The Bretton Woods Conference was a meeting that took place in the town of Bretton Woods, in New Hampshire, in 1944. It was originally known as the United Nations Monetary and Financial Conference, and essentially acted as a meeting among the Allied nations to decide how the global economy would function in the wake of World War II.
The conference took place at the Mount Washington Hotel, and lasted for three weeks, from the first of July to the twenty-second of July. At the end of the three weeks, a number of agreements were signed by the forty-four various nations present. This established many of the tools of modern international commerce, including the International Monetary Fund (IMF), the General Agreement on Tariffs and Trade (GATT) which would later become the World Trade Organization (WTO), and the International Bank for Reconstruction and Development (IBRD), the first of the five institutions that make up the World Bank Group.
One of the major accomplishments of the Bretton Woods Conference was establishing a fixed value to gold and other fairly tight currency regulations. In the wake of the Great Depression and the War, it was fresh in the minds of many nations that the ability to easily devalue currency to become more competitive in the international export economy was a profoundly dangerous situation. By controlling the value of currency, the conference agreements ensured that nations couldn’t easily devalue their currency. This system endured until the early 1970s, when the United States bucked it in the face of a dollar glut.
Fundamentally, the Bretton Woods Conference largely marked the end of economic nationalism. The Great Depression had made it very clear to everyone that the world’s economies were intricately linked, and that what affected one nation could quickly cascade to affect the entire world. As a result, the nations represented at Bretton Woods agreed to tight restrictions, in an attempt to stave off any future global catastrophe. In addition to the Western powers creating the rules that would come to govern the global economy in the future, they also agreed to take on responsibility for the global economy by themselves lowering trade barriers and allowing capital to flow freely from their countries.
In addition to setting up new institutions, the Bretton Woods Conference also acted in some ways as a coming-out party for the United States, fully taking the stage as the world’s economic superpower. The mantle of responsibility was also stressed, and US President Franklin Roosevelt emphasized this point many times. Roosevelt opened the conference by stating that, “The economic health of every country is a proper matter of concern to all its neighbors, near and far.”
Two other fairly important institutions were proposed at the Bretton Woods Conference but ultimately were never agreed upon. One was the International Trade Organization (ITO), which would have set up rules to mediate international trade. The ITO was not created at the Bretton Woods Conference, but in 1995, the Uruguay Round of GATT finally reached agreement on an international trade body, the WTO. The other organization was an International Clearing Union (ICU), which would have acted essentially as a strictly regulated international bank. The ICU was proposed by noted economist John Maynard Keynes, but ultimately the United States was firmly opposed to the ICU, and it was replaced with the IMF, which gave enormous powers to the United States, as well as allowing developed nations unlimited credit, and giving the United States dollar a position of privilege to ensure the United States would never face an economic collapse as a result of debt.