Bretton Woods Agreement and the Institutions It Created Explained

Students are advised to read these solutions on a regular basis to score well. Some who escaped faced reverse punishment and some who stayed back sought to live by making their new destinations as ‘mini India’. (e) The respective governments of the MNCs imposed heavy import tariffs. So the MNCs began relocating their production to Asian countries. The Bretton Woods system—which required a currency peg to the U.S. dollar and linked the value of the dollar to gold—is no longer in effect.

The Making of Global World Class 10 Questions and Answers History Chapter 4

(b) Rinderpest, a fast-spreading disease of cattle plague, was brought to Africa by Europeans in late 1880s. Entering Africa in the east, rinderpest moved west ‘like forest fire’ destroying almost 90 per cent of African cattle. It had a terrifying impact on people’s livelihoods and the local economy.

The IMF and World Bank

In the 1960s, the dollar had struggled within the system set up under the Bretton Woods agreement. In 1971, President Nixon suspended its convertibility into gold. Today, currencies what is meant by the bretton woods agreement class 10 float against each other, rather than keeping at firm pegs. (iii) The International Bank for Reconstruction and Development popularly known as the World Bank was set up to finance post-war reconstruction. (ii) To fight the war, millions of soldiers had to be recruited from around the world and moved to the frontlines on large ships and trains. The scale of death and destruction was beyond imagination.

While the Bretton Woods system was dissolved in the 1970s, both the IMF and World Bank have remained strong pillars for the exchange of international currencies. (ii) Over the nineteenth century, food grain and raw material exports from India to Britain and the rest of the world increased. But the value of British exports to India was much higher than the value of British imports from India. Britain used this surplus to balance its trade deficits with other countries. By helping Britain balance its deficits, India played a crucial role in the late nineteenth century world economy.

NCERT Solutions for Class 10 Social Science History Chapter 4 The Making of Global World

The withdrawal of the US loans affected much of the rest of the world. In Europe, it led to the failure of some major banks and the collapse of currencies such as the British pound sterling. In Latin America and elsewhere it intensified the fall in agricultural and raw material prices. As prices fell and agricultural incomes declined, farmers tried to expand production and bring a larger volume of produce to the market to maintain their overall income.

Faced with falling incomes, many households in the US could not repay what they had borrowed. Thousands of banks went bankrupt and were forced to close. All of the countries in the Bretton Woods system agreed to a fixed peg against the U.S. dollar with diversions of only 1% allowed.

Between 1928 and 1934, wheat prices in India fell by 50 per cent. This made the lives of peasants and farmers miserable. (iv) This forced the women to outside world in search of jobs.

Along the way the disease killed 90 per cent of the cattle. (iii) The British government also restricted the import of corn by introducing the Corn Laws. But these laws were soon abolished as a result of which food could be imported into Britain more cheaply than it could be produced within the country. The gold standard refers to any monetary system in which the value of currency is linked to gold. Currently, there are no countries that use the gold standard.

Planters, mine owners and colonial governments successfully monopolised what scarce cattle resources remained, to strengthen their power and to force Africans into the labour market. Very soon control over the African resources paved the way for European conquest. These institutions did nothing for the economic growth of former colonies and developing countries. They were still facing grim poverty and wanted to come out of it by strengthening their economic condition. (iii) The US attempt to protect its economy in the depression by doubling import duties also proved a severe blow to world trade. With the fall in prices and the prospect of depression, the US banks also slashed domestic lending and called back loans.

1. The gold standard refers to any monetary system in which the value of currency is linked to gold.
2. In tandem, the World Bank helps to promote these efforts through its loans and grants to governments.
3. The Bretton Woods system ultimately would go on to collapse in the 1970s.
4. This made India an exporter of precious metals, notably gold.
5. This system required a currency peg to the U.S. dollar which was in turn pegged to the price of gold.

The exchange rate applied at the time set the price of gold at $35 an ounce. Under the Bretton Woods system, gold was the basis for the U.S. dollar, and other currencies were pegged to the U.S. dollar’s value. The Bretton Woods system effectively came to an end in the early 1970s when President Richard M. Nixon announced that the U.S. would no longer exchange gold for U.S. currency. (ii) The technique of cold storage and use of refrigerated ships boosted the export of perishable goods. Now animals were slaughtered for food at the starting point in America, Australia or New Zealand and then exported to Europe where meat was scarce. (iii) As international prices crashed, prices in India, also plugged.

It made the feminist movement even stronger.(d) By the early twentieth century, the global economy had become an integral one. India was a British colony that exported agricultural goods and imported manufactured goods. Under the impact of Great Depression, the Indian economy was closely becoming integrated into the global economy.

The primary designers of the Bretton Woods system were the famous British economist John Maynard Keynes and chief international economist of the U.S. Keynes’ hope was to establish a powerful global central bank to be called the “Clearing Union” and issue a new international reserve currency called the bancor. White’s plan envisioned a more modest lending fund and a greater role for the U.S. dollar, rather than the creation of a new currency. In the end, the adopted plan took ideas from both, leaning more toward White’s plan.