How the Classical Gold Standard Did Not Work

Research over the last thirty years has done a good deal to destroy many of the myths surrounding the classical gold standard. For instance, it is clear from the historical evidence included in the previous chapter that the standard was by no means a truly global monetary system. A number of large, or fairly large, countries never tied their currencies to gold; and some of those that adopted the practice did not hesitate to abandon it when the cost of observing ‘the rules’ became too great. This tended to confine membership of ‘The Club’ to the most advanced economies of the time. Moreover, although a number of countries made great strides in industrialising their economies, the rates of growth achieved between 1880 and 1914 were neither as high nor as stable as after the Second World War (Maddison 1982, Boltho 1989).