Bretton Woods Conference:

A vendetta between developed and developing

nation

4/30/2014
The economic health of every country is a proper matter of concern to all its
neighbors, near and far — U.S. President Franklin D. Roosevelt at the opening
of BrettonWoods

 was officially called the United Nations Monetary and

Financial Conference
 This Conference represented nearly all the peoples of the
world, has considered matters of international money and
finance which are important for peace and prosperity .
 agreed on the problems needing attention, the measures
which should be taken, and the forms of international
cooperation or organization which are required

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What Was Bretton Woods
 In the aftermath of WWII (in Europe) The United Nations
Monetary and Financial Conference commonly known as Bretton
Woods conference, was a gathering of 730 delegates from all 44
Allied nations.
 Main goal was to regulate the international monetary and
financial.
 In 1944 as well as today historians and economists often argue
economics played a vital role in causingWWII.
 Argument
 WWI set the conditions to ensure a secondWorldWar.
 Extreme governments circa 1932 rose to power due to Global
Great Depression

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 Fear over Great Depression
Many nations wanted protection from a repeat
 “Linked economies don’t go to war”
 Support for Govt. intervention in Economic development.
 Tools to reconstruct postwar Europe.

Manjeet Kumar Sahu(R450210069) 4/30/2014

Manjeet Kumar Sahu(R450210069) 4/30/2014
Achievement Achieved
The agreements were signed to set up:
 The International Bank for Reconstruction and
Development (IBRD)
 TheGeneral Agreement on Tariffs and Trade (GATT),and
 The International Monetary Fund (IMF).
The Bretton woods system of exchange rate management was
set up.

Manjeet Kumar Sahu(R450210069) 4/30/2014

Purposes and Goals
 The nations should consult and agree on international
monetary changes which affect each other.
 They should outlaw practices which are agreed to be harmful
to world prosperity.
 They should assist each other to overcome short-term
exchange difficulties.S

Manjeet Kumar Sahu(R450210069) 4/30/2014

Main Conference Agreements
 Formation of the IMF and the IBRD (World Bank).
 Adjustably pegged foreign exchange market rate system:
 The exchange rates were fixed, with the provision of changing
them if necessary.
 Currencies were required to be convertible for trade related
and other current account transactions.
 All member countries were required to subscribe to the
IMF's capital.
 Using the US dollar as a global gold standard.

Manjeet Kumar Sahu(R450210069) 4/30/2014

Main Failures
 International Trade Organization
 The Conference also proposed the creation of an International
Trade Organization (ITO) to establish rules and regulations for
international trade.
 ITO charter was agreed on at the U.N. Conference on
Trade and Employment(held in Havana, Cuba, March,
1948), but was not ratified by the U.S. Senate. As a result, the
ITO never came into existence.

Manjeet Kumar Sahu(R450210069) 4/30/2014

Failure Continues..
 International Clearing Union
 British Economist John Maynard Keynes argued for creating a
system that would seek global trade balance by ensuring capital
flowed by nations.
 His solution was to charge interest on nations with substantial
trade surplus,the US fought against this provision.

Manjeet Kumar Sahu(R450210069) 4/30/2014

 British Economist John Maynard Keynes addressing
Manjeet Kumar Sahu(R450210069) at the conference 4/30/2014
Manjeet Kumar Sahu(R450210069) 4/30/2014
Chief features
 Obligation for each other country to adopt a monetary policy that
maintained the exchange rate of its currency within a fixed value-
plus or minus one percent – in terms of gold.
 The ability of the IMF to bridge temporary imbalances of
payment.
Its Collapse
 The US on Aug. 15 ,1971 unilaterally terminated convertibility of
the dollar to gold.This action created the situation whereby the
United States dollar became the sole backing of currency and
reserve currency for the member states.In the face of increasing
financial strain, the system collapsed in 1971.

Manjeet Kumar Sahu(R450210069) 4/30/2014

 Conclusion of the Bretton Woods
Conference
 There were two great objectives Roosevelt was trying to
accomplish with the BrettonWoods System:
 1) to free more than half the world's population from the
British, French, Dutch, Belgian, and Portuguese Empires,
and
 2) to unleash global economic reconstruction and
development, that is, to "reconstruct" shattered Europe's and
Japan's economies and to "develop" the former colonial
sector, eliminating enforced underdevelopment (this is where
the World Bank's name came from).

Manjeet Kumar Sahu(R450210069) 4/30/2014

 Thank You
Manjeet Kumar Sahu
B.A LL.B(Hons.)
R450210069

Manjeet Kumar Sahu(R450210069) 4/30/2014