Harry Dexter White on Austerity and Confidence Fairies

There is a fantastic and incredibly modern quote from White in Benn Steil's book on Bretton Woods:
"The cry of “loss of confidence” is largely a smokescreen let loose by certain conservatives who are traditionally opposed to almost any Government expenditure, who object to any increase in taxes, and are too shortsighted to know that the perpetuation of the present level of unemployment constitutes de most dangerous threat to their own interests ... The statement that the bond market could not absorb Government bonds has been made ever since the first unbalanced budget, yet today Government bond prices in the United States are higher than ever. ... If [companies] do not employ the potential purchasing power [of the unemployed], the Government can do so at virtually no expense to the community."
Of course several would dismiss White as a commie spy, even though the best evidence is that we do not know if he was a spy at all. But it's easier to blacklist Keynesians as commies than to deal with their arguments.

Comments

  1. White a "Keynesian?" It was White, at Bretton Woods, who destroyed Keynes's plan for a rational international currency system and imposed the Wall Street plan for a "gold-exchange" standard that made the US dollar the world's reserve currency (until that system collapsed leaving us with the current financial anarchy). Was White a "commie spy?"--forget the spy part, as a Stalinist during the alliance between the Kremlin and Wall Street he was equally at ease serving both of his masters!

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  2. White was no Keynesian--at Bretton Woods he was Keynes's worst enemy. On behalf of Wall Street's federal government he imposed on the world the dollar-exchange standard that forced the world financial system to submit to the USA's imperial hegemony, a hegemony that remains even long after the dollar-exchange standard broke down irreversibly in the 1970's. Was he a "commie spy?" He was certainly a Stalinist and since Wall Street and the Kremlin were still firmly allied he was, spy or not, faithfully serving both his masters.

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    1. White and Keynes were friends going back to his visit to England in the mid-1930s. And White was a Keynesian in the sense that he was for government intervention in the depression. The fact that he had a different plan than Keynes does not make him anti-Keynesian. Note that his plan defended quintessential American interests, keeping the dollar at the center of the system. If he was serving the Soviets he sucked at it. I think Craig is correct. And the Venona evidence has been misused, to say the least.

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  3. Actually, based on documents released from Moscow's archives in the post-Soviet era, we DO know that White passed information to Soviet officials. Sorry, but there's no longer much basis for argument on this point. HUAC witch hunt or no.

    That aside, the points he makes in the pithy comment you cite are debatable, but not conclusive.

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    1. Again Venona does not prove what you think it does. There is a significant grey line regarding White, Currie and other New Dealers.

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  4. Yeah, Amy Knight, an expert on the era, has some good pieces on how the Venona addicts just show how the academic standards of scholarship and proof on that era have degenerated. Might have put them in White's Wikipedia article a while back.

    The USA back then had 50%+ of the world's production. To devise a plan that would not make it hegemonic would be an amazing, probably impossible achievement. White's plan was acceptable enough for Keynes to play a role in selling it back home.

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    1. Thanks for the tip on Knight. In economics I think the work by Roger Sandilands on Currie, who paid a high price for the smearing campaign, loosing his nationality and his capacity to work as an economist for almost a decade, is the best example of serious analysis on the issue of spionage.

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  5. Yes, I kept myself up late from needed sleep a few weeks back reading Sandilands. Good to have your confirmation on its worth.

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