“A New Legal and Philosophic Conception of Credit”: Mexico, the Inter-American Bank, and the Origins of Postwar Multilateralism

With the creation of the Pan-American Union in the late 19^th century came a Latin American appeal for the establishment of a multilateral economic institution that would foster the equitable distribution of capital for the development of the region’s economies. But it was not until the 1933 Pan American Conference at Montevideo that a concrete proposal emerged for the creation of just such an Inter-American Bank. At Montevideo, Mexico led a coalition of Latin American countries arguing for the creation of a permanent economic institution to foster industrialization and trade in the Americas. As part of a larger, post-Depression project calling for the restructuring of sovereign debt and the promotion of a “bimetallist” world currency system, Mexico’s delegation argued that the time had come to recognize that international finance benefited both the recipient and the lender: Mexico’s foreign minister argued for “a new legal and philosophic conception of credit” that recognized that “credit is not an act of charity,” but rather has a real material benefit for the lenders in putting to use their surplus capital. As the United States was forced by Latin American insistence to take up the bank project throughout the following decade, the Treasury Department assigned none other than Harry Dexter White—who would later go on to chair the U.S. delegation at the Bretton Woods Conference—as the principal negotiator on the IAB, which was chartered in 1940, but never ratified by the U.S. Congress. White and his team, however, took with them the lessons learned in those negotiations when they began planning for Bretton Woods, and this paper will argue that Mexico’s social vision for multilateral finance played a vital role in embedding the idea of “development” in the Bretton Woods institutions.