The League of Nations and the Foreshadowing of the International Monetary Fund

Essays in International Finance, no. 201, Princeton University, International Finance Section, pp. 1-47, December 1996

60 Pages Posted: 10 Nov 2012 Last revised: 22 Nov 2012

Date Written: December 1, 1996

Abstract

The very phrase "League of Nations" is a metaphor for international organizational failure. In the wake of the war it was designated to prevent, the League became the example to be avoided in building new multilateral institutions. Perhaps it is not surprising, then, that our textbooks on international relations and international economics leave the impression that the multilateral organizations established after World War II represented entirely new departures in history. This essay aims to refute that impression by examining important and commonly forgotten links between the League and the International Monetary Fund (IMF). Despite the well-documented contribution of the British delegation at the 1944 Bretton Woods Conference, and the less well known input from the Canadians, the now-conventional view is that the IMF inevitably reflected a fresh and novel American vision for international monetary and financial relations. In this and other policy areas, the title of Dean Acheson's memoirs, Present at the Creation, seems to sum up the worldview of a generation of American policymakers and scholars. The global conflagration that began in the 1930s erased what had gone before. The Americans, with a little help from their friends, were painting on a blank canvass. The United States was, indeed, more than the first among equals after the war, but it was not the case that the postwar experiment in international economic institution building was entirely new. Largely forgotten now is the economic work of the League of Nations. We need to recover that memory, for as we shall see, the monetary and financial activities of the League foreshadowed the core mandate of the IMF as it developed over time. The League's economic activities also influenced the shaping of the IMF mandate in surprisingly directly ways. For this and other reasons, the evolution of those activities in the face of increasingly severe constraints continues to warrant study by those interested in the future of multilateralism in this field.

Keywords: International Monetary Fund, League of Nations, Multilateral Institutions

JEL Classification: F30, N10, N20, N24

Suggested Citation

Pauly, Louis W., The League of Nations and the Foreshadowing of the International Monetary Fund (December 1, 1996). Essays in International Finance, no. 201, Princeton University, International Finance Section, pp. 1-47, December 1996, Available at SSRN: https://ssrn.com/abstract=2173443

Louis W. Pauly (Contact Author)

University of Toronto ( email )

Sidney Smith Hall
100 St George Street
Toronto, Ontario M5S 3G3
Canada

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