Читать книгу Financial Cold War - James A. Fok - Страница 19

It is said that success has many fathers and so it is with the astonishing success of the US dollar over the past hundred years, but if any one man can be credited with having laid the foundation stone upon which the dollar's empire was built, that man would be Harry Dexter White. As a senior US Treasury Department official in the 1940s, White was the key architect of the Bretton Woods system that governed the international economic order for almost three decades after WW2.

Born in 1892, White was the son of Lithuanian Jews who had fled the tsarist pogroms in 1885 and settled in Boston. Harry was the youngest of seven children and was educated in local public schools, where he was not an exceptional student. His mother had died when he was aged just nine. His father Jacob was a peddler who made a living dealing in hardware and crockery. Through hard work and thrift, the family had eventually come to own four hardware stores by the time Jacob died, just two months after Harry graduated from high school. After school, he initially worked as a clerk in the family business, but upon President Woodrow Wilson's declaration of war on Imperial Germany in April 1917, the 25-year-old Harry White enlisted in the US Army and was commissioned as an infantry first lieutenant.

Stationed in France in training and supply camps, White had an uneventful war and returned home in November 1918. However, no longer satisfied by the life of a small businessman, he set his sights on an academic career and enrolled at Columbia University in 1922 to study government. He transferred the following year to Stanford, from which he graduated ‘with great distinction’ in economics.⁸ From Stanford, he moved on to pursue a PhD at Harvard and it was there that he appeared to develop a fascination for the relationship between the workings of the international monetary system and the performance of the real economy. He taught for six years at Harvard but, aged 40 and unable to secure a tenured position, he took up an assistant professorship at Lawrence College in Appleton, Wisconsin in 1933.

Harry White's path from Wisconsin to the US Treasury came via an invitation in the summer of 1934 from Jacob Viner, a respected University of Chicago economics professor. Viner was at the time advising Treasury Secretary Henry Morgenthau and asked White to assist him on a three-month study of monetary and banking legislation and institutions. Once in Washington, White never looked back. Following completion of the Viner study, he took another temporary position with the US Tariff Commission but returned to the Treasury just three weeks later when a position as principle economic analyst in the Division of Research and Statistics opened up. This was again a temporary position paid for, fatefully, out of profits from an emergency fund set up to stabilise the dollar's exchange rate. Remarkably, White's employment at the Treasury would continue on this tenuous ad hoc basis for another 12 years until he was finally made a fully-fledged civil servant in 1945.⁹

In the early 1930s, the world was mired in the Great Depression and the prevailing monetary orthodoxy for countries to tie the value of their currencies to a fixed quantity of gold had broken down. With great reluctance, Britain had abandoned the gold standard in September 1931 and devalued sterling. Twenty-five other nations followed suit shortly thereafter. The US held out for a time but was ultimately forced to give up the dollar's fix to gold in April 1933, shortly after President Franklin D. Roosevelt took office. There followed a period during which the dollar's exchange rate seemed to fluctuate arbitrarily, as the President took to setting a target exchange rate from his bed each morning, mostly based on whim rather than scientific method. While the thought of befuddled bankers rather tickled Roosevelt's sense of humour, concerns were raised from within the Federal Reserve and the Treasury, where some considered FDR to be acting beyond his presidential authority in buying gold at a price above the level fixed by statute. Roosevelt ultimately relented and, under the Gold Reserve Act, re-fixed the dollar's exchange rate to gold in January 1934 at $35 per ounce, 59.06 percent below its previous level.¹⁰

As countries battled with the Depression era's high unemployment, they turned to competitive devaluations and tariff barriers in an effort to make their exports more competitive and to limit imports. These ‘beggar-thy-neighbour’ policies led to a collapse in global trade, significantly worsening the economic hardship. In the subsequent years and decades, the international trade and monetary policies of the interwar years became widely viewed as a major factor contributing to the outbreak of WW2.

At the Treasury, Harry White gained a reputation as an able economist and carved out a critical role for himself in international policy. He was also known to be quick-tempered and impatient, though he ‘was meticulously civil to anyone in a position to afford him access to the powerful’.¹¹ The focus of his work reflected the major trade and monetary issues of the time, into which he threw himself energetically. Competitive currency devaluations and their impact on global trade was an issue with which he concerned himself especially. He argued that a stabilisation in international monetary policy was required to increase foreign trade, which was an important factor in achieving the economic recovery that the Roosevelt Administration sought to bring about. This would require a new form of international monetary diplomacy. Competition between the Treasury and the State Department over control of this function was to open to White a huge opportunity.

Henry Morgenthau Jr. was a long-time friend and neighbour of FDR at his Hyde Park estate in upstate New York. He had no background in economics and, upon his appointment as Treasury Secretary in 1934, the prominent New York donor Gladys Straus quipped that Roosevelt had managed to find ‘the only Jew in the world who doesn't know a thing about money’.¹² White rapidly made himself indispensable as the intellectual force behind Morgenthau's expanding power base, while Morgenthau served as a powerful patron for the ambitious White.

In 1935, Morgenthau despatched White on a trip to Europe to engage in fact-finding and exploratory talks on the matter of exchange rate stabilisation. This trip was to have great significance in Harry White's career, as his meetings with politicians, businessmen, bankers, civil servants and economists would help to position him later as the obvious candidate to coordinate and lead America's international negotiations on the post-war monetary system. It was also on this trip that he first met John Maynard Keynes, the famed British economist with whom he would later joust in the run-up to and during the 1944 Bretton Woods conference.