Finance History | Mount Washington Hotel, Bretton Woods, New Hampshire, July 1944 — A Chain of Promises Ending in Gold

The hotel had been shut since 1930. It was reopened, restored and staffed specifically so that 730 delegates from 44 Allied nations could spend three weeks arguing about money in it.

The United Nations Monetary and Financial Conference ran from 1 to 22 July 1944, while the fighting in Europe and the Pacific was still going on. The United States chose the Mount Washington Hotel because it was remote, easy to secure in wartime, and surrounded by the White Mountains.

The question on the table was what should replace the arrangement that had failed twice already. The gold standard had broken in the 1930s, countries had devalued against each other in turn, trade had contracted, and everybody in the room had watched what followed.

Two plans had been circulating since 1942. John Maynard Keynes wanted an international clearing union with its own reserve unit, one that would put pressure on surplus countries as well as deficit ones. Harry Dexter White, at the US Treasury, wanted a fund that countries paid into and could draw on, with the dollar at the centre.

White's side had the money and the plan adopted was substantially his, with concessions to Keynes, including a provision allowing the fund to ration a currency that became scarce.

The mechanism was a chain of promises. Other currencies were fixed to the US dollar within narrow bands, and the dollar alone was convertible into gold, at thirty-five dollars an ounce. Exchange rates would be stable without every country needing gold of its own, because one country held it and the rest held dollars.

That arrangement lasted as long as the promise at the end of the chain was believed. It became fully operational in 1958 and ended on 15 August 1971, when the United States stopped converting dollars into gold.

The conference produced the Articles of Agreement for the International Monetary Fund and for the International Bank for Reconstruction and Development, which became the World Bank. The Final Act was signed on 22 July 1944, and the IBRD articles were ratified in Washington on 27 December 1945.

Henry Morgenthau, the US Treasury Secretary, presided. Committees met around the clock, and a recollection published by the Bank in 1956 describes Boy Scouts carrying microphones between speakers in the plenary sessions.

The hotel was built between 1900 and 1902 for the railway executive Joseph Stickney, with a steel frame and its own power plant. It became a National Historic Landmark in 1986 and is still an operating resort.

Cover photo: King of Hearts, CC BY-SA 4.0, via Wikimedia Commons.

Coordinates 44.257353, -71.439448, resolved by Nominatim for the resort at 310 Mount Washington Hotel Road. Accurate to about 50 m. Commons geotags for this building sit several hundred metres away because the classic view is photographed from across the meadow, so they are camera positions rather than the hotel.