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The price of gold, as denominated in US dollars, was stable until the collapse of the Bretton Woods system in the mid-1970s. The Bretton Woods system of monetary management established the rules for commercial relations among the United States, Canada, Western European countries, and Australia and other countries, a total of 44 countries [1] after the 1944 Bretton Woods Agreement.
On August 9, 1971, as the dollar dropped in value against European currencies, Switzerland left the Bretton Woods system. [11] The pressure began to intensify on the United States to leave Bretton Woods. On August 11, Britain requested $3 billion in gold be moved from Fort Knox to the Federal Reserve in New York. [12]
Mount Washington Hotel. The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was the gathering of 730 delegates from all 44 allied nations at the Mount Washington Hotel, in Bretton Woods, New Hampshire, United States, to regulate what would be the international monetary and financial order after the conclusion of World War II.
The Bretton Woods System was founded on the principle that the U.S. was a steady and reliable global economy; the U.S. had over 60% of the world's total gold in its reserve. However, starting in the 1950s, the U.S. began to accrue consistent balance-of-payment debt.
Image credits: Rose Smith #9 We Got Obama Because A Producer In Hollywood Thought Garrett Wang Was Handsome. Not sure how much of this is apocryphal but the story is that after a few seasons of ...
The crash came after the collapse of the Bretton Woods system over the previous two years, with the associated 'Nixon Shock' and United States dollar devaluation under the Smithsonian Agreement. It was compounded by the outbreak of the 1973 oil crisis in October of that year. It was a major event of the 1970s recession.
This action made the dollar inconvertible to gold directly, except on the open market, and was soon dubbed the Nixon Shock, leading eventually to the collapse of the Bretton Woods system in 1976. Because oil was priced in dollars, oil producers' real income decreased when the dollar started to float free of the old link to gold.
International leaders assembled at the Bretton Woods International Monetary Conference in 1944 to develop a system for trade and finance in the war's aftermath. It was decided a common currency ...