January 1945: Lamar Fleming Jr. Declares the “British Empire…a Myth Already”
This statement, penned by Lamar Fleming Jr., President of Anderson Clayton and Company—the world’s largest cotton export brokers—to his colleague Will Clayton, is incredibly telling. Fleming’s assertion that the “British Empire and British international influence is a myth already” wasn’t just a casual observation; it was a perceptive recognition of a monumental power shift that had been underway for some time and was now reaching its zenith.
Consider the context: Britain, though an ally, had been severely weakened by the war. Its Asian empire was hanging by a thread by early 1941, with Axis forces largely capturing the Mediterranean and Erwin Rommel’s Afrika Korps pushing back the British in Egypt, threatening vital oil fields, war matériel, and the Suez Canal. British officials had even warned Washington of the “complete disintegration of the British commonwealth”. The United States, on the other hand, was emerging from the war with its industrial arsenal firing on all cylinders, having doubled its 1939 production by 1945.
Fleming’s prophecy went further: “The United States would soon become the protector of Britain against the emerging Russian landmass,” and this would mean “the absorption into the American Empire of the parts of the British Empire which we will be willing to accept”. This candid vision aligns perfectly with broader American strategic objectives. As early as 1941, President Roosevelt had privately expressed to his son, Elliot, concerns about British and German bankers “hav[ing] world trade pretty well sewn up in their pockets for a long time,” and how this was “not so good for American trade”. The war, in this view, was an opportunity to break down these established barriers and open the world to American commerce and investments, a goal sometimes referred to as “dollar imperialism”. The long-standing objective, articulated by Secretary Morgenthau, was to “move the financial center of the world from London to the United States Treasury”. Fleming’s letter, therefore, serves as a stark acknowledgment that this objective was, by early 1945, largely achieved. The old hierarchies were dissolving, and a new American-dominated world order was taking shape, often through less overt means than territorial conquest.
May 26, 1945: Stalin’s Recognition of US World Power
When Stalin told Harry Hopkins that the United States had “more reason to be a World Power than any other state”, it wasn’t just a diplomatic nicety; it was a pragmatic recognition of America’s unprecedented post-war position.
The Soviet Union had borne the brunt of the fighting against Nazi Germany on the Eastern Front, suffering immense human and material losses. Their war damage included the destruction of over 1,700 towns, 70,000 villages, and one-third of their industrial capital, and their population loss wasn’t made up until 1956. In contrast, the United States emerged from the war not only victorious but economically invigorated. Its factories were running at full capacity, production had doubled since 1939, and unemployment was at a mere 2%. The US had truly become the “industrial arsenal of democracy”.
Stalin, described as consistently “guided…by the rule that one must come to terms with a superior power,” understood that Soviet Russia had “never known a friendly neighbor” and that the nations assaulting it were typically militarily or economically superior. While the US provided crucial Lend-Lease aid, particularly vital to Russia’s counteroffensives in the later years of the war, a significant portion of Russia’s war material was produced domestically, and much of the Lend-Lease aid arrived after major turning points like Stalingrad.
Stalin’s statement reflects a strategic calculation. He was acknowledging the US’s undeniable economic and military strength, particularly in contrast to Britain’s weakening position and the devastation within the Soviet Union itself. He knew that American cooperation, even with differing ideologies, was essential for the post-war order. It speaks to a moment of potential, where despite underlying ideological differences, there was a shared recognition of America’s formidable capabilities on the global stage, even as the “One World” vision began to fracture into two distinct spheres of influence.
Mid-1945: American Approval of the Bretton Woods Agreement
The American approval of the Bretton Woods agreement in mid-1945 was a monumental step, fundamentally reshaping the international economic landscape and solidifying the US dollar’s global preeminence.
The Bretton Woods Agreement, negotiated in July 1944, aimed to replace the “economic and monetary nationalism” and “currency blocks” of the 1930s with a new international economic order. This system would be based on “fixed exchange rates of currencies based on the dollar,” with the dollar itself pegged to gold at $35 an ounce. The ultimate objective was to promote American exports, investments, and financial dealings globally – the “open door for American commerce”.
Key figures like Harry Dexter White, from the Treasury Department, were instrumental in drafting the initial plans for a stabilization fund that would lend to deficit countries, provided they adopted fixed exchange rates relative to the dollar and abandoned exchange controls. Will Clayton, who became Assistant Secretary of State for economic affairs in November 1944, was also a central figure, dedicated to carrying on Hull’s trade liberalization work and building this new international economic system.
The agreement also involved a crucial compromise: while the US secured the principle of dollar-based fixed exchange rates, it also accepted the British insistence on jointly promoting permanent inflationary policies to ensure “full employment”. This “fateful union of war and prosperity” had already been observed, where war orders could stimulate a recessed economy, a lesson learned from World War I.
The American industrial and financial interests largely supported Bretton Woods because it promised a world trade freed from exchange controls and appreciated currencies, which would greatly boost American exports. As Treasury Secretary Morgenthau openly promised, this would “greatly increase the exports of American automobiles” and other goods by ensuring that other currencies remained “overvalued and the dollar undervalued”. This alignment of national and corporate interests was a powerful force. The Council on Foreign Relations (CFR), an influential organization of businessmen and experts set up by the Morgans after World War I, played a dominant, albeit secret, role in dictating the terms for this new world gold exchange standard, effectively “reintegrat[ing] many conservative ‘internationalist’ financial interests” who had opposed the earlier New Deal’s economic nationalism.
December 1945: John Kenneth Galbraith’s Commentary on Stalingrad
John Kenneth Galbraith’s observation in Fortune magazine in December 1945 that the Germans were “caught napping” at Stalingrad is not merely an historical inaccuracy but a highly significant piece of post-war ideological framing.
Stalingrad was a cataclysmic defeat for Germany, where they had spent almost half a year in battle, suffering their greatest defeat and sacrificing the bulk of their Sixth Army. It was a pivotal turning point on the Eastern Front, demonstrating the immense military capability and resilience of the Soviet Union. To suggest that the Germans were simply “caught napping” fundamentally minimizes the scale of the Soviet victory and, by extension, the Soviet contribution to the Allied war effort.
This narrative was part of a broader “American Cold War Rewrite of Russia’s War”. After the war, there was a growing reluctance in the United States and among its allies to fully acknowledge the Soviet war record. This was driven by a political imperative to discredit and dismantle Roosevelt’s policies at home and abroad, portraying him as naive and overly conciliatory towards Stalin. By minimizing Soviet contributions, the US could more credibly present itself as “chosen by the Almighty to be the agent” of Hitler’s destruction and claim that its aid alone “saved Russia from ignominious defeat”. This selective historical memory served to justify the nascent Cold War, the rehabilitation and rearmament of Germany, the denial of promised Soviet reparations, and, crucially, America’s own “postwar global expansion as the necessary check to the Soviets’ global ambitions”. The idea was to frame the Cold War as a “symmetrical conflict” between “two ‘lethally well-matched colossi’,” even though the US and the capitalist West held a radical economic advantage over the devastated Soviet Union. Galbraith’s statement, therefore, highlights how even prominent intellectuals participated in constructing a simplified, politically expedient historical narrative to suit the emerging geopolitical realities of the Cold War.
End of 1945: Great Britain Approves the Bretton Woods Agreement
The United Kingdom’s approval of the Bretton Woods agreement by the end of 1945, after “lengthy deliberation,” was less an embrace of a new vision and more a necessary concession born of economic desperation.
As noted earlier, Britain was severely weakened by the war, losing vast national wealth, investment earnings, and export capacity. The new Labour government’s nationalization policies further complicated domestic investment. While the US had been pressuring Britain to abandon its “sterling block” and “imperial preference blocks” since at least the Atlantic Conference in August 1941, Britain had initially refused, tartly asserting that the Lend-Lease agreements committed it to “virtually nothing”. However, with the abrupt cancellation of Lend-Lease aid by President Truman in August 1945, Britain was left in an extremely vulnerable position.
Will Clayton, who himself was “never so close to resigning” over the sudden termination of Lend-Lease, understood that Britain needed to “rally if the United States was going to build an open international economic system”. He worked with Lord Keynes to negotiate a new US loan of $3.75 billion (equivalent to about $49 billion today), with easier financial terms, in exchange for Britain agreeing to policy changes that would benefit both Britain and international economic recovery. This approach foreshadowed the logic behind the Marshall Plan, which would later explicitly link aid to economic reforms and anti-communist aims.
The British “surrendered” to the new standard at a third conference in Ottawa in 1945, agreeing to retool their manufacturing to align with the new Anglophone screw thread standard, which American manufacturers would barely notice as it was practically interchangeable with their existing national agreement. This seemingly minor detail is symbolic of a larger economic shift, where Britain adapted to the US’s preferred standards and practices.
Ultimately, Britain’s “diminished place in world affairs would lessen the value of Morgan ties to the British Treasury and the Bank of England,” and unlike the 1920s, “the United States no longer deferred to Britain’s financial leadership”. A symbolic but significant outcome was the decision to base the new Bretton Woods institutions—the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD, or World Bank)—in Washington, D.C., rather than London or New York. This physical placement reinforced the shift of the world’s financial center to the United States.
These events of 1945 collectively underscore a monumental reordering of global power, with the United States stepping fully into a dominant role, eager to reshape the world in its economic and political image, even at the cost of alienating former allies and solidifying a new ideological confrontation.