The Gold Standard

Abstract

Compared with that of other metals the production of gold is insignificant, and recent events which have demonstrated the defects in the gold standard and induced many nations to come off the gold standard have led many people to wonder whether gold is a suitable metal to be used as a standard at all. The diagrams and models prepared by Sir Robert Hadfield enable us to visualise more clearly the extent to which gold can now be merely a basis for currency. On the other hand, while the output of gold according to expert opinion shows a marked tendency to decrease, the increasing volume of the world's trade tends to augment the demand for gold as a basis for currency under our old systems of currency. In addition, the concentration of 75 per cent of the gold stocks of the world in the United States of America and France, where it is not used as the basis of so much money as in the countries from which it was withdrawn, has tended to accentuate the shortage. Without advocating a definite change or the adoption of bimetallism, Sir Robert suggested that the currency situation merited expert investigation and consideration by an authoritative international organisation such as the League of Nations. Certain reforms have in fact already been suggested by the League of Nations' Gold Delegation, and are outlined in a recent memorandum on “The Functioning of the Gold Standard”, submitted by Dr. Feliks Mlynarski, which equally with Sir Robert Hadfield's speech will repay study not only by economists but also by those who are endeavouring to arrive at an intelligent view of the world's financial and economic situation.