At the Bretton Woods conference in New Hampshire, delegates from 44 Allied nations had designed a postwar economic order to prevent the currency chaos and trade wars of the 1930s. The IMF would oversee a system of fixed exchange rates tied to the US dollar and lend to countries with balance-of-payments problems; the World Bank would finance reconstruction and development. The Soviet Union took part in the conference but never joined. The IMF began operations in 1947.
The plans for the new institutions were shaped mainly by two economists: John Maynard Keynes of Britain and Harry Dexter White of the US Treasury. Keynes wanted an international clearing union with its own currency; White's plan, backed by American economic power, largely prevailed. The agreements set out a system in which currencies were pegged to the dollar, and the dollar to gold at $35 an ounce.
The articles required ratification by countries holding most of the funds' capital. On December 27, 1945, representatives of 29 governments signed them at a ceremony in the State Department in Washington, meeting the deadline set at Bretton Woods. The first meeting of the boards of governors took place in Savannah, Georgia, in March 1946, where Keynes clashed with the Americans over the location of the headquarters, which went to Washington. He died weeks later.
The fixed-rate system lasted until 1971, when President Richard Nixon suspended the conversion of dollars into gold. Both institutions survived and grew. The IMF now has 191 member countries.
Key people: John Maynard Keynes, Harry Dexter White