Switzerland and Holland

Abstract

In the preceding chapters we have purposely concentrated our attention on the operation of the gold flow mechanism in a more or less ‘normal’ period. In keeping with this aim the turbulent events of the year 1931 have been given only scant consideration. Yet it is in that year that the mechanism’s failure has been most flagrantly evident. Gold moved from country to country with unprecedented rapidity and in heretofore undreamt of quantities. And so completely ineffective was the redistributive machinery that within a few short months further outflows had to be forcibly prohibited. Over half the world currency convertibility was suspended and with this step the short-lived reign of the international measure of value came to an end.

Especially, however, should it be noted that all too often correctives of the most sensitive kinds.... if pressed too far are almost sure to ‘kick back’.... While smooth enough in their operation so long as skies are clear at the approach of danger they stop with a jerk and fly quickly into ‘reverse’. James Harvey Rogers