Pros And Cons Of The Gold Standard - 1332 Words

THE GOLD STANDARD IN THE INTERNATIONAL ECONOMIC SYSTEM During the late nineteenth century, the global economy was characterized by use of a gold standard. The gold standard helped to unite the economies of the world’s nations, thereby leading to increased prosperity and stability. The success of the gold standard was related to the particular circumstances of the time. As conditions changed, the gold standard became less viable and was eventually dropped. This paper will describe the pros and cons of the gold standard as it existed in the nineteenth century. In this way, an explanation will be provided for why the gold standard rose to prominence and then declined. The gold standard is a monetary system in which the value of a nation’s†¦show more content†¦One of the main advantages of the gold standard is that it created an international monetary system that helped to unite the world’s national economies. This resulted in smoother trade between nations, which led to greater prosperity and innovation. In the words of one economics historian, â€Å"gold, it is conventionally argued, commanded an unstoppable advantage and momentum because it promised greater price and exchange stability than silver, closer integration with the world’s financial centres, and, consequently, cheaper capital from abroad† (Balachandran 316). According to another writer on the subject, the single monetary system, based on the gold standard, resulted in the global economy being relatively stable during the late nineteenth century and early twentieth century. Thus, â€Å"the era from the beginning of Queen Victoria’s reign unt il the outbreak of World War I was one of the most stable periods in monetary history, and it produced the greatest general prosperity known in history to that time† (Weatherford 159). Another benefit of the gold standard is that it enabled nations to turn to the use of paper currency, which was backed by gold. The use of currency increased the convenience in making financial transactions. This, in turn, led to a dramatic increase in the use of money. Therefore, â€Å"paper expanded the role of money to new markets, new applications, and new clients† (Weatherford 141). In addition, the use of paper currencyShow MoreRelatedEconomics Of The Gold Standard Debate963 Words   |  4 PagesEconomics of Globalization September 18, 2015 Sydnee Lyman The Gold Standard Debate Beginning in 1870, each nation converted their national currencies to their relative worth in gold. This was called the Gold Standard and it has brought up many arguments between politicians, businessmen, and organizations with prominent economists on whether or not to return to it. 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