226 Hegemonic Stability Theories of the International Monetary System
rates rather than attempting to restore prewar parities through drastic deflation,
which would only delay stabilization.
To implement this convention, the Bank of England was instructed to call an
early meeting of central banks, including the Federal Reserve. But efforts to arrange
this meeting, which bogged down in the dispute over war debts and reparations,
proved unavailing. Still, if the official convention advocated by the Financial
Committee failed to materialize, the Genoa resolutions were not without influence.
Many of the innovations suggested there were adopted by individual countries on
a unilateral basis and comprised the distinguishing features differentiating the
prewar and interwar monetary standards.
The first effect of Genoa was to encourage the adoption of statutes permitting
central banks to back notes and sight deposits with foreign exchange as well as
gold. New regulations broadening the definition of eligible assets and specifying
minimum proportions of total reserves to be held in gold were widely implemented
in succeeding years. The second effect was to encourage the adoption of gold
economy measures, including the withdrawal of gold coin from circulation and
provision of bullion for export only by the authorities. The third effect was to
provide subtle encouragement to countries experiencing ongoing inflation to stabilize
at depreciated rates. Thus Genoa deserves partial credit for transforming the
international monetary system from a gold to a gold exchange standard, from a
gold coin to a gold bullion standard, and from a fixed-rate system to one in which
central banks were vested with some discretion over the choice of parities.
Given its dominance of the proceedings at Genoa, Britain’s imprint on the
interwar gold exchange standard was as apparent as its influence over the structure
of the prewar system. That British policymakers achieved this despite a pronounced
decline in Britain’s position in the world economy and the opposition of influential
American officials suggests that planning and effort were substitutes, to some
extent, for economic power.
The Bretton Woods System
Of the three cases considered here, U.S. dominance of the Bretton Woods
negotiations is most clearly supportive of hegemonic stability theories about the
genesis of the international monetary system. U.S. dominance of the postwar world
economy is unmistakable. Yet despite the trappings of hegemony and American
dominance of the proceedings at Bretton Woods, a less influential power—Great
Britain—was able to secure surprisingly extensive concessions in the design of
the international monetary system.
American and British officials offered different plans for postwar monetary
reconstruction both because they had different views of the problem of international
economic adjustment and because they represented economies with different
strengths and weaknesses. British officials were preoccupied by two weaknesses
of their economic position. First was the specter of widespread unemployment.
Between 1920 and 1938, unemployment in Britain had scarcely dipped below
double-digit levels, and British policymakers feared its recurrence. Second was