A Scholar in Action in Interwar America: John H. Williams on Trade Theory and Bretton Woods

Abstract

In this paper we analyse the scientific contributions of Harvard economist John H. Williams as international trade theorist and monetary reformer together with his activities as a Vice President of the Federal Reserve Bank of New York. In the first 2 Sections we first present a succinct overview of Williams’ main contributions to international trade theory and to the interwar debate on the reform of the international monetary system. Particular attention will be devoted to his early academic writings which contained different critical arguments against the two main tenets of classical international economics: the Ricardian theory of comparative advantages and the gold standard. These criticisms formed the theoretical rationale and the analytical background of Williams’ key currency approach to the reform of the international monetary system. The key currency plan was first formulated while Williams advised Roosevelt and Morghenthau to sign a Tripartite agreement with Britain and France, and was later refined during the negotiations which brought to the approval of the Bretton Woods agreement. In this respect, Section 4 is devoted to analyse the contents of Williams’ proposal and to reconstruct his main criticisms of the two official plans presented by John Maynard Keynes and Harry Dexter White. Section 5 is devoted to examine Keynes’ and White’s reactions and to elucidate what aspects of Williams’ ideas managed to influence the shaping of the Bretton Woods Agreements. Finally, Section 6 presents some general conclusions. Sections 4 and 5 have greatly benefited from the use of archival sources which have been quoted at length, mostly in the footnotes. However, the most interesting piece – Williams’ own minutes of his first meeting with Keynes in October 1943 during the Washington negotiations – has been wholly reproduced in the Appendix.