ABSTRACT
Bretton Woods involved a policy of inflation as a means of avoiding social upheaval. In the respect it was based upon 'international Keynesianism', but an international Keynesianism firmly in the control of America, rather than Britain. The financial collapse the 1929 Wall Street crash had brought a flood of gold from Europe into the US reserves. The new systems to keep the advantages of the Gold Standard while getting rid of its supposed defects. The advantages of the old system were held to lie in the fact that it preserved stable ratios between the currencies, allowed the mutual convertibility, and ensured the free movement of commodities and capital. Great emphasis was placed on the discipline associated with the nineteenth-century Gold Standard: a country living above its means would lose gold and take restrictive measures; it deflates its economy and thereby re-establishes external equilibrium. The world economy in the years after 1945 clearly rested on the power of American capital.
