In the early summer of 1941, John Maynard Keynes was sent by Churchill to negotiate with the American government the developing terms of the Lend-Lease agreement between Britain and the USA. The war was not going well for Britain at the time, and money was short. It wasn’t helped by American insistence on Britain selling UK-owned assets held in America, to American businesses, at knock-down prices. The American government, especially under the suspicious leadership of Henry Morgenthau, secretary to the Treasury, wanted Britain to continue fighting the war, but not be in any position to use American aid or money to rebuild economic capacity for after the war.

 

Morgenthau and Keynes at the later Bretton Woods Conference, 1994 (Morgenthau uncharacteristically using a bit of paper)

With this unstated aim, the Washington system of government proved to be an absolute asset. Keynes, bewildered by his need to negotiate simultaneously with three different officials, four different departments, and 23 separate political players, spent much, much longer in Washington that he expected (he said in a letter to a friend after his return to England “I always regard a visit [to the USA] as in the nature of a serious illness to be followed by convalescence.”1. Keynes wanted to brief his employers, so on 2 June 1941 he wrote a long letter to Kingsley Wood, Chancellor of the Exchequer. In the middle of advising Wood about the status and content of negotiations, he warned that the American way of doing things would hamper his efforts:

The other main criticism which must strike one’s attention here relates to the organs of government. To the outsider it looks almost incredibly inefficient. One wonders how decisions are ever reached at all. There is no clear hierarchy of authority. The different departments of the Government criticise one another in public and produce rival programmes. There is perpetual internecine warfare between prominent personalities. Individuals rise and fall in general esteem with bewildering rapidity. New groupings of administrative power and influence spring up every day. Members of the so-called Cabinet make public speeches containing urgent proposals which are not agreed as part of the Government policy. In the higher ranges of government no work ever seems to be done on paper; no decisions are recorded on paper; no-one seems to read a document and no-one ever answers a communication in writing. Nothing is ever settled in principle. There is just endless debate and sitting around. But this, I suppose, is their characteristic method. Suddenly some drastic, clear-cut decision is reached, by what process one cannot understand, and all the talk seems to have gone for nothing, being the fifth wheel to the coach, the ultimate decision appearing to be largely independent of the immense parlez-vous, responsible and irresponsible, which has preceded it.

…I have already stayed here longer than I intended. But things move very slowly owing to the dissipation of authority, the reluctance to settle anything in principle and the fact that all important matters are conducted orally. But I am still hoping that another fortnight will see me through—for better or worse.2

Any further comment necessary?

  1. Keynes Papers (Personal Papers/80/9): letter to P. A. S. Hadley, 10 September 1941 []
  2. John Maynard Keynes, ‘Letter to Sir Kingsley Wood, 2 June 1941’, in The Collected Writings of John Maynard Keynes, ed by. D. E. Moggridge, vol. 23: Activities 1940-1943, External War Finance, 30 vols. (London; New York: Macmillan; Cambridge University Press, 1979), 103–113. Emphasis added. []