The sun goes down, the sky goes twilight blue. Then indigo. This is the 1,859th day I have spent in this camp.
49
In July of 1944, the United States government convened a group of seven hundred delegates, from all the Allied countries, to design the postwar financial order. They met at the Mount Washington Hotel in Bretton Woods, New Hampshire, and there, after three weeks of meetings, they published recommendations that when ratified by the member governments resulted in the International Bank for Reconstruction and Development, and the International Monetary Fund. The intended results of these new entities included the establishment of open markets and the stability of member nations’ currencies.
An international trade organization was also proposed, but when the US Senate failed to ratify this part of the proposal, it was not founded. Later the GATT, the General Agreement on Tariffs and Trade, was established and took on the functions that the failed ITO would have fulfilled. Later the GATT was superseded by the World Trade Organization.
John Maynard Keynes, the chief British negotiator, also suggested at Bretton Woods that they found an International Clearing Union, which would make use of a new unit of currency to be called a bancor. The purpose of the bancor would be to allow nations with trade deficits to be able to climb out of their debts by calling on an overdraft account with the ICU that would allow them to spend money to employ more citizens and thus create more exports. Nations making use of their overdraft would be charged 10 percent interest on these bancor loans, which could not be traded for ordinary currencies, or by individuals. Nations with large trade surpluses would also be charged 10 percent interest on these surpluses, and if their credit exceeded an allowed maximum at the end of the year, the excess would be confiscated by the ICU. Keynes thus hoped to create an international balance of trade credit which would keep countries from becoming either too poor or too wealthy.
Harry Dexter White, the assistant secretary of the US Treasury and the chief American negotiator, said of this plan, “we have taken the position of absolutely no.” As the world’s biggest creditor and holder of gold by far, the US was in a position to enter the postwar period as the sole owner of the major global currency, the US dollar, which was to be backed by gold reserves. White proposed an International Stabilization Fund, which would place the burden of debt firmly on deficit nations; this later became part of the World Bank.
So at Bretton Woods, White’s plan prevailed over Keynes’s, and in the absence of the International Clearing Union and its bancor, postwar reconstruction and subsequent economic development was funded by the US dollar, which became the de facto global currency. The imperial coin, so to speak.
50
Mary returned to Europe, and from her base in Zurich began visiting the various central banks there, trying to improve on the unsuccessful meeting in San Francisco. In London she met with the chancellor of the exchequer, and some of the board members of the Bank of England.
In the days before that meeting, she read up on the history of the Bank of England, and saw that it was important in the financial history of the world. 1694: Charles II and William III had been borrowing money from private banks and not paying them back, or else levying taxes on all kinds of activities to be able to afford to make their debt payments, and thus making life more expensive for everyone, except for the royals involved, who were less and less liable for their profligate spending. So a Scottish merchant, William Patterson, proposed that 1,268 creditors lend the English king 1.2 million pounds for a guaranteed rate of interest of eight percent, and once William III signed off on that, a big piece of the system of the current world fell into place. The capitalizing of state power now had its roots in private wealth; thus the rich and the state became co-dependents, two aspects of the same power structure.
After that, the Bank of England became the mechanism by which the financing of the state apparatus was monopolized by a small group of wealthy tradespeople, and the shift from feudal land power to bourgeois money power was complete. The state from then on was always indebted to private wealth, and so relied on the good will of particular private individuals, who were unelected and unrepresentative of anyone but their own class, and yet were inserted right into the heart of state power. The Bank of England had also been founded in a state of emergency, during a war; but there was always an emergency that would serve when it came to finding reasons to perpetuate and extend state power. So whatever the law said, in practice the bank/state combination did what it pleased.
Naturally such a new thing was controversial. Tories of the time thought the Bank would lead to more parliamentary power, sapping the monarchy and leading to the mob; Whigs thought it was a mechanism by which the monarch would always escape paying his or her debts. Either way it was a rival to already-existing power bases, and was considered as such from the very start: an insulated enclave of power within government, made up of unelected rich bankers.
All this was ominous enough, but it kept occurring to Mary that these people’s autonomous power might now actually put them in position to help enact a quick solution to the carbon problem, should they choose to join that effort. Even if they saved the world to save their privilege, maybe that didn’t matter. Justice being not at this moment her first priority. So she went to London.
The Bank of England leaders were coolly unappreciative of her plan. Likely to cause inflation; could expose the central banks to currency-trading pirates; would create exposure to market pressure. Not sure how that
