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Bretton Woods Conference

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  • Location: Hotel Complex Bretton Woods (New Hampshire – U. S. )
  • Date: Between 1 and July 22, 1944.
  • Participants: Forty-four countries were attending, half were underdeveloped, twenty were from Latin America, besides India, Iran, Iraq, China, Egypt, Ethiopia, and the Philippines. Attended Eastern Europe Soviet Union, Czechoslovakia, and Poland.
  • Fees: On a total capital of 8,800 million USD, the U. S. will be for a fee of 2,740 million (equivalent to 31. 1%), the United Kingdom 1300 million (14. %), the Soviet Union 1,200 (13. 6%), China 550 (6. 3%) and France 450 (5. 1%) for the top five.

In 1942, President Franklin Delano Roosevelt (1882-1945) decided to convene a conference to discuss how to deal with international monetary problems, which even become worse after the Second World War.

In the months leading up to Bretton Woods had been discussed two different proposals, one backed by the United States and the other in the UK. The brainchild of the British economist John Maynard Keynes and American Harry Dexter White.

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The Keynes plan was based on the creation of an international body of compensation, the International Clearing Union, which would be capable of issuing an international currency (Bancor) linked to hard currency and local currency exchanged through a fixed exchange rate.

Through the ICU surplus countries to deficit countries funded via a transfer of surplus, so it would have the advantage of growing global demand and prevent deflation, which ultimately would be beneficial for all countries. The international banking mechanism not very formalized and automated enough in the hands of central banks). While White proposed a structured institution that legally specifying the roles, operating rules, boundaries, remedies, conditions, and measures to implement them concerning the dissolution of the institution. The key proposal was that countries Keynesian creditors and debtors would be required to maintain a favorable balance of trade, and in case of default, to pay interest on the difference, governments depend on the measures to maintain an account zero.

The plan was fully democratic: most powerful business interests could not distort trade balance and the citizens of a country whose manufacturing sector was strong not lose the material results of their efforts because of an uninterrupted export of manufactured products, but EE. UU. at the end of the war owned 80% of world reserves of gold and was a creditor country strongly and did not want to be forced to spend its trade surplus in the debtor countries, so this plan did not suit their interests and making the most political influence and the vulnerable situation of their British allies, U. S. credit needed to overcome the war pushed for the British plan was rejected. This resulted in White’s plan is the winner, and to give a New International Economic Order providing stability to commercial transactions through the international monetary system, with the strong exchange rate and stable based on the domination of the dollar. This has involved a gold standard currency, which U. S. should keep the price of gold per ounce $ 35. 00 and was granted the right to exchange dollars for gold at that price without any restrictions or limitations. By keeping fixed the price of one currency (the dollar), other countries should set the price of their currencies in relation to it, and if necessary, intervene in currency markets to keep exchange rates within A fluctuation band of 1%.

In the 22/07/1944, delegations from forty-four countries approved the constituent documents of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), now known as the World Bank. Here also considered the need to create a third world economic organization, which was renamed the International Trade Organization, and finally, it was not used but need to replace that in 1948 signed the General Agreement on Tariffs and Trade (GATT), the predecessor of the World Trade Organization (WTO).

Cite this Bretton Woods Conference

Bretton Woods Conference. (2018, Jun 13). Retrieved from https://graduateway.com/bretton-woods-conference-essay/

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