Keynes and Morganthau

keynes_morgenthau

In this picture by Alfred Eisenstaedt, Economists John Maynard Keynes of England (right) & Henry Morgenthau of the US meets at the Bretton Woods Conference to plan for postwar reconstruction. They met with envoys of 42 other nations to plan post war recovery, including idea of the World Bank at an international Monetary Conference. The conference adopted a monetary policy that maintained the exchange rate of its currency within a fixed value in terms of gold and the ability of the International Monetary Fund to bridge temporary imbalances of payments. (The system collapsed in 1971, after the United States unilaterally terminated convertibility of the dollars to gold.) Keynes’ involvement assure that the Bretton Woods supported the government intervention. 

The conference created two important international organizations: the International Monetary Fund is to protect international trade. The World Bank’s is to promote economic development. Keynes suggested that the Fund should be called a bank and the Bank should be called a fund.