Three weeks at a hotel that made the dollar the world's money

Between July 1 and July 22, 1944, the Mount Washington Hotel in Bretton Woods, New Hampshire, hosted one of the most consequential meetings of the twentieth century. 730 delegates representing 44 Allied nations spent three weeks in the White Mountains designing the economic architecture of the postwar world.

The two architects

The dominant intellectual figure was John Maynard Keynes, representing Britain. Keynes had been one of the sharpest critics of the punitive economics of the Treaty of Versailles after World War I. He wanted the new system to avoid the same mistakes. He proposed an international currency unit, which he called the 'bancor', that would be administered by a new international institution. No single national currency would dominate.

The dominant practical figure was Harry Dexter White, representing the United States. White had a different plan. His proposal centered on the US dollar, backed by gold at 35 dollars per ounce. Other currencies would peg to the dollar. The dollar would become the functional reserve currency of the world.

The United States held roughly two-thirds of the world's monetary gold at that point. Whatever Keynes argued, White had the gold. White's plan won.

What got built

The conference produced two major institutions. The International Monetary Fund (IMF) was designed to lend foreign exchange to countries running short-term balance of payments problems. The International Bank for Reconstruction and Development, now the World Bank, was designed to finance postwar reconstruction and later economic development. Both still exist.

The monetary architecture itself, with dollar-gold convertibility at 35 dollars per ounce, was supposed to be the stable third leg of the system. It lasted 27 years. Nixon suspended it in 1971, and it never came back.

The footnote

Harry Dexter White was later credibly accused of being a Soviet agent. He died of a heart attack in 1948, three days after testifying before the House Un-American Activities Committee. The accusations, drawn largely from the decrypted Venona cables, have been extensively analyzed by historians. Most conclude that White did pass information to Soviet intelligence during the 1940s. None of that appears to have materially changed the outcome of the Bretton Woods negotiations, since the United States' demands were always going to prevail given its economic position. It remains a strange footnote in the history of a very formal set of meetings.