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Bretton Woods Reappraised

Published online by Cambridge University Press:  22 May 2009

Charles P. Kindleberger
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Extract

The International Monetary Fund and the International Bank for Reconstruction and Development were established and have passed their infancy under a barrage of criticism. There were originally grave doubts as to the wisdom of creating the institutions at all. Four years of operations have been attended by a wide range of adverse comment, varying from attacks on the salary and allowance scale on the one hand, to accusations of perversion and misuse by the United States on the other. The main criticism has been, however, that the institutions were inadequate to meet the economic problems of the postwar world. Evidence for this may be found positively in the proposals for drastic revision of the articles and practice of both institutions put forward by an international group of experts in a United Nations report, and negatively by the recommendations of the Gray report, which calls for stabilization-fund loans to European countries to meet the problem once solved by the establishment of the Fund, and an expanded Point IV program, with additional funds for the Export-Import Bank, to assist the Bank in the discharge of its long-run task.

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Articles
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International Organization , Volume 5 , Issue 1 , February 1951, pp. 32 - 47
Copyright
Copyright © The IO Foundation 1951

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References

1 See Polish letter of withdrawal, International Monetary Fund, Annual Report, 04 30, 1950, p. 102–103Google Scholar.

2 United Nations, National and International Measures for Full Employment, a report by a group of experts appointed by the Secretary-General, 12, 1949Google Scholar.

3 Report to the President on Foreign Economic Policies, Washington, D. C., 11 10, 1950, especially p. 64–66, 96Google Scholar.

4 See, “42½ Billion Spent on Aid since V-J Day,” New York Times, October 23, 1950.

5 Lévy-Jacquemin, J., Grandeur ou Décadence du Plan Marshall, Paris, Librairie Marcel Rivière, 1948Google Scholar.

6 This dictum has a wider application than to lending, but has to be qualified when the several parties to a problem are equally dependent on the solution. Producer and consumer countries working together on an international commodity agreement, for example, may have equal voices in the final agreement, since neither group can arrive at a satisfactory solution without the cooperation of the other. The same is not true in international lending, where the lender needs the borrower less than vice versa, or in international relief distribution. The arrangement whereby the United States contributed 72 percent of the aid in UNRRA and had 6 percent of the votes in its council was satisfactory to the extent that objective principies governed the distribution of relief, i.e., to the extent that the voting was unimportant for this purpose.

7 For a fuller discussion (and a longer list) see Mikesell, R. F., “The International Monetary Fund,” The Journal of Political Economy, LVII, p. 395–412, especially n. 2Google Scholar.

8 Organization for European Economic Cooperation, I, General Report, Paris, 09 21, 1947Google Scholar, Chapter IV, especially paragraphs 72–77.

9 See Gutt, Camilla, “Exchange Rates and the International Monetary Fund,” reprinted in Foreign Economic Policy for the United States (Harris, S. E., ed., Cambridge, Massachusetts, Harvard University Press, 1948), p. 217–235Google Scholar.

10 The impact of the decline in inventories on imports was greater than revealed by the overall figures for the latter (which showed a decline from $2,735 millions to $2,346 millions over the relevant period), but was offset in considerable part by the rise in the price of coffee and in the value of coffee imports. This means that the pressure on the sterling area and Europe was greater, and that on Latin America less, than is revealed by the totals.

11 See “World Fund Finds Sterling Is Sate,” New York Times, November 4, 1950.

12 For a detailed statement of these criticisms, see my The Dollar Shortage, New York, Technology Press and John Wiley and Sons, 1950Google Scholar, Chapter IV.

13 See Economic Survey Mission to the Philippines, Report to the President of the United States, Washington, D. C., 10 9, 1950Google Scholar.

14 International Bank, Fifth Annual Report, p. 39Google Scholar.

15 Report to the President on Foreign Economic Policies, cited above, p. 65–66.