Golden Oldie III

"In September 1931 England found it impossible to maintain her gold reserves and was forced off the gold standard. Since then, every other gold-standard nation has either been forced off gold or has abandoned it voluntarily. Those countries which bowed first to this pressure were also the first to recover from the depression. France was among the last to abandon gold; and she is still suffering from her mistake in waiting so long.

The depression experience of all countries under the gold standard has shown that it is scarcely worthy of being called a “standard” at all. It has shown that the so-called “stability” of gold and of foreign exchange destroyed the stability of the buying power of money and thereby the stability of economic conditions generally. In fact, the effort to retain gold as a “standard” has had such disastrous results all over the world that, for the time being, international trade has been deprived of some of the useful services which gold might sill render it...

After the experience of the past decade, it is improbable that many countries will want to give their currencies arbitrary gold values at the cost of domestic deflation and depression...

Some countries, especially the Scandinavian and others included in the so-called “Sterling Bloc”, have gone further than the United States in formulating and in carrying out these new monetary policies.

On abandoning the gold standard in 1931, the Scandinavian countries took steps to maintain for the consumer a constant buying power for their respective currencies. Finland’s central bank made a declaration to this effect. The Riksbank of Sweden has done the same, and its action was officially confirmed by the Swedish Government. As a result, since then people of those fortunate lands have never lost confidence in their money. The buying power of their monetary units have been maintained constant within a few per cent since 1931. At the same time, these countries have made conscious use of monetary policy as an essential part of their efforts to promote domestic prosperity. They have been so successful as to have practically eliminated unemployment, to have raised their production figures to new peaks, and to have improved steadily the scale of living of their people." --From A Program for Monetary Reform, July 1939