------ EH.NET BOOK REVIEW ------
Title: Camille Gutt and Postwar International Finance

Published by EH.NET (November 2011)

Jean F. Crombois, /Camille Gutt and Postwar International Finance/. London:
Pickering & Chatto, 2011. xi + 192 pp. $99 (hardcover), ISBN:
978-1-84893-058-2.

Reviewed for EH.Net by Erik Buyst, Center for Economic Studies, University of
Leuven.

The title of this book is somewhat misleading. Camille Gutt was the first
managing director of the IMF (1946-1951), so the reader expects a thorough
analysis of Gutt’s opinions, strategy, achievements and failures during
that period. Unfortunately only the last chapter, about twenty pages, deals
explicitly with this highly intriguing aspect of Gutt’s remarkable career.
Most of the book is a kind of updated summary of Crombois’ earlier work
published in 1999: /Camille Gutt. Les finances et la guerre, 1940-1945/.

The first chapter provides an interesting biographical overview of Gutt until
1940 both as a successful businessman and as a politician. He was Belgian
Finance Minister in 1934-1935 and from 1939 to 1945. Gutt became a staunch
adversary of currency depreciation or devaluation. In his opinion devaluation
would only lead to price increases and delay the necessary deflationary
measures that ultimately had to be taken. These ideas were framed in the
1920s when the Belgian franc faced a difficult stabilization process. By the
end of the 1930s however the gold standard had virtually disappeared.
Nevertheless, Gutt stuck to his views.

The second chapter deals with his role as Finance Minister in the Belgian
government-in-exile in London during the Second World War. Most
governments-in-exile were cut off from their tax base and therefore highly
dependent on British financial aid. This was not true in the Belgian case for
two reasons. First, before the Nazi-invasion a large part of the gold
reserves of the Belgian central bank had been shipped to London or the U.S.
So Belgium could help to finance the British war effort by lending its gold.
Second, Belgium still controlled the Congo which provided many raw materials
crucial to war production, such as copper and cobalt -- not to mention the
deliveries of Congolese uranium to the U.S., which gave rise to complex
secret arrangements.

The next two chapters discuss Keynes’ plans concerning the setting-up of an
International Clearing Union. The Belgian government saw these plans as a
potential threat to national sovereignty. Gutt responded to the challenge by
launching the idea of regional integration. These initiatives would
eventually lead to the Benelux agreements. There are few publications
available in English on the emergence of the Benelux, so these chapters are
certainly of interest to the international reader.

Chapter 5 tackles the Bretton Woods negotiations. Crombois notes that the
Belgians were given important positions in the organization of the conference
(p. 105), but unfortunately does not provide an explanation. Anyway, Gutt and
several other Belgian delegates became “trustworthy intermediaries between
the Americans and the British while keeping on good terms with the French,
Dutch and Canadians in particular” (p. 107).

The final chapter focuses on Gutt’s role as managing director of the IMF.
The general picture largely confirms the view presented earlier by Harold
James (1996) and Barry Eichengreen (2007). In the era’s most important
challenges, such as the Marshall Plan, the sterling devaluation of 1949, and
the setting-up of the European Payments Union, the IMF did not play a
significant role. Was Gutt responsible for the side-lining of the IMF?
Crombois concludes that Gutt failed to grasp the importance of the looming
Cold War. Gutt’s views were still dominated by the legal commitments of the
Bretton Woods agreements and their universal approach to monetary and
convertibility issues.

References:

Barry Eichengreen (2007), /The European Economy since 1945: Coordinated
Capitalism and Beyond/, Princeton: Princeton University Press.

Harold James (1996), /International Monetary Cooperation since Bretton
Woods/, Oxford: Oxford University Press.

Erik Buyst is professor of economics and history at the Center for Economic
Studies, University of Leuven ([log in to unmask]). His publications
include E. Buyst and I. Maes (2008), “Central Banking in Nineteenth-century
Belgium: Was the NBB a Lender of Last Resort?” /Financial History Review/
15: 153-73 and E. Buyst et al. (2005), /The Bank, the Franc and the Euro: A
History of the National Bank of Belgium/, Tielt: Lannoo.

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Geographic Location: Europe
Subject: Financial Markets, Financial Institutions, and Monetary History
Time: 20th Century: WWII and post-WWII