Bretton Woods Conference
The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was the gathering of 730 delegates from all 44 allied nations at the Mount Washington Hotel, in Bretton Woods, New Hampshire, United States, to regulate what would be the international monetary and financial order after the conclusion of World War II.
[3] There would be a need for an entity that fostered equilibrium in exchange rates and prevented competitive devaluations while ensuring domestic policy autonomy for high employment and real income.
The Versailles treaty imposed reparations on the country for the damages it caused in World War I, and hyperinflation greatly affected the German economy.
The Bretton Woods Conference had three main results: (1) Articles of Agreement to create the IMF, whose purpose was to promote stability of exchange rates and financial flows.
(2) Articles of Agreement to create the IBRD, whose purpose was to speed reconstruction after the Second World War and to foster economic development, especially through lending to build infrastructure.
In his closing remarks at the conference, its president, U.S. Treasury Secretary Henry Morgenthau, stated that the establishment of the IMF and the IBRD marked the end of economic nationalism.
The second idea behind the Bretton Woods Conference was joint management of the Western political-economic order, meaning that the foremost industrial democratic nations must lower barriers to trade and the movement of capital, in addition to their responsibility to govern the system.
Commission I dealt with the IMF and was chaired by Harry Dexter White, Assistant to the Secretary of the U.S. Treasury and the chief American negotiator at the conference.
Commission III dealt with "other means of international financial cooperation" and was chaired by Eduardo Suárez, Mexico's Minister of Finance and the leader of the Mexican delegation.
Except when registering final approval or disapproval of proposals, the work of the conference generally proceeded by negotiation and informal consensus rather than by formal voting.
The BIS, formed in 1930, was originally primarily intended to facilitate settling financial obligations arising from the peace treaties that concluded the First World War.
Commission III of the Bretton Woods Conference, therefore, considered Norway's proposal for "liquidation of the Bank for International Settlements at the earliest possible moment.
[citation needed] The Bretton Woods Conference recommended that participating governments reach agreement to reduce obstacles to international trade.
His concern was that countries with a trade deficit would be unable to climb out of it, paying ever more interest to service their ever-greater debt, and therefore stifling global growth.
Lionel Robbins reported that "it would be difficult to exaggerate the electrifying effect on thought throughout the whole relevant apparatus of government ... nothing so imaginative and so ambitious had ever been discussed".
Instead, White proposed an International Stabilization Fund, which would place the burden of maintaining the balance of trade on the deficit nations, and impose no limit on the surplus that rich countries could accumulate.
The Articles of Agreement for the IMF and IBRD signed at Bretton Woods did not come into force until ratified by countries with at least 80 percent of the capital subscriptions ("quotas").
[19] Notably absent from Savannah was the USSR, which had signed the Bretton Woods Final Act but had then decided not to ratify it, rejecting the inclusion of the dollar alongside gold and citing that the institutions they had created were "branches of Wall Street".
