Armed with slide rules, they saved the world...
As Allied troops fought in Normandy, a group of economists faced a very different challenge, writes Ed Conway
Everyone has heard of D-Day; far fewer recall another special mission that embarked from Britain's shores in June 1944. Snakebite Party, as this group of men was called, didn't look much like soldiers. Their average age was significantly higher than that of Operation Overlord (the lead member had just turned 61); they carried with them pens, papers and slide rules rather than weapons. But their objective was no less significant.
If D-Day was engineered to win the War in Europe, this unlikely squad was on a mission to prevent World War Three. That was the aim of the Bretton Woods conference a couple of weeks later at the Mount Washington, an enormous, decrepit hotel deep in New Hampshire. Hundreds of economists had been invited from around the world to rebuild the international monetary system. These days, exchange rates and capital flows are rarely synonymous with military disaster, but 70 years ago it was clear that the rise of Hitler had been a direct result of the economic collapse following World War One.
At Bretton Woods, Allied officials set out to create the lasting economic settlement that eluded them after the Great War. The problem was, Snakebite Party was running late. The British War Office had imposed a blanket ban on travel for a period after D-Day. Only after obtaining special permission could the group board the Queen Mary and, with the first batch of German prisoners from Operation Overlord locked in the lower decks, set off for the US.
They were led by Maynard Keynes, the greatest economist of the 20th Century, who was fighting a private battle with heart disease. Though he was the sole household name, he was not the only remarkable character. There was Lionel Robbins, the LSE professor who had positioned himself as an intellectual rival to Keynes. There were delegates from Egypt and India, determined to demonstrate their independence from their colonial masters. There was Wim Beyen, the Dutchman with a fearsome reputation and an awkward history – he signed off the controversial transfer of gold from the Czech central bank to the Nazis in 1939. Theirs was not the longest journey: one elderly member of the Indian delegation endured a three-day voyage, sleeping on the floor of a plane next to an unexploded Japanese bomb. Another delegate had just escaped from a Nazi prisoner-of-war camp. The conference they arrived at set new standards for hard work, exhaustion and revelry. As troops fought their way through northern France, Keynes found himself locked in a tense stand-off with his American counterpart, Harry Dexter White. Though the pair agreed on the broad outlines of a deal, each was determined to put their respective country at the centre of the system.
White, a squat, awkward fellow from the wrong side of the tracks in Boston, won on almost every count, cementing the US as the world's undisputed superpower, and leaving Britain essentially bankrupt.
Just over halfway through, Keynes collapsed from a heart attack. Though he recovered, word got out that he had died and his obituary was published, to great celebration, in Germany. Meanwhile, as Keynes and White locked horns, the rest of the Allied representatives – everyone from France and Ecuador to Mexico and China – battled it out for the biggest stakes in the new institutions they were setting up: the International Monetary Fund and World Bank.
Similar battles continue to this day and Congress is refusing to approve the latest reapportionment of IMF quotas.
The Russian delegation, which included a number of statuesque blonde women who couldn't speak a word of English, had been ordered by Stalin not to accept any dilution in their stakes. Though they would eventually refuse to sign up to the final agreement (a decision that marked the beginning of the Cold War), they got almost everything they wanted at Bretton Woods. This owed at least something to White. For unbeknown to his colleagues, the American chief had for years been passing information secretly to Soviet intelligence agents. When the truth emerged a couple of years later it would lead, in short order, to an FBI allegation of espionage and his untimely disappearance from public life.
Despite this collision of interests, and the many late nights and parties (the Russians threw the most drunken ones), somehow the delegates managed to agree on a deal. The Bretton Woods system of fixed exchange rates lasted only a couple of decades – in part because politicians bent and broke its rules. All the same, the period following the war was the strongest and most stable the international economy has ever seen, both before and since.
Busts of Keynes and White still look out over the IMF's boardroom today. And as the international economy lurches from crisis to crisis, every so often another world leader calls for another Bretton Woods. We are still waiting.
Ed Conway is the economics editor of Sky News and author of 'The Summit' (Little, Brown)