THE END OF THE WAR ★^901The Big Three—Stalin, Roosevelt, and
Churchill—at their first meeting, in Tehran, Iran,
in 1943, where they discussed the opening of
a second front against Germany in western
Europe.Yalta and Bretton Woods
At the Yalta conference, Roosevelt and
Churchill entered only a mild protest
against Soviet plans to retain control
of the Baltic states (Estonia, Latvia,
and Lithuania) and a large part of east-
ern Poland, in effect restoring Russia’s
pre–World War I western borders.
Stalin agreed to enter the war against
Japan later in 1945, to include non-
communists in the pro-Soviet govern-
ment of Poland, and to allow “free and
unfettered elections” there. But he was
intent on establishing communism in
eastern Europe. He believed, as he put it to Yugoslav communist leader Josip
Broz (“Tito”), that in modern war, “whoever occupies a territory also imposes
his own social system.” Yalta saw the high-water mark of wartime American–
Soviet cooperation. But it planted seeds of conflict, since the participants soon
disagreed over the fate of eastern Europe.
Tension also existed between Britain and the United States. Churchill
rejected American pressure to place India and other British colonies on the
road to independence. He concluded private deals with Stalin to divide south-
ern and eastern Europe into British and Soviet spheres of influence.
Britain also resisted, unsuccessfully, American efforts to reshape and dom-
inate the postwar economic order. A meeting of representatives of forty-five
nations at Bretton Woods, New Hampshire, in July 1944 replaced the British
pound with the dollar as the main currency for international transactions.
During the 1930s, as noted in the previous chapter, FDR had taken the United
States off the gold standard, allowing the government to issue more money in
the hope of stimulating business activity. The Bretton Woods conference re-
established the link between the dollar and gold. It set the dollar’s value at $35
per ounce of gold and gave other currencies a fixed relationship to the dollar.
The conference also created two American-dominated financial institutions.
The World Bank would provide money to developing countries and to help
rebuild Europe. The International Monetary Fund would work to prevent
governments from devaluing their currencies to gain an advantage in interna-
tional trade, as many had done during the Depression.
Although the details took many years to emerge, Bretton Woods created the
framework for the postwar capitalist economic system, based on a freer inter-
national flow of goods and investment and a recognition of the United States
as the world’s financial leader. Determined to avoid a recurrence of the Great
How did the end of the war begin to shape the postwar world?