The world economic system that operates at this time was born with the adoption of the 'White Plan' at the Bretton Woods (New Hampshire USA) conference in July 1944. The International Monetary Fund, The World Bank, and the World Trade organisation grew from The White Plan.
The world was a different place in 1944. The World War was still in progress. Europe
was on its knees. Governments administered over economies gear solely towards waging
war and the civilian economic concern was survival.
The United States of America was heavily involved in the war effort but maintained an economy not affected by destruction of infrastructure. Not only that, but America was being paid for the armaments it produced and supplied for its allies. In many ways this was a blessing in that the allies in Europe had supplies of armaments that could not be interrupted by the Nazis. But it did give the USA a disproportionate say in economic matters.
The author of the White Plan was Harry Dexter White was a senior official at the US
Treasury at the time of the Bretton Woods Conference. Harry Dexter White had a
White was the son of Jewish/Lithuanian Catholic immigrants, Joseph Weit and
Sarah Magilewski. His surname White was the Americanized version of Weit.
White served in the US army in the Great War before enrolling in University to study
economics. Nominally he was a Democrat in the 'New Deal' style but was said to be a
One of the many things that White was accused of was hiring members of the Communist
Party to positions within the Treasury, and of being a member of the Communist Party
More damning are the accusations that he was author of the sanctions and ultimatums that
left Japan in the position of commencing war against America or slowly starve to death.
On the 25th of November, U.S. Secretary of War Henry Stimson said to have asked 'how
we should maneuver them into the position of firing the first shot.' It was the 10 point
ultimatum to Japan largely written by White provided the answer.
Harry Dexter White was also the originator of the Morgenthau postwar plan that was
initially accepted by Roosevelt but withdrawn due to public pressure. The Morgenthau
plan was that after the World War Germany's industry should be destroyed and Germany
would become a purely agricultural economy. In the words of the day Germany should
become a 'potato patch'. The Morgenthau plan was used by the Nazis as propaganda and
is credited with having prolonged the war. This policy was continued undercover.
By late 1946, however, economic hardship and unemployment in Germany were
worrying the United States, and former President Herbert Hoover was sent there on a
fact-finding mission. Hoover\u2019s third report of 18 March 1947 noted: \u201cThere is the illusion
that the New Germany left after the annexations can be reduced to a \u2018pastoral state\u2019. It
cannot be done unless we exterminate or move 25,000,000 people out of it.\u201d Hoover well
understood that an agricultural economy would be able to sustain a much smaller
population than an industrialized nation
In 1947, while being investigated by the House Committee on Un-American Activities on
the charge of being a member of the Communist Party, White died of a heart attack. This
accusation escalated to the charge of supplying the printing plates that allowed the
Soviets to print American Military Marks (the military occupation currency), thus
causing rampant inflation in Germany and cost the USA a quarter of a billion dollars to
fix. The accusation was made in 1948; by a defecting Soviet spy Elizabeth Bentley.
White have been a victim of the 'Red under the bed' hysteria created by Nixon/McCarthy
that resulted in many innocent lives being destroyed.
John Maynard Keynes was the son of a Cambridge (UK) economics lecturer, Neville
Keynes, and Florence Brown, a successful writer and social reformer. Keynes received an
English 'upper class' education at Eton, and then Kings College, Cambridge University.
Originally Keynes studied Mathematics, but swapped to economics.
Keynes early adult live is typified by his many homosexual love affairs until he met and married a Russian ballerina, Lydia Lopokova. They remained happily married until his death in 1946.
The first significant event in Keynes' career is his work with the British government at
the Treaty of Versailles and his 1922 book that claimed the reparation being paid by
Germany was too high.
John Maynard Keynes economic theories from then on established as a giant in the area
economics, and his theories gave rise to a new form of economics know as Keynesian
economics, in particular the new field of macro-economics.
Keynes contribution to Bretton Woods was a proposal was that a central bank with the
ability to create money like any other bank and would oversee the world economy. The
World Central Bank would create a world reserve currency called the 'Bancor' and all
international trade would be conducted in this currency. The most obvious advantage of a
world currency is that no one nation would own it.
Within the central banking system there where proposed incentives for nations to avoid imbalances in trade. The system also involved a central clearing house for international trade.
The two factors that seemed to have worked against Keynes proposal was that it was too
radical for the times, and the USA had all the economic clout and where not about to be
one amongst equals. America owned seventy-five percent of the world's existing
monetary gold and was by far the world's largest military power. America had become an
The Bretton Woods conference was a sham. It convened only to ratify negotiations
between the USA and Britain that had been going on for two years. Because of world
circumstances few countries could send proper representation. Many could not speak
English, the official language of the conference, and most had not had the opportunity of
reading through 2 years of complex negotiator between Britain and the USA.
It is ironic that the original British plan had been developed in 1941 by Keynes as a
counter to a monetary 'New Order' put out by Germany as the model for the world
economy after they had won the war. In the British model the USA was not included till
after Pearl Harbor.
trinity of world economics, the IMF, the World Bank, and the WTO.
The IMF (International Monetary Fund)
The IMF is a fund designed to stabilize exchange rates and provide a pool which member
There is a system of monetary quotas imposed on IMF members that also relate to the
voting rights of member nations. The USA holds 16.97% of the voting power. Japan has
6.02% of the voting power, but various agreements between America and Japan,
including America providing a 'Nuclear Umbrella' for Japan, makes it unlikely that Japan
would vote against America. This means a 22.99% power with the remaining nation
having 77.01% voting spit between 183 nations.
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