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By Benn Steil and Manuel Hinds
Published: May 23 2011 23:19 | Last updated: May 23 2011 23:19
A few days before the famous Bretton Woods monetary conference in July 1944, John Maynard Keynes, the UK's lead negotiator, had one of his legendary dust-ups with his American counterpart, Harry Dexter White. It was over the role of the US dollar in the postwar world.
White was determined to make the dollar the sole international currency; legally a surrogate for gold itself. Keynes, whose country was effectively bankrupt "“ meaning it had not nearly enough gold or dollars to settle its international debts "“ was equally determined to ensure the dollar would have no such special status. The survival of the British empire itself could hinge on Britain's ability to salvage some measure of international acceptability for the pound sterling or, at the very least, access to an international medium of exchange (which he wanted to call "bancor") not controlled by the Americans. Britain was a desperate debtor with no cards to play, and Keynes lost that battle.
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