The World Economic Order: Perils After Bretton Woods

In 1915 a consortium of private British and French borrowers approached the New York banks and asked for a wartime loan of $1 billion. Wall Street raised half the requested amount, but given the magnitude of the sum and the political risks involved in lending to belligerents, it insisted on adequate collateral against any future advances. In vain did Sir Edward Holden, the leader of the British delegation, protest against this lack of confidence in Britain’s standing; Wall Street insisted on collateral, and collateral it got. Sir Edward wept in his hotel suite at the news, but the British government deposited its Suez Canal stock in the vaults of the Farmer’s Loan and Trust.

This event marks the end of the era in whi...