Meanwhile, to boost confidence in the dollar, the United States has separately agreed to tie the dollar to gold at a price of $35 an ounce. With this rate, foreign governments and central banks could exchange dollars for gold. Bretton Woods set up a dollar-based payment system that defined all currencies against the dollar, themselves convertible into gold, and especially “as well as gold” for trade. The U.S. currency was now effectively the world currency, the norm to which any other currency was bound. The most important currency in the world has been most international transactions denominated in US dollars. Still on the basis of the experience of the interwar period, American planners developed a concept of economic security – that a liberal international economic system would improve the possibilities for post-war peace. One of those who saw such a security link was Cordell Hull, the U.S. Secretary of State from 1933 to 1944. [Notes 1] Hull believed that the root causes of both world wars were economic discrimination and the trade war.
Hull argued that this useful collection of basic documents and essays marked the 75th anniversary of the Bretton Woods Agreement of 20 July 1944. The Bretton Woods system is primarily identified with the monetary agreement put in place by the International Monetary Fund (IMF) to help countries maintain fixed exchange rates. Indeed, the IMF was part of a series of interdependent institutions, including the International Bank for Reconstruction and Development (IBRD), the forerunner of the World Bank, and, three years later, the General Agreement on Tariffs and Trade, the precursor to the World Trade Organization much later. . . .