The Origins of Development Lending
How the Bretton Woods institutions were created after WWII and became the primary lenders to the developing world.
The Bretton Woods Moment
In July 1944, delegates from 44 nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, to design the post-war economic order. The conference was dominated by two figures: John Maynard Keynes, representing Britain's declining empire, and Harry Dexter White, representing America's rising power. They created two institutions: the International Monetary Fund, to maintain exchange rate stability and provide emergency balance-of-payments financing, and the International Bank for Reconstruction and Development (later the World Bank), to finance post-war reconstruction and, eventually, development.
The power dynamics were explicit from the start. Voting rights at both institutions were weighted by capital contributions, giving the US and Western Europe dominant control. The US has always held an effective veto at the IMF and has always selected the World Bank president. Europe has always chosen the IMF managing director. These arrangements, designed in 1944 for a world of colonial empires, persist largely unchanged today.
