298 ChaPter^6
World Bank was given on the condition that much of that money would be
used to purchase goods and services from U.S. companies in return. So, for
instance, World Bank loans to build an electric grid, or an international
airport, or a health system, or roads, or housing, would lead to contracts
for companies like Brown & Root, a huge Texas-based construction firm
[which today is Halliburton], General Motors, General Electric, and the
like. In this way, the U.S. could develop the world along capitalist lines and
be sure of having economic partners, while also providing business for
American companies that feared another depression like they had just
experienced. Critics would create the term “corporate welfare” to describe
such a system.
The final piece of the Bretton Woods System, and a bit more complicated,
was creating a global, convertible currency–the U.S. dollar. What did this
mean? Any country could use American dollars to buy and sell goods with
other countries, and those dollars would be guaranteed by an international
gold standard, meaning the dollar could be exchanged, converted, with other
currencies at a fixed rate. If country X wanted to trade with country Y, it could
exchange its currency for dollars to make that transaction, and it could always
trade those dollars for gold, at the rate of $35 per an ounce [and it could always
trade gold for dollars on the other hand]. Whether one used marks, yen, francs,
lira or some other currency [the Euro was still far off], he/she could trade that
money for dollars, and then gold, to conduct trade. In this way, all countries
that wanted to join this new economic order would desire dollars; countries
wishing to trade, especially with the U.S., would want dollars; and the U.S.
would prosper even more because its currency was truly international and had
a fixed rate based on convertibility and the price of gold. To use a contempo-
rary example, the U.S. dollar in 2014 is worth much less than the Euro. A Euro
is worth about $1.40 or so. When the Euro was established it was worth
exactly a dollar. So if you were traveling and bought a Gucci bag for 100 Euro,
you would pay $100 for it. In mid-2014, that exact same bag would cost you
nearly $140 dollars, because currency is no longer fixed and the dollar has
weakened. But in the late 1940s [until the 1960s], the dollar was at a fixed
rate–so those fluctuations in the price of a Gucci bag would not have hap-
pened–and was the world’s most desired currency, and therefore gave America
tremendous economic power as a creditor and producer.