The Second World War was not yet over — the Normandy landings were a month behind, the Pacific war was still raging — but by the summer of 1944 the Allies could see victory and knew that winning the peace was a separate problem from winning the war. The lesson of the interwar years was clear: the economic nationalism of the 1930s, walls of protectionism, competitive devaluations, and the post-1929 financial chaos had prepared the ground for fascism and war. It must not happen again. On 1 July 1944, with an opening address by US Treasury Secretary Henry Morgenthau, 730 delegates from 44 Allied countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire.

The real axis of negotiation was a sharp clash of vision between two men. Representing Britain, John Maynard Keynes proposed an International Clearing Union built around a dollar-independent unit of account called the 'bancor,' with symmetric obligations on rich and poor countries alike and pressure applied to surplus as well as deficit nations. From the US Treasury, Harry Dexter White designed an IMF in which the dollar served as the global reserve currency, credit was conditional, and the burden fell on the borrower (usually poor) country. White's plan won — because in 1944 the US held roughly 70 percent of the world's gold, it was the country financing the war and lending to its allies, and few at the table could deny it the last word. The conference's two great outputs were signed on 22 July: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD, the seed of today's World Bank group).

The system's technical design was as follows. The US dollar was pegged to gold (a fixed rate of 35 USD to one ounce); the currencies of other members were pegged to the dollar; foreign central banks could exchange dollars for gold at the US Treasury whenever they wished. It was an indirect gold standard, but a flexible one — countries running balance-of-payments crises could borrow short-term from the IMF and could adjust exchange rates only in cases of 'fundamental disequilibrium.' The World Bank, meanwhile, would extend long-term credit to rebuild war-shattered Europe (and later to the developing world). When the General Agreement on Tariffs and Trade (GATT) was added in 1947, the roof was complete: money (IMF), development lending (WB), free trade (GATT). This triad became the economic architecture of the Cold War's 'Western bloc.'

For twenty-five years Bretton Woods worked far better than anyone had predicted — supporting what came to be called the post-war 'Golden Age' of growth. But structural strain accumulated: the financing of the Vietnam War and rising domestic spending led the United States to print dollars while its gold stock did not grow; when foreign central banks began trying to convert their dollar holdings into gold, the Treasury could not cover the claims. On 15 August 1971 President Nixon unilaterally suspended dollar-gold convertibility — the 'Nixon Shock.' The fixed-rate system formally collapsed in 1973; the major currencies have floated ever since. Yet the IMF and the World Bank survived and shifted their mandates (structural adjustment in the 1980s, crisis management in the 1990s, poverty reduction in the 2000s). The real legacy of Bretton Woods is not the institutions but the principle: the global economy must be governed under a roof states agree to bear together — and that principle, however contested, remains the working assumption of the international economic architecture.