1925 Gold Standard

• Monetary system where a country's currency is directly linked to gold reserves . A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price
• British pre-war economy was important for British traders and for financiers that pound sterling was seen stable.
• During war, international payments and trade was disrupted. Britain and Germany was forced off gold -> inflation in Italy , Britain and France
• Gold coins replaced by paper money
• Churchill rejoined 6 November 1924
• Parliamentary committee appointed by Labour in 1924 reported every effort should be made to return to gold
• Before 1924 pound was worth $3.80 . April 1925 -$4.87
• Churchill's decision was greeted by the Bank of England and his party
• Economists likes John Maynard Keynes warned that such a measure could damage British export industries like coal