Benn Steil argues that John Maynard Keynes had an
astute grasp of Britain’s debt situation in 1944 and how it might
recover from ‘financial Dunkirk’. Yet his arrogance and ineptitude in
negotiating with the Americans at Bretton Woods cost Britain dear and
has had repercussions to this day.
Keynes’ financial negotiations with the Americans were important not just to Britain in the 1940s, but to the world long after. The American-dictated terms of the famous 1944 Bretton Woods accords, which enthroned the US dollar as the ‘new gold’ atop the global monetary system, were part of the price Britain paid for American aid. When former prime minister Gordon Brown in 2008 called for ‘a new Bretton Woods’ to rectify the flaws in the current global financial and monetary architecture, it is unlikely he understood to what extent the terms of the original Bretton Woods were determined by power and personal diplomacy rather than good ideas.
Read the full text of this article in the May issue of History Today, which is out now, or get the digital edition for your iPad, Android tablet or Kindle Fire.
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