CH11 Q 1 - The gold standard collapsed for several reasons...

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The gold standard collapsed for several reasons. First, when the practice was in full use there were very few countries actively participating in international trade. It would take several decades after the collapse of the gold standard for the globalization revolution to take place. However, at the time, due to the high cost of transportation which was mainly by ship, since airplanes were relatively new the cost of transporting large quantities of gold abroad to exchange currencies was extremely expensive. Furthermore, after the end of the First World War when people went back to the gold standard they did not take into account inflation. Great Britain for example greatly mismanaged the value of their currency and thus many countries were loosing faith in Britain’s ability to manage their currency. In turn, many countries demanded their British pounds to be converted to gold. However, the demand was so great that Britain realized they could not meet these demands without greatly depleting their own gold reserves. Therefore, they left the gold standard; the United States soon followed but for different
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This note was uploaded on 09/25/2011 for the course ENG 310 taught by Professor Staff during the Spring '11 term at S.F. State.

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