Off and On and Off Again: The Distressful Changes of 1914–1931

Abstract

With the outbreak of war in 1914 the gold-standard system quickly collapsed because one country after another took independent, unco-ordinated actions which in combination had the effect of dismantling that system: ending the gold-convertibility of paper currency; controlling and managing the international movement of gold, either formally or in other ways; breaking links between gold reserves and currency-circulations; drawing gold coin into official reserve holdings and replacing it by paper currency (for a detailed account of these and latter developments, see [67]; see also [30]). The assortment of such steps, and the dates of their introduction, naturally varied as between countries; furthermore, it was common to retain the pre-war theoretical ‘gold contents’ for the various national monies. Freed from the constraining limits of the gold points, and responding to a much-altered pattern of international payments, exchange rates moved away from their pre-war, gold-determined, par values, although during the war most Allied and neutral exchange rates remained quite close to their pre-war dollar parities.