This week in Washington, the international community will be recalling the achievement of their forebears who, seventy five years ago, with the fight against fascism all but won, laid the grounds for a post-war multilateral economic order. But with today’s multilateral system in crisis, what should they be celebrating?
The aims of the Bretton Woods agreement were set out by the United States Treasury Secretary Henry Morgenthau to the House Banking and Currency Committee in March 1945. Morgenthau needed the backing of law makers to get the agreement through Congress and he was careful to frame his case as good for American businesses and households. But he was in no doubt that what was ultimately at stake was “world security and the development of the world’s resources for the benefit of all its people”.
Achieving that would require multilateral financial mechanisms to stabilise currency movements and control volatile capital flows and multilateral development funds to boost productive investment. Morgenthau insisted that countries would be given the requisite degree of economic independence – policy space – to ensure that governments could make good on their promise of full employment and would cooperate more closely to eliminate the aggression and bullying that accompanied “power economics”.
