Abstract
The subject of Professor Rueff's latest book (his sixteenth) is the instability of the gold-exchange standard, a corrupt form of the gold standard. It has collapsed twice in this century. The first phase started in the 1920s, when the buildup of sterling reserves created a pseudo gold standard in an unstable form, based mainly on sterling. Its first phase ended in 1931, when Britain suspended gold payments. But it was revived after the Second World War, based mainly on dollars. And it suffered the same fate as the one based on sterling when, in 1971, the United States formally suspended gold convertibility. The gold-exchange standard has thus twice been shown to be unstable, and, for this reason, Rueff believes, it should not be revived. Instead, it should be replaced by a reformed gold standard in which the foreign assets of central banks are confined to gold. The dollar and other major currencies should be made internally and externally convertible into gold. Because this is impossible at the present official price of gold, its dollar price should be raised. To prevent revival of a third phase of the gold-exchange standard, a central bank agreement must be concluded to reinstate the gold-standard adjustment mechanism and renounce further foreign-exchange accumulations by central banks. Only then will the inequitable practice of involuntary financing of United Kingdom or American balance-of-payments deficits be brought to an end. Only then will the instability of the international monetary system be corrected and the era of monetary crises ended. Rueff is known to economists not only as a distinguished authority on the gold standard and a critic of the present monetary system, but also as a leading critic of the central thesis of Keynes's General Theory. He has played an active role in international monetary affairs, starting with his participation in the Poincare-Rist reform of 1926-28 in which he had the responsibility for determining the exchange rate for the franc. (His criterion was a major innovation: that rate that would leave money wages unaltered.) In 1958 he had a more comprehensive role in setting France on the track of sound finance, this time for President de Gaulle. Since then he has continued to be an active participant in academic and official conferences studying reform of the international monetary system
Published Version
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