Back to article index


Harry Dexter White

Keynes's antagonists in the negotiation with the United States were Henry Morgenthau and Harry Dexter White, architects of the famous 'Morgenthau Plan' for the de-industrialisation of Germany. Roosevelt, Morgenthau and White were well aware that the consequence of a radical weakening of Germany would be a strengthening of the Soviet Union. The 'Programme to prevent Germany from starting World War III' was worked out, apparently by White, in August 1944 and in September Roosevelt told Cardinal Spellman, who can't have been pleased at the news, that Russian domination of Europe was inevitable. Robert Skidelsky in his biography of Keynes quotes White's biographer, David Rees, as saying:

'Drawn toward the Soviet Union by an emotional sympathy at the very least ... White may have felt in the late summer of 1944 that the irreversible crushing of the Reich would help to lead to post-war Soviet-American understanding. If the Russians achieved a dominant position in Europe as a result, this might be a price worth paying ...' (2)

(2) Robert Skidelsky: John Maynard Keynes, Fighting for Britain, 1937-1946, Macmillan 2000. p.362. Lacunae as in Skidelsky. Roosevelt and Spellman, p.363.

In 1948, White appeared before the House Committee on Unamerican Activities, successfully rebutting charges of conspiracy with the Soviet Union. He died a few days later, apparently of a heart attack. Subsequently definite evidence emerged that almost from the moment that he started working in the Treasury in the 1930s he had been passing classified documents to people he knew were Soviet agents. But that clandestine activity was small beer compared to the perfectly open initiative he took in April 1944, delivering to the Soviet Union a duplicate set of plates for the printing of the military occupation marks that were to be the legal currency of post-war Germany 'resulting in the Soviets effectively raiding the U.S. Treasury for $300 - $500 million, or roughly $4.0 - $6.5 billion in today's dollars ...

'Concerned that the Soviet government might not ratify the conference agreements, White six months later proposed a low-interest U.S. reconstruction loan of $10 billion for the Soviet Union—more than three times as much as what he advocated in transitional assistance for the United Kingdom. The fact that such a credit was not ultimately offered turned out to be one of the primary reasons the Soviet government decided against joining the IMF and the World Bank, as White had feared it would.' (3)

(3) Benn Steil: 'Red White: Why a Founding Father of Postwar Capitalism Spied for the Soviets', Foreign Affairs, March/April 2013, Vol. 92, No. 2, pp.121-2.

It seems to me fairly clear that, whatever personal sympathies White might have had for the Soviet Union, or whatever his admiration for Soviet Socialism, his ambition was to incorporate the Soviet Union into the multilateral free trading system based on the dollar which he was trying to establish at Bretton Woods. The account I've just been quoting goes on to say (p.128):

'In August 1945, according to testimony given nine years later by the journalist Jonathan Mitchell before the Senate Internal Security Subcommittee, a gloomy White told Mitchell that the system of government-controlled trading that had emerged during the war would continue into the postwar period, owing to a lack of dollars and gold, which would oblige governments to maintain tight controls on cross-border private trade. The IMF would fail to rectify this problem ... The United States, White continued, would, with its huge domestic market, be able to carry on a system of private enterprise for five to ten years but could not ultimately survive as a capitalist island in a world of state trading.'

'State trading' is as good a two word summary as one could wish of the system Keynes was trying to establish. The implication - not drawn out by the author of the article - is that White's pussyfooting with the Soviet Union was an attempt to subvert the Soviet system, or at least to prevent the division of the world into two irreconcilable camps - Capitalist and Socialist - with a genuine fear that the Socialist system would prove to be the stronger of the two.

Let us step back a little and try to enter into the interesting mind of Harry White.

Although the US had already destroyed the American 'Indians', subjected its black population to a reign of terror, done what it could to subject Latin America to its will and taken control of the Philippines, it was not yet decided on a policy of world domination, with the huge military investment that would entail. It was still willing to accept that there could be other powers in the world. However, it had a problem of which White at the Treasury was acutely aware. It had developed a productive capacity far beyond the consumption capacity of its own domestic market. Some idea of this is given in a French account published in April 1948, the month in which Marshall Aid was finally approved by Congress:

'In fact one can hardly see where France and Europe could at the present time find at once the products and the credits they need other than from the economic power that owns, with only 6% of the population and of the territory of the world, 25% of world revenue, 55% of commercial shipping and which produces 20% of its wheat [blé], 33% copper, 40% rubber, 45% lead and cotton, 55% of its iron [fonte], 60% of its coal [charbon] and 63% of its petrol.' (4)

(4) Jacques-René Rabier: 'Plan Monnet et plan Marshall', Esprit, Nouvelle série, No 144 (4), April 1948, pp. 587-8 (fn).

The solution to the problem was exports. But, as we've already seen, it was impossible to develop a substantial export surplus without generating elsewhere in the world a substantial trade deficit. Britain, still the dominant political power in the world, had formed its Empire into a trading bloc that formed an obstacle to the expansion of US trade. In the 1930s, when White began his clandestine dealings with the Soviet Union, the rising European power - Nazi Germany - had devised an ingenious method for conducting international trade that obviated the need for trade surpluses and deficits. It may be that the expansion of the Japanese Empire also posed a potential obstacle to US trade (Japan had been the US's best trading partner). Under those circumstances, might it not be a good idea to open lines of communication with the other potential great power in the world, the Soviet Union? And having seen the collapse of National Socialism in Germany, and outmanoeuvred Keynes in the construction of a new world financial order, was not the prospect of implicating the Soviet Union in this new gold based order also very enticing - perhaps the more tempting for the Soviet Union given that Russia was a gold rich country and Marx was a believer in money that had a value of its own? (5)

(5) For an alternative view - White as unequivocally a traitor to the US acting in the interests of world Communism - see Also Anthony Kubek: The Morgenthau Plan and the Problem of Policy Perversion,

At any rate at the end of the war it would be obvious to the US that Europe, Japan and to only a slightly lesser extent Britain, Empire and all, were at its mercy, while the Soviet Union too was wrecked and had absorbed a territory much larger than it could reasonably be expected to support with its own resources. There was now no problem in finding people willing to accept imports from the US. The problem was a lack of money to pay for them. It was up to the US to supply both the goods and the money.