This chapter examines the embedded liberal perspective of the Anglo-American thinkers who played a lead role in designing Bretton Woods order, including John Maynard Keynes and Harry Dexter White. These thinkers endorsed the broad liberal goals of boosting global prosperity, international peace, and individual freedom, but they argued that these goals could only be met with a new kind of institutionalized liberal multilateralism that would make an open world economy compatible with various kinds of active public management of the economy. The roots of embedded liberalism can be found in efforts to reformulate the international side of classical economic liberal thought earlier in the twentieth century, including by thinkers such as Jehangir Coyajee.and John Hobson. The promoters of embedded liberalism at Bretton Woods sought to accommodate not just new ideas of domestic social security and activist macroeconomic management in Western Europe and North America but also the Soviet Union’s commitment to central planning and neomercantilist views prominent in many less industrialized regions. At the same time, they made much less effort to engage with the perspectives discussed in the second part of this volume.

This chapter looks at the two men, T. V. Soong and H. H. Kung, who dominated financial positions from 1928 until the collapse of the Nationalist regime on the mainland. Both had personal ties to Chiang through his wife Madame Chiang Kai-shek (Song Mei-ling). A bitter rivalry developed between them that impacted the entire coterie of financial and banking officials. On a related issue, it examines the prevalence of American education among financial officials and its impact on ties to America, particularly in the Soong family. This chapter uses the papers of Lauchlin Currie, a key aide to Roosevelt, who made several trips to China on his behalf. The chapter closes with an examination of the way in which the two men have been portrayed in writings about the Chiang Kai-shek era, suggesting some reevaluation is needed.

This chapter examines the scandal associated with the American Dollar Bond issue and the resignation of H. H. Kung

What should be done with Germany after the war? The problem of how to handle a defeated Germany spawned intense and bitter debate within the highest levels of American government. The divisions only intensified as victory came into view. Treasury Secretary Henry Morgenthau’s plan was to remove all heavy manufacturing capabilities from the defeated nation. The Germans had launched two world wars, and it was time to ensure that they could never trouble their neighbors again. But given the widespread food shortages expected to come after the war, stripping the country of its factories and machinery would almost certainly lead to mass starvation, and everyone knew it. Morgenthau’s plan could only seem cruel. It was a modern-day version of a Carthaginian peace, and at the Treasury Secretary’s urging, President Roosevelt signed on. The problem was that most other members of the administration opposed Morgenthau’s plan, and they launched a rear-guard action to defeat it.

This chapter narrates the twists and turns in monetary relations that culminated in the Tripartite Agreement. After discussing the franc's deteriorating position from the spring of 1935 and the implications for Britain's management of the pound, it turns to the pivotal Anglo-American relationship. Distrust was pervasive, but the two sides eventually came to an understanding, assuring each other that they would not further depreciate their currencies in response to a fall in the franc. With London and Washington talking again, there was now space for an agreement to facilitate French devaluation. The resulting Tripartite Agreement, announced on September 26, 1936, set forth revolutionary principles for monetary cooperation, including the rejection of competitive depreciation and exchange controls. With time, the Agreement--informal and vague, unconventional and pathbreaking--would turn the page on the chaos of earlier years and redefine the international monetary landscape.

This chapter explores the first fifteen months under the Tripartite Agreement, from September 1936 to the end of 1937. It focuses on two events that consumed the attention of authorities: the Gold Scare in the spring and the Dollar Scare that autumn. Both events involved questions about the price of gold and wreaked havoc on markets. But the club members--foremost Britain and America---worked together to calm markets and to reaffirm gold's centrality as the international reserve asset par excellence around which the system revolved. In so doing, they demonstrated the Tripartite Agreement's role as the cornerstone of their international monetary policies.

This chapter examines the problems of the franc during the Tripartite years. The Big Three generally shared the following hierarchy of priorities (in decreasing order of importance): maintain solidarity, uphold the Tripartite Agreement, forestall exchange control, and prevent excessive depreciation. They succeeded in achieving their top three priorities, a signal accomplishment. Yet confidence in the franc plummeted at times, and with French requests for financial support refused and capital fleeing at an unsustainable rate, depreciation seemed the only way out. The ensuing falls in the franc were larger than Britain or America wished, but both agreed that it was much better to manage them within the club than to eject France. It was far more important for the general framework of the Agreement to survive than to risk all that had been gained over too strict an interpretation of its guidelines.

This chapter describes the monetary antagonism that pervaded the world from Roosevelt's inauguration in 1933 to the development of an uneasy ceasefire by the middle of 1935. Roosevelt's departure from the gold standard fundamentally changed the monetary system, and his chaotic method of doing so exacerbated the mutual suspicion already rife in the great capitals of the world. Once Roosevelt officially devalued the dollar in January 1934, Britain and France were clueless as to what, if anything America would do next; America and France were furious as Britain refused to stabilize the pound; and the world watched France flounder as its currency increasingly came under pressure. While Britain and America reached an uneasy suspension of monetary hostilities in 1935, the precariousness of the franc meant that this superficial stability was liable to crumble at any moment.