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In 1944, during WW2, the 44 Allied nations met in Bretton Woods, NH for the United Nations Monetary and Financial Conference. It was there that they established rules and institutions (i.e., International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD) which later became the World Bank*) to govern international monetary relations in the interests of global financial stability. The main features of the Bretton_Woods_system were: 1. to adopt an international monetary system of fixed exchange rates based on the U.S. dollar to stabilize the global financial system; and 2. to use the IMF to bridge temporary imbalances of payments in times of crisis.
The Bretton_Woods_system occurred in the aftermath of the Great Depression of the 1930s where foreign exchange controls and "beggar thy neighbor" policies (e.g., high tariffs and currency devaluations to increase the competitiveness of a country's export products to reduce balance of payments deficits) undermined the international payments system. Trade in the 1930s was mostly restricted to currency blocs (i.e., groups of nations that use an equivalent currency, such as the "Pound Sterling Bloc" of the British Empire). These blocs hindered the international flow of capital and foreign investment opportunities. To avoid a recurrence of the closed markets and economic warfare that characterized the 1930s, the agreements of Bretton_Woods favored a liberal system that decreased barriers to trade and capital flows while advocating a more open world economy.
The Bretton_Woods_system resulted in a triangular trade system: the U.S. used the convertible financial system to trade at a profit with developing countries, expanding industry and acquiring raw materials. The surplus went to Europe (in the form of efforts like the Marshall Plan) to rebuild their post-war economies with the U.S. as the main market for their products. This then allowed other industrialized nations to purchase products from developing countries which reinforced the U.S. as the guarantor of stability. When this triangle became destabilized, the Bretton_Woods_system fell into crisis which helped lead to its breakdown. 
In 1968, during the U.S. balance of payments crisis (1958-1968), the attempt to maintain the peg (i.e., $35/ounce of gold) collapsed. The U.S. was running increasing balance of trade deficits which were good in creating liquidity in the international monetary system but problematic in causing a loss of confidence in the dollar. After the attempt to maintain the peg collapsed, a new policy program was put into place to convert Bretton_Woods to a system with a floating enforcement mechanism (i.e., a floating exchange rate where a currency's value was allowed to fluctuate according to the foreign exchange market).
*In essence, the IMF stabilizes the global financial structure and the World Bank encourages economic development.
 Richard Peet, Unholy Trinity: The IMF, World Bank and WTO (2003)
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