7. The New Deal and the Post War International Monetary System – Murray N Rothbard

20th Century American Economic History

7. The New Deal and the Post War International Monetary System

Lecture by Murray N. Rothbard

The World Economic Conference of 1933 in London met to deal with America’s Great Depression, but, without consulting anyone, FDR declared that the U.S. would not agree to the proposal because he wanted to take the U.S. off the gold standard in order to inflate the dollar. The gold-supporting British and French were horrified; Nazi Germany was delighted.

Hitler loved FDR’s New Deal. Morgan men continued to hold power positions internationally, creating worldwide inflation. By 1945, Bretton Woods had established the rules for post-war international monetary management. On 15 August 1971, the U.S. brought this system to an end, rendering the dollar a fiat currency.

7 of 8 from Murray Rothbard’s 20th Century American Economic History lecture series.

This lecture as a Podcast: http://enemyofthestate.podomatic.com/

Sourced from: https://mises.org/library/20th-century-american-economic-history

Source: 7. The New Deal and the Post War International Monetary System – Murray N Rothbard – YouTube

http://www.readrothbard.com/7-the-new-deal-and-the-post-war-international-monetary-system-murray-n-rothbard

TRANSCRIPT

00:00
be abandoned the story last night with
00:02
the general conference system general
00:05
system the 1920s having collapsed with
00:08
Britain having gone off a gold standard
00:09
Europe having gone off with old standard
00:11
and then the United States finally in
00:12
1307 $31.99 ASA 33 and I’m the United
00:17
States goes off a ghost and the dollar D
00:19
values British suddenly found like the
00:23
glories of the devaluation of the pound
00:24
might have another side of the coin
00:26
which is the dollar also might be
00:28
devalue then there were real trouble so
00:30
the British proposed a internet a world
00:34
economic conference in London in June
00:36
1933 to far re-establish a working
00:39
workable international monetary system
00:40
because what they could see looming
00:42
ahead of them as white horse eventually
00:43
does loom ahead of them competing
00:45
devaluations fayed paper money’s
00:49
currency blocks exchange controls world
00:53
tariff Wars and so forth and so on
00:55
leading to World War two as well go go
00:58
into also so they saw the Frostbite
01:01
looming ahead didn’t like it and then
01:02
the conference was cool can resume
01:05
rulings in this tract preparations for a
01:08
conference have been underway for a year
01:10
under the guidance of a League of
01:11
Nations which means the red versus
01:13
Brittany and that’s per attempt the a
01:16
the world he cannot make a financial
01:18
crisis by attempting quote the restoring
01:20
of the currencies and healthy basis
01:31
exactly on the world legal making offers
01:34
an excellent book which I recommend
01:35
buying a house Volsky called current
01:37
monetary issues published by Brookings
01:40
in 1933 which is a detailed study of the
01:43
soul philosophy is one of the people at
01:45
the conference’s detail studying the
01:46
whole business the Hoover administration
01:48
was planning to urge the restoration of
01:50
the International gold standard but the
01:52
abandonment of global rules no
01:53
administration in March and April 1933
01:55
changed the American position radically
01:57
the conference loomed ahead it was clear
02:00
there are three fundamental positions
02:01
the gold block a company’s thought on
02:04
the gold standard headed by France
02:05
France had been a hard money country
02:07
since the late 20s which is I had a
02:09
media incidentally the France was the
02:11
great French monetary adviser
02:13
at the time the Bank of France that as
02:14
Charles Rhys I mentioned was one another
02:17
one was JA crew laughs from strolling
02:18
there now in the 70s he was the Gauls
02:21
great gold standard economic advisor
02:23
which almost busted the dollar system in
02:25
68 which was prevented by the French
02:27
Revolution 68 the French general strike
02:29
68 maybe work out like a Spurs anything
02:33
their CIA CIA spurring on the Maoist of
02:37
something 68 and rusting of the glow of
02:40
hard money position nothing right that’s
02:42
pure speculation for the so we had a
02:48
jockey was still the hard the big the
02:50
very hard money or gold standard person
02:53
let’s clear the coal the gold block the
02:56
companies fell on the gold standard head
02:57
of my France which is alright immediate
02:59
return to a full international gold
03:00
standard with fixed exchange rates
03:01
between the major currencies and gold
03:03
the United States which now place
03:05
greatest stress on domestic inflation of
03:06
the price level so we were the most
03:08
inflation country you know we are again
03:10
now by Isis we come back full circle
03:13
from the it’s almost as almost the
03:15
course of those cyclical Theory history
03:18
said here the cycles come like every 20
03:19
years and the British supported by their
03:23
dominions which some form a combination
03:25
of the two things British I mean the
03:27
least the United States position
03:28
although bad was coherent and the French
03:31
position was growing here for the
03:32
British position the British somehow
03:33
want to have have that cake and eat it
03:34
also have some kind of fixed and
03:37
fluctuating and or whatever the
03:40
invitation of President rose Oh what was
03:42
still unclear was whether a satisfactory
03:44
compromise between these divergent views
03:46
could be worked out now the invitation
03:48
of President Roosevelt Prime Minister
03:49
Ramsay MacDonald of Great Britain
03:51
convening statesmen of the other major
03:53
countries journey to Washington for
03:55
individual talks with a president that’s
03:56
supposedly sort of preparation for the
03:58
big big conference well will emerge from
04:00
these conversations were very agreements
04:02
of intent but the most interesting
04:04
aspect of the talks is an American
04:05
proposal originated by William C bullet
04:07
and rejected when the French to
04:09
establish a coordinated worldwide
04:11
inflation and devaluation of currencies
04:13
and here we get the leap Sicily one of
04:17
the first evidences of a woman what’s
04:20
really the great American dream
04:22
which is right now the verb American
04:24
establishment green
04:25
which is a coordinated worldwide
04:27
inflation with a World Bank out sort of
04:29
stuff world paper a unit that’s then
04:32
full of then goes into this whole thing
04:34
this that’s because that’s the current
04:35
American dole has multi rights they were
04:44
serious discussion of a proposal
04:45
sponsored by the United States and
04:47
vigorously opposed by the gold countries
04:48
of the whole world should embark upon a
04:50
cheaper money policy not only through a
04:52
vigorous and concerned program credit
04:54
expansion and the stimulation of
04:56
business enterprise my means in public
04:57
works but also through a simultaneous
04:59
devaluation by a fixed percentage of all
05:02
currencies were just throw their pre
05:03
depression parodies so we have this idea
05:05
of this coordinated worldwide inflation
05:08
the American delegation to London was a
05:11
mixed bag but the conservative those
05:12
standard forces could take heart from
05:14
the fact that safa cannot make an
05:15
advisor is James P Warburg and Kimora
05:18
and company who have been eagerly
05:20
working on a plan for international
05:21
currency stabilization based on goal of
05:24
new and realistic paradise in other
05:25
words the ideas are I forget about the
05:26
old parties this is thanks everything
05:28
was talking about early twenties the
05:30
except the current the value of the
05:32
value parties we established it also has
05:35
a more workable level furthermore
05:38
conservative professor Oliver MW spray
05:40
and George Harrison governor of the New
05:42
York Fed it succeeded swarm were sent to
05:45
discuss proposals for temporary
05:46
stabilization and major currency to
05:48
stabilize the thing until they until the
05:51
iteration the conference and contrast
05:54
the president paid no attention to the
05:55
petition of eighty five congressmen
05:56
including ten senators I think appointed
06:00
is he counting advisor to the conference
06:02
the radical inflation as an anti gold
06:03
priest follow Charles E Coughlin
06:05
so this is so one of the high points in
06:07
current American history at ten senators
06:10
and seventy-five congressmen petition
06:13
the president appoint father Coughlin is
06:14
a common comprise the world economic
06:20
conference attended by delegates from 64
06:23
major nations open a London on June with
06:25
12 the first crisis occurred over the
06:27
French suggestion for a so-called a
06:28
temporary so-called currency truce and
06:30
they facto stabilization exchange rates
06:33
between the franc dollar and pound the
06:35
duration of the conference surely
06:37
eminently Ruiz
06:38
bullying clowns also clever device for
06:39
entering wedge toward a hopefully
06:41
permanent stabilization exchange rates
06:42
on full gold basis the British run venom
06:45
will provide the power main fairly cheap
06:46
in relation to the dollar that was their
06:48
stick well then will I go along almost
06:50
anything only the palace cheap inflation
06:52
the dollar so that the you know they
06:54
could export stuff to us and we couldn’t
06:55
expose myself to none
06:58
so there are export advantage gained
07:00
since nineteen thirty one will not be
07:01
lost on June 16th Sprague in Harrison
07:04
concluded an agreement with the British
07:06
and French for temporary stabilization
07:07
of the three currencies studying the
07:09
dollar sterling rated about four dollars
07:11
per pound and pledging the United States
07:13
not to engage in massive inflation
07:14
currency for the duration of the
07:16
agreement the American representatives
07:18
urge Roosevelt who accept the agreement
07:20
spray warning quote that a failure now
07:22
would be most disastrous and Warburg
07:24
declaring that without stabilization
07:25
quote there’d be practically impossible
07:28
to assume a leading role in attempting
07:29
to bring about a lasting economic peace
07:31
unquote but Roosevelt quickly rejected
07:34
the agreement on June 17th giving two
07:36
reasons one of the runs of the power
07:38
must be stabilized and no cheaper than
07:39
four thousand twenty five cents so as we
07:41
can’t accept a for all of time
07:42
push the pound up against an American
07:44
exports to be stimulated and British
07:46
exports
07:47
stopped unrestricted and to could not
07:50
accept any restraint on his freedom of
07:52
action to inflate in order to raise
07:53
domestic prices well as well I’m
07:56
honestly concluded quote that is my
07:57
personal view but far too much
07:59
importance of the place on existing and
08:00
temporary fluctuations unquote
08:03
unless the American delegation take his
08:05
reasoning as a stimulus to renegotiating
08:06
the agreement those well reminded of how
08:08
on June 20th quote remember the far too
08:11
much influence is attached to exchange
08:13
stability by bankers influence cabinets
08:15
unquote can we have the antis new a new
08:19
note of my banker and I back Yoli I’m
08:25
receiving the presidential veto the
08:26
British and French were indignant and
08:27
George Harrison quit on a turn home to
08:29
discuss that was a first-rate a
08:30
resignation from Roosevelt team at the
08:34
American delegation when I had an issued
08:36
its official statement a temporary
08:37
currency stabilization on June 22nd a
08:40
declared temporary stabilization
08:41
impermissible quote because the American
08:43
government feels that its efforts to
08:44
raise prices are the most important
08:46
contribution it can make
08:50
that already cast a great pool and
08:52
confidence obviously I’m another very
08:55
happy foot to start off on the temporary
08:58
stabilization scuffle the conference
08:59
settle down to longer range discussions
09:01
most important work being sat on the sub
09:03
Commission on immediate measures of
09:05
financial reconstruction of the monetary
09:07
and financial commission in the
09:08
conference the British delegation began
09:11
by introducing a draft resolution one
09:12
emphasizing the importance of quote
09:14
cheap and plentiful credit and close and
09:16
we raised a world level of commodity
09:17
prices and two stating of the central to
09:20
the central banks of the principal
09:21
countries should undertake to cooperate
09:23
with a view to securing these conditions
09:25
and should announce their intention for
09:26
sealing vigorously a policy cheap and
09:28
plentiful money by our market operations
09:29
so essentially this is sort of a bullet
09:31
thing you if you emphasize coordinated
09:35
all the countries get together and
09:36
coordinate inflationary policy
09:39
cheep-cheep further policy and open
09:41
market operations the British must lay
09:43
stress on coordinated inflation but said
09:45
nothing about the sticking point
09:46
exchange rate stabilization the Duchess
09:50
a check of Slovak the Japanese and the
09:51
Swiss criticize the British advocacy of
09:53
inflation the Italian delegate warned
09:56
quote though to put one’s faith and
09:57
immediate measures for augmenting the
09:59
volume of money in credit might lead to
10:02
a speculative boom follow my heat and
10:04
even worse slump and so the Austrian
10:06
motif a hasty and unregulated flood of
10:08
credibly to destructive results and the
10:11
French dollar gets stressed that no
10:12
genuine recovery could occur without a
10:13
sense of economic and financial security
10:15
quote French don’t like it would be
10:18
prepared to lend the fear of being
10:19
repaid and depreciated currency always
10:21
before his eyes we would find the
10:23
capital financing vast programs we
10:25
cannot make recovery an abolition of
10:27
unemployment as long as there is a
10:28
possibility that economic struggles will
10:30
be transported to the monetary field you
10:33
have the specter of competing the
10:36
evaluations left road and a word without
10:37
stable currency there can be no lasting
10:39
confidence while the hoarding of capital
10:41
while the hoarding of capital continues
10:42
there can be no solution the American
10:46
delegation that submitted its own draft
10:47
proposal which was similar to the
10:49
British ignore currency stability
10:51
navigate a close cooperation between all
10:53
governments and central banks quote the
10:55
carrying out of a policy making credit
10:57
abundantly and readily available to
10:58
sound Enterprise especially by open
11:01
market operations which expanded the
11:02
money
11:02
why also also government expenditures
11:05
and deficits should be synchronized
11:07
between the different nations so it’s
11:08
the same service and coordinated
11:09
inflation the difference of views
11:12
between the nations on efficient prices
11:13
however if accrued at any agreement in
11:15
this area of the conference on the gold
11:17
question Great Britain’s submit of the
11:19
policy declaration in the US a draft
11:21
resolution which looked forward to
11:23
eventual restoration of the gold
11:24
standard but again nothing was spelled
11:26
out on exchange rates or on the crucial
11:28
question whether restoration of prices
11:29
inflation should come first
11:30
I mean restoration or price inflation
11:32
should come first so a pious hope about
11:36
the eternity somewhere off in the future
11:38
in both the American British proposals
11:41
however even the eventual gold standard
11:43
would be considerably more inflation
11:44
arey than it had been in the 20s for all
11:46
domestic gold circulation whether coin
11:48
or bullion would be abolished this was
11:49
this was very clear pop vaguely in the
11:53
British and the American resolutions and
11:56
gold used only as a medium for suppling
11:58
international balances of payment and
12:00
all gold reserve ratios the currency
12:01
would be lowered as could have been
12:05
predicted before the conference there
12:07
were three sets of views on gold and
12:08
currency civilization united face back
12:10
only by Sweden favourite cheap money in
12:12
order to raise domestic prices a
12:14
currency stabilization we defer nicola
12:16
sufficient price rise that occurred
12:17
again the fisher beef whatever
12:20
international cooperation was envisaged
12:21
which trust joined the facia nary action
12:24
to raise price levels in some coordinate
12:25
manner the united states moreover when
12:27
it further even in sweden calling for
12:29
refighting wholesale prices back in 1926
12:31
levels the gold block attack currency
12:34
and price inflation when is the early
12:36
post-war experience of severe inflation
12:37
and currency depreciation and hence
12:40
insisted on stabilization of exchanges
12:41
any wins of depreciation in the confused
12:44
middle where the british and sterling
12:46
block and wanted price reflation and
12:47
cheap credit but also one of the men
12:49
xual return of those standards in
12:50
temporary stabilization of the key
12:51
currency so again we have this little
12:53
polar thing the french and go block on
12:56
one hand and i think some of the other
12:58
pole in the british in sterling middle
13:00
as the one that conference found that on
13:02
severe disagreements the gold block cut
13:04
phase began to panic from the one hand
13:06
the dollar was falling in the exchange
13:07
markets so what was timely they were
13:09
talking less making American goods and
13:11
currency more competitive what is more
13:13
the general
13:14
moon at the conference gave
13:15
international speculators the idea then
13:17
in the near future many of these
13:19
countries were themselves we forced the
13:20
goal off gold the consequence money
13:23
began to flow out of the gold countries
13:24
during June during June and how long
13:26
Switzerland lost over 10% of the gold
13:28
reserve during that one month alone
13:33
consequently the gold company launched a
13:35
final attempt to draft a compromise
13:37
resolution proposed resolution was
13:39
surprisingly mild one it committed the
13:41
signatory countries re-establishing the
13:43
gold standard and stable exchange rates
13:45
but deliberately emphasized of the
13:47
parity and date for each country to
13:48
return to goal was strictly up to each
13:50
individual country existing gold
13:52
standard countries were pleasure remain
13:53
on gold which is not difficult since
13:55
that was our fervent hope an unco
13:58
countries were to reaffirm their
13:59
ultimate objective to return to gold but
14:01
try that best to limit exchange
14:02
speculation meanwhile and to cooperate
14:04
with other central banks in these two
14:06
endeavors mean oculus innocuousness word
14:09
really the proposed declaration comes
14:11
from the fact in a committee United
14:13
States are very little more than its own
14:15
resolution of over a week earlier to
14:17
return eventually to the gold standard
14:18
couple will avail you dreamed of a
14:20
agreement to cooperate in limiting
14:21
exchange speculation in the major
14:23
currencies this joint declaration was
14:25
agreed upon by Spray Warburg James
14:28
uncocks head of the monetary Commission
14:29
the conference of Mo Raymond moley well
14:31
taken charge of the delegation of the
14:33
freewheelin White House advisor
14:35
Molina is Assistant Secretary of State
14:37
you have been a monetary nationalists
14:39
moley however it’s not the declaration
14:41
in roseville on June 30th urging the
14:43
president who accepted especially since
14:44
Rosa there were only a few weeks earlier
14:46
to stabilize at a four dollars and
14:47
twenty-five cents pound while the
14:49
depreciation of the dollar during June
14:50
and now brought the market rate up to
14:52
440 suros over they had nothing right
14:53
back of the palace
14:54
wasn’t happily had expensive more
14:57
expensive up to four dollars and 40
14:59
cents of course the Atlantic Under
15:02
Secretary of Treasury Dean good or ham
15:04
Acheson appears for the first time as a
15:06
powerful figure in America
15:08
influential Wall Street financier
15:10
Bernard Baruch and Louis W SS also
15:12
strongly endorsed the London declaration
15:14
by hearing immediately from the
15:16
president moley frantically wired
15:18
Roosevelt the next morning that quote
15:20
success even continuance of a conference
15:22
depends of our United States agreement
15:23
Roosevelt cabled his rejection on July
15:25
1st declaring quote
15:27
the sufficient interval should be allow
15:29
the United States to permit a
15:30
demonstration of the value of price
15:31
lifting efforts which we have well on
15:33
hand value be flashing upward
15:35
those about to injection even even the
15:37
innocuous agreement was in itself
15:39
startling enough but he felt he had to
15:41
add insult to injury the slashaway the
15:43
1:1 comprehensive the no deja might
15:45
exist the currency stabilization or the
15:47
reconstruction of an international
15:48
monetary order hence he sent on July 3rd
15:51
an arrogant a contemptuous public
15:52
message public message to London
15:54
conference the famous bombshell message
15:56
so named for his impact on a conference
15:59
those not began by lambasting the idea
16:02
of temporary currency stabilization
16:03
which he termed the specious fallacy an
16:05
artificial and temporary diversion
16:07
instead Roosevelt declared while the
16:09
emphasis must be placed on called the
16:10
sound internal economic system of a
16:12
nation in particular quote old finishes
16:16
of so-called international bankers are
16:17
being replaced by efforts to plan
16:19
national currencies the objective of
16:21
giving to those currencies are
16:22
continuing continuing purchasing power
16:23
which a generation hence will have the
16:25
same purchasing and death paying power
16:27
as a dollar value we hope to obtain in
16:29
the near future the old thing the Fisher
16:31
motif of stabilization of the dollar you
16:34
can see of course not successful Rizzo
16:35
and as successors of benefice taking
16:38
even the price low the objective means
16:41
more to the good of other nations and a
16:42
fixed ratio for a month or two in terms
16:44
of a pound or a franc unquote ensure
16:46
what the president is not totally
16:47
committed to the Nationalists Fisher –
16:50
Committee of the nation program for
16:51
paper money currency inflation and a
16:53
very steep reflation prices and then
16:55
stabilization of the higher internal
16:57
price level the idea of stable exchange
16:59
rates and international monetary order
17:01
to fade into limbo the world economy
17:05
coffers limped along aimlessly for a few
17:07
more weeks but the Roosevelt bombshell
17:09
message effectively killed the
17:10
conference and hopefully restored
17:12
international monetary order was dead
17:13
for a fateful decade from here on in the
17:16
1930s monetary nationalism currency
17:18
blocks and commercial and financial
17:19
warfare would be the order of the day
17:22
the French were bitter an English
17:25
stricken at the Roosevelt message to the
17:27
chagrin James P Warburg properly
17:29
resigned as financial adviser of the
17:30
delegation this is this would be the
17:32
beginning of the exit of this highly
17:33
placed economic advisor from Roseville
17:35
administration a similar fate was in
17:37
store for all of us praying in Dean
17:38
Acheson you know one particular thing
17:40
about being
17:40
aside here when I was growing up Oh
17:44
first entered the movement and clothes
17:47
teen actions was to be a comedy I mean
17:49
international Moscow transfer right
17:51
believe excuse it turns back and how’s
17:53
your hiss and he lost us-china and and
17:57
then and then if the qu thing is you
17:58
look at the the later record of Dean
18:00
actually you find he’s very
18:01
conservatively want the bomb on the
18:04
roster Russian do be clear and someone’s
18:05
don’t want and then you say well maybe
18:07
he was a leftist back on the forty then
18:09
he turned right-wing turned conservators
18:11
in sixty fifty and sixty but when you
18:13
look at back at the early 30s and forth
18:14
he’s very conservative of any being left
18:17
in the Rose administration Harley only
18:18
those than a question as which seems to
18:25
indicate that he was not a coming in the
18:26
forties that’s for laymen moley who had
18:31
been repudiated by the president’s
18:32
action he trying to restore himself the
18:34
Roosevelt’s graces when I forming and
18:35
obviously insincere telegram only to be
18:37
ousted from office shortly after his
18:39
return the United States playing
18:42
ambivalent role in the entire affair
18:43
Barbour who who was privately in favor
18:45
of the old gold standard praise was all
18:47
fulsomely for his message quote until
18:50
each nation puts his house in order
18:51
about the same Herculean efforts that
18:52
you were performing the road the
18:54
president now can be no common
18:56
denominators by which we can endeavor to
18:58
solve the problems there seems to be one
19:00
coming around all nations can take and
19:01
that is the one out behind by you one
19:03
calls here we have this forming
19:04
bootlicking message wrote the Rosen at
19:07
the same time he’s telling everything as
19:08
friends as a terrible thing and you
19:10
should have gone back to a gold standard
19:11
which seems the catheter certain you
19:17
know skeptical light amber Luke’s milder
19:19
than my own beloved integrity we
19:23
evacuate the Brookins a grenade
19:24
expression of enthusiastic support for
19:27
the president’s decision came as might
19:28
be expected from Irving Fisher and
19:30
George F Warren
19:31
George Roosevelt to avoid any possible
19:33
agreement that Michael limit our freedom
19:35
to change the dollar any day my you
19:40
might have to wait a week before you can
19:41
EE exchange rate and that that would be
19:43
terrible thing Jane today Farley is
19:45
recorded in his memoirs it rose what was
19:48
pumped of the Sun his angry message by
19:50
coming to suspect a plot that went on
19:51
smoothly and favor of stable is a favor
19:54
stabilization by Thomas W Lamont from
19:55
partner of JP Morgan and company working
19:58
from all these conference aid and White
19:59
House adviser Herbert Bay yard swap was
20:02
opposed to the Morgan’s and also a
20:03
longtime confidant Oboro
20:05
this might well McAfee Roosevelt’s
20:06
bitter reference to the so called
20:08
international bankers quote the
20:10
situation is curious however since what
20:12
was firmly on the suck on the anti
20:13
stabilization inside and those of us
20:16
London message was read in
20:17
enthusiastically by Russell laughing
20:18
well a partner JPMorgan apparently took
20:21
little notice of its attack on the
20:22
international bankers probably roll
20:24
right off wasn’t least wasn’t think
20:26
about back and I think well wrote to the
20:28
president after he sent his message
20:30
Devon show message quote you were very
20:32
right not to wonder in any temporary or
20:34
permanent arrangements to take the
20:35
dollar in relation to sterling or any
20:37
other currency it’s kind of a curious
20:39
situation here he’s more wrapping up
20:44
from the date of a torpedo on the
20:46
monetary conference monitoring
20:48
nationalism prevail for a remainder of
20:49
1930s the United States finally fixed
20:51
the dollar at $35 an ounce in January
20:53
1934 in my name to a two-thirds increase
20:56
in the gold price in Ravello its
20:58
original moorings less than a year
20:59
before into a forty percent devaluation
21:01
the dollar which should have been twenty
21:02
dollars and house the gold nation’s
21:05
continued on gold for two more years
21:06
but the greatly devalued dollar and I
21:08
began to attract a fun of gold in gold
21:10
countries and France was finally forced
21:12
off the road in fall of 1936 but the
21:15
other major gold country’s football in
21:16
Belgium and how long following shortly
21:17
thereafter
21:18
well the dollar was technically fixed in
21:20
terms of gold with no further gold coin
21:22
with balloon redemption within the
21:23
United States gold was used only as a
21:25
method of clearing balance news of
21:27
payments the only football redemption to
21:29
foreign country so we were technically
21:30
paying a foreign countries a foreign
21:33
central bank so it really did that only
21:34
sort of fitfully when they really
21:35
insisted on it
21:36
he try to get him not to insist on the
21:39
only significant act of international
21:41
collaboration after 1934 came in the
21:44
fall of 36 about the time France was
21:45
forced to leave the gold standard partly
21:48
to assist the French the United States
21:49
Great Britain and France entered into a
21:51
tripartite agreement beginning on
21:53
September 25th 1936 that French shook me
21:56
to throw in the exchange rate sponge and
21:58
the value of the franc by between 1 1/4
22:00
and 1/3 and this new par the three
22:04
governments agreed not to stabilize
22:05
their currencies with the iron out
22:07
day-to-day fluctuations in them to
22:09
engage in mutual stabilization of each
22:10
other’s currencies only within each
22:12
24-hour periods you have so like a day
22:14
to day kind of single day so relation
22:16
this was scarcely stabilization but this
22:18
constituted moderating of fluctuations
22:20
as well as political – monetary
22:22
collaboration which began with the three
22:24
Western countries and soon expanded to
22:26
include the other former gold nations
22:27
don’t enrolments whistle on this
22:29
collaboration continued until the
22:31
outbreak of World War two so this was
22:32
the United States Great Britain France
22:33
Belgium Holland Switzerland at least one
22:41
incident more the harmony of the
22:42
tripartite agreement in the fall of 1938
22:45
while the United States and Britain were
22:46
hammering out a trade agreement the
22:48
British began pushing the town below 480
22:50
as a third of the cheapening of a pound
22:53
the US Treasury officials warned
22:55
Secretary of Treasury Henry Morgenthau
22:56
jr. but if quote sterling drop
22:59
substantially below for four dollars and
23:01
80 cents
23:01
our foreign domestic business will be
23:03
adversely affected in quote the
23:05
consequence Norma passed successfully
23:07
insisted the trade agreement of Britain
23:08
must include a clause the agreement
23:11
would terminate it would terminate if
23:13
Britain shall allow the pound of pull
23:14
below 480 so we are putting vigorous
23:17
pressure on Britain to keep the pan of
23:18
480 little British your Latin and then
23:22
we’ll let you know the Nazis threat
23:24
overseas and looming up but we gotta
23:25
bury forgot to keep the pound above 480
23:28
or else any we may touch only in a
23:31
fascinating historical problem which has
23:35
been discussed by revisionist historians
23:38
in 1930s for what extent was the
23:40
American drama for war against Germany
23:42
the result of anger uncomfortably over
23:43
the fact that in 1930s the 1930s world
23:46
of economic and monetary nationalism the
23:48
Germans on the guidance of dr. helm are
23:50
shocked went their way successfully on
23:53
their own
23:53
totally outside the a wrangle American
23:55
control of the confinements what remain
23:57
of the cherished American open door
24:02
[Music]
24:04
more stuff here speaking of this
24:08
question will serve as a prelude to
24:09
examining the aim of the war born second
24:11
new deal in constructing a new
24:13
international monetary order in order of
24:16
in many ways resemble the lost world the
24:17
1920s German economic nationalism the
24:20
1930s was first of all conditioned about
24:22
horrifying experience that Germany in
24:23
had with runaway inflation and currency
24:25
depreciation during the early 1920s
24:27
culminating the monetary collapse in
24:29
1923 the whole German trick and this
24:32
myth in the depression starting 1931 but
24:37
shock does the economic wizard so to
24:39
speak the quarrel and continually
24:41
laughter through the 30s as it was it’s
24:45
totally conditioned about his experience
24:47
the Germans going through his fantastic
24:49
runaway inflation the first
24:50
hyperinflation in modern times of
24:52
industrial nation the mark was worth you
24:56
know 1 2 billion marks were worth
24:58
something I want one piece of bubble gum
25:00
and the people are tapering a wall with
25:02
some walk notes and trillion mark notes
25:04
all the rest of it so and the Germans
25:06
the general public marched on is sort of
25:09
a symbol and the cause of all this
25:10
exchange rate depreciation devaluation
25:13
exchange rate so even though the the
25:16
Germans could cunningly increase the
25:17
money supply and supply marks in Germany
25:20
it could not could not not not lots of
25:22
who is in power B value of the mark so
25:25
the fixed thing is where’s a German has
25:26
a face since Perry is a mark has a
25:28
remain at the old par there’s any even
25:30
hint of the magic the evaluation of the
25:31
mark have had a revolution okay so that
25:35
was there that was there things here we
25:37
have a situation with a every currencies
25:39
a collapsing everybody goes off a gold
25:41
standard the German mark is overvalued
25:43
what do you do about you can’t evaluate
25:45
the mark but the Germans did it Matt it
25:51
was to start since they were outside
25:54
then the international monetary order
25:56
says the powers of the mark was
25:57
overvalued they started a system of
26:01
exchange controls and bilateral trade
26:02
agreements but they’re really miss Kay
26:05
in this sense outside a multilateral
26:07
system and in the course of doing that
26:09
they were attacked literally by United
26:13
States as being evilly discriminatory
26:15
and bilateral
26:16
they’re into the biological they’re
26:18
entered by lateral trading agreements
26:19
not because of any sinister plotting on
26:21
their part but because they can barely
26:23
barely do anything else
26:25
given this factor they could not the
26:26
value of the mark politically couldn’t
26:28
leave me anymore and continuing in here
26:35
though quote was an overvalued part each
26:38
European country went off the gold
26:39
standard no German government could have
26:41
politically succeeded in engaging once
26:42
again on the dreaded act of devaluation
26:44
nothing wrong unable to the value of the
26:47
mark Germany was obliged to engage is
26:49
strict exchange controls news economic
26:51
climate dr. Schaack was particularly
26:54
successful making bilateral trade
26:56
agreements with individual countries
26:58
agreements which amounted to direct
26:59
quote bought her on cold arrangements an
27:02
angle of the United States and other
27:03
Western countries and totally bypassing
27:06
gold and other international banking and
27:07
financial arrangements in the
27:10
International and the anti-german
27:11
propaganda of the 1930 the german barter
27:13
deals were agreements with Germany
27:15
somehow invariably emerges coercive
27:17
victor and exploit her the other country
27:18
involved say bulgaria romania and
27:21
changing manufactured good for weak even
27:24
though they were mutually agreed upon
27:25
and therefore presumably we should be
27:26
beneficial exchanges actually there’s
27:29
nothing here diabolical unilaterally
27:30
exploited about the bar her needles part
27:33
of the essence of the border
27:34
arrangements has been elected by
27:35
historians
27:36
deliberate over evaluation of the
27:38
exchange rates of both currencies
27:39
involved in these deals typically what
27:42
would happen the german mark we have
27:47
seen is deliberately overvalued as the
27:49
alternative to the expector of currency
27:50
depreciation the situation the other
27:52
currencies is a bit more complex thus on
27:55
the Bronner agreements between germany
27:56
in the various balkan countries
27:57
especially Romania Bulgaria Hungary
27:59
Yugoslavia which the Balkans exchange
28:01
agricultural products for German
28:03
manufactured goods the Balkan currencies
28:05
were also affects an artificially
28:07
overvalued rate these are the gold and
28:09
the currencies of Britain on the other
28:10
western country so we had a mark was
28:12
over value on them and these are from
28:13
these agreements shakily the markers
28:16
overriding also the Bogue are on the
28:18
Rome or whatever they became the name of
28:20
these currencies are those met a Germany
28:24
agreed to pay higher than world market
28:26
rates for Balkan agricultural products
28:28
the Balkan countries pay
28:30
higher rates for German manufactured
28:31
products and what was the point of this
28:35
peculiar arrangement with both
28:37
currencies are overvalued the point was
28:40
that for the Balkan countries the point
28:41
the point was the force Balkan consumers
28:43
of manufactured goods the subsidized
28:45
their own peasants honorable jurists
28:47
aware this is a loan an end-run if I
28:50
wish the Romanian government forces the
28:52
Romanian consumer to subsidize the
28:55
Romanian peasant the Romanian consumer
28:58
who buys manufactured goods is in this
29:00
way forces so like a foreign India farm
29:03
program so it’s done around the basket
29:05
of currencies to the exchange rate
29:06
currency system so the Romanian urban
29:10
person or whatever a businessman buys
29:12
manufactured goods is really is
29:13
subsidizing a Romanian peasant and
29:15
landlord the external consequence of
29:18
this was that Germany was able to freeze
29:19
out Britain and other Western nations
29:21
from buying bulk and food and raw
29:22
materials because they were paying a
29:24
higher price
29:25
Germany was paying a higher price than
29:26
the British would pay on the market and
29:29
since the British could not compete and
29:31
paying for Balkan projects the Balkan
29:32
countries in the bilateral world of
29:34
1930s did not have sufficient pound
29:36
sterling or dollars the buy manufactured
29:38
goods from the West
29:39
thus Britain in the West for the private
29:42
raw materials and markets for the
29:43
manufacturers are the assistant policies
29:45
of Hilmar shocked and mutually agreeable
29:47
barter agreements between Germany and a
29:49
broken and others including Latin
29:50
American countries of course when they
29:52
start dealing with out in America and
29:53
they’re really everything hits the fan
30:01
may not Western anger at successful
30:03
German competition through bilateral
30:04
agreements and Western desire to
30:07
liquidate such competition have been an
30:09
important factor in the Western driver
30:10
war against Germany the late Gardner has
30:16
demonstrated the early hostility in the
30:17
United States through a German economic
30:18
controls and brought her arrangements as
30:21
attempts to pressure Germany to shift or
30:23
multilateral open-door system for
30:24
American products the repeated American
30:27
rebus the German proposals for bilateral
30:28
exchanges between the two countries I
30:31
have some other stuff here on tonight
30:34
instead of integrating I just sort of
30:36
had the other stuff which I’ve done
30:37
absences papers come after a season I
30:40
hope that it works in
30:44
it really is June 26 1933 the
30:46
influential American Consul General of
30:48
Berlin George Messersmith was mourning
30:51
at such continued policy who make quote
30:54
Germany a danger to world peace for
30:55
years to come this is not count the
30:57
things you wrote me there’s nothing to
30:58
do any German troops marching that
31:00
swords German bilateral trade agreements
31:02
and changing flows and pursuing this
31:06
aggressive policy president Roosevelt
31:08
over old AAA chief George peak who
31:11
becomes for this point becomes an i-cord
31:13
isolationist unquote the world war to me
31:14
from then on he kim johnson by the wing
31:17
and high wharf the general formula
31:19
foreign policy is beginning to shape up
31:22
to much people favorite accepting
31:24
bilateral deals with germany and perhaps
31:26
not coincidentally was to be an ardent
31:27
isolationist in late 1930s instead
31:30
roosevelt follow the policy of leading
31:32
interventionist and spokesman for an
31:33
open door of American products Secretary
31:35
of State Cordell Hull as well as the
31:38
assistant secretary Frances be Sayer
31:40
son-in-law of Woodrow Wilson Wilson pops
31:42
up again if only is an ancestor by 1935
31:48
American officials were calling Germany
31:49
an aggressor because of a successful
31:51
bilateral trade competition and Japan
31:53
was similarly castigated for much the
31:55
same reasons late nineteen five eight
31:57
1938 Jeep J Pierpont Muffet the head of
32:00
the Western European division the State
32:02
Department was complaining a German
32:04
controlled central-eastern in Eastern
32:05
Europe would mean quote a still further
32:07
extension of the area under a closed
32:08
economy and more specifically in May
32:11
1940 Assistant Secretary of State
32:13
freckling what didn’t read long warned
32:15
the Germans dominated Europe would mean
32:17
quote and every commercial order will be
32:19
routed to Berlin rooted in Berlin and
32:21
fully under its orders somewhere in
32:22
Europe rather than the in the United
32:24
States unquote so begin to see here that
32:26
maybe the reason for the American drive
32:28
to war with Germany but not because not
32:31
for a crusade to save 6 million 6
32:32
million European Jews but for more for
32:35
more for less for less ideological let’s
32:40
abstract an ideological reason and
32:45
shortly before American entry into the
32:46
war John J McCloy later to the u.s. High
32:50
Commissioner occupied Germany and number
32:51
one establishment Percy in Rockefeller
32:54
REM but let’s
32:55
in a draft for a speech by Secretary of
32:57
War Henry Stimson quote with German
32:58
control of the buyers of Europe and her
33:00
practice of government control of world
33:01
trade it would be well within our power
33:04
as well as the pattern she had thus far
33:05
displayed the shuttle of our trade with
33:08
Europe with South America and with the
33:09
Far East
33:10
unquote not only were hull in the United
33:14
States ardent and pressing an anti
33:16
German policy against its bilateral
33:17
trade system but sometimes secretary
33:19
Hall had the whip even Britain in the
33:21
line even our heroic a line looming
33:23
heroic our bus in early 1936 Cordell
33:26
Hull warn the British ambassador I’ll
33:28
quote the clearing arrangements reached
33:30
by Britain will Argentina Germany Italy
33:31
in other countries were handicapping the
33:33
efforts of this government to carry
33:34
forward its broad program with a favored
33:36
nation policy underlying it towards the
33:38
open door molding hiring on favour of
33:41
Federation policy the tenancy of these
33:43
British arrangements with the quota
33:45
drive straight toward bilateral trading
33:47
and they were therefore milestone
33:49
milestones on the world through war so
33:51
here’s a you know sort of direct angry
33:53
threat the New Year you were pursuing a
33:56
policy which the Germans been pursuing a
33:57
bilateral trading and that’s the road to
33:58
war and this was also also going to be
34:00
drawn as a war evenly with us one of the
34:04
United States government’s biggest
34:05
economic worries or there was a growing
34:07
competition of Germany and its bilateral
34:08
trade in Latin America here it gets
34:11
really hairy course as early in 1935
34:14
Cordell Halle concluded that Germany was
34:16
quote straining every tendon to
34:18
undermine United States trading
34:19
relations with Latin America
34:20
unquote a great deal of political
34:22
pressure was used to combat this
34:24
competition thus in the mid 1930s the
34:26
American Chamber of Commerce in Brazil
34:28
repeatedly pressed the State Department
34:30
the scuffle of Germany Brazil for her
34:32
deal I was to put an enormous political
34:35
pressure on the Brazilians scarlet which
34:37
the chamber term quote the greatest
34:39
single obstacle of free trade in South
34:40
America Brazil was finally induced the
34:43
cancellous agreement lead Germany in
34:44
exchange for sixty million dollar loans
34:46
the United States America’s exporters
34:49
group the National foreign trade Council
34:51
issued resolutions against German trade
34:54
methods and pressure the government for
34:56
stronger action in late 1939 President
34:58
Roosevelt a surge Ames Harvey Rogers and
35:00
the mentioned before the price enslave
35:02
eliezer an economist and cycling fisher
35:05
to make a currency study of all south
35:07
in order to quote to minimize quote
35:09
German and Italian influence on this
35:11
side of the Atlantic unquote there’s no
35:14
wonder the German diplomats in Brazil
35:16
Chile and Uruguay report at home the
35:21
United States was quote exerting a very
35:23
strong pressure against Germany
35:24
commercially unquote which included
35:27
economic commercial and political
35:28
opposition designed to drive Germany out
35:30
of the Brazilian and other South
35:31
American markets the spring of 1935 the
35:34
German ambassador to Washington
35:35
desperately anxious to bring an end to
35:37
American political and economic warfare
35:39
as the United States what Germany could
35:41
do to end American hostilities the
35:44
American answer which amounted to demand
35:45
for additional economics surrender was
35:48
the Germany abandoned at economic policy
35:49
in favor of America in other words
35:51
abandon let’s hold bilateral trading
35:52
change control business and allow US and
35:56
export non-discriminatory export into
35:59
Germany I’ll go a little bit more than
36:01
that and then the American reply really
36:04
meant no to P upon Moffat
36:06
quote fundamental acceptance by Germany
36:11
and this is what they demanded in reply
36:14
the fundamental acceptance by Germany of
36:16
our trade of our trade philosophy and
36:18
thoroughgoing partnership with us along
36:20
the road of equality of treatment and
36:21
the reduction of trade barriers
36:22
everything needs a price reduction of
36:24
German trade barriers our trade barriers
36:27
United States further indicated there
36:29
was interest in the Germany except not
36:30
so much the principle of the most
36:31
favored nation clause and all
36:33
international trade that specifically
36:35
for American exports when push came to
36:38
shove he doesn’t really care about what
36:39
Germany did with other countries as
36:41
import some other countries we were
36:43
interested in you know are they do with
36:45
American exports
36:50
but no heerlen might be noted in the
36:53
spring of 1936 secretary Hall refused to
36:56
settle for a bilateral deal the South
36:58
Germany large store of American cotton
36:59
hold announced the ideals blackmail the
37:03
particular bull result was the next
37:04
couple of years the source of raw cotton
37:06
imported into Germany shifted sharply
37:08
from the United States to Brazil in
37:09
Egypt which had been willing to make
37:11
barter sales of cotton and starts the
37:13
harrasses a bazillion problem when war
37:17
broke out in 1910 by 1939 Bernard Baruch
37:21
Sri action he’d heard of this was the
37:24
tell President Roosevelt quote but if we
37:26
keep our prices down there was no reason
37:28
why we shouldn’t get the customers of
37:29
the belligerent nations that we shipped
37:31
them start over again if we keep our
37:33
prices down there’s no reason why we
37:35
shouldn’t get the customers of a
37:36
belligerent nations if they have had a
37:37
drop because of the war it was the
37:39
Brutes first reaction and i think about
37:41
saving six million jews his first
37:43
reaction was the personal crush and then
37:45
that event Farouk exalted Germany’s
37:47
border system will be destroyed but
37:50
particularly significant is a
37:51
retrospective comment made by secretary
37:53
Hall he made them no mores
37:57
after the war nor did not break out
38:00
between United States in any country or
38:02
did not break out between the United
38:03
States in any country with which we have
38:05
been able to negotiate a trade agreement
38:06
it’s also a factor with very few
38:09
exceptions the countries with which we
38:11
signed trade agreements joined together
38:12
and resisting the axis political lineup
38:14
follows Egon hummock line up the line
38:18
underline that now the thing is you know
38:21
why first I I sort of knew about this
38:23
when I was he’s growing up on a graduate
38:26
school cetera and grandmothers stuff
38:27
right so the Tennessee that was sort of
38:29
dismissed hollers and sort of a
38:30
free-trade nut and and and they kept
38:33
making any statements nobody believed
38:34
them and if we as sort of we we listen
38:39
or reread house statements in this
38:40
regard and begin to take him serious
38:42
when he said maybe every news in April
38:44
he was a Secretary of State during his
38:46
whole period if he says a major cause of
38:48
war Germany was this economic struggle
38:50
maybe he was right lease is this chance
38:51
that he might be right or as I say here
38:56
considering a secretary of hall with Lee
38:58
a leading maker of American foreign
39:00
policy throughout the 1930s and through
39:02
World War two
39:03
there’s certainly a possibility that his
39:05
remark should be taken not as a quaint
39:06
testimony to hold a fix and reciprocal
39:08
trade but as a positive causal statement
39:11
of the thrust of American foreign policy
39:12
rather than that light house remark
39:14
becomes a significant admission rather
39:16
than a flight of speculative fancy
39:20
reinforcing this interpretation would be
39:22
a similar reading the testimony before
39:23
the House of Representatives in 1945 a
39:26
top Treasury eight Harry Dexter white
39:28
defending the Bretton Woods agreements
39:30
you can come to I declared quote I think
39:33
it’s Brendan looks just just actually
39:35
he’s a gentleman system the eyes face in
39:37
control of the Britain I think it would
39:40
very definitely have made a considerable
39:41
contribution to checking the war
39:42
possibly might have prevented it
39:44
what’s he talking about with the war’s
39:45
over Jews now so it’s not on the Rhine
39:47
landed on sick and my possibly might
39:51
have prevented a great many of the
39:52
devices which Germany Japan utilize
39:53
would have been illegal in the
39:54
international sphere had these countries
39:57
been participating members is white
40:01
saying that the Allies deliberately made
40:03
war upon the axis because of these
40:05
bilateral exchange from other
40:06
competitive devices which are Bretton
40:08
Woods or for that matter nineteen twenty
40:09
system would preclude it and I wind out
40:15
this part of the paper my noting the
40:18
assertion of the influential influential
40:20
London Times well after the start of the
40:22
war a quote one of the fundamental
40:24
causes of this war said this in 1900 by
40:28
1940
40:29
one of the fundamental causes of this
40:31
war has been the Unruh laxing efforts of
40:33
Germany since 1918 since 1918 to secure
40:37
wine are not far on markets the
40:39
straightening her finances at the very
40:40
time when all of her competitors were
40:42
forced to buy their own debts that
40:44
without exactly the same course
40:45
continuous friction was inevitable once
40:48
again we have the economic
40:48
interpretation I’m a very distinguished
40:51
British Journal ok I have more which so
40:56
it fits in to this going parallel more
40:59
or less and here I refer this forum
41:02
practice module which I just read fairly
41:04
recently by the professor Thomas that’s
41:05
sold I hope I have the title and
41:09
bibliography something like why the
41:10
United States for German reward to as a
41:15
so lewis i happening here undoubtedly
41:17
unpublished professor Garrity of
41:20
Columbia gave a very interesting long
41:22
paper of the at the OAH organization
41:24
American Historians meeting in Chicago
41:26
this this April and the paper largely
41:30
focused on the comment Hitler and the
41:32
Nazis had to toe of the New Deal in the
41:33
early period 33:35 etc for the friction
41:36
began and it was laudatory Hitler and
41:40
the Nazi love them to the on kept
41:42
raising Roosevelt for doing in the
41:43
United States what Hitler was doing in
41:44
Germany and then fixing out the economic
41:46
system corporate izing it and putting in
41:49
saving and saving a capitalism whatever
41:51
remember the phraseology one it was an
41:54
oratory in the extreme okay uh what went
42:01
further things that went wrong in this
42:03
multilateral business deals with a whole
42:07
tariff question other basically one of
42:09
the problems was the German long this
42:12
had nothing to do with hypnosis this was
42:14
a German system tariffs were not a
42:16
legislative matter they were negotiated
42:18
with they were treaties negotiated each
42:20
country so Germany would settle a tariff
42:22
of Britain by having a treaty
42:23
negotiation finance the tariffs there
42:25
and so forth so on you know in the
42:27
United States of course tariffs are
42:28
outside treaties with tariffs are passed
42:30
by Congress and nothing to do with
42:32
treaties and and so here we have this
42:35
peculiar system first of all the Jersey
42:36
the United States you see the can insist
42:38
but everybody else being multilateral
42:40
because we’re multilateral we’re not
42:42
discriminating as German exports of
42:43
French exports and we raise our tariffs
42:45
two hundred percent we’re keeping at
42:47
everybody equally we’re not
42:48
discriminating as a nation in ASL a
42:50
foreign country so we can take a very
42:52
high moral tone about non-discrimination
42:54
and multilateral be now the for Germans
42:56
when everyone did not have this kind of
42:58
system but it’s just a negotiate a
43:00
treaty and half ago share with each
43:03
country they can’t be multilaterals
43:05
almost impossible but to be meeting a
43:07
lot on the same sets so we have this
43:09
culture clash and for the very beginning
43:12
from 1931 on this whole thing collapse
43:15
and monetary boxes but constantly on say
43:17
it’s constantly attacking Germany for
43:19
discriminating against American products
43:21
and because of the way their thing is
43:23
structured they’re not giving us this
43:24
benefit multi Musa waiver a nation
43:26
clause and so forth and the end
43:28
accusing us of being hypocritical would
43:30
be they don’t care that we’re also
43:31
keeping our Bulgarian products high
43:33
tariffs they worried about the fact that
43:35
German exports we kept that kept that we
43:37
say who cares rubbing our entire that’s
43:38
a legislative matter the point we’re not
43:40
discriminate against you personally so
43:42
this goes off for the whole 1930s this
43:44
whole was full get communications gap on
43:47
that he wants Mississippi doing there
43:52
during late 1920s they really great
43:53
falling lending boom Germany had been
43:56
one of the largest debtors and creditors
43:58
debtors give me in the United States and
44:00
I’m very close to the otic that hurt
44:02
creditor-debtor relationship between
44:04
United States and Germany at a time of
44:09
the 1931 crash American creditors has
44:12
almost seven hundred million dollars in
44:14
German short term securities and over
44:17
1.2 billion dollars in long-term German
44:19
securities so we were the practice of
44:22
virtually the biggest predators and
44:25
comes the crash and comes the overvalued
44:30
market supple Germans have great
44:32
difficulty in getting dollars up to pay
44:34
the American creditors this is another
44:35
big there was one problem of the whole
44:37
tariff caper the other problem was whole
44:39
evaluation overvaluation bilateral
44:42
agreements with Eastern Europe and Latin
44:43
America the third problem was American
44:45
creditors American Pharoah’s a wholly on
44:47
the German bonding and Germans great
44:49
difficulty from getting dollars to pay
44:51
off because they’re not no more in the
44:52
multilateral picture and the Germans are
44:59
right things as are our powers keep
45:01
going up and so they how can they
45:02
acquire dollars in a sensible position
45:04
we telling them to get dollars in pay
45:07
off American creditors they say how can
45:08
we acquire nauseum if you know why
45:10
germans allow us to sell german product
45:11
in its face and the German exports
45:15
United States kept fooling because of
45:17
the higher u.s. powers have smooth only
45:18
10 percent from 31 which in this period
45:23
and the German is now put on exchange
45:26
control with a limit or an exchange
45:27
payments they have this be the marketing
45:30
overvalued they have the usual effect of
45:32
that which is a foreign exchange
45:33
shortage these they have to ration
45:35
dollars and pounds of separate
45:39
[Music]
45:44
and the Germans by 33 the Germans
45:46
reduced their service in other words a
45:48
death service the debt payment on the
45:49
medium and long term German bonds which
45:52
they’re mostly that’s of German
45:54
municipalities with tree which we gain
45:57
Lee gave them during the Greek bloom
45:59
farm when they move in the 20s and we’re
46:00
correctly the bankers took over Germany
46:02
because they forced them to borrow from
46:05
them and bullies the city hold and
46:08
injure municipal workers in the sort of
46:11
thing and the shot that was in this bind
46:18
and and the the policy and chalk lane I
46:22
mean to the whole line Hitler because
46:24
the Germans reduced American debt
46:26
payments in 33 he actually was shocked
46:28
at their it was a favor of servicing
46:29
paying American deaths a shock told him
46:32
that I can’t exactly I met the money
46:34
shock had been I’m running as I’m saying
46:36
the same since 1931 and then Germany
46:43
goes over by the summer of 33 this
46:45
bilateral system where they announced
46:47
that Germany could only buy abroad what
46:49
I could pay for it would limit its
46:51
imports the classical Merkin was saying
46:52
if you’re in this bilateral thing the
46:54
limit their enforcement each nation
46:57
depending on the balance of trade was
46:59
were like they try to have a balance
47:00
balance of payment with each country
47:04
hold on an American we had they had a
47:07
big balance but balance of payment
47:08
deficit with the United States Germany
47:10
at this point so the mediator
47:12
they had to coercively reduce American
47:14
exports to Germany Paul of course but
47:16
Tesla very but don’t even have this
47:17
whole culture conflict
47:19
puncture – you can come I can fight and
47:27
we constantly I know is constantly
47:29
attacking Germany for these quotas of
47:31
reducing American exports to Germany and
47:33
so forth there’s also a whole
47:38
complicated deal here which I’m not
47:40
gonna go into where where where the
47:43
German exports you’re having a German
47:45
exchange control works the name was a
47:46
whole complicated scheme which the
47:49
Americans right that is again this
47:50
limited
47:51
or the Germany the meantime and the
47:57
aggravator will listen 1933 1934 the
48:00
United Sates discover the Germany was
48:02
paying their food that serviced the food
48:03
that charges the other countries like
48:05
Britain how long Switzerland so we have
48:09
very rile up about this and we demand an
48:11
explanation from shopton shocks is wrong
48:12
we have a dollar shortage we have huge
48:15
deficits and often times were the United
48:16
States cuz he’s on this bilateral and
48:20
ambit and yeah I say this is illegal and
48:25
all that sort of stuff whole is whole
48:26
guess where as a very legalistic of
48:27
course a little time first thing that’s
48:30
a export ideology and then we have this
48:34
whole tariff thing in the old on which I
48:36
mentioned before in in March 1935 the
48:48
Germans got panicky because the United
48:49
States is getting more and more
48:50
aggressive aggressive in this thing
48:51
refusing any kind of compromise and
48:54
Germany finally is ready to capitulate
48:55
okay we accept the most favored nation
48:58
principle this is the and they said we
49:01
and there was a spring of 35 to show
49:03
their good faith Germany resumes partial
49:05
debt service on some of the US have on
49:07
the German bonds and shot even sent word
49:11
to DNS basing he’s ready he was up the
49:12
whole Unites States program even a
49:13
reciprocal trade treaty with me I just I
49:15
never gonna be scared
49:18
so hole decides that the quote test
49:21
unquote your him does faith and it has
49:23
noted June 28 35 he demands that Germany
49:26
allocate foreign exchange and quotas and
49:29
give you a nice eights commerce is
49:30
proportional Sheryl and German market
49:32
this a recorder like I sound like a full
49:35
of affirmative action plans American
49:37
University system them and give it me a
49:39
quotas versus proportionate share in the
49:42
German market and make reductions in
49:44
German tariffs and US exports and I mean
49:49
and we insist it’s not only not only to
49:51
me except this so over a kill thing
49:52
unconditionally gonna make surrender the
49:54
mission rich poor but how insisted this
49:56
a typical hollien ISM which you famous
49:58
note of 1940 wanting us Japan but
50:02
Germany would have to meet every one of
50:04
these a man before
50:05
even talk about this is Lee Hodgins this
50:07
thing is non-negotiable demand of the
50:09
new left first just put your throat and
50:13
then we’ll talk about the whole Susanna
50:14
talk about the whole thing
50:15
so this fantastical D’Amato really
50:18
German McFarland system we assisted me
50:22
every every court has to be met before
50:24
you know before negotiate Germany agreed
50:27
him to Germany agree even after this all
50:31
the model was very nicely all the mono
50:33
during the agrees to meet so all the
50:34
conditions except one they said they
50:37
couldn’t allocate dollars in advance in
50:39
the words they could before they can’t
50:40
they can’t promise us and guarantee us
50:42
foreign exchange in other words dollars
50:44
to pay to pay our creditors in advance
50:47
because they don’t know how much dollars
50:49
are gonna get they don’t know how I
50:50
would be able to do in the trade system
50:52
center so they can’t guarantee this was
50:55
an advance of trade and investment so
50:59
they couldn’t be sure a trade surplus
51:00
with other country so they can maneuver
51:02
around and get dollars home refused also
51:05
that’s it we tested that good faith and
51:07
at it that’s now long everything about
51:09
the shoot and well this is one J
51:20
Pierpont Moffatt come at the via the
51:23
mayor that unconditionally going to make
51:24
surrender and person okay that’s an
51:31
indie author National Mall processing
51:32
into thirties and long the Bretton Woods
51:41
and interesting enough the whole
51:44
controversy among American diplomatic
51:46
historians about what was America’s war
51:48
aims during World War two I’m not know
51:51
my my expertise is not the romantic
51:53
history but having a mobile bars for
51:56
example claiming our Warrington simply
51:58
maximum killing a little journey I know
52:00
that many Germans as possible whether or
52:03
not that was true we had we didn’t have
52:04
very definite economic monetary warnings
52:07
which we were very firm about from the
52:08
very beginning of the war whether in to
52:12
one extent German economic nationalism
52:13
of course the American drive toward war
52:15
one point
52:34
Wow anyway one point was clear that we
52:37
had a clear warning the war an economic
52:40
monetary warming
52:41
and the warning was to reestablish
52:45
international national competing
52:47
national evaluation currency separate
52:49
hadn’t worked brought about war we’re
52:51
going to re-establish a general type
52:55
system and a couple of key differences
53:00
one difference was if no more of this
53:03
nonsense about domestic because before
53:06
that in 20 the united states have
53:08
redeemed and gold the only currency even
53:09
even though now we have differences
53:11
nobody’s ever diamond a little
53:12
domestically the only go redemption
53:14
would be in foreign transactions in the
53:17
united states did in the 30s the second
53:19
difference is more politically
53:20
far-reaching for instead of two joint
53:22
partner key currency using the pound the
53:23
dollar but the dollars workhorse juniors
53:26
subaltern the only key currency now has
53:28
to be the dollar which respects the
53:29
three finalists of the lamp st. only
53:38
think there is going on same business so
53:41
now everybody’s determining the other
53:43
nations bulgaria we respond via whatever
53:46
and written a permitting a couple of
53:49
dollars dollars now the key part is
53:51
total business side into the into the
53:55
Junior category with Bulgarian so the
54:02
pound the pound had had had it just in
54:05
the United States to use the Second
54:06
World War to replace British imperialism
54:08
with its own far-flung Empire so in the
54:11
monetary sphere the United States are
54:12
now to move in and take over with a
54:14
pound no less subordinate and all the
54:16
other major currencies it was truly a
54:18
triumphant dollar imperialism the
54:19
parallel the imperial Americans trust in
54:21
the political sphere Security Secretary
54:24
of Treasury Henry Morgenthau jr. was
54:26
later later to express it the critical
54:28
and eminently successful objectives
54:30
was quote to move the financial center
54:32
of the world I’m called from London to
54:34
the United States Treasury and we might
54:37
not have been successful in one
54:38
political sphere but we certainly very
54:40
successful at least where does this
54:41
framework of our goals and achieving
54:44
them no list was eminently and keeping
54:49
with a prophetic vision of Cordell Hull
54:51
a man who in the world the words of
54:52
Gabriel koko had called the basic
54:54
responsibility for American political
54:56
and economic planning for the peace for
54:58
Holland urged upon Congress as far back
55:00
of 1932 way way back America gird itself
55:05
quote itself yield to the law of
55:06
manifest destiny where we heard that
55:09
before
55:09
and go forward as a supreme world factor
55:12
economically and morally World War two
55:16
is the occasion for new coalition to
55:17
form behind the New Deal I’ll get back
55:19
to the mister gluteal
55:21
coalition which reintegrated many
55:23
conservative internationalists and close
55:25
financial interests would then thrown
55:27
into opposition by the domestic state is
55:29
a more economic nationalism of the
55:30
earlier New Deal this reintegration of
55:39
the entire conservative financial
55:41
community he was particularly true and
55:43
he was international economic and
55:44
monetary policy here dr. Leo Paz Volsky
55:47
a conservative economist who broke of
55:48
the New Deal and scuffling on the
55:51
economic conference returned to a
55:52
crucial role secretary hold special
55:54
advisor and post-war planning Dean
55:56
Acheson also disaffected by radical
55:58
monetary measures of 1933-34 was not
56:01
back as Assistant Secretary of State for
56:03
economic affairs playing a key role and
56:06
when the alien Cordell Hull retired in
56:07
late 1944 he was replaced by Edwards
56:09
Tania’s son of a Morgan partner and
56:11
sauce former president Morgan went to
56:13
the United States Steel but æneas chose
56:15
us Assistant Secretary of Economic
56:17
Affairs the man quickly became the key
56:19
official for post-war international
56:21
atomic planning
56:24
William L Clayton the formal leader of
56:26
the anti Rubio Liberty League and
56:28
chairman a major partner mandersohn
56:29
Clayton company the world’s largest
56:31
cotton export firm Clayton’s major focus
56:36
in post-war planning was to promote and
56:38
encourage American exports but cotton
56:40
not unnaturally never out of the
56:42
forefront of is concerned
56:48
even before house entry into the war US
56:50
economic war aims were well-defined a
56:52
relatively simple a hinge in a determine
56:55
of soul to find the 1930 system of
56:56
economic and monetary nationalism so is
56:59
the promote America exports investments
57:00
in financial dealings overseas in short
57:02
the open door for American commerce the
57:05
sphere of commercial policies took the
57:06
form of pressure for reduction of
57:08
tariffs on American products that’s for
57:09
entire an elimination of quantitative
57:12
import restrictions on those products
57:14
the Allied sphere of monetary policy is
57:16
not the breakup of powerful
57:18
nationalistic currency blocks the
57:20
restoration of an International Monetary
57:21
order based on the dollar in which
57:23
currencies would be convertible into
57:24
each other a predictable and fixed
57:25
parodies and the amendment of national
57:27
exchange controls will purchase and use
57:29
of foreign currencies and even as the
57:31
United States was prepared into the war
57:32
to say that’s how I agree Ally Great
57:34
Britain those preparing to bludgeon the
57:36
prediction of time rate parallel to
57:37
abandon their sterling Mach they say the
57:39
organize effectively since the auto our
57:41
agreements in 1932 World War two it was
57:43
only deal effectively effectively with a
57:45
German bilateral trading currency Menace
57:48
but what about the problem Great Britain
57:49
they they solve that such economist so
57:53
it urged a policy of what allowed II can
57:55
I make a monetary nationalism on behalf
57:56
of inflation and full employment it
57:59
going so far as the Heil Roosevelt’s
58:00
torpedoing London economic conference
58:02
but over the past is unclear for
58:04
economic nationalism Keynes has visit
58:06
the Washington on behalf of the British
58:07
government in the summer of 1941 and
58:09
I’ll strike gloom about the British
58:11
determination to continue their
58:12
bilateral economic policies after the
58:14
war hi State Department official deep
58:16
here Tom Moffatt poppy despaired quote
58:19
the future is clouding up rapidly know
58:21
despite the war but hit Larry and
58:23
commercial policy will probably be
58:25
adopted by Great Britain so let’s look
58:28
then what we do about this or when you
58:29
start bombing Britain who after we get
58:32
rid of the German Minister United States
58:35
responded by putting the pressure on
58:37
Great Britain of the Atlantic conference
58:38
in August 1941 – one minute shorter I
58:43
know the Secretary of State Sumner
58:45
Welles insist of the British agreed to
58:46
remove discrimination against American
58:47
exports and abolish their politics of
58:50
autarky exchanging for Imperial
58:51
preference blocks Prime Minister
58:54
Churchill partly refused by the United
58:56
States was scarcely prepared with
58:57
it’s crucial a more breaking down
58:58
throwing block as President Roosevelt
59:00
privately told the son Elliot of the
59:02
Atlantic conferences and the days and
59:03
Elliot Elliot’s books were authorized by
59:06
FDR quote it’s something that’s not
59:13
generally no this is Roosevelt talking
59:14
it was you know it’s kid etter than me
59:19
tell me it’s not generally known but
59:21
British bankers and German bankers have
59:24
had world trade pretty well sewn up in
59:25
their pockets for a long time well now
59:28
that’s not so good for American trade is
59:29
it it’s in the past German and British
59:34
economic interests have operated to
59:35
exclude us from world trade kept on
59:37
merchant shipping closed down close us
59:39
out of this of that market and now
59:41
Germany and Britain are on war what
59:42
should we do so Roosevelt at least
59:46
apparently in addition of hall and
59:48
zelicah I was also thinking an economic
59:49
determinist foreign trade a separate
59:51
monetary terms rather while on high and
59:54
moral principle assigning one lease
59:57
agreements or the ideal time for ringing
59:58
concessions from the British but Britain
60:00
cos son of the signed agreements article
60:02
7 which merely involve a commitment to
60:06
the elimination of discriminatory
60:07
treatment in an international trade only
60:09
after a tense pressure by United States
60:10
the agreement was signed at the end of
60:12
February 42 and returned the State
60:15
Department pledge to the British and the
60:17
US would pursue a policy minami
60:18
expansion of full employment after the
60:20
war it means inflation marathas
60:22
inflation even under these conditions
60:26
however Britain soon maintained the one
60:27
lease agreement committed is virtually
60:29
nothing ever to Cordell Hull however the
60:31
agreement all legalists for an imported
60:34
own home the cordon however they green
60:36
in article 7 the decisive because
60:38
constituted quote a long step towards
60:40
fulfillment after the war of economic
60:42
principles for which I have been
60:44
fighting for half a century the
60:46
interesting turn of phrase there the
60:48
United States will also insisted the
60:51
other nation is receiving lend-lease
60:53
sign a virtually identical commitment
60:54
the multilateral was in after the war
60:56
this is part of a quid pro quo Finland
60:57
lease the first major public address you
61:01
notice how hardheaded consistently
61:02
euonymus this aspect of our foreign
61:04
policy as first major public address in
61:07
nearly a year
61:08
Holland July 1942 could now look for
61:11
constantly the quote leadership toward a
61:12
new system of international
61:13
relationships and trade and other
61:15
Economic Affairs will devolve very
61:17
largely upon the United States because
61:19
of our great economic strength we should
61:21
assume this leadership and
61:22
responsibility that goes with it
61:23
primarily for reasons of pure national
61:25
self-interest okay the post-war planning
61:31
for economic affairs I think the forum
61:33
was in charge of commercial and trade
61:34
policies while the Treasury conducted
61:36
the planning in the areas of money in
61:37
finance in charge of post-war
61:39
international financial planning and
61:41
Treasury with economist Harry Dexter
61:42
white in early 1942 white presented his
61:46
first plan which is be one of the two
61:47
major foundations of a post-war monetary
61:50
system
61:50
Whitey’s proposal was of course within
61:52
the framework of American post-war
61:53
economic objectives the countries of the
61:56
world with a join of stabilization
61:57
funding totally 5.5 million dollars
62:00
which will loan funds at short term the
62:02
deficit countries dine out temporary
62:05
balance of payments difficulties but a
62:07
return of those provision of radio
62:08
liquidity and short-term ADA deficit
62:10
countries if she change rates of
62:12
currencies would have been fixed in
62:13
relation of the dollar and hence the
62:14
gold or the gold price to be set at $35
62:16
an ounce and exchange controls that were
62:18
to be abandoned by the various nations
62:20
while the white plan envisioned a
62:22
substantial amount of inflation to
62:24
provide greater currencies the liquidity
62:25
the British responded with a Keynes plan
62:28
that was far more inflationary at this
62:30
time will retains that abandoned
62:31
economic and monetary nationalism for
62:33
Britain on the severe American pressure
62:34
as a missus salvage as much domestic
62:36
inflation and cheap money from Britain’s
62:38
he could possibly induce America to
62:39
accept the Kanes plan a vision
62:42
international clearing unions which in
62:45
return for me agreeing to stable
62:46
exchange rates between currencies and
62:48
the amendment of exchange control
62:49
provided a huge loan funds would loan
62:52
fund those members of twenty six million
62:53
dollars and the contrast of the five
62:54
billion white plan the Kings plan
62:57
moreover provided for new international
62:59
monetary unit the bank or which could be
63:01
issued by the clearing Union in such
63:03
large amounts to provide almost
63:04
unchecked room for inflation even in the
63:06
country with large deficit in its
63:08
balance of tightness you see the thing
63:09
is this is a case I now burst on and
63:11
tripped on the American establishment
63:12
the things that those are a me for as a
63:15
World Bank the areolar World Bank well a
63:17
world Reserve Bank issuing a world paper
63:19
unit the bank core unit ah whatever you
63:21
SDR whatever you want to call it and
63:23
then you
63:25
I guess you this an unlimited amount
63:27
this would be the world currency goal be
63:29
kicked out this is being the world
63:31
currency and then the World Bank an
63:32
issue if any Conti in any kind of
63:35
payment the balance of payments deficit
63:37
because it’s inflating too much the
63:39
World Bank issues more unit cause of
63:41
bankers and ships in the United States a
63:42
nice a ships under Germany Germany is
63:44
stuck will the unit ours and this is and
63:47
then the World Bank an uncoordinated
63:49
world line inflation like the Federal
63:51
Reserve’s Canadian and an Asian one
63:52
reflection so this is the great
63:54
objectives and goals coordinated
63:56
worldwide unlimited inflation of the
63:58
American monetary establishment the
64:08
nation’s the Keynes combinations would
64:10
consult with each other about correcting
64:12
balance of payment disequilibrium
64:14
so altering their exchange change rates
64:16
Keynes plant furthermore provide an
64:18
automatic access to the fund the
64:20
quiddity but none of the embarrassing
64:22
requirements is included in the white
64:23
plan for dozens of countries to see
64:25
screening deficits firefighting their
64:27
currency whereas the white plan
64:29
authorized a Stabilization Fund to
64:31
acquire deficit country to see since
64:32
fighting and return from fun loans the
64:35
Keynes plan and vision inflation will
64:37
proceed unchecked the lower the burden
64:39
of necessary adjustments any place on
64:40
the hard money creditor country this is
64:42
now popping up in the idea that Japan
64:43
and Germany have to keep raising their
64:44
value of their of a mark on the end at
64:46
cetera sort of the dollar being devalued
64:50
the hard money cut other countries will
64:52
be expecting to incite faster themselves
64:54
in order not to gain currency from the
64:56
deficit nations the white plan was
64:59
strangely attacked by a conservative
65:00
nationalist and inflation is in Britain
65:02
particularly Jean you are both fee war
65:04
beaver Brooklyn eleven times in the
65:06
moment economists the Cannes plan was
65:08
attacked by could serve as an Iran space
65:10
as well even the white plan for
65:12
interfering with market forces and for
65:14
what amount of extension of part of the
65:15
deficit country’s critical of a white
65:18
plan with a guaranteed survey of errant
65:19
a Trust Company the American Bankers
65:21
Association furthermore New York Times
65:23
New York Herald Tribune if you close the
65:25
return of the classical gold standard
65:26
and attack a large measure of government
65:28
financial planning envisioned by both
65:30
Akane’s and white proposed
65:34
negotiating during 1943 into a spring of
65:37
44 United States and Britain hammered
65:39
out a compromise of the lighting canes
65:40
plans in April 1944 a compromise adopted
65:44
by a world economic conference in July
65:45
at Bretton Woods New Hampshire his
65:47
Bretton Woods was to provide a monetary
65:49
framework for the post world world up
65:50
until 1971
65:52
it sparked very visibly in 68 and 71 put
65:55
the final kibosh
65:57
– it compromised established
65:59
international monetary fund as a
66:01
stabilization mechanism its total funds
66:04
were six of eight point eight billion
66:05
dollars far closer to the white and the
66:07
Canes prescriptions its balance of IMF
66:10
international control is against
66:11
domestic autonomy lay between the white
66:14
and Keynes plans leaving the whole
66:15
problem Valley fuzzy knows we’re very
66:17
fuzzy by how much control the IMF will
66:19
have over the deficit countries and how
66:21
much really forced them to stop them
66:22
fighting and so forth the one hand
66:24
national access to the fund was not to
66:25
be automatic on the other of the
66:27
function will require corrective
66:29
domestic economic policies of its
66:30
members a question of exchange rates the
66:33
Americans yielded to the British
66:35
insistence allowing room for domestic
66:37
inflation even the expensive stable
66:39
exchange rates the compromise provider
66:41
that each country could be free to make
66:42
a ten percent change in exchange rate
66:44
the larger changes can be made to
66:46
correct for the methyl disequilibrium
67:09
[Music]
67:22
the major European companies with
67:25
currencies will be overvalued currencies
67:34
and then until the exchange control them
67:36
scarce under $19 but despite these
67:40
expensive concessions with no bank or no
67:43
Keynesian medical dollar six of $35 per
67:46
gold ounce oh man so now to be
67:48
firmly establishes a key currency base
67:49
of a new world monetary order the size
67:51
fit was ought to be undervalued and
67:53
other major currencies to be over about
67:54
you greatly Spurs America exports so
67:57
this is a cha for American exporters
67:59
which is one of the basic aims of the
68:01
entire operation US ambassador to Great
68:03
Britain John you why not report of the
68:06
deceptive hostility to the Bretton Woods
68:07
agreements by the majority of the
68:08
directors of the bank of England so
68:10
these men saw quote was one anthem
68:12
there’s a plan is adopted financial
68:14
control will leave London and sterling
68:16
exchange will be replaced by dollar
68:17
exchange quote the proposed
68:23
International Monetary Fund ran into a
68:25
storm a conservative opposition in the
68:27
United States from the opposite pole the
68:28
hostile even British nationalist someone
68:30
who will fight more the American attack
68:32
on the IMF is essentially launched by
68:34
two major groups conservative Eastern
68:36
bankers in those Western isolationists
68:38
among the bankers the American Bankers
68:40
Association attack the UMP now and the
68:41
play sharing policy of allowing debtor
68:43
countries to control access to
68:44
international funds and wo Randolph
68:47
bridges president the American Bankers
68:48
Association and I was the provision for
68:51
debtor rationing of scarce currencies as
68:52
an abomination unquote the New York
68:56
Times urge rejection of the IMF and
68:58
proposed making loans to Britain in
69:00
exchange for the abolition of exchange
69:01
controls and quantitative restrictions
69:03
on imports another banker group came up
69:06
with a so-called key currency proposal
69:07
as a substitute for Bretton Woods this
69:10
key currency plans proposed by economist
69:12
John H Williams of Harvard also vice
69:14
president of Federal Reserve Bank of New
69:15
York and Doris by Leon Fraser present
69:18
the First National Bank of New York my
69:19
wizard will be old rich head of the
69:20
chase National Bank
69:21
this is vision of bilateral pound/dollar
69:24
stabilization really getting back to the
69:25
old Genoa you will buy a large
69:28
transitional American loan or even grant
69:30
the Great Britain plus the key currency
69:33
people are ready to abandon temporarily
69:34
not only the classical goes down but
69:35
even an international monetary order and
69:37
the state temporarily in a modified
69:39
version of the world 1930s the
69:42
Midwestern isolationist critics of the
69:45
IMF were led by Senator Robert a Taft
69:47
Republican of Ohio who charged that
69:49
while the bulk of the valuable hard
69:51
money placed in the fun with the
69:52
American dollars but that wasn’t be
69:54
subject to international control by the
69:56
fund authorities and therefore by the
69:57
debtor countries the debtor countries
70:00
could still continue change into
70:01
in Sterling block kind of practices he
70:04
attack failed to realize a formal
70:06
informal structures in Breton will
70:07
design would ensure effective United
70:09
States control of both the IMF me ally
70:11
international bank to New Mexico me to
70:16
the administration calendar the critics
70:18
of Bretton was with a massive propaganda
70:19
campaign which is able to rise agreement
70:22
through Congress by mid July 1945 the
70:25
campaign emphasizes the US government
70:27
would have effective control at least of
70:28
its own representatives and the fun it
70:31
played up in what proved to be gross
70:32
exaggeration the favor of aspects of the
70:34
various ambiguous provision since this
70:36
thing is that our access to the fund
70:37
will not be automatic an exchange
70:39
controls will be removed and exchange
70:41
rates would be stabilized it pushed
70:43
heavily the vague idea the fungus
70:44
crucible post-war international
70:45
cooperation to keep the peace
70:47
particularly interesting was the
70:49
argument William L Clayton and others
70:51
that Britain Lizabeth facilitated
70:52
general commercial policy of eliminating
70:54
trade discrimination and barriers
70:55
against American exports this arguments
70:58
put particularly boldly by Secretary of
70:59
Treasury morgan i on a speech of detroit
71:01
detroit industrialists Morgenthau
71:03
promise of the Bretton Woods Agreement
71:05
will lead to a world trade free from
71:07
exchange control and the appreciated
71:08
currencies and this would greatly
71:10
increase the exports of American
71:11
automobiles since the fun would begin
71:14
operations the following year I
71:15
accepting the existing grossly
71:17
overvalued currency parodies and most of
71:19
the nation’s assisted upon this another
71:21
Morgan I might have known where well he
71:22
spoke for other currencies are
71:26
overvalued in the dollar undervalued
71:27
America exports are indeed encouraged
71:29
and subsidized
71:34
as perhaps understandable but not only
71:37
the major farm labor and New Deal
71:39
liberal organizations push for Bretton
71:40
Woods those of the large majority of
71:42
industrial financial interests also
71:43
approve the agreement urges passage in
71:45
Congress American approval in the 1945
71:48
was following like these little
71:50
searching but they proved a Great
71:51
Britain at the end of the year by the
71:53
end of its existence therefore the
71:55
second New Deal established the
71:56
triumphant dollar is the base of a new
71:58
international monetary system a dollar
72:00
displaced the pound and within the
72:02
general political framework in which the
72:03
American Empire had replaced the British
72:05
looking for perceptively to the post-war
72:07
world in January 1945 Lamar Fleming jr.
72:11
president of Anderson Clayton company
72:13
wrote to his longtime cow
72:14
William Clayton of the quote the British
72:16
Empire and British international
72:17
influence is a myth already unquote our
72:22
harrowing a loss of a nasty tone there
72:27
the United States would soon become the
72:29
British protector yes the emerging
72:31
Russian landmass prophesize Fleming this
72:34
will mean quote the absorption into the
72:36
American Empire of the parts of the
72:38
British Empire which we which we will be
72:39
willing to accept unquote as a new deal
72:45
as a new deal came to a close the
72:47
triumphant United States been ready to
72:49
reap its fruits in the world warrants
72:50
worldwide scale let me get to the
73:00
consequences maybe tomorrow same with
73:10
just amount of monetary kick I’m reading
73:13
I read you the epilogue on something
73:15
Bretton Woods Agreement established the
73:17
framework the international monetary
73:18
system doubt of the present day I mean I
73:20
1971 written a couple of years ago and
73:23
then one more restricted international
73:24
dollar Gold Exchange standard had
73:26
replaced the collapse the dollar pound
73:27
gold exchange the end of the 1920s
73:29
during the early post-war years the
73:31
system worked quite successfully within
73:33
its own terms the American banking
73:35
community completely abandoned in some
73:36
position well the European currencies
73:38
inflated and overvalued and European he
73:40
cannot economy is exhausting
73:41
the other the undervalued dollar wasn’t
73:44
strongest and hardest the world
73:45
currencies the world dollar Shorter’s
73:47
prevail and the dollar can have it base
73:48
itself upon the vast pack of gold in the
73:50
united states much of which is fled from
73:52
warren devaluation devastation abroad
73:54
but in the early 1950s the world
73:57
economic balance began slowly better
73:59
faculty to change but while the united
74:01
states anything that’s why Keynesian
74:02
economics proceeded wisely to and fight
74:04
the dollar seemingly relieved of the
74:06
limits imposed by the classical gold
74:07
standard several european countries
74:09
began to move the opposite direction
74:11
another revived if once a conservative
74:13
free-market and hard money oriented of
74:15
the economist in such countries in West
74:16
Germany France Italy and Switzerland
74:17
these newly recovered countries began to
74:20
achieve prosperity with far less and
74:22
slighted currencies hence these car
74:24
thieves became ever stronger and harder
74:25
while the dollar became softer and
74:27
increasingly inflated
74:28
in this connection anyone in this
74:32
connection the key people interestingly
74:34
enough for this whole thing leading
74:36
these various companies to to a toy horn
74:38
much harder money and less inflation
74:40
we’re also thinking to Lilly von Mises
74:42
some of the last Austrian economists on
74:45
the board West Germany’s like the keys
74:47
the West German policy he’s both him
74:49
free trade and free markets and and hard
74:52
money a little igloo big Erhard was
74:55
essentially influenced by his
74:57
theoretician economist Alfred Miller ah
74:59
Michael is a student going on RUP guess
75:01
what someone so someone who in turn was
75:04
a student wrong Jesus in Austria so they
75:06
have this whole rep me disrupt key
75:08
Miller unmarked connection and France
75:11
Jacques Rueff was hard at work I
75:13
mentioned before was also means a
75:15
student and in Italy Li Xian or D
75:17
president of Italy a great deal
75:19
influence on shifting Italy right word
75:21
after World War Two was also a friend
75:24
and colleague and we constituent
75:26
students are closely associated with
75:29
Mises from long time doesn’t like so so
75:34
this is all like the last cap of last
75:36
gasp for the old one stream influence
75:38
continually inflation of the dollar
75:40
began I have two important consequences
75:42
one that the dollar was increasingly
75:44
overvalued in relation to gold and to
75:46
the dollar was also increasingly
75:48
overvalued in relation in the West
75:49
German mark French and Swiss francs the
75:51
Japanese yen and other ardent hard money
75:53
currencies there’s always a chronic at
75:55
continuing deficit of the American
75:57
balance of payments beginning in the
75:58
early 1950s a persisting ever since the
76:01
consequence of the chronic deficit would
76:03
continuing outflow of gold abroad and
76:04
having piling up of dollar claims in
76:06
several banks of the hard money
76:07
countries since 1962 foreign short-term
76:10
claims American Gold therefore therefore
76:12
become increasingly greater than the
76:13
u.s. gold supply in short just as
76:16
inflation in England and the United
76:17
States during the 1920s let’s finally do
76:19
the breakdown the International Monetary
76:21
order then so as inflation of the
76:23
post-war key current country United
76:24
States Lesley increasing strains and
76:27
fissures in the triumphant dollar order
76:28
of the post-world War two world o post
76:31
footnote to that of course but now the
76:33
breakdown of that system to it has
76:36
become increasingly evident that an ever
76:37
more inflated and overvalued dollar
76:39
cannot continue with a permanently
76:41
secure base of the
76:42
monetary system and therefore there’s
76:44
several more strain in Sakura system
76:45
cannot won’t continue in anything like
76:47
its present forms it wasn’t like a six
76:48
months or a year before like they crash
76:51
the tank the post-war system has already
76:54
been changed considerably and an
76:55
ultimately futile attempt to preserve
76:57
its basic features in spring of 1968 a
77:00
severe monetary run on the dollar by
77:03
Europeans redeeming dollar claims led to
77:05
major changes one was the partial
77:07
abandonment of the fixed $35 an ounce
77:09
gold price instead of two to price our
77:12
two-tier gold price system was
77:13
established the dollar and gold were
77:15
allowed to find their own level in the
77:16
Figo markets of the world with the
77:19
United States no one we’re standing
77:20
ready to support the dollar in the gold
77:21
market at 35 miles an ounce on the other
77:24
hand thirty-five dollars will continue
77:25
this is supposedly eternally fixed price
77:27
for the world central bank’s we’re
77:29
pledged not to sell goal in the world
77:30
market to buy it either it’s must be
77:32
completely sealed off before you go
77:34
market Keynesian economists have
77:37
convinced that with a dollar on gold
77:38
suffered on the world market most of the
77:39
Freeman I assume the price of gold
77:41
without falling freely fluctuating
77:43
market the only guys were predicting
77:44
except for a couple of us creating crazy
77:46
gold bugs all the top economists in the
77:48
country were predicting the price of
77:50
gold neither now that it was owned one
77:51
was supported by the dollar price tag
77:53
over for with natural industrial pricing
77:56
for jewelry and teeth and one sort of
77:58
staff of $10 an ounce that was the firm
78:01
prediction from our problems organized
78:04
of course we now know something I’m
78:06
Harvin 20 never fell below 35 its
78:10
skyrocketed the reverse however has
78:16
occurred since the world market
78:18
continued to have more faith in the
78:19
soundness than relative relative
78:20
hardness of gold and the increasingly
78:22
inflated dollar the second change the
78:25
creation Special Drawing rights a new
78:26
phone quote paper gold will unquote a
78:28
newly created paper which in
78:30
supplemental is an international
78:31
currency reserve behind each currency
78:34
while this induce while listen be put
78:36
more making behind the dollar the
78:38
quantity of SD ours has been too limited
78:39
to make an appreciable difference to
78:41
world economy to trust the dollar less
78:43
with each passing year understatement
78:46
point me to minor repairs however failed
78:49
to change the fundamental overvaluation
78:50
of the ever more inflated dollar the
78:52
spring of 1971 a new monetary crisis
78:54
finally led to a massive
78:55
valuation of several of the hard
78:57
currencies if the honesty is suddenly
79:00
refused to lose face by raising the
79:01
price of global buy otherwise the
79:03
evaluating the dollar down to its
79:04
genuine value in world market then the
79:06
harder currency such as West Germany’s
79:07
whistling the homes
79:09
found themselves were ultimately forced
79:10
to raise the value of their currency
79:11
whose course it was continuing since
79:13
then to err alternative a massive
79:15
calling upon United States would even go
79:17
there thereby the Smashing of a solid
79:19
dollar reduction goal there’s too much
79:21
of a protocol break with the u.s. to
79:22
these nations in the comment plate
79:23
actually this is what they did finally
79:25
August 71 I wrote this obviously in the
79:27
spring of something more my August 71
79:29
the central banks in Europe were
79:31
beginning to say look we have any
79:32
billions almost pile up dollars here and
79:35
you got only 10 billion or 9 billion
79:36
dollars worth of gold or diamond we’re
79:37
gonna start cashing it in we’re sick of
79:39
calling up the dollars at that point
79:41
mixing your issues in famous August 1971
79:46
speech puts on freezes prices that has a
79:49
little grand show both kind of thing
79:51
meantime as part of the things by the
79:53
way we’re also ending all Redemption and
79:54
gold period for the United States to
80:01
preserve the facade of gold redemption a
80:02
35-mile was a big has been using intense
80:04
political pressure on its creditors
80:06
retain their dollar balances an utterly
80:08
moving gold by the late 1960s General de
80:11
Gaulle and on the influence of classical
80:12
gold standard an advocate junk rule was
80:15
apparently preparing to make just such a
80:16
challenge to break the dollar standards
80:18
and move toward restoring the classical
80:20
gold standard in France and much of the
80:21
rest of Europe but the French domestic
80:23
troubles in spring of 68 end of that
80:24
dream at least temporarily as Frances
80:27
forceful inflate the Frankfort time in
80:28
order to pay the overall wage increase
80:30
and agreed upon under the threat of the
80:32
general strike but having their of
80:33
course as they the workers are insisting
80:35
in a gentle way Jake piece of fourteen
80:37
percent of it I really fresh finally
80:38
agreed to pay it and they inflate the
80:40
currency by 14-7 prices go up by 40
80:42
percent in the end of the year a year or
80:44
so the French workers know better off
80:46
than they were before and the French
80:48
franc has been softened
80:53
despite these hasty repairs and becoming
80:56
increasingly evident there they are
80:57
makeshift stop gaps and the series of
81:00
more aggravated crises will shake the
81:01
International Monetary order and until a
81:03
fundamental changes made a hard money
81:05
policy in the United States that put an
81:06
end to inflation and increase the
81:08
soundness of the dollar
81:09
to stay in the current system but this
81:11
is so politically remote is to be hardly
81:13
unlikely prognosis there are some of the
81:15
possible monetary systems that might
81:16
replace the present deteriorating order
81:18
an insistent bizarre by the Keynesian
81:20
economists and by the American
81:21
government would be a massive accession
81:23
of paper gold would be monetized goal
81:25
completely replaced by new monitoring
81:26
units I mentioned before such as the
81:28
Keynesian Bank core and a paper currency
81:30
issue by new world wizard Bank if this
81:33
were achieved a new American dominated
81:35
world Reserve Bank would be able to
81:36
fight any currencies indefinitely and
81:38
allowing fighting currencies and pay for
81:39
any animal deficits on infinitum such a
81:42
scheming bodies and tripping plant and
81:44
brimstone plant and others is now the
81:45
American Dream has met the term in
81:47
opposition by the hard money countries
81:49
and remains doubtful the United States
81:51
will be able to force these companies to
81:52
go along with the plan the other logical
81:54
will turn into the real-life plan
81:56
returning is a classical gold standard
81:58
and for massive increase in the world
82:00
price of gold
82:00
I was jacket off two hundred and fifty
82:02
two hundred dollars an ounce 300 and
82:04
then go back and gold Stan but this too
82:06
is unlikely especially under over over
82:08
powerful American opposition borrowing
82:10
acceptance of a new world currency the
82:12
United State the Americans would be
82:13
content to keep in fighting and simply
82:15
forced the hard money countries to keep
82:16
appreciating their exchange rates but
82:19
again added that for a German French
82:20
Swiss and other exporters we can tend to
82:22
keep crippling themselves in order
82:23
subsidized on lower inflation we still
82:25
have for having a problem perhaps the
82:28
most likely prognosis of the formation
82:30
of a new card money European currency
82:31
bloc which might eventually be strong
82:33
enough to challenge the dollar
82:34
politically as well as economically in
82:36
that case the dollar standard would
82:38
probably fall apart well you may see a
82:40
return of the currency box in 1930s
82:42
where the European bloc this time on a
82:43
harder and quasi gold basis it is at
82:45
least possible the future will see goal
82:47
and the hard European country currencies
82:49
and lastly thrown with triumphant but
82:51
I’m reasonably uneasy dollar all we have
82:53
now is essentially in 1930 back again
82:55
yes but shifts back and forth and in
82:57
temporary but we’re getting to I think
82:59
prognosis for the monetary future
83:01
there’s a pretty bleak one because what
83:03
we have is a situation with a whole
83:06
currency or old currency media broken
83:08
down and we have exchange rates shifting
83:12
back and forth from fluctuating to fixed
83:14
various combination the woman a
83:16
so-called dirty float where they where
83:18
the release or the exchange rate is
83:21
supposedly fluctuating free leaving
83:23
several banks Texas knows owner and
83:25
interferes with us clean float quotes
83:27
and what we can envision in this thing
83:30
says doesn’t seem to be any hope of
83:32
restoring any kind of stable system
83:34
while we can a vision is going back to
83:36
the 30th currency blocks
83:38
PDD valuations export industries in
83:41
control of governments and money have
83:43
one more devaluation than high popular
83:46
exports higher tariffs exchange control
83:48
keeping a Japanese products and all the
83:50
rest of it and if core time how was
83:52
right but you know the political
83:53
conflict halls economic conflict we
83:55
expect to test the international wars
83:58
perhaps one of them you know one of my
84:01
soaps quasi jokes it’s really only a
84:04
half joking best this is a darn good
84:07
thing of Japan but isn’t isn’t very
84:10
isn’t very funny arm yet otherwise you
84:11
could have provoked another Pearl Harbor
84:13
and have another another war against the
84:16
evil grinning Japanese to be coming back
84:20
so I hope that Japan continues to be
84:23
friendly relatively unarmed to avoid
84:25
this kind of setup ok this sort of
84:31
covers a video internationally and try
84:33
again in some more some New Deal
84:34
domestic stuff

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