Free Gold by Matthew Hart Page A

them, and that’s what Roosevelt wanted—more currency in circulation to stimulate the economy out of the Depression.
    Raising the gold price was easy: the Treasury just bid it up. Henry Morgenthau, Jr., Roosevelt’s treasury secretary, recorded in his diaries how he and the president rigged the price.
    Franklin Roosevelt would lie comfortably on his old-fashioned three-quarter mahogany bed. . . . The actual price [ of gold ] on any given day made little difference. Our object was simply to keep the trend gradually upward. . . . One day, when I must have come in more than usually worried about the state of the world, we were planning an increase of from 19 to 22 cents. Roosevelt took one look at me and suggested a rise of 21. “It’s a lucky number,” the president said with a laugh, “because it’s three times seven.”
    Preserved throughout the war, the huge gold reserve of the United States gave it a uniquely powerful hand to shape the world that followed, and in a feat of statecraft pulled off in the mountains of New England, to obtain for the dollar a status that has guaranteed the U.S. Treasury a cheap supply of money ever since.
    I N J ULY OF 1944, ONLY weeks after D-Day, as Allied armies battled out of Normandy in the invasion that would defeat Germany, the representatives of forty-four countries arrived at a meeting thousands of miles away to plan for the victory. At the town of Bretton Woods in the New Hampshire forest, sleek black cars swept up the drive to the regal Mount Washington Hotel. Within days, 730 delegates were rewriting the rules of international finance. An American participant sounded a rousing theme.“We fight together on sodden battlefields,” said Fred M. Vinson, later chief justice of the United States. “We sail together on the majestic blue. We fly together in the ethereal sky. The test of this conference is whether we can walk together, solve our economic problems, down the road to peace as we today march to victory.”
    They would go down the road to peace, all right, guided along it every step of the way by the United States. America and Britain seemed to share the decisive power at Bretton Woods—the United States because it was rich and militarily preeminent; Britain, because its empire was so vast. But the British power was illusory.A newly discovered transcript of the Bretton Woods meetings shows the empire “disintegrating before your eyes,” one expert who read it said. Britain, shattered by war and in debt, followed the course the Americans wanted, and although they often objected, so did everyone else.“Now the advantage is ours here,” Morgenthau said to a member of his team, “and I personally think we should take it.”
    They did take it. There was no question of a return to the old gold standard system, because the United States had 75 percent of the world’s monetary gold. At Bretton Woods the participants agreed to peg their currencies instead to the U.S. dollar, and the dollar wouldbe convertible to gold. The system enshrined the dollar as the world’s reserve currency, giving it advantages it still enjoys. Most commodity prices are denominated in dollars, and Americans buying such commodities escape the transaction cost that other countries’ citizens must pay to get the dollars they need to make their purchases. The international community’s need for dollars also means that the Treasury has a ready market for its debt, and generally can pay a lower interest on it.
    The United States was a cornucopia of what the world needed as it recovered from war, especially capital. America wanted open markets and free trade. Two of the institutions created at Bretton Woods, the International Monetary Fund and the World Bank, helped the United States achieve those ends. Dollars flowed into the war-torn countries, and their economies began to recover. As Americans imagined it, the