Bretton Woods Designs a Postwar Economy

On July 1, 1944, 730 delegates representing forty-four allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. Formally designated the United Nations Monetary and Financial Conference, the summit sought to establish a stable international economic architecture before the conclusion of World War II. Memories of the interwar period weighed heavily on the participants, who remembered how abandoning the gold standard, enduring the Great Depression, and engaging in competitive devaluations had fractured world trade. Allied planners believed that multilateral monetary cooperation was necessary to secure high employment, avoid protectionist currency wars, and sustain long-term economic growth.

Preparations had begun years earlier, driven by the British economist John Maynard Keynes and Harry Dexter White of the United States Treasury. Working independently, both men drafted blueprints for postwar finance before opening bilateral talks between their respective governments. Keynes sought to prevent chronic balance-of-payments imbalances by proposing an International Clearing Union. Under his design, countries with large surpluses as well as those with deficits would face financial penalties to maintain equilibrium. White opposed this concept on behalf of the United States, which held the position of the world's leading creditor. White favored an arrangement that placed the primary adjustment burden on deficit countries, and the preliminary agreements hammered out in early 1944 drew far more from his framework than from Keynes's plan.