History Of The Gold Standard
The gold standard refers to the policy adopted by countries wherein the currency was supported by a reserve supply of gold. The first country to begin using the gold standard was the UK and then the US followed suit along with several other Western economies. However, this system was not perfect and the weaknesses were revealed during recession and war. Due to increase in government spending and subsequent rise in deficits, the US turned away from the gold standard in the year 1971, and with this most other countries also stopped using this standard. |
If you check out the history of gold standard, you will see that the first country to begin using it was the UK. This occurred way back in 1717, and was based on the work done by Sir Isaac Newton who was trying to convert the country from silver standard. Then in the year 1833, the Bank of England began printing paper money and this was used as the currency of the country instead of coins made from silver. However, in 1844, the paper money was then linked to the gold standard. (See Reference 1)
It was not easy to stick to the gold standard. During recession and both World Wards, it became hard for the UK to adhere to the standard. However, it was because the US also adhered to the gold standard, it kept the standard viable. (See Reference 1)
The US took to the gold standard in the year 1834. When the US experienced the gold rush during the latter part of the 1800s, it helped the US to fill its coffers with gold and this allowed the gold standard to be successful for the country. In the year 1900, the Gold Act was passed and the standard was made into a law. However, the US stayed away from the gold standard right after the First World War ended as the world was engulfed in recession. Then in the year 1933, it was President Franklin Roosevelt who re-set the gold standard. (See Reference 1)
As economies of the countries, who were not using the gold standard, grew, it put a strain on economies of those countries that were using the standard. Many financial experts blame the gold standard for the recession that occurred during the early part of the 20th century as well as the Great Depression. Due to rising deficits, the US government had to use its gold reserves to pay. Also, with rising government spending on different programs and Vietnam War, President Nixon finally decided to move away from the gold standard in the year 1971. This led to all other countries moving away from the standard. (See Reference 1)
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History Of The Gold Standard
Many people make it a profession to invest in precious metals such as gold and silver. In fact, these are the most traded bullion in the market. It is also possible that some people inherit bullion from their parents or relatives, and they may want to sell in order to get hard cash. One of the most commonly asked question is how do I sell gold coins. If you are also wondering about this question, then read on.