Closing the Gold Window: The End of Bretton Woods as a Contingency Plan

Abstract

In August of 1971, President Nixon announced that the United States was “closing the gold window,” bringing an end to the postwar system of international exchange rate stability and precipitating a period of significant uncertainty and transformation in global institutions. Although this critical historical episode is important for an understanding of historical “neoliberalism” and institutional change, modern sociological perspectives have scarcely been applied to it. The present analysis uses archival data to show that closing the gold window was never the goal or preferred strategy of the Nixon administration, which had spent years preparing much more modest reforms. Nevertheless, US policymakers took this unilateral action as a contingency plan to achieve a short-term goal, knowing that it would dramatically change the functioning of the international economy. Surprisingly, the autonomous structure of the IMF did not channel US initiatives toward gradual evolution but rather helped determine a radical change in strategy.