International clearing system as alternative monetary order

Abstract

The purpose of this paper is to reconstruct the debate on the international clearing mechanism from the pioneering proposals of the nineteenth century to the years of high theory, at the beginning of the 1940s, when several plans were defined to establish international clearing mechanisms, and the well-known John Maynard Keynes’s International Clearing Union Plan was joined by other projects proposed by Paul Einzig and two German-born economists, Ernst Friedrich Schumacher and Hubert Ladenburg. As is well known, the Keynes plan was conceived as a response to the Nazi plan to establish a multilateral clearing system for regulating trade relations in the economic space of the countries occupied by the Third Reich. However, Keynes did not elaborate a plan radically opposed to the Nazi proposal, but shared its essential core. While being opposite sides of the conflict, both Nazi Germany and the British government proposed the same monetary order, based on multilateral clearing system, for the post-war world. The project of a new international monetary order based on the multilateral clearing system was not unanimously shared among the Allies: the United States moved on different lines confirming the centrality of gold in the post-war world order. Economic interests imposed the restoration of gold-exchange standard, based on the dollar supremacy and the Bretton Woods agreement, confirming the political success of Harry Dexter White’s proposal, was a turning point in a spontaneous path towards a new international order based on clearing agreements. Keynes proposed an economically realistic solution, based on the experience of clearing agreements resulting from the collapse of the gold exchange standard, but his plan was politically unrealistic in the face of the interests of the United States superpower. Keynes did not accept a compromise, but was simply defeated.