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The Indian delegation to Bretton Woods in 1944. It was le dby two British officialsJeremy Raism an and TheodoreGregory. The Indians in the team were C.D. Deshmukh,Shanm ukham Chetty, A.D. Shroff and B.K. Madan. Photo:worldbankimflib.org

A page from history: 70 years before the Brics bank Delegates from 44 countries met at Bretton Woods to build a new global monetary system that is now being challenged by the Bricsnations

Mumbai: Almost exactly 70 years before Narendra Modi becameone of the signatories to an agreement between five developingcountries to establish a development bank as well as a formalarrangement to provide liquidity support to members facing balanceof payments difficulties, delegates from 44 countries met at a hotel inthe town of Bretton Woo ds near the US eas t coast to build a newglobal m onetary system that is now being challenged by Brazil,Russ ia, India, China and South Africa (Brics). There was a s mallIndian delegation at the conference; it made up for its lack of numbers with intellectual heft.

The reasons for the choice of the venue were interesting. BrettonWoods was attractive because of its salubrious climate at a timewhen air conditionin g was not a comm on offering. The conferencewas hel d at the Mount Washington Hotel because it was open toJews. The delegates m et over three weeks in July 1944 to ensurethat a repeat of the financial calamities that had s carred the world inprevious decades would be avoided in the future with sensibleinternational coordination done through new global institutions.

The Indian delegation to Bretton Woods was led by two BritishofficialsJeremy Raisman and Theodore Gregory . The Indians

in the team were C.D. Deshmukh , Shanmukham Chetty , A.D. Shroff and B.K. Madan . Deshmukh later became finance minister. Sodid Chetty. Shroff was a director of Tata Sons. Madan became an executive director of the International Monetary Fund (IMF). David Meek

was an advisor to the Indian delegation.

In his fine his tory of Indian finance, Barons of Banking , Bakhtiyar K. Dadabhoy s ays that the Indian delegation to Bretton Woods had four main concerns: to convince the conference participants that IMF should also be s ensitive to economic development iss ues, a fair settlement of the problem of sterling balances that had built up during World War II, securing a satis factory quota for India and bagging apermanent s eat on the executive board of the institutions that emerged from the Br etton Woods negotiations. The las t two items are stillcontentious iss ues for those who quite rightly argue that developing countries need higher quotas as well as a greater say in thegovernance of major global ins titutions, or the s o-called quota and voice reforms. Deshm ukh also worked very closely with John MaynardKeynes on the comm iss ion that designed the World Bank; it is s aid Keynes was deeply impress ed by the abilities of his Indian colleague.

The transcripts of the Bretton Woods negotiations have recently been released in a book edited by Kurt Schuler and AndrewRosenberg . The main debates were between the Americans headed by Harry Dexter White and the British led by Keynes. Much hasbeen written about how the global power that came to dom inate the post-war world got its way against the older power that was s oon to becut down to s ize by decolonization. But the transcripts als o s how how the Indians punched way above their weight. So did delegates fromBelgium, Cuba, Czechoslovakia, Greece and Norway, according to the editors of the transcripts.

One iss ue should interest all those who currently worry that the New Development Bank that will be s et up by the Brics nations wil l be a toolof Chinese hegemony.

The Indian delegation at Bretton Woods protested when the original quotas sugges ted by the Americans gave $300 million to India and$600 million to China. The main worry was not the absolute numbers but the relative lack of importance given to India compared to China.France was another country that felt slighted.

Dadabhoy notes: It was here that Keynes played a decisive supporting role having s ensed that India was as much concerned with equali tyor near equal ity with China than wi th the absolute am ount. Keynes convinced White that some rebalancing was necess ary. India eventually

got a quota of $400 million whi le China was g iven $550 mil lion.

The Bretton Woods transcripts suggest that new institutions emerge from a combination of high ideali sm , intellectual clarity and hardbargaining. What the Indian delegation did in 1944 i s now a forgotten episode in our his tory. But their comm itment to protect nationalinterest even as they were ready to play a pos itive role in the creation of new international institutions is exemplary. The United States andthe United Kingdom had the greatest influence at the conference...but Bretton Woods was a genuinely mul tilateral negotiation. The other

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large and medium-s ize countries als o shaped the conference, say Schuler and Rosenberg in their introduction to the transcripts.

Many commentators believe that the two new institutions being set up by the Brics nations will eventually threaten the Bretton Woodssystem that has not created more s pace for countries such as India and China despite their economic res urgence. There is als o talk abouthow this could be the first step towards dis lodging the dollar as the global reserve currency.

Most of this seem s far-fetched. But it is definitely ironical that this potential challenge to Bretton Woods comes almos t exactly sevendecades after 730 delegates from acros s the world m et in a hotel to redesign the global m onetary architecture.