Introduction to Finance

World War I through World War II: 1915–1944 
During the interwar period 
from 1915 through 1944, which encompassed most of World War I, the period in between, 
and World War II, an attempt was made to go back onto the gold standard. Many nations 
returned to the gold standard during the 1920s only to go off it again in the early 1930s be-
cause of fi nancial crises associated with the Great Depression. A series of bank failures and 
continued outfl ow of gold caused the United States to abandon the gold standard in 1933. 
Bretton Woods Fixed Exchange Rate System: 1945–1972 
In mid-1944, 
authorities from all major nations met in Bretton Woods, New Hampshire, to formulate a post–
World War II international monetary system. The 
International Monetary Fund (IMF)
was 
created to promote world trade through monitoring and maintaining fi xed exchange rates and 
by making loans to countries facing balance of trade and payments problems. The Interna-
tional Bank for Reconstruction and Development, or 
World Bank
,
 
also was created to help 
economic growth in developing countries.
The most signifi cant development of the conference was the exchange rate agreement com-
monly called the 
Bretton Woods system
, in which individual currencies would be tied to gold 
through the U.S. dollar via fi xed, or pegged, exchange rates. One ounce of gold was set equal to 
gold standard 
standard by which 
currencies of major countries 
are convertible into gold at fi xed 
exchange rates
International Monetary Fund 
(IMF) 
created to promote world 
trade through monitoring and 
maintaining fi xed exchange rates 
and by making loans to countries 
facing balance of trade and 
payments problems
World Bank 
created to help 
economic growth in developing 
countries (also called the 
International Bank for 
Reconstruction and Development)