This Saturday, leaders from 20 of the wealthiest nations will gather in Toronto’s convention center and try to rewrite the rules of the global financial system. The venue for this G-20 summit, however, is a far cry from the scene of the first such meeting that tried to manage the world’s economy.
I happened to visit the Mount Washington Resort in New Hampshire a few days ago after a hike in the White Mountains and was quickly reminded of the hotel’s historic significance. It was here, 66 years ago this July, that leaders from 44 nations agreed to create new financial institutions and set up an economic “system” – known for the local area called Bretton Woods – that helped promote decades of prosperity after World War II and the Depression.
The giant granite-and-stucco hotel with more than 200 rooms sits like a white cruise ship on the lower reaches of the tallest mountain in the Northeast. It was built in 1902 with 250 Italian craftsmen and still retains the grandeur of an era in which great men thought they could understand and control free markets like they could the game of golf. They no doubt sat, as I did with my teenage daughter, in the rocking chairs on the hotel’s wide porches, drawing lofty inspiration from the view of Mount Washington, whose 6,288-foot peak has winter winds that can howl at 200 miles per hour.
The mountain resort was chosen for the 1944 conference to accommodate the health of the great British economist John Maynard Keynes. His theories about using government money to stimulate a dormant economy are still in favor, even though the ideas are not fully proven.
For economic historians, the hotel offers many photos, plaques, and old furniture from those crucial weeks in which some 1,000 representatives hammered out agreements on such things as currency exchange rates and the creation of the World Bank and International Monetary fund. In 1986, the hotel became a National Historic Landmark.
Recently, French President Nicolas Sarkozy called for a “new Bretton Woods.” He didn’t mean a new hotel but rather a different financial order aimed at preventing asset bubbles, recessions, and financial panics.
The original conference marked the rise of America as a global economic power – and the beginning of the end of Britain’s imperial influence. Today, export-giant China challenges the US dominance and yet it has only begun to really shape international financial rules.
Perhaps the next history-making conference like the original “Bretton Woods” will take place someday soon on a mountainside in China where a cool breeze can temper the hot discussions over how best to manage an ever-evolving global economy.