9781422282861

A meeting of world leaders at the United Nations Monetary and Financial Conference at the Mount Washington Hotel in Bretton Woods, New Hampshire, to discuss the establishment of new international economic systems following World War II.

Officially known as the United Nations Monetary and Financial Conference, the goal of the Bretton Woods meeting was to provide war-ravaged nations the financial help they needed to rebuild their shattered economies. Consequently, the conference created the International Monetary Fund (IMF) and the International Bank for Re- construction and Development (IBRD), which is now part of the World Bank. The guiding principle of the Bretton Woods Conference was the belief that free trade promotes international prosperity and peace. Roosevelt, along with many of those who attended Bretton Woods, believed that high tariffs and the devaluation of currencies—undertaken to help countries compete better against each other in trade— all contributed to the economic calamity that precededWorldWar II and led to the rise of Nazi Germany and Imperial Japan, the two main protagonists in the war. One of the first acts of the IMF, therefore, was to establish a monetary system to sta- bilize exchange rates (rates at which one country’s currency is valued against another’s). Given the strength of the U.S. economy after the war, the IMF used the U.S. dollar as

11

CHAPTER 1