1971 1972 silver dollar value11/29/2023 Furthermore, a negative balance of payments, growing public debt incurred by the Vietnam War, and monetary inflation by the Federal Reserve caused the dollar to become increasingly overvalued in the 1960s. However, from 1950 to 1969, as Germany and Japan recovered, the US share of the world's economic output dropped significantly, from 35% to 27%. owned over half the world's official gold reserves-574 million ounces at the end of World War II-the system appeared secure. With the Marshall Plan, Japan and Europe were rebuilding from the war, and countries outside the US wanted dollars to spend on American goods-cars, steel, machinery, etc. Thus, the United States was committed to backing every dollar overseas with gold, and other currencies were pegged to the dollar.įor the first years after World War II, the Bretton Woods system worked well. Countries now settled their international accounts in dollars that could be converted to gold at a fixed exchange rate of $35 per ounce, which was redeemable by the U.S. It was not until 1958 that the Bretton Woods system became fully operational. Conference attendees had hoped that this new system would "ensure exchange rate stability, prevent competitive devaluations, and promote economic growth". In 1944, representatives from 44 nations met in Bretton Woods, New Hampshire, to develop a new international monetary system that came to be known as the Bretton Woods system. See also: Closure of the Suez Canal (1967–1975)
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