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Sam Marcy

Financial Jugglery at Bretton Woods

(July 1944)

From Fourth International, Vol. 5 No. 7, July 1944, pp. 203–204.
Transcribed, edited & formatted by Ted Crawford & David Walters in 2008 for the Encyclopedia of Trotskyism On-Line (ETOL).

At Bretton Woods, New Hampshire, there are now assembled delegations from forty-four so-called “United Nations” for a monetary and financial conference. The announced purpose of this conference is: 1. to devise a plan for stabilizing the world currency system through the establishment of an International Stabilization Fund, and 2. to establish a Bank for Economic Reconstruction and Development. The realization of these objectives, according to the sponsors of the proposed plan, will “promote world trade, production, and employment in the postwar world.”

Elaborate plans for this conference have been in preparation for many months and have acutely engaged the attention of Allied monetary and financial experts ever since the outbreak of the second imperialist war. In order to camouflage their real aims and hide their respective imperialist appetites, the experts have clothed this plan in the most ambiguous language and made it cumbersome by a host of complicated technical details.

One illuminating detail, however, which was apparently “overlooked” by the monetary experts, was the designation of the country where the Stabilization Fund would deposit its gold holdings! A most remarkable manifestation of the trust and confidence which the “United” Nations repose in each other! Even the currency contributions which each member must make are not to be deposited in some central place designated by the Stabilization Fund, but each participating member is supposed to allocate its share of its own currency and deposit it in its own Central Bank and – “hold it in trust” for the Fund. This is indeed the very extreme of unorthodox capitalist banking procedure.

The Specter of Past Failures

The significance of the Conference, foreshadowed in the preliminary addresses by Roosevelt, Keynes and Morgenthau, was most dramatically emphasized by Republican Senator Tobey, one of the American delegates, in these words: “We must not, we cannot, we dare not fail.”

Apparently no one at the Conference reminded Senator Tobey of the fact that international monetary conferences beginning with the Paris Conference of 1867 and the following conferences held in 1878, 1881, 1892 and all the way up to and including the London Economic Conference of 1933 – have consistently – without a single exception – failed to achieve their purpose. And the reason has invariably been the same: the utter impossibility of reconciling the basic antagonisms inherent in the capitalist system of production.

As a matter of fact, during the eighteen months in which the capitalist experts worked on the stabilization scheme, a very sharp and increasingly widening cleavage developed between Roosevelt and his financial experts headed by Morgenthau and White on the one hand, and the bulk of American high finance on the other. This rift, after a series of acrimonious attacks upon the plan in the financial press, culminated on the very eve of the conference in a so-called “Bankers’ Committee” headed by Winthrop Aldrich Chairman of the Chase National Bank, whose purpose it is to serve notice on the conferees (especially Great Britain) that Roosevelt and his experts do not, at least in this particular instance, represent “their point of view.” The banking magnate Aldrich made it clear that his committee is not just anybody, but bluntly stated that it represented the top notch banking, business and trade associations of America. In the press release announcing the formation of his committee, no attack was made on the conference, but in January of this year Aldrich made an address before his board of directors in which he severely attacked both the British (Keynes) plan and the Morgenthau plan on the ground that either of these schemes, if tried, “would lead us (American finance capital) to a worse condition.”

The difference between Roosevelt and the bankers revolves around the degree of imperialist independence to be manifested by US capitalism in relation to its allies, especially Britain. The Bankers’ Committee will not however attempt to torpedo the Conference as Roosevelt did at the 1933 London Conference. They will bring pressure upon the Conference, so that it may more completely adopt the viewpoint of the American bankers. But they too cannot afford to have the Conference completely fail. They will “only” try to more completely dominate it.

Let us then proceed to analyze each of the specific problems under consideration at Bretton Woods, and expose the illusion they carefully cultivate, that a capitalist quack medicine in the form of a Stabilization Fund or Bank is capable of staving off the impending economic and political collapse that is sure to follow upon the heels of World War II. We must begin with the first objective of the Bretton Woods Conference: the creation of an International Fund to stabilize world currencies and thereby to restore “normal” commerce and trade which, as Morgenthau warned the delegates, is the “life blood” of capitalist society.

This fund is planned to have a paid-in capital of eight billion dollars. The subscription of each nation would be according to a system of quotas based in part on the amount of its normal foreign trade and partly on the size of its gold holdings. Under the latest revised plan, the quota for the US will be about 2.75 billion dollars, Great Britain about 1.25 billions, the Soviet Union about 1 billion, China 600 million and Canada 300 million.

A great deal of material has lately appeared in the capitalist press, dealing with the relative advantages and disadvantages that would accrue under the mechanism of this plan, either to Great Britain or the US – such as the degree of dependability of the Fund upon gold, the management of the Fund, the distribution of the voting powers and the size of the subscription of each of the participating nations. All this is, however, of secondary importance, and is within the realm of an imperialist solution. The key problem – the problem of deciding what the currencies of the nations at the Conference are actually worth (their exchange value) in terms of the dollar and the stabilization of those currencies at an agreed level – has not even been publicly discussed and is so shrouded in secrecy that no press release of its status on the agenda of the Conference has been issued! But that, precisely, is the foundation upon which all the plans of the Conference are to be erected.

A glance at some of the world’s currencies and their approximate exchange value in terms of the dollar will help to make the problem plainer:

Canadian Dollar



British Pound


African Pound


Australian Pound


Cuban Peso


Mexican Peso


Before any so-called “Fund” (which is more than a mere camouflaged loan transaction granted by the creditor nations to the debtors) can become effectively operative and on a sustained basis, the conferees must first fix a rate of exchange for each of the currencies represented at the Conference. In other words, it must be agreed, let us say, that the British Pound shall be assigned a par value of $4.04; that the Mexican Peso shall be assigned a par value of 20c.; the Cuban a value of $1.00, etc., etc.

Why Fixed Currency Is Impossible

Why is such an agreement necessary? Is it not a fact that by the automatic operation of the law of supply and demand, currencies find their own price levels?

In the days of normal capitalist international relationships, no such agreements as are presently contemplated at Bretton woods were necessary. The exchange rate for a specific currency was arrived at by the free (automatic) operation of the world money market. But since the crisis of 1930 and the severe economic dislocation that followed in its wake, the so-called “free” capitalist money markets gradually began to disappear and various “managed” or “doctored” currencies arose, ranging from those that deteriorated to mere scraps of paper, and some of dubious value, to those that are still strong and directly exchangeable such as the dollar and the pound.

So that today, about 90 per cent of the world’s currencies are inconvertible, i.e., they cannot be freely sold on the regularly organized money exchange, because of their uncertain value. It is therefore plain that if the Conference is to set an actual value on each of the national currencies represented at Bretton Woods, some of them would have to be declared bankrupt and still others far below their nominal value. The chaotic state of the world’s currencies is merely a reflection in the field of foreign exchange of the anarchy that prevails in the sphere of capitalist production and distribution on a world scale.

If we assume that the United States, and Britain to a lesser extent, are to lend (or to subscribe, as is contemplated by the Stabilization Fund) gold-supported money to all participating countries of the Conference so that each would commence anew with a currency that is internationally valid and convertible the experts would still be faced with the second and more significant problem of maintaining the stability of a fixed relationship among the currencies of the world.

To maintain the stability of a fixed currency means, however, to freeze its exchange value. To freeze it from a legal (external) standpoint is quite a simple matter, but to freeze the actual (internal) value of a currency can only be done by freezing the total value of the commodities of a country. And that is quite impossible.

The reason for this was explained many years ago by Marx in his monumental book Capital.

“Values,” says Marx, “are only definite masses of congealed labor time. The value of a commodity can only remain constant (i.e., frozen – S.M.) if the labor time required for its production remains constant” (or frozen). But, he continues, “the latter changes with every variation in the productiveness of labor.”

Thus, in order to freeze the exchange value of a currency, it would also be necessary to freeze the commodities which are represented by the currency and thereby freeze the productiveness of labor. To do that, according to Marx, means to freeze the “average skill of the worker, the state of science, its practical application, the social organization of production, and the extent and capabilities of the means of production.” In other words, it means, to put the economic relationships in each of the various countries in an iron vise, where no change whatsoever is permissible.

And does not this very tendency, in a somewhat different form, resemble the regimented and totalitarian economy which has been so roundly condemned as Nazism and Fascism at this very Conference? Try hard as the capitalist planners may under the rule of monopoly capitalism, all their schemes, if ultimately carried out, lead inevitably to the most ruthless economic and political regimentation. They can plan the most ingenious system of “blocked marks” in one part of the territory under imperialist domination and Stabilization Funds and Reconstruction Banks in another, but beneath it all is brutal and unrestrained finance capitalism in a blind alley. Only the proletarian world revolution can adequately solve the economic problem of our day on the basis of a free, socialist world.

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