The Second World War and Bretton Woods

  • J. A. H. de Beaufort Wijnholds
Part of the Publication of the Netherlands Institute of Bankers and Stock Brokers book series (PIBS, volume 31)


The outbreak of the Second World War brought about further drastic alteration in the organization of international trade and payments. International trade became even more bilateralized than before and international payments were subjected to exchange control to an un unprecedented extent. Belligerent countries, that had not previously done so, pegged their exchange rates at a certain level and so brought about the end of a relatively brief episode of floating exchange rates. In short, as in all other fields of economic activity, countries so organized their international monetary relations as to contribute as much as possible to the overriding objectives of the war effort.


International Monetary Fund Current Account International Reserve International Liquidity Float Exchange Rate 
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  1. 1.
    The clearest example is that of the United Kingdom that had to make large payments in gold and dollars to the United States for the purchase of essential supplies prior to the Lend-Lease Agreement of March 1941; cf., for instance, Bank for International Settlements, twelfth Annual Report, Basle, 1942, pp. 95, 96, 103–105.Google Scholar
  2. 2.
    Bank for International Settlements, eleventh Annual Report, Basle, 1941, p. 97.Google Scholar
  3. 3.
    League of Nations, International Currency Experience: Lessons of the Internar Period, Geneva, 1944.Google Scholar
  4. 1.
    International Currency Experience, p. 13.Google Scholar
  5. 2.
    As regards the global level of international liquidity, Nurkse noted that it should “be large enough to permit the settlement of all short-term balance-of-payments discrepancies”; cf. Ragnar Nurkse, Conditions of International Monetary Equilibrium, Essays in International Finance No. 4, Princeton, 1945, p. 15.Google Scholar
  6. 3.
    See pp. 20, 21 and 25, 26 above.Google Scholar
  7. 4.
    Cf. section iii of chapter 5 below.Google Scholar
  8. 5.
    International Currency Experience, p. 14.Google Scholar
  9. 6.
    See pp. 27, 28 above.Google Scholar
  10. 1.
    International Currency Experience, p. 93.Google Scholar
  11. 2.
    Cf. Robert Triffin, Monetary and Banking Reform in Paraguay, Board of Governors of the Federal Reserve System, Washington, 1946, pp. 82–84.Google Scholar
  12. 3.
    Cf. Robert Triffin “National Central Banking and the International Economy”, Review of Economic Studies, February 1947, p. 70 (reproduced in International Monetary Policies, Federal Reserve Board, Postwar Economic Studies No. 7, Washington, 1947).Google Scholar
  13. 1.
    Cf., for instance, George N. Halm, International Monetary Cooperation, Chapel Hill, 1945, pp. 90 et seq. The relatively high aggregate quotas suggested by Keynes can be seen in the light of his aim of “the substitution of an expansionist, in place of a contractionist, pressure on world trade”; cf. Proposals for an International Clearing Union, IV-10, reproduced in IMF, The International Monetary Fund 1945–1965, Volume III, Washington, 1969, p. 26.Google Scholar
  14. 2.
    IMF (J. Keith Horsefield), The International Monetary Fund 1945–1965: Twenty Years of International Monetary Cooperation, Volume I, Washington, 1969, p. 95.Google Scholar
  15. 1.
    Ibid. p. 43.Google Scholar
  16. 3.
    Cf. Oscar L. Altman, “Quotas in the International Monetary Fund”, IMF Staff Papers, August 1956, p. 136.Google Scholar
  17. 4.
    Cf. Horsefield, p. 43.Google Scholar
  18. 5.
    Joint Statement by Experts on the Establishment of an International Monetary Fund (April 1944), reproduced in The International Monetary Fund 1945–1965, Volume III, pp. 128–135.Google Scholar
  19. 1.
    Reproduced in The International Monetary Fund 1945–1965, Volume III, pp. 136–182.Google Scholar
  20. 2.
    See note 3.Google Scholar
  21. 3.
    Drawings on the Fund were initially intended only for the financing of temporary deficits incurred on current account. In 1961 the Executive Directors of the Fund decided to interpret the Articles of Agreement in such a way that the Fund’s resources could also be used for the financing of deficits due to capital movements.Google Scholar
  22. 1.
    Suggestions for the differentiation of quotas according to quota functions have been made several times.Google Scholar
  23. 2.
    Thus the component national income, which usually had to be estimated, provided leeway for making minor adjustments to the quota calculations according to the US Treasury formula whenever these were politically unrealistic; cf. Horsefield, p. 95.Google Scholar
  24. 3.
    Rudolf Kroc, The Financial Structure of the Fund, IMF Pamphlet Series No. 5, second edition, Washington, 1967, p. 2.Google Scholar
  25. 4.
    The quinquennial quota reviews, the quota revisions of 1959, 1965, 1970, and 1976, and the motivation behind the revisions are discussed in chapters 4 and 8.Google Scholar
  26. 5.
    Cf., for instance, Pierre-Paul Schweitzer, “A Report on the Fund”, in A.L.K. Acheson, J.F. Chant and M.F.J. Prachowny (eds.), Bretton Woods Revisited, Toronto, 1972, p. 127.Google Scholar
  27. 6.
    Proposals for an International Clearing Union, reproduced in The International Monetary Fund 1945–1965, Volume III, p. 20.Google Scholar

Copyright information

© Springer Science+Business Media New York 1977

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  • J. A. H. de Beaufort Wijnholds

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