The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states. Money is anything that is generally accepted as Payment for Goods and services and repayment of Debts. Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated The term developed country, or advanced country, is used to categorize countries with developed Economies in which the tertiary and quaternary sectors The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.
Preparing to rebuild the international economic system as World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire for the United Nations Monetary and Financial Conference. World War II, or the Second World War, (often abbreviated WWII) was a global military conflict which involved a majority of the world's nations, including The Allies of World War II were the countries officially opposed to the Axis powers during the Second World War. The Mount Washington Hotel opened in 1902 near Mount Washington, in the town of Carroll New Hampshire. Bretton Woods is an area within the town of Carroll, New Hampshire, USA, whose principal points of interest are three leisure and recreation facilities The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was a gathering of 730 Delegates from all 44 Allied The delegates deliberated upon and signed the Bretton Woods Agreements during the first three weeks of July 1944.
Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the International Bank for Reconstruction and Development (IBRD) (now one of five institutions in the World Bank Group) and the International Monetary Fund (IMF). The International Bank for Reconstruction and Development (IBRD is one of five institutions that comprise the World Bank Group. The World Bank Group (WBG is a family of five International organizations responsible for providing Finance and advice to countries for the purposes of economic The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic These organizations became operational in 1946 after a sufficient number of countries had ratified the agreement.
The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments. Monetary policy is the process by which the Government, Central bank, or monetary authority of a country controls (i the Supply of Money, In Finance, the exchange rates (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how A currency is a unit of exchange, facilitating the transfer of Goods and/or services It is one form of Money, where money is Gold (ˈɡoʊld is a Chemical element with the symbol Au (from its Latin name aurum) and Atomic number 79 In Economics, the balance of payments, (or BOP) measures the Payments that flow between any individual Country and all other countries In the face of increasing strain, the system collapsed in 1971, following the United States' suspension of convertibility from dollars to gold. The United States of America —commonly referred to as the Convertibility is the quality of paper Money substitutes which entitles the holder to redeem them on demand into money proper The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been
Until the early 1970s, the Bretton Woods system was effective in controlling conflict and in achieving the common goals of the leading states that had created it, especially the United States. The United States of America —commonly referred to as the
Origins
The political basis for the Bretton Woods system are in the confluence of several key conditions: the shared experiences of the Great Depression, the concentration of power in a small number of states (further enhanced by the exclusion of a number of important nations because of the war), and the presence of a dominant power willing and able to assume a leadership role in global monetary affairs.
The Great Depression
A high level of agreement among the powerful on the goals and means of international economic management facilitated the decisions reached by the Bretton Woods Conference. The foundation of that agreement was a shared belief in capitalism. Capitalism is the Economic system in which the Means of production are owned by private Persons and operated for Profit and where Although the developed countries' governments differed somewhat in the type of capitalism they preferred for their national economies (France, for example, preferred greater planning and state intervention, whereas the United States favored relatively limited state intervention), all relied primarily on market mechanisms and on private ownership. This article is about the country For a topic outline on this subject see List of basic France topics.
Thus, it is their similarities rather than their differences that appear most striking. All the participating governments at Bretton Woods agreed that the monetary chaos of the interwar period had yielded several valuable lessons.
The experience of the Great Depression was fresh on the minds of public officials. The planners at Bretton Woods hoped to avoid a repeat of the debacle of the 1930s, when foreign exchange controls undermined the international payments system that was the basis for world trade. The "beggar thy neighbor" policies of 1930s governments—using currency devaluations to increase the competitiveness of a country's export products in order to reduce balance of payments deficits—worsened national deflationary spirals, which resulted in plummeting national incomes, shrinking demand, mass unemployment, and an overall decline in world trade. Deflation is the opposite of Inflation. Therefore under the usual contemporary definition of inflation 'deflation' means a decrease in the general price level. Income, refers to consumption opportunity gained by an entity within a specified time frame which is generally expressed in monetary terms Supply and demand is an Economic model describing effects on price and quantity in a Market. Unemployment occurs when a person is available to work and currently seeking work but the person is without work. Trade is the willing exchange of goods, services, or both Trade is also called Commerce. Trade in the 1930s became largely restricted to currency blocs (groups of nations that use an equivalent currency, such as the "Sterling Area" of the British Empire). The sterling area came into existence at the outbreak of the second world war. The British Empire was the largest empire in history and for over a century was the foremost global power. These blocs retarded the international flow of capital and foreign investment opportunities. Although this strategy tended to increase government revenues in the short run, it dramatically worsened the situation in the medium and longer run.
Thus, for the international economy, planners at Bretton Woods all favored a liberal system, one that relied primarily on the market with the minimum of barriers to the flow of private trade and capital. A market economy is a realized Social system based on the Division of labour in which the prices of Goods and Services are determined in a Trade is the willing exchange of goods, services, or both Trade is also called Commerce. Although they disagreed on the specific implementation of this liberal system, all agreed on an open system.
“Economic security”
Also based on experience of interwar years, U. S. planners developed a concept of economic security—that a liberal international economic system would enhance the possibilities of postwar peace. An economic system is a System that involves the production, distribution and consumption of goods and services between One of those who saw such a security link was Cordell Hull, the United States Secretary of State from 1933 to 1944. Cordell Hull ( October 2, 1871 &ndash July 23, 1955) was an American politician from the U The United States Secretary of State (commonly abbreviated as SecState) is the head of the United States Department of State, concerned with Foreign affairs [1] Hull believed that the fundamental causes of the two world wars lay in economic discrimination and trade warfare. Specifically, he had in mind the trade and exchange controls (bilateral arrangements) of Nazi Germany and the imperial preference system practiced by Britain (by which members or former members of the British Empire were accorded special trade status). Nazi Germany and the Third Reich are the common English names for Germany under the regime of Adolf Hitler and the National Socialist German Workers Hull argued
| “ | [U]nhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war…if we could get a freer flow of trade…freer in the sense of fewer discriminations and obstructions…so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance of lasting peace. [2] | ” |
The rise of governmental intervention
The developed countries also agreed that the liberal international economic system required governmental intervention. In the aftermath of the Great Depression, public management of the economy had emerged as a primary activity of governments in the developed states. Employment, stability, and growth were now important subjects of public policy. In turn, the role of government in the national economy had become associated with the assumption by the state of the responsibility for assuring of its citizens a degree of economic well-being. The welfare state grew out of the Great Depression, which created a popular demand for governmental intervention in the economy, and out of the theoretical contributions of the Keynesian school of economics, which asserted the need for governmental intervention to maintain an adequate level of employment. This article refers specifically to the Welfare state of the United Kingdom. The word theory has many distinct meanings in different fields of Knowledge, depending on their methodologies and the context of discussion. In Economics Keynesian economics (ˈkeɪnziən also Keynesianism and Keynesian Theory) is based on the ideas of twentieth-century British economist An economy is the realized social system of production exchange distribution and consumption of goods and services of a country or other area
At the international level, these ideas evolved from the experience of the 1930s. The priority of national goals, independent national action in the interwar period, and the failure to perceive that those national goals could not be realized without some form of international collaboration resulted in “beggar-thy-neighbor” policies such as high tariffs and competitive devaluations which contributed to economic breakdown, domestic political instability, and international war. For other uses of this word see Tariff (disambiguation. A tariff is a tax imposed on goods when they are moved across a political boundary The lesson learned was as the principal architect of the Bretton Woods system New Dealer Harry Dexter White put it:
| “ | the absence of a high degree of economic collaboration among the leading nations will…inevitably result in economic warfare that will be but the prelude and instigator of military warfare on an even vaster scale. The New Deal was the name that United States President Franklin D Harry Dexter White ( October 9, 1892 &ndash August 16, 1948) was an American economist and senior U [3] | ” |
To ensure economic stability and political peace, states agreed to cooperate to regulate the international economic system. The pillar of the U. S. vision of the postwar world was free trade. Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions Free trade involved lowering tariffs and among other things a balance of trade favorable to the capitalist system. The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of Exports and imports in an
Thus, the more developed market economies agreed with the U. S. vision of postwar international economic management, which was to be designed to create and maintain an effective international monetary system and foster the reduction of barriers to trade and capital flows.
The Atlantic Charter
Throughout the war, the United States envisaged a postwar economic order in which the U. S. could penetrate markets that had been previously closed to other currency trading blocs, as well as to expand opportunities for foreign investments for U. S. corporations by removing restrictions on the international flow of capital.
The Atlantic Charter, drafted during U. The Atlantic Charter was negotiated at the Atlantic Conference (codenamed Riviera) by British Prime Minister Winston Churchill and U S. President Roosevelt's August 1941 meeting with British Prime Minister Winston Churchill on a ship in the North Atlantic, was the most notable precursor to the Bretton Woods Conference. Sir Winston Leonard Spencer-Churchill, KG, OM, CH, TD, FRS, PC, PC (Can ( 30 November 1874 Like Woodrow Wilson before him, whose "Fourteen Points" had outlined U. Thomas Woodrow Wilson (December 28 1856—February 3 1924 was the twenty-eighth President of the United States. The Fourteen Points were listed in a speech delivered by President Woodrow Wilson of the United States to a joint session of the United S. aims in the aftermath of the First World War, Roosevelt set forth a range of ambitious goals for the postwar world even before the U. World War I (abbreviated WWI; also known as the First World War, the Great War, and the War to End All S. had entered the Second World War. The Atlantic Charter affirmed the right of all nations to equal access to trade and raw materials. Moreover, the charter called for freedom of the seas (a principal U. S. foreign policy aim since France and Britain had first threatened U. The Quasi-War was an Undeclared war fought entirely at sea between the United States and France from 1798 to 1800 The First Coalition ( 1792 – 1797) was the first major concerted effort of multiple European powers to contain Revolutionary France. S. shipping in the 1790s), the disarmament of aggressors, and the "establishment of a wider and permanent system of general security. "
As the war drew to a close, the Bretton Woods conference was the culmination of some two and a half years of planning for postwar reconstruction by the Treasuries of the U. S. and the UK. U. S. representatives studied with their British counterparts the reconstitution of what had been lacking between the two world wars: a system of international payments that would allow trade to be conducted without fear of sudden currency depreciation or wild fluctuations in exchange rates—ailments that had nearly paralyzed world capitalism during the Great Depression.
Without a strong European market for U. S. goods and services, most policymakers believed, the U. S. economy would be unable to sustain the prosperity it had achieved during the war. In addition, U. S. unions had only grudgingly accepted government-imposed restraints on their demand during the war, but they were willing to wait no longer, particularly as inflation cut into the existing wage scales with painful force. A trade union or labour union is an organization of workers who have banded together to achieve common goals in key areas such as wages hours and working conditions forming (By the end of 1945, there had already been major strikes in the automobile, electrical, and steel industries. Steel is an Alloy consisting mostly of Iron, with a Carbon content between 0 )
In early 1945 Bernard Baruch described the spirit of Bretton Woods as: if we can "stop subsidization of labor and sweated competition in the export markets," as well as prevent rebuilding of war machines, "oh boy, oh boy, what long term prosperity we will have. Bernard Mannes Baruch (bəˈɹuk ( August 18, 1870 &ndash June 20, 1965) was a Jewish-American Financier, stock market Speculator "[4] The United States would therefore use its position of influence to reopen and control the world economy, so as to give unhindered access to all nations' markets and materials.
Wartime devastation of Europe and East Asia
Furthermore, U. S. allies—economically exhausted by the war—accepted this leadership. They needed U. S. assistance to rebuild their domestic production and to finance their international trade; indeed, they needed it to survive.
Before the war, the French and the British were realizing that they could no longer compete with U. S. industry in an open marketplace. A free market is a Market in which property rights are voluntarily exchanged at a price arranged completely by the mutual consent of sellers and buyers During the 1930s, the British had created their own economic bloc to shut out U. S. goods. Churchill did not believe that he could surrender that protection after the war, so he watered down the Atlantic Charter's "free access" clause before agreeing to it.
Yet, the U. S. officials were determined to open their access to the British empire. The combined value of British and U. S. trade was well over half of all the world's trade in goods. In order for the US to open global markets, it first had to split the British (trade) empire. Whilst Britain had economically dominated the 19th century, they intended the second half of the 20th to be under U. S. hegemony. Hegemony (hɨˈdʒɛməni (Amer /hɨˈɡɛməni/ (Brit (ἡγεμονία hēgemonía) is a concept that has been used to describe and explain the dominance of one social
A devastated Britain had little choice. Two world wars had destroyed the country's principal industries that paid for the importation of half the nation's food and nearly all its raw materials except coal. The British had no choice but to ask for aid. In 1945, the U. S. agreed to a loan of $3. 8 billion. In return, British officials promised to negotiate the agreement.
For nearly two centuries, French and U. S. interests had clashed in both the Old World and the New World. The Old World consists of those parts of Earth known to Europeans Asians and Africans in the 15th century The New World is one of the names used for the non-Eurasian/non-African parts of the Earth specifically the Americas and Australia. During the war, French mistrust of the United States was embodied by General Charles de Gaulle, president of the French provisional government. Charles André Joseph Marie de Gaulle ( ( 22 November 1890 – 9 November 1970) was a French General and statesman who led the Free French De Gaulle bitterly fought U. S. officials as he tried to maintain his country's colonies and diplomatic freedom of action. In turn, U. S. officials saw de Gaulle as a political extremist. Extremism is a term used to describe the actions or ideologies of individuals or groups outside the perceived political center of a society or otherwise claimed to violate
But in 1945 de Gaulle— at that point the leading voice of French nationalism—was forced to grudgingly ask the U. The term nationalism can refer to an Ideology, a sentiment, a form of Culture, or a Social movement that focuses on the Nation S. for a billion-dollar loan. Most of the request was granted; in return France promised to curtail government subsidies and currency manipulation that had given its exporters advantages in the world market. A currency is a unit of exchange, facilitating the transfer of Goods and/or services It is one form of Money, where money is
On a far more profound level, as the Bretton Woods conference was convening, the greater part of the Third World remained politically and economically subordinate. Third World is a name given to nations that are generally considered to be underdeveloped economically Linked to the developed countries of the West economically and politically—formally and informally—these states had little choice but to acquiesce to the international economic system established for them. In the East, Soviet hegemony in Eastern Europe provided the foundation for a separate international economic system. The Union of Soviet Socialist Republics (USSR was a constitutionally Socialist state that existed in Eurasia from 1922 to 1991 Eastern Europe is a general term that refers to the Geopolitical region encompassing the easternmost part of the European continent.
Design
Free trade relied on the free convertibility of currencies. Convertibility is the quality of paper Money substitutes which entitles the holder to redeem them on demand into money proper Negotiators at the Bretton Woods conference, fresh from what they perceived as a disastrous experience with floating rates in the 1930s, concluded that major monetary fluctuations could stall the free flow of trade.
The liberal economic system required an accepted vehicle for investment, trade, and payments. An economic system is a System that involves the production, distribution and consumption of goods and services between Unlike national economies, however, the international economy lacks a central government that can issue currency and manage its use. Central government or the national government (or in Federal states the Federal government) is the Government at the level of the Nation-state In the past this problem had been solved through the gold standard, but the architects of Bretton Woods did not consider this option feasible for the postwar political economy. The gold standard is a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set fixed quantities of Gold Instead, they set up a system of fixed exchange rates managed by a series of newly created international institutions using the U. A fixed exchange rate, sometimes called a pegged exchange rate, is a type of Exchange rate regime wherein a Currency 's value is matched to the value of S. dollar (which was a gold standard currency for central banks) as a reserve currency. A reserve currency (or anchor currency) is a Currency which is held in significant quantities by many governments and institutions as part of their Foreign
Informal
Previous regimes
In the 19th and early 20th centuries gold played a key role in international monetary transactions. The gold standard was used to back currencies; the international value of currency was determined by its fixed relationship to gold; gold was used to settle international accounts. The gold standard is a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set fixed quantities of Gold The gold standard maintained fixed exchange rates that were seen as desirable because they reduced the risk of trading with other countries.
Imbalances in international trade were theoretically rectified automatically by the gold standard. A country with a deficit would have depleted gold reserves and would thus have to reduce its money supply. A budget deficit occurs when an Entity (often a Government) spends more Money than it takes in In Economics, money supply, or money stock, is the total amount of money available in an Economy at a particular point in time The resulting fall in demand would reduce imports and the lowering of prices would boost exports; thus the deficit would be rectified. Supply and demand is an Economic model describing effects on price and quantity in a Market. In Economics, an import is any good (eg a Commodity) or Service brought into one country from another country in a legitimate fashion In Economics, an export is any good or Commodity, Transported from one country to another country in a Legitimate fashion Any country experiencing inflation would lose gold and therefore would have a decrease in the amount of money available to spend. In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time This decrease in the amount of money would act to reduce the inflationary pressure. In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time Supplementing the use of gold in this period was the British pound. The Pound Sterling ( symbol £; ISO code: GBP) subdivided into 100 pence (singular penny) is the Currency Based on the dominant British economy, the pound became a reserve, transaction, and intervention currency. But the pound was not up to the challenge of serving as the primary world currency, given the weakness of the British economy after the Second World War.
The architects of Bretton Woods had conceived of a system wherein exchange rate stability was a prime goal. Yet, in an era of more activist economic policy, governments did not seriously consider permanently fixed rates on the model of the classical gold standard of the nineteenth century. Gold production was not even sufficient to meet the demands of growing international trade and investment. And a sizable share of the world's known gold reserves were located in the Soviet Union, which would later emerge as a Cold War rival to the United States and Western Europe. The Union of Soviet Socialist Republics (USSR was a constitutionally Socialist state that existed in Eurasia from 1922 to 1991 Cold War is the state of conflict tension and competition that existed between the United States and the Soviet Union (USSR and their respective allies from the Western Europe at its most general meaning means 'all the countries in the West of Europe '
The only currency strong enough to meet the rising demands for international liquidity was the US dollar. The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been The strength of the US economy, the fixed relationship of the dollar to gold ($35 an ounce), and the commitment of the U. S. government to convert dollars into gold at that price made the dollar as good as gold. In fact, the dollar was even better than gold: it earned interest and it was more flexible than gold.
The Bretton Woods system of fixed exchange rates
The Bretton Woods system sought to secure the advantages of the gold standard without its disadvantages. Thus, a compromise was sought between the polar alternatives of either freely floating or irrevocably fixed rates—an arrangement that might gain the advantages of both without suffering the disadvantages of either while retaining the right to revise currency values on occasion as circumstances warranted.
The rules of Bretton Woods, set forth in the articles of agreement of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), provided for a system of fixed exchange rates. The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic The International Bank for Reconstruction and Development (IBRD is one of five institutions that comprise the World Bank Group. The rules further sought to encourage an open system by committing members to the convertibility of their respective currencies into other currencies and to free trade.
What emerged was the "pegged rate" currency regime. A fixed exchange rate, sometimes called a pegged exchange rate, is a type of Exchange rate regime wherein a Currency 's value is matched to the value of Members were required to establish a parity of their national currencies in terms of gold (a "peg") and to maintain exchange rates within plus or minus 1% of parity (a "band") by intervening in their foreign exchange markets (that is, buying or selling foreign money).
In practice, however, since the principal "Reserve currency" would be the U. S. dollar, this meant that other countries would peg their currencies to the U. S. dollar, and—once convertibility was restored—would buy and sell U. S. dollars to keep market exchange rates within plus or minus 1% of parity. Thus, the U. S. dollar took over the role that gold had played under the gold standard in the international financial system. The global financial system ( GFS) is a Financial system consisting of institutions and regulations that act on the international level as opposed to those
Meanwhile, in order to bolster faith in the dollar, the U. S. agreed separately to link the dollar to gold at the rate of $35 per ounce of gold. At this rate, foreign governments and central banks were able to exchange dollars for gold. Bretton Woods established a system of payments based on the dollar, in which all currencies were defined in relation to the dollar, itself convertible into gold, and above all, "as good as gold. " The U. S. currency was now effectively the world currency, the standard to which every other currency was pegged. As the world's key currency, most international transactions were denominated in dollars.
The U. S. dollar was the currency with the most purchasing power and it was the only currency that was backed by gold. Purchasing power is the amount of value of a good/services compared to the amount paid with a Currency. Additionally, all European nations that had been involved in World War II were highly in debt and transferred large amounts of gold into the United States, a fact that contributed to the supremacy of the United States. Thus, the U. S. dollar was strongly appreciated in the rest of the world and therefore became the key currency of the Bretton Woods system.
Member countries could only change their par value with IMF approval, which was contingent on IMF determination that its balance of payments was in a "fundamental disequilibrium. Par value, in Finance and Accounting, means stated value or face value. "
Formal regimes
The Bretton Woods Conference led to the establishment of the IMF and the IBRD (now the World Bank), which still remain powerful forces in the world economy. The World Bank is an internationally supported Bank that provides financial and technical assistance to developing countries for development programs (e
As mentioned, a major point of common ground at the Conference was the goal to avoid a recurrence of the closed markets and economic warfare that had characterized the 1930s. Thus, negotiators at Bretton Woods also agreed that there was a need for an institutional forum for international cooperation on monetary matters. Already in 1944 the British economist John Maynard Keynes emphasized "the importance of rule-based regimes to stabilize business expectations"—something he accepted in the Bretton Woods system of fixed exchange rates. John Maynard Keynes 1st Baron Keynes CB (ˈkeɪnz "cains" (5 June 1883 &ndash 21 April 1946 was a British Economist whose ideas Currency troubles in the interwar years, it was felt, had been greatly exacerbated by the absence of any established procedure or machinery for intergovernmental consultation.
As a result of the establishment of agreed upon structures and rules of international economic interaction, conflict over economic issues was minimized, and the significance of the economic aspect of international relations seemed to recede.
The International Monetary Fund
Officially established on December 27, 1945, when the 29 participating countries at the conference of Bretton Woods signed its Articles of Agreement, the IMF was to be the keeper of the rules and the main instrument of public international management. Events 537 - The Hagia Sophia is completed 1512 - The Spanish Crown issues the Laws of Burgos, governing the Year 1945 ( MCMXLV) was a Common year starting on Monday (link will display the full calendar The Fund commenced its financial operations on March 1, 1947. Events 86 BC - Lucius Cornelius Sulla, at the head of a Roman Republic army enters in Athens, removing the Tyrant Year 1947 ( MCMXLVII) was a Common year starting on Wednesday (link will display full 1947 calendar of the Gregorian calendar. IMF approval was necessary for any change in exchange rates in excess of 10%. It advised countries on policies affecting the monetary system.
Designing the IMF
The big question at the Bretton Woods conference with respect to the institution that would emerge as the IMF was the issue of future access to international liquidity and whether that source should be akin to a world central bank able to create new reserves at will or a more limited borrowing mechanism. Market liquidity is a Business, Economics or Investment term that refers to an Asset 's ability to be easily converted through an act of buying
Although attended by 44 nations, discussions at the conference were dominated by two rival plans developed by the U. John Maynard Keynes 1st Baron Keynes CB (ˈkeɪnz "cains" (5 June 1883 &ndash 21 April 1946 was a British Economist whose ideas Harry Dexter White ( October 9, 1892 &ndash August 16, 1948) was an American economist and senior U S. and Britain. As the chief international economist at the U. S. Treasury in 1942–44, Harry Dexter White drafted the U. S. blueprint for international access to liquidity, which competed with the plan drafted for the British Treasury by Keynes. Overall, White's scheme tended to favor incentives designed to create price stability within the world's economies, while Keynes' wanted a system that encouraged economic growth.
At the time, gaps between the White and Keynes plans seemed enormous. Outlining the difficulty of creating a system that every nation could accept in his speech at the closing plenary session of the Bretton Woods conference on July 22, 1944, Keynes stated:
| “ | We, the delegates of this Conference, Mr. Events 1099 - First Crusade: Godfrey of Bouillon is elected the first Defender of the Holy Sepulchre of The Kingdom of Year 1944 ( MCMXLIV) was a Leap year starting on Saturday (link will display full calendar of the Gregorian calendar. President, have been trying to accomplish something very difficult to accomplish. [. . . ] It has been our task to find a common measure, a common standard, a common rule acceptable to each and not irksome to any. [5] | ” |
Keynes' proposals would have established a world reserve currency (which he thought might be called "bancor") administered by a central bank vested with the possibility of creating money and with the authority to take actions on a much larger scale (understandable considering deflationary problems in Britain at the time). A reserve currency (or anchor currency) is a Currency which is held in significant quantities by many governments and institutions as part of their Foreign The bancor was an international Currency that was proposed by John Maynard Keynes, as leader of the British delegation and chairman of the World Bank commission in A central bank, reserve bank, or monetary authority is the entity responsible for the Monetary policy of a country or of a group of member states
In case of balance of payments imbalances, Keynes recommended that both debtors and creditors should change their policies. As outlined by Keynes, countries with payment surpluses should increase their imports from the deficit countries and thereby create a foreign trade equilibrium. Thus, Keynes was sensitive to the problem that placing too much of the burden on the deficit country would be deflationary.
But the U. S. , as a likely creditor nation, and eager to take on the role of the world's economic powerhouse, balked at Keynes' plan and did not pay serious attention to it. The U. S. contingent was too concerned about inflationary pressures in the postwar economy, and White saw an imbalance as a problem only of the deficit country. In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time
Although compromise was reached on some points, because of the overwhelming economic and military power of the U. S. , the participants at Bretton Woods largely agreed on White's plan. As a result, the IMF was born with an economic approach and political ideology that stressed controlling inflation and introducing austerity plans over fighting poverty. An ideology is a set of beliefs aims and Ideas especially in politics Poverty (also called penury) is deprivation of common necessities that determine the quality of life including food clothing shelter and safe Drinking water, and This would influence its approach to Third World countries struggling with underdevelopment. Underdevelopment is the state of an organism or of an organization (e
Subscriptions and quotas
What emerged largely reflected U. S. preferences: a system of subscriptions and quotas embedded in the IMF, which itself was to be no more than a fixed pool of national currencies and gold subscribed by each country as opposed to a world central bank capable of creating money. The Fund was charged with managing various nations' trade deficits so that they would not produce currency devaluations that would trigger a decline in imports. Devaluation is a reduction in the value of a Currency with respect to other monetary units
The IMF was provided with a fund, composed of contributions of member countries in gold and their own currencies. The original quotas planned were to total $8. 8 billion. When joining the IMF, members were assigned "quotas" reflecting their relative economic power, and, as a sort of credit deposit, were obliged to pay a "subscription" of an amount commensurate to the quota. The subscription was to be paid 25% in gold or currency convertible into gold (effectively the dollar, which was the only currency then still directly gold convertible for central banks) and 75% in the member's own currency.
Quota subscriptions were to form the largest source of money at the IMF's disposal. The IMF set out to use this money to grant loans to member countries with financial difficulties. Each member was then entitled to withdraw 25% of its quota immediately in case of payment problems. If this sum was insufficient, each nation in the system was also able to request loans for foreign currency.
Financing trade deficits
In the event of a deficit in the current account, Fund members, when short of reserves, would be able to borrow foreign currency in amounts determined by the size of its quota. In Economics, the current account is one of the two primary components of the Balance of payments, the other being the Capital account. In other words, the higher the country's contribution was, the higher the sum of money it could borrow from the IMF.
Members were required to pay back debts within a period of 18 months to five years. In turn, the IMF embarked on setting up rules and procedures to keep a country from going too deeply into debt, year after year. The Fund would exercise "surveillance" over other economies for the U.S. Treasury, in return for its loans to prop up national currencies. The United States Department of the Treasury is a Cabinet department and the Treasury of the United States government.
IMF loans were not comparable to loans issued by a conventional credit institution. Instead, it was effectively a chance to purchase a foreign currency with gold or the member's national currency.
The U. S. -backed IMF plan sought to end restrictions on the transfer of goods and services from one country to another, eliminate currency blocs and lift currency exchange controls.
The IMF was designed to advance credits to countries with balance of payments deficits. Short-run balance of payment difficulties would be overcome by IMF loans, which would facilitate stable currency exchange rates. This flexibility meant that member states would not have to induce a depression automatically in order to cut its national income down to such a low level that its imports will finally fall within its means. In Economics, a depression is a term commonly used for a sustained downturn in one or more national economies Thus, countries were to be spared the need to resort to the classical medicine of deflating themselves into drastic unemployment when faced with chronic balance of payments deficits. Unemployment occurs when a person is available to work and currently seeking work but the person is without work. Before the Second World War, European nations often resorted to this, particularly Britain.
Moreover, the planners at Bretton Woods hoped that this would reduce the temptation of cash-poor nations to reduce capital outflow by restricting imports. In effect, the IMF extended Keynesian measures—government intervention to prop up demand and avoid recession—to protect the U. S. and the stronger economies from disruptions of international trade and growth.
Changing the par value
The IMF sought to provide for occasional discontinuous exchange-rate adjustments (changing a member's par value) by international agreement. Member nations were permitted first to depreciate (or appreciate in opposite situations) their currencies by 10%. This tends to restore equilibrium in its trade by expanding its exports and contracting imports. This would be allowed only if there was what was called a "fundamental disequilibrium. " A decrease in the value of the country's money was called a "devaluation" while an increase in the value of the country's money was called a "revaluation". Revaluation means a rise of a Price of Goods or products This term is specially used as revaluation of a currency where it means a rise of currency to the relation
It was envisioned that these changes in exchange rates would be quite rare. Regrettably the notion of fundamental disequilibrium, though key to the operation of the par value system, was never spelled out in any detail—an omission that would eventually come back to haunt the regime in later years.
IMF operations
Never before had international monetary cooperation been attempted on a permanent institutional basis. Even more groundbreaking was the decision to allocate voting rights among governments not on a one-state, one-vote basis but rather in proportion to quotas. Since the U. S. was contributing the most, U. S. leadership was the key implication. Under the system of weighted voting the U. S. was able to exert a preponderant influence on the IMF. The U. S. held one-third of all IMF quotas at the outset, enough to veto all changes to the IMF Charter on its own.
In addition, the IMF was based in Washington, D. C. , staffed mainly by U. S. economists. It regularly exchanged personnel with the U. S. Treasury. When the IMF began operations in 1946, President Harry S. Truman named White as its first U. S. Executive Director. Since no Deputy Managing Director post had yet been created, White served occasionally as Acting Managing Director and generally played a highly influential role during the IMF's first year.
The International Bank for Reconstruction and Development
No provision was made for international creation of reserves. The International Bank for Reconstruction and Development (IBRD is one of five institutions that comprise the World Bank Group. New gold production was assumed to be sufficient. In the event of structural disequilibria, it was expected that there would be national solutions—a change in the value of the currency or an improvement by other means of a country's competitive position. Few means were given to the IMF, however, to encourage such national solutions.
It had been recognized in 1944 that the new system could come into being only after a return to normalcy following the disruption of World War II. It was expected that after a brief transition period — expected to be no more than five years — the international economy would recover and the system would enter into operation.
To promote the growth of world trade and to finance the postwar reconstruction of Europe, the planners at Bretton Woods created another institution, the International Bank for Reconstruction and Development (IBRD) — now the most important agency of the World Bank Group. The World Bank Group (WBG is a family of five International organizations responsible for providing Finance and advice to countries for the purposes of economic The IBRD had an authorized capitalization of $10 billion and was expected to make loans of its own funds to underwrite private loans and to issue securities to raise new funds to make possible a speedy postwar recovery. Capitalization (or capitalisation &mdash see spelling differences) is writing a word with its first letter as a Majuscule (upper case letter The IBRD was to be a specialized agency of the United Nations charged with making loans for economic development purposes.
Readjusting the Bretton Woods system
The dollar shortages and the Marshall Plan
The Bretton Wood arrangements were largely adhered to and ratified by the participating governments. It was expected that national monetary reserves, supplemented with necessary IMF credits, would finance any temporary balance of payments disequilibria. In Economics, the balance of payments, (or BOP) measures the Payments that flow between any individual Country and all other countries But this did not however prove sufficient to get Europe out of its doldrums.
Postwar world capitalism suffered from a huge dollar shortage. The United States was running huge balance of trade surpluses, and the U. S. reserves were immense and growing. It was necessary to reverse this flow. Dollars had to leave the United States and become available for international use. In other words, the United States would have to reverse the natural economic processes and run a balance of payments deficit.
The modest credit facilities of the IMF were clearly insufficient to deal with Western Europe's huge balance of payments deficits. The problem was further aggravated by the reaffirmation by the IMF Board of Governors in the provision in the Bretton Woods Articles of Agreement that the IMF could make loans only for current account deficits and not for capital and reconstruction purposes. Only the United States contribution of $570 million was actually available for IBRD lending. In addition, because the only available market for IBRD bonds was the conservative Wall Street banking market, the IBRD was forced to adopt a conservative lending policy, granting loans only when repayment was assured. Wall Street is a street in lower Manhattan, New York City, United States. Given these problems, by 1947 the IMF and the IBRD themselves were admitting that they could not deal with the international monetary system's economic problems. [6]
Thus, the much looser Marshall Plan—the European Recovery Program—was set up to provide U. The Marshall Plan (from its enactment officially the European Recovery Program, ERP) was the primary plan of the United States for rebuilding and creating a stronger S. finance to rebuild Europe largely through grants rather than loans. The Marshall Plan was the program of massive economic aid given by the United States to favored countries in Western Europe for the rebuilding of capitalism. In a speech at Harvard University on June 5, 1946, U. Events 70 - Titus and his Roman Legions breach the middle wall of Jerusalem in the Siege of Jerusalem Year 1946 ( MCMXLVI) was a Common year starting on Tuesday (link will display full 1946 calendar of the Gregorian calendar. S. Secretary of State George Marshall stated:
| “ | The breakdown of the business structure of Europe during the war was complete. George Catlett Marshall Jr (December 31 1880 &ndash October 16 1959 was an American military leader Chief of Staff of the Army, Secretary of …Europe's requirements for the next three or four years of foreign food and other essential products… principally from the United States… are so much greater than her present ability to pay that she must have substantial help or face economic, social and political deterioration of a very grave character. [7] | ” |
From 1947 until 1958, the U. S. deliberately encouraged an outflow of dollars, and, from 1950 on, the United States ran a balance of payments deficit with the intent of providing liquidity for the international economy. Dollars flowed out through various U. S. aid programs: the Truman Doctrine entailing aid to the pro-U. The Truman Doctrine was a proclamation by US President Harry S S. Greek and Turkish regimes, which were struggling to suppress socialist revolution, aid to various pro-U. Greece (Ελλάδα transliterated: Elláda, historically, Ellás,) officially the Hellenic Republic (Ελληνική Δημοκρατία Turkey (Türkiye known officially as the Republic of Turkey ( is a Eurasian Country that stretches S. regimes in the Third World, and most important, the Marshall Plan. From 1948 to 1954 the United States gave 16 Western European countries $17 billion in grants.
To encourage long-term adjustment, the United States promoted European and Japanese trade competitiveness. Policies for economic controls on the defeated former Axis countries were scrapped. The Axis powers also known as the Axis alliance Axis nations Axis countries or sometimes just the Axis were those Countries Aid to Europe and Japan was designed to rebuild productive and export capacity. In the long run it was expected that such European and Japanese recovery would benefit the United States by widening markets for U. S. exports, and providing locations for U. S. capital expansion.
In 1956, the World Bank created the International Finance Corporation and in 1960 it created the International Development Association (IDA). The International Finance Corporation (IFC promotes sustainable private sector investment in developing countries as a way to reduce poverty and improve people's lives The International Development Association ( IDA) created on September 24, 1960, is the part of the World Bank that helps the world’s poorest countries Both have been controversial. Critics of the IDA argue that it was designed to head off a broader based system headed by the United Nations, and that the IDA lends without consideration for the effectiveness of the program. Critics also point out that the pressure to keep developing economies "open" has led to their having difficulties obtaining funds through ordinary channels, and a continual cycle of asset buy up by foreign investors and capital flight by locals. Capital flight, in Economics, occurs when Assets and/or Money rapidly flow out of a Country, due to an economic event that disturbs Investors Defenders of the IDA pointed to its ability to make large loans for agricultural programs which aided the "Green Revolution" of the 1960s, and its functioning to stabilize and occasionally subsidize Third World governments, particularly in Latin America. The Green Revolution refers to the transformation of Agriculture that began in 1945 at the request of the Mexican government to establish an agricultural research station to
Bretton Woods, then, created a system of triangular trade: the United States would use the convertible financial system to trade at a tremendous profit with developing nations, expanding industry and acquiring raw materials. It would use this surplus to send dollars to Europe, which would then be used to rebuild their economies, and make the United States the market for their products. This would allow the other industrialized nations to purchase products from the Third World, which reinforced the American role as the guarantor of stability. When this triangle became destabilized, Bretton Woods entered a period of crisis which led ultimately to its collapse.
Bretton Woods and the Cold War
In 1945, Roosevelt and Churchill prepared the postwar era by negotiating with Joseph Stalin at Yalta about respective zones of influence; this same year U. Joseph Stalin ( ნამდვილი გვარი ჯუღაშვილი|Iosif Vissarionovich Dzhugashvili; March 5 1953 was General Secretary of the Communist Party Yalta (Ялта Yalta is a city in Crimea, southern Ukraine, on the north coast of the Black Sea. S. and Soviet troops divided Germany into occupation zones and confronted one another in Korea. Germany, officially the Federal Republic of Germany ( ˈbʊndəsʁepuˌbliːk ˈdɔʏtʃlant is a Country in Central Europe. Korea is a geographic area composed of two sovereign countries a civilization and a former state situated on the Korean Peninsula in East Asia.
Harry Dexter White succeeded in getting the Soviet Union to participate in the Bretton Woods conference in 1944, but his goal was frustrated when the Soviet Union would not join the IMF. Harry Dexter White ( October 9, 1892 &ndash August 16, 1948) was an American economist and senior U In the past, the reasons why the Soviet Union chose not to subscribe to the articles by December 1945 have been the subject of speculation. But since the release of relevant Soviet archives, it is now clear that the Soviet calculation was based on the behavior of the parties that had actually expressed their assent to the Bretton Woods Agreements. The extended debates about ratification that had taken place both in the UK and the U. S. were read in Moscow as evidence of the quick disintegration of the wartime alliance. Moscow (Москва́ romanised: Moskvá, IPA: see also other names) is the Capital and the largest city of
Facing the Soviet Union, whose power had also strengthened and whose territorial influence had expanded, the U. S. assumed the role of leader of the capitalist camp. The rise of the postwar U. S. as the world's leading industrial, monetary, and military power was rooted in the fact that the mainland U. S. was untouched by the war, in the instability of the national states in postwar Europe, and the wartime devastation of the Soviet economy.
Despite the economic effort imposed by such a policy, being at the center of the international market gave the U. S. unprecedented freedom of action in pursuing its foreign affairs goals. A trade surplus made it easier to keep armies abroad and to invest outside the U. S. , and because other nations could not sustain foreign deployments, the U. S. had the power to decide why, when and how to intervene in global crises. The dollar continued to function as a compass to guide the health of the world economy, and exporting to the U. S. became the primary economic goal of developing or redeveloping economies. This arrangement came to be referred to as the Pax Americana, in analogy to the Pax Britannica of the late 19th century and the Pax Romana of the first. Pax Americana ( Latin: "American Peace" describes a period of relative Peace in the Western world since the end of World War II in Pax Britannica ( Latin for "the British Peace" modelled after Pax Romana) was the period of relative peace in Europe Pax Romana ( Latin for " Roman Peace " was the long period of relative peace and minimal expansion by military force (See Globalism)
The late Bretton Woods System
The U. Globalization (or globalisation) in its literal sense is the process of transformation of local or regional phenomena into global ones S. balance of payments crisis (1958–68)
After the end of World War II, the U. S. held $26 billion in gold reserves, of an estimated total of $40 billion (approx 65%). As world trade increased rapidly through the 1950s, the size of the gold base increased by only a few percent. In 1958, the U. S. balance of payments swung negative. The first U. S. response to the crisis was in the late 1950s when the Eisenhower administration placed import quotas on oil and other restrictions on trade outflows. Dwight David "Ike" Eisenhower (October 14 1890 – March 28 1969 was President of the United States from 1953 until 1961 and a five-star general More drastic measures were proposed, but not acted on. However, with a mounting recession that began in 1959, this response alone was not sustainable. In 1960, with Kennedy's election, a decade-long effort to maintain the Bretton Woods System at the $35/ounce price was begun. John Fitzgerald "Jack" Kennedy (May 29 1917&ndashNovember 22 1963 often referred to by his initials JFK, was the thirty-fifth President of
The design of the Bretton Woods System was that nations could only enforce gold convertibility on the anchor currency—the United States’ dollar. Gold convertibility enforcement was not required, but instead, allowed. Nations could forgo converting dollars to gold, and instead hold dollars. Rather than full convertibility, it provided a fixed price for sales between central banks. However, there was still an open gold market, 80% of which was traded through London, which issued a morning "gold fix," which was the price of gold on the open market. For the Bretton Woods system to remain workable, it would either have to alter the peg of the dollar to gold, or it would have to maintain the free market price for gold near the $35 per ounce official price. The greater the gap between free market gold prices and central bank gold prices, the greater the temptation to deal with internal economic issues by buying gold at the Bretton Woods price and selling it on the open market.
However, keeping the dollar was still more desirable than holding gold because of the dollar's ability to earn interest. In 1960 Robert Triffin noticed that holding dollars was more valuable than gold was because constant U. Robert Triffin ( October 5, 1911, Flobecq, Belgium &ndash February 23, 1993, Ostend, Belgium) was S. balance of payments deficits helped to keep the system liquid and fuel economic growth. In Economics, the balance of payments, (or BOP) measures the Payments that flow between any individual Country and all other countries What would later come to be known as Triffin's Dilemma was predicted when Triffin noted that if the U. The Triffin dilemma, less commonly called Triffin's paradox, is the problem of fundamental imbalances in the Bretton Woods system. S. failed to keep running deficits the system would lose its liquidity, not be able to keep up with the world's economic growth, and, thus, bring the system to a halt. But incurring such payment deficits also meant that, over time, the deficits would erode confidence in the dollar as the reserve currency created instability. [8]
The first effort was the creation of the "London Gold Pool. " The theory behind the pool was that spikes in the free market price of gold, set by the "morning gold fix" in London, could be controlled by having a pool of gold to sell on the open market, that would then be recovered when the price of gold dropped. Gold's price spiked in response to events such as the Cuban Missile Crisis, and other smaller events, to as high as $40/ounce. The Cuban Missile Crisis was a confrontation between the United States, the Soviet Union, and Cuba during the Cold War. The Kennedy administration drafted a radical change of the tax system in order to spur more productive capacity, and thus encourage exports. This culminated with his tax cut program of 1963, designed to maintain the $35 peg.
In 1967, there was an attack on the pound and a run on gold in the "sterling area," and on November 17, 1967, the British government was forced to devalue the pound. The sterling area came into existence at the outbreak of the second world war. Events 284 - Diocletian is proclaimed emperor by his soldiers Year 1967 ( MCMLXVII) was a Common year starting on Sunday (link will display full calendar of the 1967 Gregorian calendar. U. S. President Lyndon Baines Johnson was faced with a brutal choice, either institute protectionist measures, including travel taxes, export subsidies and slashing the budget—or accept the risk of a "run on gold" and the dollar. From Johnson's perspective: "The world supply of gold is insufficient to make the present system workable—particularly as the use of the dollar as a reserve currency is essential to create the required international liquidity to sustain world trade and growth. " He believed that the priorities of the United States were correct, and, although there were internal tensions in the Western alliance, that turning away from open trade would be more costly, economically and politically, than it was worth: "Our role of world leadership in a political and military sense is the only reason for our current embarrassment in an economic sense on the one hand and on the other the correction of the economic embarrassment under present monetary systems will result in an untenable position economically for our allies. "
While West Germany agreed not to purchase gold from the U. West Germany ( Inf German: Westdeutschland or West-Deutschland) was the common English name for the Federal Republic of Germany ( S. , and agreed to hold dollars instead, the pressure on both the Dollar and the Pound Sterling continued. In January 1968 Johnson imposed a series of measures designed to end gold outflow, and to increase U. S. exports. However, to no avail: on March 17, 1968, there was a run on gold, the London Gold Pool was dissolved, and a series of meetings began to rescue or reform the existing system. Events 45 BC - In his last victory Julius Caesar defeats the Pompeian forces of Titus Labienus and Pompey the Younger Year 1968 ( MCMLXVIII) was a Leap year starting on Monday (link will display full calendar of the Gregorian calendar. But, as long as the U. S. commitments to foreign deployment continued, particularly to Western Europe, there was little that could be done to maintain the gold peg.
The attempt to maintain the peg collapsed in November 1968, and a new policy program was attempted: to convert Bretton Woods to a system where the enforcement mechanism floated by some means, which would be set by either fiat, or by a restriction to honor foreign accounts.
Structural changes underpinning the decline of international monetary management
Return to convertibility
In the 1960s and 70s, important structural changes eventually led to the breakdown of international monetary management. One change was the development of a high level of monetary interdependence. The stage was set for monetary interdependence by the return to convertibility of the Western European currencies at the end of 1958 and of the Japanese yen in 1964. Convertibility is the quality of paper Money substitutes which entitles the holder to redeem them on demand into money proper For a topic outline on this subject see List of basic Japan topics. Convertibility facilitated the vast expansion of international financial transactions, which deepened monetary interdependence.
The growth of international currency markets
Another aspect of the internationalization of banking has been the emergence of international banking consortia. Since 1964 various banks had formed international syndicates, and by 1971 over three quarters of the world's largest banks had become shareholders in such syndicates. Multinational banks can and do make huge international transfers of capital not only for investment purposes but also for hedging and speculating against exchange rate fluctuations. In Finance, a hedge is an investment that is taken out specifically to reduce or cancel out the Risk in another investment Speculation, in a financial context is making an investment that increases the overall risk in a portfolio
These new forms of monetary interdependence made possible huge capital flows. During the Bretton Woods era countries were reluctant to alter exchange rates formally even in cases of structural disequilibria. Because such changes had a direct impact on certain domestic economic groups, they came to be seen as political risks for leaders. As a result official exchange rates often became unrealistic in market terms, providing a virtually risk-free temptation for speculators. They could move from a weak to a strong currency hoping to reap profits when a revaluation occurred. If, however, monetary authorities managed to avoid revaluation, they could return to other currencies with no loss. The combination of risk-free speculation with the availability of huge sums was highly destabilizing.
The decline of U. S. monetary influence
A second structural change that undermined monetary management was the decline of U. S. hegemony. The U. S. was no longer the dominant economic power it had been for more than two decades. By the mid-1960s, the E.E.C. and Japan had become international economic powers in their own right. The European Community (EC is one of the Three pillars of the European Union (EU created under the Maastricht Treaty (1992 With total reserves exceeding those of the U. S. , with higher levels of growth and trade, and with per capita income approaching that of the U. Per capita income means how much each individual receives in monetary terms of the yearly income generated in the country S. , Europe and Japan were narrowing the gap between themselves and the United States.
The shift toward a more pluralistic distribution of economic power led to increasing dissatisfaction with the privileged role of the U. S. dollar as the international currency. As in effect the world's central banker, the U. S. , through its deficit, determined the level of international liquidity. Market liquidity is a Business, Economics or Investment term that refers to an Asset 's ability to be easily converted through an act of buying In an increasingly interdependent world, U. S. policy greatly influenced economic conditions in Europe and Japan. In addition, as long as other countries were willing to hold dollars, the U. S. could carry out massive foreign expenditures for political purposes—military activities and foreign aid—without the threat of balance-of-payments constraints.
Dissatisfaction with the political implications of the dollar system was increased by détente between the U. Détente is a French term meaning a relaxing or easing the term has been used in international politics since the early 1970s S. and the Soviet Union. The Soviet threat had been an important force in cementing the Western capitalist monetary system. The U. S. political and security umbrella helped make American economic domination palatable for Europe and Japan, which had been economically exhausted by the war. As gross domestic production grew in European countries, trade grew. When common security tensions lessened, this loosened the transatlantic dependence on defense concerns, and allowed latent economic tensions to surface.
The decline of the dollar
Reinforcing the relative decline in U. S. power and the dissatisfaction of Europe and Japan with the system was the continuing decline of the dollar—the foundation that had underpinned the post-1945 global trading system. The Vietnam War and the refusal of the administration of U.S. President Lyndon B. Johnson to pay for it and its Great Society programs through taxation resulted in an increased dollar outflow to pay for the military expenditures and rampant inflation, which led to the deterioration of the U. The Vietnam War, also known as the Second Indochina War, or the Vietnam Conflict, occurred in Vietnam, Laos and Cambodia The President of the United States is the Head of state and Head of government of the United States and is the highest political official in United States by The Great Society was also a 1960s band featuring Grace Slick, and a 1914 book by English social theorist Graham Wallas. In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time S. balance of trade position. The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of Exports and imports in an In the late 1960s, the dollar was overvalued with its current trading position, while the Deutsche Mark and the yen were undervalued; and, naturally, the Germans and the Japanese had no desire to revalue and thereby make their exports more expensive, whereas the U. S. sought to maintain its international credibility by avoiding devaluation. Meanwhile, the pressure on government reserves was intensified by the new international currency markets, with their vast pools of speculative capital moving around in search of quick profits.
In contrast, upon the creation of Bretton Woods, with the U. S. producing half of the world's manufactured goods and holding half its reserves, the twin burdens of international management and the Cold War were possible to meet at first. Cold War is the state of conflict tension and competition that existed between the United States and the Soviet Union (USSR and their respective allies from the Throughout the 1950s Washington sustained a balance of payments deficit in order to finance loans, aid, and troops for allied regimes. But during the 1960s the costs of doing so became less tolerable. By 1970 the U. S. held under 16% of international reserves. Adjustment to these changed realities was impeded by the U. S. commitment to fixed exchange rates and by the U. S. obligation to convert dollars into gold on demand.
The paralysis of international monetary management
"Floating" Bretton Woods (1968–72)
By 1968, the attempt to defend the dollar at a fixed peg of $35/ounce, the policy of the Eisenhower, Kennedy and Johnson administrations, had become increasingly untenable. Gold outflows from the U. S. accelerated, and despite gaining assurances from Germany and other nations to hold gold, the profligate fiscal spending of the Johnson administration had transformed the "dollar shortage" of the 1940s and 1950s into a dollar glut by the 1960s. The dollar glut is a term for the accumulation of United States dollars outside of the United States contrasted with the Dollar gap that lead to the creation of the In 1967, the IMF agreed in Rio de Janeiro to replace the tranche division set up in 1946. Rio de Janeiro ("River of January" ˈhiw dʒi ʒʌˈnejɾu in Brazilian Portuguese, /ˈriːoʊ di ʒəˈnɛroʊ/ in English is the second largest city of Brazil In Structured finance, a tranche (misspelled as traunch or traunche) is one of a number of related securities offered as part of the same transaction Special Drawing Rights were set as equal to one U. Special Drawing Rights ( SDRs) is a potential claim on the freely usable currencies of International Monetary Fund members S. dollar, but were not usable for transactions other than between banks and the IMF. Nations were required to accept holding Special Drawing Rights (SDRs) equal to three times their allotment, and interest would be charged, or credited, to each nation based on their SDR holding. Special Drawing Rights ( SDRs) is a potential claim on the freely usable currencies of International Monetary Fund members The original interest rate was 1. 5%.
The intent of the SDR system was to prevent nations from buying pegged gold and selling it at the higher free market price, and give nations a reason to hold dollars by crediting interest, at the same time setting a clear limit to the amount of dollars which could be held. The essential conflict was that the American role as military defender of the capitalist world's economic system was recognized, but not given a specific monetary value. In effect, other nations "purchased" American defense policy by taking a loss in holding dollars. They were only willing to do this as long as they supported U. S. military policy, because of the Vietnam war and other unpopular actions, the pro-U. The Vietnam War, also known as the Second Indochina War, or the Vietnam Conflict, occurred in Vietnam, Laos and Cambodia S. consensus began to evaporate. The SDR agreement, in effect, monetized the value of this relationship, but did not create a market for it.
The use of SDRs as "paper gold" seemed to offer a way to balance the system, turning the IMF, rather than the U. S. , into the world's central banker. The US tightened controls over foreign investment and currency, including mandatory investment controls in 1968. In 1970, U. S. President Richard Nixon lifted import quotas on oil in an attempt to reduce energy costs; instead, however, this exacerbated dollar flight, and created pressure from petro-dollars now linked to gas-euros resulting the 1963 energy transition from coal to gas with the creation of the Dutch Gasunie. A petrodollar is a US dollar earned by a country through the sale of petroleum NV Nederlandse Gasunie (short form Gasunie) is a Dutch Natural gas infrastructure and transportation company Still, the U. S. continued to draw down reserves. In 1971 it had a reserve deficit of $56 Billion dollars; as well, it had depleted most of its non-gold reserves and had only 22% gold coverage of foreign reserves. In short, the dollar was tremendously overvalued with respect to gold.
The "Nixon Shock"
By the early 1970s, as the Vietnam War accelerated inflation, the United States as a whole began running a trade deficit (for the first time in the twentieth century). The term Nixon Shock is used to refer to two different policy measures taken by U The crucial turning point was 1970, which saw U. S. gold coverage deteriorate from 55% to 22%. This, in the view of neoclassical economists, represented the point where holders of the dollar had lost faith in the ability of the U. Neoclassical economics is a term variously used for approaches to Economics focusing on the determination of prices outputs and income distributions in markets S. to cut budget and trade deficits.
In 1971 more and more dollars were being printed in Washington, then being pumped overseas, to pay for government expenditure on the military and social programs. In the first six months of 1971, assets for $22 billion fled the U. S. In response, on August 15, 1971, Nixon unilaterally imposed 90-day wage and price controls, a 10% import surcharge, and most importantly "closed the gold window," making the dollar inconvertible to gold directly, except on the open market. Events 778 - The Battle of Roncevaux Pass, at which Roland is killed Year 1971 ( MCMLXXI) was a Common year starting on Friday (link will display full calendar of the 1971 Gregorian calendar. Unusually, this decision was made without consulting members of the international monetary system or even his own State Department, and was soon dubbed the "Nixon Shock". The term Nixon Shock is used to refer to two different policy measures taken by U
The surcharge was dropped in December 1971 as part of a general revaluation of major currencies, which were henceforth allowed 2. 25% devaluations from the agreed exchange rate. But even the more flexible official rates could not be defended against the speculators. By March 1976, all the major currencies were floating—in other words, exchange rates were no longer the principal method used by governments to administer monetary policy.
The Smithsonian Agreement
The shock of August 15 was followed by efforts under U. The Smithsonian Agreement was a December 1971 agreement that ended the Fixed exchange rates established at the Bretton Woods Conference of 1944 Events 778 - The Battle of Roncevaux Pass, at which Roland is killed S. leadership to develop a new system of international monetary management. Throughout the fall of 1971, there was a series of multilateral and bilateral negotiations of the Group of Ten seeking to develop a new multilateral monetary system.
On 17 and 18 December 1971, the Group of Ten, meeting in the Smithsonian Institution in Washington, created the Smithsonian Agreement which devalued the dollar to $38/ounce, with 2. Events 218 BC - Second Punic War: Battle of the Trebia - Hannibal 's Carthaginian forces defeat those of the Year 1971 ( MCMLXXI) was a Common year starting on Friday (link will display full calendar of the 1971 Gregorian calendar. The Smithsonian Institution (smɪθsoʊnɪən is an educational and research institute and associated Museum complex administered and funded by the Government of The Smithsonian Agreement was a December 1971 agreement that ended the Fixed exchange rates established at the Bretton Woods Conference of 1944 25% trading bands, and attempted to balance the world financial system using SDRs alone. It was criticized at the time, and was by design a "temporary" agreement. It failed to impose discipline on the U. S. government, and with no other credibility mechanism in place, the pressure against the dollar in gold continued.
This resulted in gold becoming a floating asset, and in 1971 it reached $44. 20/ounce, in 1972 $70. 30/ounce and still climbing. By 1972, currencies began abandoning even this devalued peg against the dollar, though it took a decade for all of the industrialized nations to do so. In February 1973 the Bretton Woods currency exchange markets closed, after a last-gasp devaluation of the dollar to $44/ounce, and reopened in March in a floating currency regime. A floating currency is a Currency that uses a Floating exchange rate as its Exchange rate regime.
Bretton Woods II?
A number of economists (e. g. Doole, Folkerts-Landau and Garber) have referred to the system of currency relations which evolved after 2001, in which currencies, particularly the Chinese renminbi (yuan), remained fixed to the US Dollar as Bretton Woods II. The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been The argument is that a system of pegged currencies is both stable and desirable, a notion that causes considerable controversy.
"Bretton Woods II", unlike its predecessor, is not codified and does not represent any kind of a multilateral agreement. It contains the following key elements:
- The United States imports considerable amounts of goods, particularly from East Asian export-oriented economies such as China, Japan and various other Southeast-Asian countries.
- Since China and Japan don't have much demand for U. S. -produced goods, United States runs large trade deficits with both countries.
- Under normal circumstances, trade deficits would correct themselves through depreciation of the dollar and appreciation of the yen and the renminbi. However, Chinese and Japanese governments are interested in keeping their currencies low with respect to the dollar to keep their products competitive. To achieve that, they are forced to buy large quantities of U. S. treasury securities with freshly-printed money.
- Similar mechanisms work in the Eurozone with the euro and its satellite currency (Swiss franc). Euro Enlargement of the Please update other articles as well to avoid contradiction within Wikipedia e The franc ( German: Franken, French and Romansh: franc, Italian: franco; code: CHF The Eurozone is somewhat less coupled to the U. S. economy, so the euro has been allowed to appreciate considerably with respect to the dollar.
Academic legacy
The collapse of Bretton Woods would lead to the study in economics of credibility as a separate field, and to the prominence of "open" macroeconomic models, such as the Mundell-Fleming model. The Mundell-Fleming model is an economic model first set forth by Robert Mundell and Marcus Fleming.
Pegged rates
Dates shown are those on which the rate was introduced
Pound sterling
| Date | Value of pound in US dollars |
|---|---|
| 27 December 1945 | 4. The Pound Sterling ( symbol £; ISO code: GBP) subdivided into 100 pence (singular penny) is the Currency Events 537 - The Hagia Sophia is completed 1512 - The Spanish Crown issues the Laws of Burgos, governing the Year 1945 ( MCMXLV) was a Common year starting on Monday (link will display the full calendar 03 |
| 18 September 1949 | 2. Events 96 - Nerva is proclaimed Roman Emperor after Domitian is assassinated Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. 8 |
| 17 November 1967 | 2. Events 284 - Diocletian is proclaimed emperor by his soldiers Year 1967 ( MCMLXVII) was a Common year starting on Sunday (link will display full calendar of the 1967 Gregorian calendar. 4 |
French Franc
| Date | Value of US dollar in francs |
Note |
|---|---|---|
| 27 December 1945 | 119. The franc (represented by the franc sign ₣ or more commonly just F) is a former Currency of France. Events 537 - The Hagia Sophia is completed 1512 - The Spanish Crown issues the Laws of Burgos, governing the Year 1945 ( MCMXLV) was a Common year starting on Monday (link will display the full calendar 11 | £1 = 480 FRF |
| 26 January 1948 | 214. Events 1340 - King Edward III of England is declared King of France. Year 1948 ( MCMXLVIII) was a Leap year starting on Thursday (link will display the 1948 calendar of the Gregorian calendar. 39 | £1 = 864 FRF |
| 18 October 1948 | 263. Events 1009 - The Church of the Holy Sepulchre, a Christian church in Jerusalem, is completely destroyed by the Fatimid Year 1948 ( MCMXLVIII) was a Leap year starting on Thursday (link will display the 1948 calendar of the Gregorian calendar. 52 | £1 = 1062 FRF |
| 27 April 1949 | 272. Events 1124 - David I becomes King of Scotland. 1296 - Battle of Dunbar: The Scots are defeated Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. 21 | £1 = 1097 FRF |
| 20 September 1949 | 350 | £1 = 980 FRF |
| 10 August 1957 | 420 | £1 = 1176 FRF |
| 27 December 1958 | 493. Events 451 - The Battle of Chalons takes place in North Eastern France. Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. Events 612 BC - Killing of Sinsharishkun, King of Assyrian Empire Year 1957 ( MCMLVII) was a Common year starting on Tuesday (link displays the 1957 Gregorian calendar) Events 537 - The Hagia Sophia is completed 1512 - The Spanish Crown issues the Laws of Burgos, governing the Year 1958 ( MCMLVIII) was a Common year starting on Wednesday (link will display full calendar of the Gregorian calendar. 71 | 1 FRF = 1. 8 mg gold |
| 1 January 1960 | 4. New Year See also New Year The Ancient Romans began their consular year on January 1st since 153 BC Year 1960 ( MCMLX) was a Leap year starting on Friday (link will display full calendar of the Gregorian calendar. 9371 | 1 new franc = 100 old francs |
| 10 August 1968 | 5. Events 612 BC - Killing of Sinsharishkun, King of Assyrian Empire Year 1968 ( MCMLXVIII) was a Leap year starting on Monday (link will display full calendar of the Gregorian calendar. 48 | 1 new franc = 162 mg gold |
Deutsche Mark
| Date | Value of US dollar in marks |
|---|---|
| 21 June 1948 | 3. Events 524 - Godomar, King of the Burgundians defeats the Franks at the Battle of Vézeronce. Year 1948 ( MCMXLVIII) was a Leap year starting on Thursday (link will display the 1948 calendar of the Gregorian calendar. 33 |
| 18 September 1949 | 4. Events 96 - Nerva is proclaimed Roman Emperor after Domitian is assassinated Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. 20 |
| 6 March 1961 | 4 |
| 29 October 1969 | 3. Events 1079 - Omar Khayyám completes the Iranian calendar. 1454 - Thirteen Years' War: Delegates of Year 1961 ( MCMLXI) was a Common year starting on Sunday (link will display full calendar of the Gregorian calendar. Events 437 - Valentinian III, Western Roman Emperor, marries Licinia Eudoxia, daughter of his cousin Theodosius II Year 1969 ( MCMLXIX) was a Common year starting on Wednesday (link will display full calendar of the Gregorian calendar. 67 |
Italian lira
| Date | Value of US dollar in lire |
|---|---|
| January 4, 1946 | 225 |
| March 26, 1946 | 509 |
| January 7, 1947 | 350 |
| November 28, 1947 | 575 |
| 18 September 1949 | 625 |
Japanese yen
| Date | Value of US dollar in yen |
|---|---|
| 25 April 1949 | 360 |
Swiss franc
| Date | Value of US dollar in francs |
Note |
|---|---|---|
| 27 December 1945 | 4. The lira (plural lire) was the Currency of Italy between 1861 and 2002 Events 46 BC - Titus Labienus defeats Julius Caesar in the Battle of Ruspina. Year 1946 ( MCMXLVI) was a Common year starting on Tuesday (link will display full 1946 calendar of the Gregorian calendar. Events 1026 - Pope John XIX crowns Conrad II as Holy Roman Emperor. Year 1946 ( MCMXLVI) was a Common year starting on Tuesday (link will display full 1946 calendar of the Gregorian calendar. Events 1325 - Alfonso IV becomes King of Portugal. 1558 - France takes Calais, the last continental Year 1947 ( MCMXLVII) was a Common year starting on Wednesday (link will display full 1947 calendar of the Gregorian calendar. For the town in Argentina, see 28 de Noviembre. Events Year 1947 ( MCMXLVII) was a Common year starting on Wednesday (link will display full 1947 calendar of the Gregorian calendar. Events 96 - Nerva is proclaimed Roman Emperor after Domitian is assassinated Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. Events 1607 - Eighty Years' War: The Dutch fleet destroys the anchored Spanish fleet at Gibraltar. Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. The franc ( German: Franken, French and Romansh: franc, Italian: franco; code: CHF Events 537 - The Hagia Sophia is completed 1512 - The Spanish Crown issues the Laws of Burgos, governing the Year 1945 ( MCMXLV) was a Common year starting on Monday (link will display the full calendar 30521 | £1 = 17. 35 CHF |
| September 1949 | 4. 375 | £1 = 12. 25 CHF |
Dutch gulden
| Date | Value of US dollar in gulden |
|---|---|
| 27 December 1945 | 2. Events 537 - The Hagia Sophia is completed 1512 - The Spanish Crown issues the Laws of Burgos, governing the Year 1945 ( MCMXLV) was a Common year starting on Monday (link will display the full calendar 652 |
| 20 September 1949 | 3. Events 451 - The Battle of Chalons takes place in North Eastern France. Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. 8 |
| 7 March 1961 | 3. Events 161 - Roman Emperor Antoninus Pius dies and is succeeded by co-Emperors Marcus Aurelius and Lucius Verus Year 1961 ( MCMLXI) was a Common year starting on Sunday (link will display full calendar of the Gregorian calendar. 62 |
Belgian franc
| Date | Value of US dollar in francs |
|---|---|
| 27 December 1945 | 43. The franc ( Dutch: frank - French: franc - German: Franken) was the currency of Belgium until 2002 when the Events 537 - The Hagia Sophia is completed 1512 - The Spanish Crown issues the Laws of Burgos, governing the Year 1945 ( MCMXLV) was a Common year starting on Monday (link will display the full calendar 77 |
| 1946 | 43. 8725 |
| 21 September 1949 | 50 |
Finnish markka
| Date | Value of US dollar in markkaa |
Note |
|---|---|---|
| October 17, 1945 | 136 | |
| July 5, 1949 | 160 | |
| September 19, 1949 | 230 | |
| September 15, 1957 | 320 | |
| January 1, 1963 | 3. Events 1217 - The Estonian tribal leader Lembitu of Lehola was killed in a battle against Teutonic Knights. Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. The markka ( Finnish) or mark ( Swedish) was the Currency of Finland from 1860 until February 28, 2002, when Events 539 BC - King Cyrus The Great of Persia marches into the city of Babylon, releasing the Jews from almost Year 1945 ( MCMXLV) was a Common year starting on Monday (link will display the full calendar Events 1295 - Scotland and France form an alliance the beginnings of the Auld Alliance, against England. Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. Events 335 - Dalmatius is raised to the rank of Caesar by his uncle Constantine I. Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. Events 668 - Eastern Roman Emperor Constans II is assassinated in his bath at Syracuse Italy. Year 1957 ( MCMLVII) was a Common year starting on Tuesday (link displays the 1957 Gregorian calendar) New Year See also New Year The Ancient Romans began their consular year on January 1st since 153 BC Year 1963 ( MCMLXIII) was a Common year starting on Tuesday (link will display full calendar of the Gregorian calendar. 2 | 1 new markka = 100 old markkaa |
| October 12, 1967 | 4. Events 539 BC - The army of Cyrus the Great of Persia takes Babylon. Year 1967 ( MCMLXVII) was a Common year starting on Sunday (link will display full calendar of the 1967 Gregorian calendar. 2 |
Greek drachma
| Date | Value of US dollar in drachmae |
|---|---|
| 1954 | 30 |
Danish krone
| Date | Value of US dollar in krone |
Note |
|---|---|---|
| August 1945 | 4. Drachma, pl drachmas or drachmae (δραχμή pl δραχμές or δραχμαί (until 1982 is the name of An ancient currency unit found in many The krone ( sign: kr; code: DKK) is the Currency of Denmark, including the autonomous provinces of Greenland 8 | |
| September 19, 1949 | 6. Events 335 - Dalmatius is raised to the rank of Caesar by his uncle Constantine I. Year 1949 ( MCMXLIX) was a Common year starting on Saturday (link will display the full calendar of the Gregorian calendar. 91 | Devalued in line with sterling |
| November 21, 1967 | 7. Events 164 BC - Judas Maccabaeus, son of Mattathias of the Hasmonean family restores the Temple in Jerusalem. Year 1967 ( MCMLXVII) was a Common year starting on Sunday (link will display full calendar of the 1967 Gregorian calendar. 5 |
Spanish peseta
| Date | Value of US dollar in pesetas |
Note |
|---|---|---|
| July 17, 1959 | 60 | |
| November 20, 1967 | 70 | Devalued in line with sterling |
See also
Notes and references
- ^ For discussions of how liberal ideas motivated U. The peseta ( ISO 4217 code ESP standard abbreviation Pta Pts or Ptas Events 180 - Twelve inhabitants of Scillium in North Africa are executed for being Christians The year 1959 ( MCMLIX) was a Common year starting on Thursday (link will display full calendar of the Gregorian calendar. Events 284 - Diocletian was chosen as Roman Emperor. 762 - Bögü Khan of the Uyghurs, Year 1967 ( MCMLXVII) was a Common year starting on Sunday (link will display full calendar of the 1967 Gregorian calendar. This is a list of International trade topics. Absolute advantage Agreement on Trade-Related Aspects of Intellectual Property Rights " Anti-globalization " is a term that encompasses a number of related ideas The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of Exports and imports in an In Economics, the balance of payments, (or BOP) measures the Payments that flow between any individual Country and all other countries A floating currency is a Currency that uses a Floating exchange rate as its Exchange rate regime. The 'General Agreement on Tariffs and Trade' (typically abbreviated 'GATT' was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO The global financial system ( GFS) is a Financial system consisting of institutions and regulations that act on the international level as opposed to those Globalization (or globalisation) in its literal sense is the process of transformation of local or regional phenomena into global ones This article discusses buying gold as an investment. Gold price The usual benchmark for the price of gold is known as the London Gold Fixing, a twice-daily The gold standard is a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set fixed quantities of Gold Foreign exchange reserves (also called Forex reserves) in a strict sense are only the foreign Currency deposits held by Central banks and monetary The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic Monetary Hegemony is an Economic and Political phenomenon in which a single State has decisive influence over the functions of the International Originally coined by its critics and opponents " neoliberalism " is a label referring to the recent reemergence of Economic liberalism or Classical liberalism Pax Americana ( Latin: "American Peace" describes a period of relative Peace in the Western world since the end of World War II in The Triffin dilemma, less commonly called Triffin's paradox, is the problem of fundamental imbalances in the Bretton Woods system. The term Washington Consensus was initially coined in 1989 by John Williamson to describe a set of ten specific economic policy prescriptions that he considered to constitute The World Bank is an internationally supported Bank that provides financial and technical assistance to developing countries for development programs (e The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was a gathering of 730 Delegates from all 44 Allied The International Bank for Reconstruction and Development (IBRD is one of five institutions that comprise the World Bank Group. S. foreign economic policy after World War II, see, e. g. , Kenneth Waltz, Man, the State and War (New York: Columbia University Press, 1969) and David P. Calleo and Benjamin M. Rowland, American and World Political Economy (Bloomington, Indiana: Indiana University Press, 1973).
- ^ Hull, Cordell (1948). The Memoirs of Cordell Hull: vol. 1. New York: Macmillan, 81.
- ^ Quoted in Robert A. Pollard, Economic Security and the Origins of the Cold War, 1945-1950 (New York: Columbia University Press, 1985), p. 8.
- ^ Baruch to E. Coblentz, March 23, 1945, Papers of Bernard Baruch, Princeton University Library, Princeton, N. Events 1174 - Jocelin, Abbot of Melrose, is elected Bishop of Glasgow. Year 1945 ( MCMXLV) was a Common year starting on Monday (link will display the full calendar J quoted in Walter LaFeber, America, Russia, and the Cold War (New York, 2002), p. 12.
- ^ Comments by John Maynard Keynes in his speech at the closing plenary session of the Bretton Woods Conference on July 22, 1944 in Donald Moggeridge (ed. Events 1099 - First Crusade: Godfrey of Bouillon is elected the first Defender of the Holy Sepulchre of The Kingdom of Year 1944 ( MCMXLIV) was a Leap year starting on Saturday (link will display full calendar of the Gregorian calendar. ), The Collected Writings of John Maynard Keynes (London: Cambridge University Press, 1980), vol. 26, p. 101. This comment also can be found quoted online at [1]
- ^ Mason, Edward S. ; Asher, Robert E. (1973). The World Bank Since Bretton Woods. Washington, D. C. : The Brookings Institution, 105-107, 124-135.
- ^ Comments by U. S. Secretary of State George Marshall in his June 1947 speech "Against Hunger, Poverty, Desperation and Chaos" at a Harvard University commencement ceremony. A full transcript of his speech can be read online at [2]
- ^ [3]
External links
- The Gold Battles Within the Cold War (PDF) by Francis J. Gavin (2002)
- International Financial Stability (PDF) by Michael Dooley, PhD, David Folkerts-Landau and Peter Garber, Deutsche Bank (October 2005)
- "Bretton Woods System", prepared for the Routledge Encyclopedia of International Political Economy by Dr.B.Cohen
- Bretton Woods Agreement by Addison Wiggin Author of Empire of Debt
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