice, but also partly to understand the kind of cauldron in which this was forged, and to try to to tell to tell the story, the human story of it as much as the the the specific economics of it. That’s a good moment to bring in two of the star characters in this story. And every great story, even in economics, or especially in economics, needs colorful people. So, let’s start with the most famous of the two men who were really at the center of it, John Maynard Keynes. He’s somebody who hangs over me every single day at Cambridge University because he was at King’s College, Cambridge. He dominated the college for many years. His portrait and his bust is everywhere. Um but what kind of man actually was Keynes, and how did he end up at the Bretton Woods Hotel leading the British delegation? He was a Renaissance man. He was I mean, obviously we we know him as this famous economist. Um but his interests kind of were spread across all sorts of different disciplines. I mean, he was obsessed with the arts, he was obsessed with literature. He was a part of the the Bloomsbury set. So, you know, in the kind of 1910s, the 1920s, this group of people, Virginia Woolf, Vanessa Bell, E.M. Forster, Lytton Strachey. He he was part of that kind of that club. And it was a club that was very liberal, very much part of the establishment, but they were um um fixated with intelligence. And I suppose that’s kind of this this kind of Right. key strength and weakness of of John Maynard Keynes. He was he he had this extraordinary intellect, and from his early days regarded as a prodigy essentially. Um but he was also massively intellectually snobbish. And so that meant that when whenever he would have meetings with people, if he didn’t intellectually respect who he was talking to, he would treat them like dirt. And that’s not great politics at all. Now, we have the archives of Keynes at King’s College, and one of the most more moving part of the archives was Keynes’s trip to Paris in 1919 after World War I, when he fell, as he wrote in letters to his mother, into a deep depression about what was happening. And that’s absolutely critical to why he so fought so hard years later in 1944 to try and create Bretton Woods. Explain to us why he was so depressed after World War I, and why in many ways what happened was his second attempt to fix it. The starting point for all of this was that throughout this period there was a fixation with the state of the international monetary system, which in a way, like to to the modern mind, feels quite foreign, cuz we’re used to this era of exchange rates that float against each each other. We’re used to, you know, the fact that a country like Britain or the US has this enormous deficit in its current account and its budget deficit. Back in in that world, there was this kind of obsession with trying to maintain some degree of stability in the monetary system. So so maintaining the fact that exchange rates were going to be fixed with each other, maintaining the notion that countries shouldn’t have enormous deficits or enormous surpluses against each other. And a lot of that kind of went back to the old idea of the Victorian gold standard, so that there was this notion and and a system whereby if you were kind of trading with another country, that gold would be this kind of anchor that would keep your exchange rates fixed with each other and often when you would kind of trade with each other gold would be that somewhere in the middle. And that entire system, that Victorian gold standard, basically broke down in the face of the First World War. And when the First World War came to an end, um obviously there was this effort to try to create some sort of a settlement between the both both sides and that happened at Versailles. Um but what was first of all, what was never done at that point was to really try and make a kind of a more functional version of what had broken before. And secondly, so much of the onus of of uh reparations was put on Germany um in the Versailles kind of treaty that Keynes saw that this was going to be such an inordinate burden on Germany that it was basically going to consign the world to another likely war um and wrote about that at the time. And that was his brilliant book Economic Consequences of the Peace, which basically is a howl of despair against the triumph of revenge politics and anti-globalization politicians who were wedded to populism, protectionism, and extreme nationalism. Sound familiar? It was an extraordinary bestseller. That’s the thing about Economic Consequences of the Peace, such a bestseller that he was a household name because it did foresee what eventually happened with the kind of the breakdown of the international monetary system in the years that followed, the rise of of Hitler. But his opportunity, I guess from 1919 onwards, he had had in his head that the global monetary system and just the economic set of rules that defines the the relationship between nations had never been properly fixed after after the First World War and that everyone suffered as a consequence. And so the 1940s and what would eventually become Bretton Woods, he saw as this is my opportunity to put right what went wrong in 1919 and I couldn’t really do anything about. But his first plan to sort of address this, like a a big master plan for a new post-war monetary system I think came to him in 1940. What was that plan and what prompted him to sort of start sketching out the contours of it? The allies had discovered that the Germans had a plan for how they would arrange the new world order under the Nazis if they won the war. And there was a guy called Walter Funk who drew up this big monetary plan. And he was essentially Keynes was given a copy of of the Funk plan the the German plan the Nazi plan. Can we call it a funky plan? [laughter] Is that too much of a funky plan? It was a funky plan. Yeah, funky. He was given it by by Harold Nicholson. So another part of the the establishment elite at the time and he said well good be a good chap and you know explain why this is not a good idea. And Keynes Keynes went away read the plan and said well actually and I’ve got the quote he said in in my opinion about three quarters of it would be excellent if only the name of Great Britain substituted for Germany. And so basically Keynes. That’s classic Keynes in a way you know when the facts change I change my mind. I mean one of the things that’s fascinating about Keynes is that he was quite flexible and adaptable to changing circumstances. And not afraid to to say say say something controversial if he had to. Part of the personal backdrop of Keynes he was homosexual in an age where that was you know tacitly not accepted. I mean it was it was legal but he was not ashamed of it and then later on went to marry Lydia Lopokova who was one of the world’s most famous ballerinas. But throughout this period was a flamboyant person and so intelligent that very few people would ever challenge him. And so when it came to the Nazi plan he kind of basically said actually this is pretty good. And it’s worth it’s worth pointing out that because he was so hard to define intellectually in many occasions today he has bipartisan an from people on both right and left. I mean, yes, the left often talk about his vision, but I was in Washington just recently talking to people in the Trump administration, some of whom, like James and Greer, are great fans of Keynes because of what he said about international imbalances and are looking to that history for how they fashion policy today. So, history’s very relevant in that sense. That’s so interesting and actually so much of what was discussed at Bretton Woods was tantalizingly, you know, analogous to what we’re living through right now. And there’s still a lot of people who say if we had had the Keynes plan versus the White plan, then how different could history be? And what could we do to try and adopt it these days? Um But before we get to the White plan, can you tell us what were the key points of of Keynes’s plan? The one that he kind of took inspiration from this this funky plan that uh an Nazi German official had done. So so at the heart of this was the idea that at the center of of the international system, there should be something called a clearing union. And basically, when you’re trading with another nation, all of that exchange of, you know, your money to their money needs to go via this institution. That’s kind of the key thing. Um and this union would have its own currency, which he called bancor, although he did try and come up with other names. Bancor was the one that that he eventually ended up with. It’s French for gold. Yeah, French for gold, but he also came up with unicorn was another one. [laughter] Ahead of his time. But the key thing is international currency right in the middle of things. And then the other kind of key thing is that there had to be symmetrical adjustment, okay? So basically, if your country had a big deficit, so basically, you’re importing lots more from the rest of the world than they than you’re sending out to the rest of the world. Which is kind of basically, that’s the UK today. That’s the US today. If you had a deficit, you had you got penalized by this clearing union and had to try and kind of gradually reduce your deficit, but symmetrical. Also, if you had a surplus, in other words, you’re like China today and you’re exporting far more to out to the rest of the world than you are importing, you also got penalized by the clearing union. And so, it was it was a really radical and a lot of people read this at the time and were just blown away. I guess the the other kind of bit of background and why this was attractive to the UK at the time was that the UK was a deficit nation. And it was and Keynes was very conscious that if all of the onus of trying to sort out your own kind of affairs was put on to deficit nations like the UK, he was aware that the Britain was in trouble. On the flip side, America was a surplus nation. So, America was very similar back then so to China today. It had enormous exports and lo and behold, when the American plan came out, there was nothing like that. It wasn’t that you had to suddenly adjust a surplus nation. And it’s worth pausing on that because Robert Skidelsky, Keynes’s great biographer, who sadly passed away recently, always argued that this was one of Keynes’s most important insights, right? Keynes wasn’t just trying to help deficit countries like Britain. I mean, he wanted a system that would force surplus countries to adjust, to force them to stop holding surpluses and pushing all the pain onto everybody else. But, now let’s turn to Keynes’s American counterpart, Harry Dexter White, who’s the chief under secretary of international finance at the US Treasury. And he’s the opposite of Keynes, right? He was definitely not a celebrity. He was a brilliant person, very clever person, very impressive person to a lot of people, but clearly, he wasn’t even a famous economist, let alone the kind of incendiary celebrity that Keynes was at that point. So, Harry White Harry Dexter White is kind of the exact opposite to Keynes. You know, he was short where Keynes was very tall. He was a self-made man. Keynes came from the establishment. Harry Dexter White was working class, genuinely working class. He He was the son of Lithuanian Jewish immigrants. Keynes was you know, anti-Semitic in that way that many people of the British establishment were at that point. In World War Keynes was sent out. He was a conscientious objector, but he was sent out on tours to tour the battlefield and understand the economics. Whereas White, he never quite made it to the trenches, but he was out there as a volunteer. Um and he was he kind of scrambled his way up to the top and gradually worked his way both into Harvard uh and then joined the US Treasury. But he was never someone who stuck stuck out. He was just a hard working guy. He was spotted by Henry Morgenthau who became the Treasury Secretary in in the US. He basically made him his protege. Um and the upshot of that was that by the time they were coming to try and negotiate, say the British and the Americans to negotiate what the post-war settlement was going to look like, White had risen from obscurity and Keynes was this enormous kind of figure. And so there was a massive imbalance in terms of the personalities of the two figures. But by the same token, that was completely offset by the imbalance between America, which was the obvious coming superpower, and Britain, which was diminishing enormously and was basically, you know, close to bankrupt. But I remember there’s this great quote in in your book that you had that talks about the the the different stature of the men in terms of celebrity terms that, you know, some a friend of Harry Dexter White said the happiest day in his life when when he was on the first name basis with Keynes, which is shows just how much of a humble person he really was. Yeah, he was a he was a fanboy and just to be able to to to play on the top table like this was was had always been his dream. But then by the same token, you know, he He he was smart. He was opinionated. And he also he you know he he was probably I would say more political than than Keynes. He was part of this democratic tradition that was you know by today’s standards really quite left wing which would later come to haunt him but wasn’t totally unconventional in you know in the Democratic Party of the time. And Key also had um White a plan for how he wanted to organize the global monetary system, didn’t he? Which was different from Keynes. Give us a quick summary of how he saw the best solution to these problems unfolding. So White’s plan was far less revolutionary, far less radical than Keynes’s. Basically, it involved somewhat refashioning the old pre-war gold standard and replacing that with he called it gold backed exchange. And the idea was that all countries around the world would have their exchange rates fixed with some sort of gold backed exchange which was ultimately going to be the dollar and there would be the stabilization fund which eventually basically became the International Monetary Fund which would provide kind of you know emergency help for countries that needed it. On the flip side, you would also have a bank that was going to kind of help with the post-war reconstruction. And this is kind of basically what happened in the end. Right. So just to recap, we’ve got these two brilliant men um a made for Hollywood kind of scenario, very different characters with countries in radically different circumstances coming together. One of them wants a global currency, the other one wants the dollar. One wants to give trade deficit a break. No surprise there given that um Keynes came from Britain which was a deficit country. The other wants to let the country with the world’s biggest trade surplus, which back then was America not China, call the shots. So you’ve got this inbuilt tension between their visions and between the men from the get-go. Did they try and thrash out their differences at all before Bretton Woods or was Bretton Woods the first time they really clash. Now a lot a lot of the the pre kind of summit stuff happened in in the intervening years. So both White and Keynes were charged with coming up with their vision of how the global international monetary system would look it kind of around 1940 1941. That basically kick-started a set of different meetings and you’ve got White’s and you’ve got Keynes meeting time and time again throughout this period. Initially, Keynes doesn’t know who the hell White is and he is massively dismissive towards White in so many of these initial meetings and he he is convinced that his plan is genius and that White’s plan is disastrous. Um and the meetings go on and on and initially, as you were saying Robert, you know, for White it was just such an honor to be there on the top table but that very quickly broke down and the two of them had kind of shouting matches with each other as the 1940s go on. Um and so you have something kind of meeting after meeting all of which culminates in 1944 with right, okay, we know we know that we’re kind of winning the war at this point. Now let’s actually have the official meeting which is going to happen in Bretton Woods. In practice, by the time Bretton Woods comes around, you kind of already have a decent sense that this is the broad plan and the broad plan at that point is basically White’s plan. Keynes Keynes’s plan has been suppressed and suppressed and ignored and ignored and by the time 1944 comes around, the only person who kind of believes he might have a chance of getting the international currency like bank or and his clearing union instituted is John Maynard Keynes. Everyone else has seen the writing on the wall and it’s going to be America’s century and America is going to be the the the architect of what happened to Bretton Woods. Okay, so by now it’s it’s June 1944. They’ve had all these meetings leading up to Bretton Woods but they still have to get all the allies on board, right? Because this was basically the UK and the US trying to thrash things out and then they have to get frankly the rest of the world to agree to that. And to do that they had to get them all together. And that brings us to one of my favorite scenes in your book which is what you call the Tower of Babel on wheels. Because it was summer um it was hot and so Keynes and the others decided to head to the mountains up in New Hampshire and hundreds of delegates from 44 different Allied Nations all got onto a train together to go up to Bretton Woods and try and thrash out the agreement speaking lots of different languages which is why the Tower of Babel. Um in fact Keynes’s wife Lydia is pressed into service as a translator between the Russian delegations and the Americans which turns out to be crucial. But off they go up to Bretton Woods. And after the break we will hear about what happened next. The future of fixed income investing will continue to blur the lines between public and private markets. Nuveen’s credit platform was built to navigate the shifting landscape channeling capital toward the businesses, infrastructure and energy solutions that are shaping tomorrow’s economy all while aiming to deliver the resilience and returns that portfolios seek today. Nuveen, invest like the future is watching. Visit nuveen.com/future to learn more. Investing [clears throat] involves risk. Principal loss is possible. Welcome back. Well, the train has reached its destination, Bretton Woods. And it has disgorged these hundreds of delegates from the US, the UK and 42 other Allied Nations and including Norway I have to add. So all come up there to negotiate a new post-war monetary system based on this outline plan agreed between Harry Dexter White and John Maynard Keynes. And the talks will take place at this Mount Washington Hotel in Bretton Woods. Ned, it’s a pretty special venue, not just because of its historical significance. Can you tell us a bit about it? What was it like at the time? Yeah, it’s it’s I don’t know have have either of you been to it? It’s like an extraordinary place. I have been there a few times and in fact I once put my kids there when I was a juggling single mom to an economics conference where they ran around the lawn. They managed to dive bomb George Soros in the swimming pool and [laughter] practically rugby tackle Paul Volcker. So I have very fond memories of how beautiful [laughter] the hotel is in the middle of the mountains and the woods. Um but in those days it wasn’t quite so beautiful and they’ve refurbished it since, haven’t they? Yeah, it’s kind of very nice now actually uh and you wouldn’t have have guessed that at various periods in its existence including, you know, including in 1944 cuz a lot of the time it was, you know, on the brink of of of literal and metaphorical collapse. Um it’s worth saying, you know, the the reason that they chose to do this in New Hampshire is is obviously it was summer. This was before the days of very widespread, you know, air conditioning availability and Keynes in particular was not a well man even though he was still relatively young by today’s standards. He he’d had heart problems for for a long time and he he had basically begged the the US Treasury, “Please do not have this in Washington, D.C. where it gets incredibly swampy as everyone knows in the summer. Do it somewhere Do it somewhere else cool.” In fact, a fun little aside, you know, the the Federal Reserve building or the the main meeting place where the Fed governors and and uh Bureau Reserve presidents get together to decide, that’s where D-Day was planned because it was one of the few rooms in D.C. that had air conditioning. Oh, that is interesting. I did not know. Yeah, but because of the air-conditioning, that’s fascinating. So, partly it’s cuz it’s cuz of the air-conditioning thing, but partly also, I think there was some senator or congressman from New Hampshire who needed a favor done and so having this within New Hampshire is always the way it works. Sounds very American, right? Yeah, exactly. So, so everyone everyone was was more or less happy with this with this compromise. And so up they went on the train and the the the hotel is an extraordinary place, as Gillian was saying. The landscape around there is stunningly beautiful and the hotel is in this kind of nook, this valley in the middle of the the mountains, but just by Mount Washington, as the name would kind of imply, which is famous for having the worst weather in the world. I think one of the the fastest wind speeds ever recorded was on the top of Mount Washington. And it’s worth going up if you ever go around there, you can take a little train to the top and get blown away by the wind. And it’s it’s pretty cool in in every sense of the word. The the hotel is kind of one of these Gilded Age enormous structures, all made of wood. it’s one of the biggest wood buildings in anywhere in the planet. And these days, I can I can kind of imagine you your children running around because I I think if I was a kid running around those long corridors, it has these incredibly long corridors that are a bit like in The Shining. Yeah. And when when I went there, I was thinking, “God, this this place it’s the perfect setting for some sort of suspenseful drama.” Which is exactly what happened there. And actually, there was one newspaper reporter who wrote, “This is the perfect setting for a murder.” And indeed, you know, I don’t know if that did happen this time, but there was lots going on. So, obviously the hotel is really nice now, but what was it like when these delegates all poured in in 1944? Yeah, it’s in total disrepair. No one is going on holiday there at this point during wartime. And so they’ve got you kind of holes in the roof, broken furniture. It it had recently kind of gone bankrupt and then it had a new owner in there who was desperate to try and rejuvenate it. And just in order to to to kind of make it vaguely livable, you had kind of people US Army people and also German POWs, so so German prisoners, rushed in to try and fix it up and to paint everything. Everything gets painted white to like to the great to the to the to the horror of the new owner because they’re all if you go there these days you’ll see there’s lots of beautiful glasswork including Tiffany stained glass windows and they painted everything including these stained glass windows. Yeah, apparently they told these the POWs, they gave them 25 gallons of white paint and told them to paint anything that doesn’t move essentially. Yeah, exactly. And so there’s kind of hundreds of rooms but nowhere near enough rooms to accommodate all of the delegates. So you have delegates kind of sleeping in linen cupboards and a load of them are kind of shunted off to another place, you know, guest house around the corner. And everyone kind of congregating on this place. Keynes was terrified that the longer this goes on the more likely it is to veer alcohol poisoning is going to set in because he’s, you know, concerned about the stakes being so high. And there’s a bar, right? There are several bars at the hotel as well that were unusually well stocked for wartime. Yeah, there’s several bars. There’s one called the Moon Room and these were kind of prohibition era bars or bars that had kind of certainly continued serving through the prohibition. One of the trains kind of coming in one of the characters was completely full of alcohol just as, you know, to to to the to the rafters. So of course one of the not so secret aspects of Bretton Woods was that whenever you put lots of people under huge pressure together at close quarters with lots of alcohol, there was inevitably some fraternizing, womanizing that happened as well. How bad was it? I think it was by by today’s standards it was pretty pretty damn bad to be honest with you. You had lots of people should we say, I mean secretaries who may not have been secretaries who were drafted in there. I mean, it wasn’t all womanizing. There was just lots of straightforward drunkenness at the same time. They brought in one of the world’s most famous magicians called Cardini was brought in to to do tricks for some of the delegates. And so, you can still see photos of him doing card tricks. There was golf tournament tournaments and there was a volleyball contest as well where Harry Dexter White actually took part. He was photographed diving for a volleyball at one point. But, for the most part, it was negotiation, it was drunkenness, and there was lots of womanizing going on by at the same time. If you look at any of the photos from this conference, there’s this suspicious preponderance of very glamorous-looking women alongside these not-very-glamorous-looking finance ministers. What? Our finance ministers not glamorous, Ed? How dare you? I’m It I mean, you know, these days it’s changed enormously, but back in the day Well, there’s even this famous drinking song, the Bretton Woods song, right? Where I I think I have it here. And when I die, don’t bury me at all, just cover my bones with alcohol. Put a bottle of booze at my head and feet, and pray the Lord my soul to keep. And that was the Bretton Woods song. That probably sums up a little bit what the zeitgeist was like. And I think for a lot of the delegates, you know, who were used to war and they were used to rationing, and many of them had come across from Europe, they they came to places like Atlantic City and and and New Hampshire and thought to themselves, “My goodness, it’s it’s it’s like there’s no war.” You know, you you can order food and it comes. You can order a burger, you can order a lollipop, and and here it is. You can order ice cream. And and so, there’s this strange this strange kind of surreal holiday-like atmosphere that that precludes throughout this entire period. And then, at the same time, everyone is just absolutely working, you know, kind of 18-hour days, just trying to draft the the quite complex legal agreement that that constitutes, you know, the articles of foundation for for Bretton Woods and for the Bretton Woods institutions. Um, it kind of a realistic atmosphere. Right. And of course there are those extraordinary verandas, like many Gilded Age mansions, where people held meetings um, and would have been nice and cool in the summertime in Bretton Woods. And that’s where a lot of the conversations actually took place alongside the indoor actual conference rooms. So, how did the negotiations actually go um, once they all got over their hangovers? So, it’s a bit it’s kind of a bit like a, you know, Davos or or the IMF, a kind of negotiation rooms. There’s a famous moment where the French delegate tries to collar, I think it’s one of the Americans and is absolutely furious that the articles that are being negotiated are not going to be put in French as well as in English. It’s the main the main thing that that that upsets the the French representative. I hope I’m not going to offend any French listeners to say that sounds extremely French. Plus ça change. Yes. Yeah, le plus ça change. Um, but also I mean the the other thing that everyone is trying to negotiate desperately is what their quota is going to be at the International Monetary Fund, which is also how much voting power is each nation going to have. How much influence will they going to have in the future? So, what about the dollar? I mean, how did the dollar end up being put at the center of this new global monetary system? Within the White Plan, there was always this kind of strange thing which which there was a euphemism in the middle of it, which is that if you’re making a transaction with another country, um, that had to go via [snorts] something that they called a gold convertible exchange. I mean, basically, the only gold convertible exchange in the universe at that point was the dollar. Mhm. And so, it was say it was kind of a statement of the obvious that that that should be the dollar, but it at no point up until then had been formally written into any of the articles that this was the dollar at that linchpin of this new system. And actually, in in one of the meetings, there was a UK delegate called Dennis Robertson, kind of very well-regarded uh economist who had worked actually quite extensively with with Keynes on the general theory. And so so very smart uh quite diffident character who was was given the responsibility on behalf of the Brits to to do the negotiations on the fund. So he was in that while Keynes was working on the World Bank, Robertson was working on the fund. And he he said at one point, “Well, why are we going to just keep going on about gold convertible exchange? Can’t we just call a spade a spade and put dollar in there?” And that’s basically what happens. And then, lo and behold, the dollar was officially at the center of the international monetary system. And everything then depends on the fate of the dollar, which is kind of, you know, part of the the later story about what happens with Bretton Woods and its breakdown. If you don’t have the dollar being a relatively stable currency in the middle, which you can assume will always be convertible into gold, then you’ve got problems, which, you know, spoiler alert, is kind of that’s that’s that’s what happened. That was the demise of Bretton Woods later on. Yes. And and that is another great story. And one that I promise we will cover in another episode. But for now, can we you tell us a little bit about the Russian delegation, and well, the Soviet Union delegation really, and Harry Dexter White’s um shall we say controversial relationship with them? Yeah, well, it is interesting, shall we say, and it’s still a matter of debates and speculation even now. He was having a series of meetings, most of which were undocumented, with members of the Russian delegation. So, basically, the Russians arrived, enormous delegation. Um there was this determination, which really came from the top, which came from FDR, that the Russians were going to be involved in Bretton Woods, and that it wouldn’t be a success if the Russians didn’t sign off on it. And they were wartime allies at the time, right? They were the ones who were winning the war in Europe at least, you know? And and if you looked at some of the polling in America at the time, the Russians were were much more popular than the British because it was they were seen as heroes. They were seen as the ones who were, you know, who were actually driving Hitler back towards towards Berlin. So so the Russians were there and FDR was determined that they were going to be at the heart of this, but the extent to which they were dedicated to Bretton Woods is not altogether clear. They, as always happens with the Russian negotiators, were playing hardball. Many of them did not speak any English. And that’s why Lydia, Keynes’ wife, was being pulled in to act as translator. She she was no fan of the the Russian regime at that point. Uh And she’s a ballerina, by the way, as well. I mean, you know. An incredibly uh famous ballerina, one of Diaghilev’s uh Ballet Russes. Um so so an icon, actually, of of ballet at the time. And she yeah, she’s called in to to do translation. But one of the the the delegation is a man called Nikolai Chechulin. And he is quite a suave-looking man, and he’s a member of the the I think the Central Bank at that at this point, the State Bank. And it later transpires that he is a member of the NKVD. So he’s he’s a secret agent. He’s that’s the precursor to the KGB, basically. The precursor to the KGB. And and he, Chechulin, uh meets White a succession of times both at Bretton Woods and prior to Bretton Woods, which then later comes out. Um this is kind of after 1945 when suddenly the Iron Curtain has fallen and there is a lot more kind of Sovietophobia uh in the United States. Later on uh White is accused of being a spy who has sold out America and has passed secrets to the Russians um and is basically a traitor. Um, and is called before the House on Un-American Activities Committee, has to testify, and essentially his reputation is totally trashed. And, you know, it’s worth just underlining, this is the main American negotiator. This is the the man who has derived the plan that we now have in existence, that created the IMF, that created the World Bank. And it transpires that he is accused of being a Soviet spy. Well, obviously Harry Dexter White was very close to the Soviet delegates. And, you know, we do know that the conference ended in, frankly, the US giving the Russians pretty much everything they wanted. But, on the other hand, you know, Roosevelt wanted to keep the Russians close. He was telling Harry Dexter White to be close to them, to be friendly, to keep them on board, cuz that was one of the main goals of this conference. So, and I’m curious whether you think, having read, you know, both the the US and British and Russian sources on this, whether you think Harry Dexter White really was a spy for the Russians? I like I would tend to the view that he was doing his own private diplomacy with a country that was at the time an an ally, not involving the State Department, but then the Treasury hated the State Department. You know, there’s this other kind of bit of drama here. The Treasury hates the State Department, uh, and and then later on, I think that White, you know, he he went further than he should have done. But, was he was he actually a spy who wanted to try to further, you know, Russia’s kind of status at the at the at the detriment of America? I I’m just not convinced that there’s enough of a smoking gun on that. I don’t think, having read, you know, a lot of his own his own writings and having looked in his archives, I don’t think there’s much in there to suggest he was particularly sympathetic to the communists. He was definitely a lefty. I think he was a redistributive democratic ideologue at the time. But, was he a communist? No, and I don’t think he was thinking in those terms. I think he was just thinking, “How can I make this happen? And what can I do behind the scenes to to make it happen?” But as I say, views vary on this, and I I suspect it’s going to be one of these things that people debate for a long time um about White and about, you know, the Soviets at the time. Yeah, and the Soviets did of course get an inflated IMF quota, they got reduced gold obligations, and control over the exchange rate. So, there were winners from from the conference, and it would arguably be the Soviet Union. Ultimately, irony of ironies, they never actually signed the agreement. That’s the critical thing. They They never even signed up to it in the first place. They saw it as this diplomatic kind of win, but then when push came to shove, was was a communist regime really going to be part able to function as part of this? It seemed unlikely. I guess it’s what people might call today um a case where Harry Dexter White was perhaps a useful idiot rather than an asset. Yeah, I think that’s probably a generous uh assertion, yeah. Right, well, let’s come back to that later. Before we do, um how did the conference actually end? Because we have Keynes getting increasingly unwell, but did they actually sign an agreement there? So, Keynes while while White is is is having his secret meetings with the Russians, Keynes has his own issues, which is that his heart is is is kind of failing at this point. Uh and at one point he he has this big argument with the American delegation um over it was actually over whether the Bank for International Settlements should be shut down, which might seem kind of slightly obscure, but um the Bank for International Settlements was set up to basically um manage the system of reparations after the First World War. Um and it had somehow transmogrified into this club of central bankers, which is what it is today. And part of what the Americans wanted they thought it was semi-corrupt, and they kind of wanted to it to be shut down immediately. Uh Keynes did not want it to be shut down immediately, and they were fighting over that. Keynes got very angry about it. Uh he’s running upstairs for a meeting um um and then has a heart attack. He kind of collapses, he’s taken to his room. This starts to to filter out. Reuters reported that Keynes has died. The von Stauffenberg assassination attempt on Hitler uh was the same day that reported on the same day. So, in this strange moment um you have reports that Hitler has been killed and that Keynes has died, neither of which actually turn out to be right. Um so, cuz Keynes does recover uh in his rooms. Uh he’s shaken by it. He just about makes it uh to the final dinner of Bretton Woods. And at that final dinner, there’s the great moment of suspense towards the end of this this conference. It’s not really about whether the dollar’s going to be in the center of it. It’s kind of about whether the Russians are going to sign up to this and what the quota arrangements are going to be. How much power are they going to have? And the Russians are playing hardball all the way to the very end. And then finally, at the very last minute, literally the last day of this conference, and it’s already been extended long beyond what it was supposed to take. At the very last day, finally the Russians sign up to it. And then there was this big dinner and everyone celebrates and it is it is a moment where I think they are quite ecstatic because if if you think about this, what was the main thing that that prefigured World War II? It was the breakdown in the global economy. You know, it was the rise in protectionism and the suspicion that if we didn’t resolve those problems, then there’d be another world war. If you look at all of the documentation, all of the pamphlets that published around this time, it was saying Bretton Woods is there to prevent World War III from happening. And so, when they finally have this dinner at the end and and and everyone has signed up to it, there is this total extraordinary relief that they feel this is one of these single most important things that they’ve achieved in this war that wasn’t achieved in the previous war. So, Ed, I mean, I hate to shoehorn Norway into absolutely everything, but I have a golden opportunity here because there was a Norwegian delegation there, and at the final signing ceremony, the the head of the delegation stood up and thanked the conference for being such an enormous consumer of Norway’s biggest export at the time, which was paper. There was just reams and reams of paper being churned out by the conference. But what was the final sort of day like? What was, you know, the final don- don don more of the of the conference? Well, it was I mean, it was it was very rushed, to be honest with you. Everyone was totally exhausted at that point. Um and they they the owners of the hotel uh had another conference that was booked in to to finish basically the minute Bretton Woods had finished, which was a conference for the American Bankers Association. And the irony of this is that if there was one group who were most set against what was agreed at Bretton Woods, it was the American Bankers Association. And why was that? It’s because one of the parts, you know, the key parts of Bretton Woods was to regulate flows of capital around the world, and if there’s one thing that particularly international investment banks do not like, it is restrictions on the flow of capital because that is basically their business. Uh and so you have this kind of amusing pastiche, this this moment in history where the finance ministers and the negotiators are kicked out, and then all of a sudden the American Bankers get in there and start to work on dismantling Bretton Woods, the thing that has just been agreed in the same rooms they were in only a moment ago. A lovely example of of how American domestic policy always trumps international commitments and responsibilities. They got kicked out of the hotel, and they signed the agreement so fast that Keynes didn’t even read it properly, did he? Yeah, I mean, he a lot of particularly the the detail on the dollar being inserted in there explicitly came as a complete shock to him when eventually he discovered it and he he was furious with Dennis Robertson who had who done this. And I think a lot of the delegates was just spent the following weeks and months kind of realizing in some cases with horror what they had actually just signed up to and then had to actually implement it. So let’s recap. Now the delegates get back on that train going back from Bretton Woods down to the hot and humid climbs of Washington or New York and beyond and going back to their home countries. The dollar is set to reign supreme. Um you’ve got two new institutions, the IMF and World Bank have been created at least on paper. It’ll take a while till they actually exist in practice. But the story doesn’t really end there because what happens next is that the US President Franklin D. Roosevelt FDR died in April 1945 and his famously blunt Vice President Harry Truman comes in. And then 3 months later the UK also changes government with Clement Attlee’s Labour government coming into power. So tell us what happened to the Bretton Woods agreement under the new US President and what happened to Britain? Well, it’s it’s a massive sea change both in both both in the UK but even more so in in the US just in as much as you know, Roosevelt had just been this linchpin of the kind of diplomatic relations for for such a long time. He had been the one who had wanted to keep Russia as close as possible. He had been the one who had pushed through Lend-Lease when most people I think a lot of people within the administration and within Congress wouldn’t have supported Britain throughout that period. Um and suddenly he was gone. So Britain’s relationship with the US Treasury it started off quite frosty between White and Keynes but it had become closer and closer as as the years had gone on. But then suddenly Morgenthau who’s the Treasury Secretary is chucked out uh and then you have a new a new Treasury Secretary Fred Vinson, who doesn’t really care much about the UK. Um all of a sudden all of the Lend-Lease support for Britain is just stopped abruptly, leaving Britain in a kind of you know real trouble. Um and while Bretton Woods is pushed through Congress, support from the US administration for it has diminished enormously. At the same time, because the Iron Curtain is falling and Russia is also the Soviet Union is seen as as a potential enemy rather than ally. Um there’s the a mistrust that falls into both relations internationally and internally. And so anyone who was previously quite close to Russia um is viewed with great suspicion now, including Harry Dexter White. And so Harry Dexter White is called up before the House on Un-American Activities Committee. Um and that goes kind of pretty badly for him. And Britain well, it’s left in a pretty parlous financial condition. Keynes continues to serve under the Labour government. And he gets sent back to to Washington to try and come up with a post-war loan for Britain, because Britain’s economy has been left in terrible condition by this. It was it was left in terrible condition after the First World War. It is in even worse condition uh at this period. The the empire is kind of disintegrating. Um there there are many people, Keynes included, who want to try and keep it all together. And as a result of you know in order to make to facilitate that, they want a post-war grant actually, not just a loan. They want a grant from America. And so Keynes is sent to Washington to to negotiate this grant. He is in even worse physical condition than he was last time around. Then and yet for some reason he’s asked to lead these negotiations. I I mean whoever did that was I think would desperately regretting that very shortly afterwards, because then conducts some of the worst economic negotiation known to humanity. And basically shows his hand right from the start. It later transpires by the way that he was on a a type of medication uh called sodium amatol, which was kind of a drug that was there for his heart, which taken in large enough quantities actually is a truth serum. So, that might explain partly why his negotiation is so is so bad. But nonetheless, he totally flunks this and goes in there hoping for a big grant from America to set up Britain to, you know, repair some of its good problems during the war and ends up with this loan and a loan on quite harsh conditions that involve having to allow the sterling to be freely convertible much sooner than he would have liked, which is ultimately what sets Britain on the road towards kind of decades of economic kind of crises in the following years. That post-war loan is like incredibly consequential. And that was Keynes’s last act really because shortly after that uh he he attends the kind of inaugural meeting in 1946 of the International Monetary Fund uh just makes it through and does a a beautiful speech there. And then shortly afterwards he on the train back to Washington he has a heart attack and then very shortly afterwards he dies. Um and Harry Dexter White, it’s there’s similar This is the thing that that that their fates are somewhat intertwined. Harry Dexter White at around about the same period um has to testify before the House on Un-American Activities Committee. He goes in and and launches a impassioned defense that he’s an American, he’s proud to be an American. And then a day or two later he’s found dead at home uh of I think a heart attack as well. So, the two the two men who were the protagonists of this story um they die in very similar circumstances, you know, in ignominy when it comes to Harry Dexter White, uh in disappointment when it comes to to John Maynard Keynes. But even so, they’ve kind of forged together something that if not perfect in any kind of way was at least an attempt to go one better than what happened after World War I and to try to repair some of the problems, the economic problems that led to war. Wow, so that’s basically Keynes getting his second attempt to fix the mistakes he saw back in 1919. And in many ways that illustrates one of the key twists of the story, which is that yes, Bretton Woods helped to destroy the two men who created it. But the sacrifices in some ways weren’t in vain because actually the Bretton Woods system itself, the institutions of meme, ended up being very influential. Many would say a roaring success because it birthed the IMF and World Bank and it did stitch together the post-war global economic system that didn’t just perhaps help peace, but sparked a lot of growth after World War II. Although ironically neither the World Bank nor the IMF ended up serving the purposes for which they were originally set up for. And the World Bank was supposed to finance the post-war reconstruction of Europe. But that role got usurped in 1948 by the Marshall Plan, named after Harry Truman’s Secretary of State who proposed it. And as for the IMF, well, that was supposed to be the referee for the system of fixed exchange rates that Bretton Woods ushered in. But by the early 1970s that system was also going well, pretty much pear-shaped, right? Absolutely. And that’s a story that we’re going to be picking up in a future episode of The Story of Money because sadly, very sadly, this week’s episode is drawing to a close. But there is thankfully just enough time for us to say thank you to Ed Conway. Ed, thank you so much for being here and making time for us. I promise to viewers we haven’t actually kidnapped him and stuck him in some some cell even though it looks like that’s where he’s sitting. But Ed, thanks so much for being here today and I loved The Summit. I thought it was a fabulous book. Thank you so much. No, it’s a it’s a pleasure to to to be able to discuss stuff that is um incredibly important and also it’s it’s a great economic story. Very true. Well, that’s it for this episode of The Story of Money with me, Robin Wigglesworth. And me, Gillian Tett. We’ll see you all here next week.