"I can truly report that the Securities and Exchange Commission is in very good standing throughout the world and enjoys a favorable reputation. It has been described to me by European delegates as certainly the most successful of the new deal agencies."
As Allied victory in World War II grew closer, it became clear that the United States would be the world's major economic power. The question was how the United States would exercise this new power and responsibility. Before the war was over, the Roosevelt administration began contemplating the post-war world economic order and the SEC was closely involved in many of these policy discussions.
Some of the SEC's most important work in creating the structure for a post-war economic order was in connection with the Bretton Woods Conference. In June and July 1944, with war still raging, 730 delegates from 44 countries met in New Hampshire with the intent of creating a blueprint for a new post-war world economic order. More specifically, the goals were to create stable currencies, free trade, and a bank that could finance large reconstruction and development projects and help countries transition from a war time to a peace time economy.
The bank and the monetary fund were the centerpieces of U.S. post-war policy and represented the county's new faith in internationalism. Before the start of the conference, U.S. officials had spent significant time creating the basic architecture for the bank and stabilization fund. As one leading British official wrote, "In regard to international investment, it was agreed that the British ought not to take an initiative, on the ground that they would not be in a position in the period immediately following the war to contribute substantial sums towards it. It was for the Americans to take the initiative in this part of the field."(28) One of the visible indicia was that the new International Bank for Reconstruction and Development (later called the World Bank) would be located in the United States, not in London.
The SEC actively participated in the Bretton Woods process and the creation of what would become the post-war economic order. SEC staff member Walter C. Louchheim, Jr. represented the SEC in preparatory meetings held before Bretton Woods. He also attended the conference and participated in the multiple gatherings which followed Bretton Woods.
Louchheim primarily devoted his attentions to the creation of the Bank and, in his words, "to those aspects of the Bank which related to its connection with the private capital markets in the United States and throughout the world."(29) Louchheim was assigned to the committee on the operation of the Bank and spent considerable time in discussions with Lord Keynes, the famed British economist, who served as Chairman of the Bank Commission. Louchheim often reported that he had good relations with Keynes and "how pleased Lord Keynes was" with Louchheim's work.(30) In a stream of correspondence with the SEC, Louchheim informed the agency of the daily discussions and negotiations at Bretton Woods and made others aware of the SEC's interest in assisting the Bank because of its expertise in markets.
At Bretton Woods and other international conferences, Louchheim discussed with foreign delegates their views of the SEC and U.S. securities laws. Although one delegate from Mexico criticized the SEC's disclosure rules and pressed for greater leniency for sovereign debt, Louchheim reported, "I found among the foreign delegates . . . a complete and hearty endorsement of our objectives and of the manner in which the [securities] statutes are being administered."(31) Louchheim essentially functioned as the first SEC foreign ambassador.
(28) Edward S. Mason and Robert E. Asher, The World Bank Since Bretton Woods (Washington D.C.: The Brookings Institutions,1973), 13, quoting Roy F. Harrod, The Life of John Maynard Keynes (Harcourt, Brace, 1951), 573.
(29) September 16, 1946 Report to the SEC Commission from Walter C. Louchheim, Jr., Adviser on Foreign Investments, on the Commission's participation in international economic and financial affairs (courtesy of the National Archives and Records Administration)
(30) July 8, 1944 Letter from Walter C. Louchheim, Jr. to SEC Chairman Ganson Purcell reporting on the progress of the United Nations Monetary and Financial Conference (courtesy of the National Archives and Records Administration) [1940/1944_0708_LouchheimConferenceT.pdf]
(31) Id.
