In this paper, we show that the monetary rule followed by a number of key
countries, especially England and to a lesser extent the U. S., before 1914
represented a commitment technology preventing the monetary authorities from
changing planned future policy. The experiences of these maj or countries suggest
that the gold standard was intended as a contingent rule. By that, we mean, that
the authorities could temporarily abandon the fixed price of gold during a
wartime emergency on the understanding that convertibility at the original price
of gold would be restored when the emergency passed. The experiences of other
countries, however, suggest that the gold standard rule was often viewed more
as a desirable goal than an operational constraint.
*Published:
Explorations in Economic History, vol. 32, pp. 423-464, (October 1995).
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