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Nákupní košík je prázdný
Nákupní košík je prázdný
The gold standard was the commitment of the participating countries to fix their domestic currencies against a certain amount of gold. National currencies and other forms of money (bank deposits and banknotes) were freely exchanged for gold for a fixed amount.
The gold standard was not created, but rather it came from the general acceptance of gold as a usable currency. The fact that gold has lost the least value over time has played a significant role in the adoption of the gold standard.
The first gold coins were accepted as means of payment in Asia Minor and China around 600 B.C. During the Middle Ages, under the Byzantine Empire, gold coins commonly called “bezants” circulated in Europe. As the influence of the Byzantine Empire declined, the silver standard prevailed in Europe.
By the end of the 18th century, Western Europe suffered a profound lack of silver as a result of wars and trade with China.
The path to adopting the so-called classic gold standard began in England in 1717, when the price of the gold “guinea” coin was set at 21 silver “shilling” coins, based on a recommendation report made by Isaac Newton. This low ratio caused people to exchange gold for silver en masse. After that year, bimetallism (or the fading silver standard) was replaced by the gold standard in Britain.
Gradually, the possession of silver as legal means of payment was limited in England until it was completely abandoned. At the end of the 18th and during the early 19th centuries, the Bank of England took over the role of banknote issuer. During the crisis of the Napoleonic Wars, the bank was unable to cover all the banknotes issued with gold, and so this standard almost ceased to exist. In 1821, the so-called pure gold standard was finally re-adopted by law, and in 1844 Bank of England banknotes were the only legal means of tender.
In the US, this gold standard was adopted in 1834 with a ratio of 20.67 US dollars per ounce (until 1933), but bimetallism remained there until 1876. Officially, the US gold standard was adopted in 1900.
Upon transition to the gold standard, many European countries changed the name of their currencies to “crowns”, which distinguished theses currencies from their original link to silver (Denmark, Sweden and Austria-Hungary).
During World War I, in order for the warring powers to cover their rising spending they increased banknote emissions, thereby leading to the abandonment of gold. After the war ended, most countries tried to go back to the gold standard by adopting the so-called gold bullion standard, despite rising gold prices and inflation.
Germany, France as well as the Czechoslovak Republic and other countries adopted the gold bullion standard during 1924–1926. The only country that did not abandon the gold standard at that time was the United States.
A short period of economic growth followed, which was overturned by the economic crisis in the early 1930s. Many countries have refrained from reverting back to gold, either because of economic unsustainability or the difficulties of foreign trade.
The worst hit country – the US – abandoned the gold standard in 1933 while devaluing the currency to 35 US dollars per troy ounce (this price lasted until 1971). The rest of the Western world left the standard in 1936.
In 1944, the world’s powers met at the Bretton Woods Conference, where the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) were established. The conference aimed to create a stable monetary system that would have all the benefits of the gold standard and none of the risks. Another goal was to help Europe, ravaged by the war. The conference resulted in the gold backing of dollar and the pegging of other currencies to the dollar at fixed rates. An ounce of gold was fixed at 35 US dollars.
However, due to increased spending, such as during the Vietnam War, US governments have been gradually producing more paper money than this exchange rate could accommodate. Other countries, especially France, responded to this by asking for a dollar-to-metal exchange, which meant that the US began losing its currency gold. Finally, President Nixon decided to cut the dollar “loose from its golden anchor” in 1971. From that moment on, gold lost almost all of its former use as a medium of exchange, with the last states abandoning gold in 1978.
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