A crucial economic summit in 1944 ushered in 28 years of growth and stability
The crucial Bretton Woods summit in 1944 ushered in an era of above-average growth and stability
Ed Conway, Little Brown, 453pp, $ 35.
THE centenary of World War I has filled bookshop shelves with commemorative titles like never before but this is one such book that’s definitely worth reading because it offers important insights into post war economic history and the economic challenges faced by the global economy today.
Conway, the London-based economics editor of Sky News, has written this book to mark the 70th anniversary of the Bretton Woods summit, which took place over 22 long days and nights in July 1944. The result is an absorbing and detailed work rather than a reheated history aimed at the commemorative market.
As well as recording these events in an engaging and accessible style, this is a history book that has great relevance for the problems facing Europe and the US today. Amid calls for a new Bretton Woods, this book is an important reminder of what world leaders were able to achieve at a time when the future of Europe was hanging in the balance.
Conway takes readers inside the marathon meetings of 700 representatives from 44 countries at Mount Washington Hotel, Bretton Woods, New Hampshire, where the delegates ate, drank and discussed a new world economic order until late into the night. The summit not only created the International Monetary Fund and the World Bank (also known as the International Bank for Reconstruction and Development), but it designed a post-war foreign exchange system that ended the gold standard and the current account imbalances that it had generated.
Conway says it achieved a great deal, and delivered unrivalled stability, growth and prosperity. Economic growth averaged 2.8 per cent from 1948 to 1970, which is more than double the growth achieved under the gold standard and one percentage point higher than the period from 1971 until the 2008 financial crisis. What’s more, the instances of financial crises and bank failures were lower under Bretton Woods than ever before, Conway argues.
The agreement lasted until August 1971 when president Richard Nixon ended the US dollar’s convertibility to gold, which in turn collapsed the system of fixed exchange rates linked to the US dollar. Bretton Woods was replaced by a “hodge podge” of floating and fixed exchange rates. The rise of currency as a commodity has reached the point where the global turnover of foreign-exchange markets has reached $5.3 trillion a day, Conway points out, and the problems in Europe are a prime example of what happens with flawed currency systems.
“The European single currency has provided the world with the best example to date of what happens when one tries to reinstate the gold standard in the modern world. The European currency may not have gold as its anchor but it is akin to the gold standard in almost every other way,” he writes.
The summit began just one month after the D-Day landing. World War II was far from won and the attendees had their minds focused on a new world order that would avoid the blunders made with the Treaty of Versailles.
Britain’s delegation was led by John Maynard Keynes, who had been scathing of this 1919 treaty and the economic imbalances that followed in his inter-war post-Depression work, The Economic Consequences of Peace.
The main focus of the summit was to overcome the damage done by the gold standard, which had forced weaker countries to pursue austerity measures. Germany had been especially vulnerable to these policies, and this in turn led to the rise of Nazism. The big issue raised by this book is whether the global economy needs a new Bretton Woods. Santos boss David Knox personally asked Weidenbach to write this book to mark the 60th anniversary of the company’s incorporation. Weidenbach is not a resources or business writer but she was a good choice because her work is focused on the outback, and the story of Santos is very much an outback story. Santos began as a pioneering company that made its luck by searching for oil and gas in the most remote and inhospitable parts of Australia. The name stands for South Australian Northern Territory Oil Search. Weidenbach relished the opportunity, having written a biography of the Birdsville mailman that sold 100,000-plus copies, and a biography of the geologist Reg Sprigg, who helped to found Santos. Knox attended a talk that she gave on the Sprigg book and that prompted him to ask her to write this book. The book’s strength is its ability to vividly capture the spirit of the outback in the early days of Santos, before its national and international expansion. It must be said that this is an official history, even though Santos executives told Weidenbach they wanted a “warts and all” account. Weidenbach was paid as a consultant to write it and she submitted drafts for vetting to a team of three Santos staff. This arrangement is clearly a double-edged sword. One of the most gripping parts of the book recounts how a handful of Brisbane-based executives drove the push into “unconventional” gas on the Darling Downs and beyond, even though the Adelaidebased management was highly sceptical. The book assures us that Santos has vast experience in CSG, despite the immense size and complexity of these projects. The China boom has fuelled a publishing tsunami and Brown has been at the front of this wave. He has written or edited 10 books on China since 2009, and has five coming out this year. New
Emperors tells the story of the “princelings” who really matter in China and how their networks work. Brown begins with the concept of what a network in China is and looks at how they operated during the leadership transition that took place between 2011 and 2013. Much of the focus is on the seven members of the Politburo Standing Committee who were the “winners” from this power struggle, and what their political ideology means. The central question that Brown tries to answer is where China as a polity and a society might be headed, and what this means for neighbouring states and the world as whole.
British economist John Maynard Keynes, centre, at the Bretton Woods summit
Blue Flames, Black Gold The story of Santos Kristin Weidenbach, Santos Ltd, 450pp, $ 35.
The New Emperors Kerry Brown I.B. Tauris, 244pp, $ 42.95.