This provision seemed weak on paper. However, it collapsed under pressure from real-world markets. The U.S. trade deficit continued to rise, and as a result, the value of gold rose to $210 per ounce in 1972. As a result, all members of the G-10 abandoned the Smithsonian agreement. This ended with the forex markets closing for a while! All of these new relationships went into effect within a week of the Smithsonian agreement. The Canadian dollar continued to push. The agreed exchange rate relationships are summarized in Table 17. At the time it was negotiated, some observers viewed the Smithsonian agreement as a milestone in international monetary diplomacy. However, the reaction of many monetary experts was cautious: they feared that the partial guarantee of the value system without any guarantee would offer a lasting solution. The agreed exchange rates should last less than 14 months. Nevertheless, the agreement was important because, for the first time in international monetary history, it negotiated the exchange rates of the major industrialized countries at a conference table. As far as the procedure was concerned, Mr Schweitzer considered the unification of the major industrialised countries to be an essential first step.
He is convinced that the finance ministers and central bank governors of the Group of Ten countries should not wait for their meeting scheduled in Washington on 26 September, the Sunday before the opening of the annual meeting of the Fund`s Board of Governors. It would be too late, he thought, for the Fund to take appropriate action through the governors of all Member States. That is why he would insist that the group of ten meet earlier. The question of when the Group of Ten would meet was not a matter for the Fund to decide, but Mr. Schweitzer informed the Executive Director that he had informed Canada`s Minister of Finance, Mr. Benson, then Chairman of the Group of Ten, strongly believed in the need for Mr. Benson to convene such a meeting. The Smithsonian Agreement was a revision of the Bretton Woods Agreement of 1944, which provided for changes to fixed exchange rates. This agreement has also contributed to the creation of forex markets. As a result of the Smithsonian agreement, the U.S. dollar was partially devalued, since it was tied to the currencies of the countries that signed the agreement. .