As a result flexibility of governments was limited.A loss of gold (or convertible currencies) often forced governments to raise interest rates. Apart from the gold standard, economic policy barely existed.
As a result flexibility of governments was limited.A loss of gold (or convertible currencies) often forced governments to raise interest rates. Apart from the gold standard, economic policy barely existed.Tags: Le Conseil Constitutionnel DissertationHomework JobsHomework CalendarsLiterary Research Paper ExampleSatire Essay On WelfareBook Essay Face Feature From
The arrangement was unstable because any withdrawal of short-term loans would force the borrowing countries to retrench, which could cripple world trade.
There was no tradition (as there is today) of continuous, modest inflation.
Most countries went off the gold standard during World War I, and restoring it was a major postwar aim. Other countries backed their paper money not with gold, but with other currencies—mainly U. dollars and British pounds—that were convertible into gold.
"People will work harder, live a more moral life," Andrew Mellon, Treasury secretary under President Herbert Hoover, said after the depression started.
"Enterprising people will pick up the wrecks from less competent people," he claimed. Two-fifths of world trade was in farm products, another fifth in other raw materials. Wartime inflation, when the gold standard had been suspended, raised prices and inspired fears that gold stocks were inadequate to provide backing for enlarged money supplies at the new, higher price level.