Changes

When the Bretton Woods Conference was conducted, the world was at war and had been without a standard monetary regime for a number of years. The Classical Gold Standard had gradually ended after World War I with an influx of the world’s gold filling the chambers of Fort Knox. Although there were some moves to revamp the Gold Standard after the war, the Great Depression made sure that countries would go their own ways. European nations began devaluing their currencies in 1931 in order to increase exports and their currency supplies with little to no effect. American President Franklin Roosevelt responded with his own measures, which included the New Deal, but also an executive order that confiscated privately held gold. The government paid the private holders well below the market valuation for their gold, effectively ending the Gold Standard. <ref> Conway, p. 82</ref> Keynes, White, and most of the other prominent economists of the time knew that the world would not return to the unwieldly unwieldy Gold Standard anytime soon, so replacing it became the subject of many debates and academic publications. As the debates raged in the West, Keynes found an unlikely source of inspiration in National Socialist Germany.

In 1940, Walther Funk, the German economic minister, issued a bold new economic plan for Europe. Funk’s plan called for all currencies of the new Nazi German economic bloc to be pegged to the German Reichsmark as the standard currency. All international payments would be conducted through a central office in Berlin and although gold would still have a value, currency would no longer be tied to it. Keynes was impressed with several aspects of the Funk plan and used some of it to outline his initial ideas at the Bretton Woods Conference. <ref> Conway, pgs. 99-102</ref> White was also familiar with the Funk plan and was willing to allow Keynes great leeway during the conference, but in the end did whatever he could to make sure that the United States was the nation calling the shots.