The Dollar and National Security: The Monetary Component of Hard Power

244 Pages·2014·0.864 MB·English

by  Paul Viotti

The Dollar and National Security

The Dollar and National Security
The Monetary Component of Hard Power
Paul R. Viotti
Stanford Security Studies
An Imprint of Stanford University Press
Stanford, California
Stanford University Press
Stanford, California
© 2014 by the Board of Trustees of the Leland Stanford Junior University.
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Library of Congress Cataloging-in-Publication Data
Viotti, Paul R., author
The dollar and national security : the monetary component of hard power / Paul R. Viotti.
pages cm.
Includes bibliographical references and index.
isbn 978-0-8047-9113-7 (cloth : alk. paper) — isbn 978-0-8047-9225-7 (pbk. : alk. paper)
1. National security—Economic aspects—United States—History. 2. Foreign
exchange—United States—History. 3. Monetary policy—United States—
History. 4. Dollar, American—History. 5. National security—Economic aspects—
Europe—History. 6. Foreign exchange—Europe—History. 7. Monetary policy—
Europe—History. I. Title.
hc110.d4v56 2014
355'.033073—dc23 2014010073
isbn 978-0-8047-9230-1 (electronic)
Typeset at Stanford University Press in 10/14 Minion
Special discounts for bulk quantities of Stanford Security Studies are available to
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Tel: [phone], Fax: [phone]
To John Gerard Ruggie
for the conceptual insights he shared
and the support he gave me and
fellow doctoral students at Cal decades ago,
which are as meaningful now as they were then.

Contents
Acknowledgments, xi Preface, xiii
Introduction: Money and Security 1
Part one. the euroPean Center: sterling,
the Dollar, anD seCurity before WorlD War ii
1 Money, Empire, and Prewar Security 29
2 Wartime Security and Monetary Exchange in the Great War 45
3 Restoring Sterling, Commerce, and Security after World War I 55
Part tWo. the uniteD states Moves to the Center:
Dollar PriMaCy anD aMeriCan national seCurity
4 Money and Cooperative Security, the Interwar Years, and
World War II 75
5 Cold War and the Bretton Woods Years 93
6 Sustaining Dollar Primacy—From Bretton Woods to
Managed Flexibility 113
7 The Dollar, the Euro, and Cooperative Security 132
Conclusion: Money and Cooperative Security 153
Notes, 165 Bibliography, 189 Index, 207

tables
1.1 Key Currency Reserves, 1913 37
2.1 U.S. Deposits by Region, June 1918 48
2.2 Gold Reserves, 1913, 1918 49
3.1 Central Bank Discount Rates (percentages), 1919–25 60
3.2 Dawes Loan Subscriptions 63
4.1 Central Bank Discount Rates, 1936–39 77
4.2 British Reserves, 1939–45 79
4.3 British External Liabilities, 1941–45 79
5.1 Central Bank Discount Rates, 1948–70 98
5.2 Collaboration with the U.S. as Regime Leader: U.S. Liabilities
to Foreign Central Banks and Governments, 1958–71 100
5.3 The Growth in Aggregate Regime Liquidity, 1958–71 102
5.4 Regime Collaboration: General Arrangements to Borrow (GAB),
January 5, 1962 105
5.5 Regime Collaboration: Swap Arrangements 106
5.6 Regime Collaboration, 1958–71: Use of IMF Credit Facilities 107
5.7 Regime Collaboration: Compensatory Drawings Outstanding,
1963–71 108
5.8 Regime Collaboration: Value of Compensatory Drawings, 1965–71 108
6.1 Managing Exchange Rates by Coordinating Central Bank Discount
Rates, 1972–76 127
6.2 Early Post–Bretton Woods Collaboration: Use of Compensatory
Drawings and the IMF Oil Facility, 1972–76 128
6.3 Regime Collaboration: SDR Users and Recipients, 1970–76 128
ix