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Working Paper

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Since the time of the French Revolution, when a gold standard saved the nation from hyperinflation, France has wanted gold to be the linchpin of international monetary arrangements. And, indeed, from the earliest use of bills and coins as money until August 1971, money was, in principle at least, a claim on gold.

At Bretton Woods, New Hampshire, where in July 1944 730 delegates from 44 countries met to create the post-war international financial order, the French argued that gold – which John Maynard Keynes had described two decades earlier as a “barbarous relic” – was the key to international monetary stability. The French attachment to gold was rooted at least as much in politics as in economics, in particular in France’s efforts to take international economic power away from the United States and lodge it in a stronger and more powerful France.

On Sunday, August 15, 1971, Richard Nixon announced that the United Sates was no longer willing to exchange dollars for gold. In a few short sentences, the president had dismantled the existing international monetary system and abrogated the agreements of Bretton Woods, which had required each country to maintain its currency’s exchange rate within a specified value of gold. No one knew exactly what this would mean for the international monetary system, but the French were especially unhappy. France soon became the principal antagonist to the United States in the transformation of the international monetary system from fixed to floating exchange rates.

This paper, to be published as a chapter in Naomi Lamoreaux and Ian Shapiro, eds., The Bretton Woods Agreement together with Scholarly Commentaries and Essential Historical Documents (forthcoming, Yale University Press), traces France’s efforts to maintain a central role for gold in international monetary arrangements until 1976 when the IMF Articles were amended to reflect the new reality of floating exchange rates.


International Law | Law | Law and Economics