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Review: [Untitled] Reviewed Work(s): The Bretton-Woods-GATT System: Retrospect and Prospect After Fifty Years

. by Orin Kirschner Barry Eichengreen The Journal of Economic History, Vol. 56, No. 4. (Dec., 1996), pp. 968-969.
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Reuiezus of Books
far lower, but also the French attempts at systemic disruption of the system might not have occurred. Kirshner studies other intriguing experiences, including the U.S. monetary war on Panama in the late 1980s. Although a military invasion followed, the Noriega regime very nearly toppled from the monetary blows. Also he provides a most thorough and original analysis of the 1956 Suez Crisis, arguing that it was U.S. monetary warfare against the United Kingdom-the sale of British pounds by the Federal Reserve Bank of New York, the threat to block U.K. access to the financial resources of the International Monetary Fund, and the promise of financial assistance should withdrawal occur-that induced the United Kingdom and France to accept a cease-fire and withdraw from Egypt. A counterfactual history is in order. What if the United States had remained neutral (the British and French woefully miscalculated worst-case scenario)? With the Nasser regime brought down, a Western-oriented government would have avoided Soviet economic and military aid. Subsequent Mideast wars, or at least Egyptian involvement, might not have occurred, and Mideast peace might have been achieved at an early stage. Impressive to the economic historian is the author's analysis of examples of missed opportunities to practice monetary warfare: by the League of Nations against Italy in 1935 and 1936, by the United States in favor of Italy from 1946 to 1948, by South Africa against Britain from 1920 to 1950, and by the Soviet Union against the West during the Cold War. All in all, this book provides economists, historians, and political scientists with fascinating case studies of both the utilization and nonutilization of monetary power. LAWRENCE . OFFICER,University of Illinois at Chicago H

The Bretton-Woods-GATT System: Retrospect and Prospect Afier F& Years. Edited by Orin i Kirschner. Armounk, NY: M. E. Sharpe for the Institute for Agriculture and Trade Policy, 1996. Pp. xiii, 321.
All too often, outstanding conferences end up producing mediocre books. Here we have a more unusual phenomenon: a dismal conference that produced a splendid book. The volume brings together contributions by more than 20 founding fathers of the three so-called Bretton Woods institutions: the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade. Their papers were commissioned to mark the fiftieth anniversary of the Bretton Woods Conference. Contributors include Edward Bernstein, chief technical adviser, enfant tem'ble and executive secretary of the U.S. delegation; Victor Urquidi, member of the Mexican delegation; Roberto Campos, member of the Brazilian delegation; Simon Reisman, member of the Canadian delegation to the founding sessions of the GAlT; Harlan Cleveland, who served with the U.S. Board of Economic Warfare and Foreign Economic Administration; Alec Cairncross of the U.K. Board of Trade; and Isaiah Frank, Jacob Kaplan, and Raymond Vernon, all of whom were with the U.S. State Department at the time of the conference. Their illustrious subsequent careers will be familiar to readers of this J o u R ~ ~ ~ - B e r n s t e ias first director of research n at the IMF, Urquidi as president of El Colegio de Mexico, Campos as ambassador to the United States and United Kingdom, Reisman as deputy Canadian minister of finance, Kaplan as official historian of the European Payments Union, and Frank, Mikesell, Cairncross, Cleveland, and Vernon as professors at John Hopkins, Oregon, Oxford, Minnesota, and Harvard. One could go on. The point is that it is difficult to think of another collection of authors so illustrious and well qualified to speak to the history and future prospects of the Bretton Woods institutions. The conference organizers should be commended for bringing them together. The picture the contributors paint is one of a remarkable intellectual and practical achievement. The Bretton Woods Agreement, they remind us, was concluded despite serious disagreement between members of the U.S. and European delegations. It was

Reviews o Books
ratified despite serious reservations about its gold-standard-like provisions in the British House of Lords and about its departure from gold-standard rules in the U.S. Congress. As authors like Mikesell emphasize, the structure it bequeathed was successfully adapted to circumstances never anticipated at Bretton Woods: the Marshall Plan, which usurped the World Bank's responsibility for European reconstruction and whose provisions barred the IMF from making loans to recipients of U.S. aid; the European Payments Union creating a regional mechanism for balance-of-payments adjustment and finance; the failure of the United States to ratify the charter of the International Trade Organization; and the collapse of the postwar system of pegged-but-adjustable exchange rates. In a sense, resiliency and adaptability were key to the Bretton Woods System's success. The contributors remind us of the profound uncertainty that existed in 1944 about the nature of the postwar world and hint that they were consciously attempting to create a structure capable of adapting to unanticipated contingencies. They provide much food for thought for those seeking to extend the recent academic literature on the subject by John Odell, John Ikenberry, and others. In addition, they convey a vivid sense of what it must have been like to be present at the creation. The British were continually frustrated by the all but total autonomy with which competing U.S. government agencies were permitted to develop their own plans for postwar stabilization and reconstruction. The British were led to couch their own proposals in multilateral terms for fear that bilateral negotiations would give vent to the United States' protectionist inclinations. Once the Bretton Woods Conference convened, the delegates worked incessantly, on fewer than five hours of sleep a night. The British and American delegations dominated the proceedings to a remarkable extent; the developing countries were forced to defer to their opposition to the stabilization of commodity prices and to a monetary role for silver as well as gold. Similarly, the British were able to rebuff India's attempts to give the Fund authority to restore the convertibility of the sterling balances. These are but a sampling of the fascinating details that emerge from the authors' first-hand accounts. The conference from which these papers were taken was by no means as satisfactory as the book. Understandably, no one who was invited could resist visiting the Mount Washington Hotel in Bretton Woods, New Hampshire, at the height of the leaf-turning season. But what they found was something of a surprise. Along with the founding fathers (or "older-generation leaders" as they were called by the organizers), the conference was attended by a younger generation of granola liberals, mostly in their twenties, associated with the sponsoring Institute for Agriculture and Trade Policy. (In addition there was a handful of commentators from academia; by the end of the weekend we were referring to ourself as the "middle-aged generation.") Although the motivation for the conference was to encourage a dialogue between the older and younger generations, sessions were marked by the complete inability of the two groups to communicate. The founders described the limits of wartime planning and the efficiency advantages of markets but also the need for institutions to structure their successful operation. The younger generation characterized markets and international institutions as the problem rather than the solution. They called for abolishing the IMF and the World Bank and substituting a new regime in which economic development was halted in order to maximize environmental quality and in which first-world values were foisted on third-world populations by beneficent social planners, namely themselves. It is possible to detect echoes of this view in the editor's introduction, which cites economic integration, international financial markets and multinational corporations as creating problems whose solution has eluded the Bretton Woods institutions. In the end, this slightly jarring note does not diminish the impact of the book. The latter is a remarkable historical document containing much thought-provoking analysis. It is well worth its modest purchase price.

University of California, Berkeley BARRY EICHENGREEN,