Forty-Four Allied Nations Built the Postwar Money System in Three Weeks at a New Hampshire Hotel

From July 1 to July 22, 1944, with the Allied invasion of Normandy six weeks old and the war in the Pacific still half its length to run, 730 delegates from 44 Allied nations checked into the Mount Washington Hotel in Bretton Woods, New Hampshire, and spent three weeks designing the postwar international monetary system. The two main negotiators were John Maynard Keynes, leading the British delegation, and Harry Dexter White of the U.S. Treasury.

They did not agree on much. Keynes wanted a true world central bank issuing a synthetic reserve unit he called the bancor, with surplus countries forced to recycle their imbalances by importing, investing abroad, or accepting capital controls. White wanted something simpler and more advantageous to the United States: fix every currency to the dollar, fix the dollar to gold at $35 an ounce, and put the IMF on top to police the rates. White had the leverage — the U.S. held two-thirds of the world's monetary gold by then — and his plan won.

The arrangement worked for about 25 years. By the late 1960s, growing dollar liabilities held abroad exceeded U.S. gold reserves, and a quiet run on the gold window began. On August 15, 1971, President Nixon announced on national television that the United States would no longer redeem dollars for gold and froze prices for 90 days. He had not consulted the IMF, the foreign signatories of Bretton Woods, or, by some accounts, his own State Department. The 1976 Jamaica Accords formalized the move to floating exchange rates that has, more or less, held ever since.