In July 1944, delegates from 44 nations met at a resort in Bretton Woods, New Hampshire, to design the monetary order that would govern the post-war world. The deal they struck put gold at the center one last time: the US dollar was fixed to gold at $35 an ounce, and every other currency was fixed to the dollar.
It was a gold standard at one remove — countries held dollars as reserves, confident those dollars were "as good as gold" because they could, in principle, be redeemed for metal at the US Treasury. For 27 years the arrangement held, and the $35 price became one of the longest-lived numbers in monetary history.
Its fatal flaw — that the US had to supply the world with dollars even as those dollars came to exceed America's gold — would bring the system down in 1971. The full story is told in The Gold Standard & Bretton Woods.
Key events of 1944
- 1944-07-22
Bretton Woods Agreement
The dollar is pegged to gold at $35/oz and world currencies to the dollar; the IMF and World Bank are founded.