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Hello, the century between 1870

0:26

and 1970 was the age

0:28

of gold standard. where occurrences around

0:30

the world where in some way tied to

0:32

the price of gold Britain. ,

0:35

it goes down there long before with sovereigns you can

0:37

use either to buy a pounds worth of goods

0:39

or melt down into pounds worth of gold

0:41

it was. Sound money when other

0:43

countries rush to the same system and confidence

0:46

in the currency grew, world trade

0:48

took off and then world was set trade

0:50

bucket was believed that And it was essential

0:52

to rescue it, wouldn't be there discuss

0:55

it goes down under dot Catherines shrink professor

0:57

of economic and social history at the University

0:59

of. oxford matthias morris

1:01

senior lecturer economic history at the university

1:03

of york and helen poll lecturer

1:05

in economics and economic history at the university

1:07

of southampton

1:09

And handful, when did go become valuable

1:11

in trade in Europe?

1:13

Oh. Don't have been viewed as valuable

1:16

since time immemorial really because

1:18

people found that they could melt down

1:21

he doesn't town this it's,

1:23

not something you can easily you can't

1:25

create. Go to can have fake

1:28

goal does it work so anything

1:30

that was valuable that be used as store

1:32

of value? that cubbies

1:34

is that medium of exchange would be helpful

1:37

in trades

1:38

However there are other things as well that could

1:40

also be used like say silver

1:43

and. gold as many one of a number of different

1:46

metals you could Hey and.

1:49

coins i fall Circulator:

1:51

A form of money you stole them

1:53

and, as you said, you can melt them down this

1:55

well if you wanted to put them back into

1:58

the base metal into the metal of the. Really,

2:02

it's about other people thinking

2:04

that it's valuable lessons you

2:06

to understanding the this is an import, it's

2:09

still have your wealth if you could actually

2:11

then sell it on to someone else in some

2:13

form in the future. His will you use as

2:15

was a?

2:15

Sort of almost amateur way

2:18

of going about it as much to do with Barter

2:20

as with goal itself not,

2:22

entirely that was very sums of money

2:25

quite sophisticated Money's like,

2:28

money so you didn't necessarily have

2:30

people telling international trading for

2:32

shipping,. what's a

2:38

trace

2:39

You. Didn't know the other person,

2:41

the idea is you can have anonymous trade

2:44

the you don't need after which is

2:46

requiring you to have something

2:49

other person wants money

2:51

makes things easier. If you have something

2:53

that you know that much wants and gold

2:55

coins can. be that saying

2:58

however they're not perfect

3:00

because with all commodity money's

3:03

there are issues about things like

3:08

Oh, okay? Any

3:15

money? We

3:17

shouldn't think of it in terms of there being just one

3:19

type of money there are various things that

3:22

are used to sometimes extracts

3:25

but there isn't this very formal gold

3:27

standard system until economies

3:30

become much more developed later on was.

3:33

britain doing something with gold and is

3:35

cozy before on the notions A

3:37

lot of Britain's trading

3:40

was actually a, ritzy with things

3:42

like silver coins but eventually

3:45

silver becomes very interesting

3:47

to the Chinese economy

3:50

the Chinese economy some biggest in

3:52

the world. and the

3:54

chinese don't really want european manufacturers

3:57

Have a lot of silver. Hum

3:59

and. From? Anish. America, South

4:02

America through Europe and then out

4:04

to China and within

4:06

the British context

4:09

or, really the English context as is concerned

4:11

growing up that there isn't really enough.

4:13

Silver staying around

4:16

to be useful and Isaac

4:18

Newton his that the master of the meant

4:21

he decides to do something

4:23

about this, essentially he sets certain

4:25

exchange between gold and. Silver and

4:28

it becomes clear to lot of people

4:30

that they get more for their money if

4:32

they by foreign imports using

4:34

silver and they keep the cold to do

4:36

with. That domestic transactions

4:39

as mechanism wasn't developed

4:41

like that, aren't facto

4:44

becomes goals is

4:46

therefore the coin it's to

4:49

use within the singly slater british

4:51

system mahnaz so gold

4:54

standard that means that you

4:56

tie

4:57

The value of your currency to gold

5:00

now, that is obviously the case When

5:03

you actually have gold coins in circulation

5:06

bites? That was not

5:08

the large amount of coins raimi

5:11

the. key thing here is especially

5:13

once yeah banknotes let

5:15

you make any bank note convertible

5:18

into gold so you tie

5:20

your currency to go

5:23

you can always exchanged into gold

5:26

That a domestic thing but,

5:28

if several countries connect

5:31

their currencies to gold. they

5:33

have six exchange rates

5:35

to each other through gold

5:38

and that is the international dictation

5:40

of the gold standard I actually

5:42

very much uglier Melvin with what you

5:44

said we used to have only bought

5:46

a trait I, think

5:48

when you have gold standard that is essentially

5:50

bother traits because you shoot

5:53

to change something else

5:55

again schools. and

5:58

what this really shows This

6:00

is the. This cost

6:03

between. the parties

6:06

and the only way to overcome that was

6:08

essentially to do "The

6:10

bought trade and I bought a trade really

6:13

in that sense it lasted until

6:15

the early nineteen seventies

6:18

and I think we see this very much. The

6:20

European languages so take

6:23

the friends they use of your for

6:25

money. And for silver

6:28

the German say the words they're worth

6:30

four gold and money are almost

6:32

interchangeable so. there

6:35

is a very strong sense that real

6:37

money is only money under pins

6:40

Buy you precious commodity,

6:43

what difference did the go rushes

6:45

of the nineteenth century to create America

6:47

and Australia makes and why? The

6:50

gold rushes of the mid nineteenth

6:52

century we're really crucial

6:55

in transforming the gold standard

6:57

and in making the gold standard universal

7:00

system so. Until.

7:03

Eighteen fifty four there really was only

7:05

one country on gold,

7:07

and then was England's now if one

7:09

country runs the systems and

7:11

you don't need an awful lot of gold

7:13

to. Actually to run it to have

7:15

enough gold in circulation but,

7:18

once you start expanding that,

7:21

to European countries and

7:23

then two countries worldwide, you've really

7:25

need really lot of. goals and

7:28

That is the function

7:30

of the California gold

7:33

rush in eighteen forty eight and

7:35

of Australia few years later. So

7:38

basically, and well, monetary

7:40

system was it reads? In

7:44

lot of colds and sense

7:46

forms over the next.

7:48

Two decades so. basically

7:50

what happens is that these new worlds

7:53

go discovery sites they

7:56

sent their goals to the

7:58

two main means of your To.

8:00

London and to Paris nice to

8:02

country to transform them into gold coins

8:05

and, the French system see plays particularly

8:08

important role in the French case

8:10

you could means. Both silver

8:13

and gold so you had so

8:15

cold or metallic system and

8:17

in the Aegean fifties and sixties,

8:19

the French mint'a choose out

8:21

an enormous amount of gold coin.

8:25

and for the first time ever

8:28

Then. Late eighteen Sixties early

8:30

age and six, these people start

8:32

contemplating the most to

8:34

I know a gold standard because I realized

8:36

that are simply enough gold we

8:38

could think of doing. That would with

8:41

the hurdles to international trade when

8:43

exam to finance what is a gold standard

8:45

deaths than to Seoul were overcome. I.

8:47

Think we should try to see

8:50

the emergence of the gold standard

8:52

as, an evolution of

8:54

the international monetary system,

8:57

before eighteen sixties we

8:59

really lacked the gold

9:02

at least. Let the golds if we

9:04

wanted to transit to

9:06

gold for many countries

9:08

and then we have these eighteen fifties and sixties,

9:11

which are really are transitional

9:13

period in which for two.

9:15

decades we have in operation

9:18

three systems we have gold standard

9:20

in, England's we have england's

9:22

by, metallic system in

9:25

France and some other countries

9:27

like it's in the. And, Switzerland and Belgium

9:30

and the rest of the world. is basically

9:32

on silva and then this

9:34

three ways system which We're

9:37

halfway okay in the eighteen

9:39

fifties and sixties gives way to

9:42

gold standard for my point of view, it really

9:44

is and evolution. There's

9:46

more gradual change.

9:49

Catherine Television: Why did so

9:51

many countries time their currencies to silver

9:53

around them go before they are to zoom does?

9:56

I refuse to pay for Matthias, that was the

9:58

an important goldest. The race around

10:00

the world of in California but also

10:03

in the West Coast of Canada and Australia

10:05

and, this altered the supply of gold

10:08

fellas who to this type of silver and affect

10:10

the price of gold in terms of silver fall

10:13

in those years absurdity fifty feet

10:15

he succeeds the price of silver the actually rising

10:17

the The goal to gets home. Fundamentally,

10:20

they countries, which is so that in

10:22

order to earn a to move to

10:24

gold standard, you have to have enough gold

10:26

reserves in order to make that. Link.

10:29

To your ability to defend fixed

10:31

price of your currency in terms of gold

10:34

and in order to do that you need to have gold reserves

10:37

for some countries that don't. Have large gold reserves

10:40

remain on the sell her standard and stayed

10:42

indeed sam all the way through into the twentieth century

10:44

like that China and Japan some

10:46

poor countries to discount. So far indeed,

10:48

after the it can seventies, but until

10:50

the our sort of late eighteen

10:53

sixties, it's not clear that there's gonna

10:55

be move to the gold standard

10:58

and. They're still quite lot of room for

11:00

maneuver in the by metallic or silver standard.

11:03

Receding at the time go through that they had

11:05

to get this so they had the at one currency

11:07

for all the big trade is

11:09

of the world to make something work

11:11

better so, that it real pricing.

11:14

will be two in thousand miles

11:17

was determined when the sniper thing because

11:19

it was the go sanders

11:21

Then. "An of having a stable price

11:23

for your currency and sort of predictable value

11:25

for your currency over time was really

11:27

important for trade I think and

11:29

that's the benefit of" Having a pink exchange

11:32

rate to something out to some kind

11:34

of metal or some kind of great value and

11:36

credible him, that that's

11:39

believe in. It so that gives them confidence

11:41

to trade over long distance over long time,

11:44

the issues with having multiple

11:47

muscles of, for example, by nationalism:

11:49

why do you define your current? See

11:51

in terms of the value of silver and gold,

11:53

simultaneously has to do

11:55

with the changes in the market

11:58

The price of gold. There's

12:00

silver. I'm and it speaks

12:02

to really cut fundamental so

12:04

decent are for the issues

12:06

around the gold standard or any metallic standard

12:09

and that is that there's market price for this commodity

12:12

gold or silver and. then there's an

12:14

official place at the central bank or the government

12:16

is setting and so the it's

12:18

really important that the detriment

12:21

of the central bank can maintain

12:23

the official place at the scene The cases,

12:25

the marketplace. The new changes

12:27

in the mouth. Pay, for example, if.

12:29

Then. "Marketplace is

12:32

or the official pulses cheaper and

12:34

the marketplace and you'll get the central bank

12:36

and buy some", she told by some cheap

12:38

silver I'm and then make profit.

12:40

By selling it on the private market and,

12:42

sell gold will flow out of the central

12:44

bank or of out of the Treasury comfort.

12:47

food it's this kind of tension

12:49

between market price and market surprise

12:52

that's really tricky and it becomes especially

12:54

tricky when you've got to vessel That

12:56

are changing in relation to. Header and,

12:59

it's how

12:59

You can kind of sustain this tense and depends

13:01

on how much metallic reserves

13:04

you have, the government or the central bank has

13:06

at it's disposal.

13:07

Then. Girl and then poof, why

13:09

do so many countries adopt a ghost hundred

13:11

and the ages of his would pass, did

13:14

the city of London play analysts I think

13:16

that comes a? Point where really,

13:19

the big player the big economic

13:21

player is prison and you start

13:23

to see country was well

13:25

simply because the industrial revolution and then

13:27

empire see. You have this, what

13:29

we talking about his lumps of

13:31

metal, we're not really connecting

13:34

them to what's going on in the economy

13:36

itself is starting to see

13:39

really with all the. Reasons behind British

13:41

economic growth and power, that

13:44

the gold standard just happens

13:46

to be The one that Britain

13:48

is on and that

13:51

gold is held in London

13:53

in launch amounts it's still that's

13:55

the case today and Bank of England

13:58

particularly and,.

14:00

What a lot of countries do,

14:02

he's the.

14:04

Hughes, the gold standard because

14:06

they want to be a signal that they

14:08

all developed country that

14:11

they are copying the British lead

14:13

and that it's almost like an exclusive club,

14:16

but again as cousin was saying

14:18

the Asian countries on. In

14:20

that kinds of all bit

14:23

they're not so interested in joining

14:25

the Gold Standard but other countries

14:28

start. to think that dates and show

14:30

that they not simply basket

14:33

case economies the say governments

14:35

can be Held to list

14:38

of, the go

14:39

What that means is, if you're going to

14:41

connect your currency to your

14:43

gold reserves, it limits

14:45

your ability to just print lots of

14:47

money and that's what

14:49

this is about. It's showing that

14:52

you all have a disciplines Policy.

14:55

Every

14:56

time you do

15:03

whatever you

15:05

could go and

15:07

replace your piece of paper

15:09

with old, and that's part of an evolution

15:11

of getting people to trust paper money, which.

15:13

We now take for granted as being

15:16

passed more trustworthy than electronic money

15:18

off of debt because we can all think

15:20

of how money has evolved to out

15:22

our lifetimes and how. Particularly,

15:24

people struggle with that transfer

15:27

of paper money to gold really

15:30

helps The ring about this move

15:32

for the ordinary public to accept or

15:34

its notes. Mars Mars,

15:36

what advance?

15:37

The use appeared to flow from this

15:40

acceptance. of the goes on and by so many

15:42

rich countries so send

15:44

an already touched on the main

15:46

domestic advantage so the gold standard

15:49

stood for sound money

15:51

if it came to stand for

15:54

limited government because the

15:57

government couldn't print money

16:00

Needed to cooperate with

16:02

Parliament which had to say on

16:04

the budget and so on so sort of it's

16:07

sense for constrained government but.

16:10

Then. Main element, or at least the main

16:12

element which we remember today

16:14

from the Gold Standard, are the

16:16

technician advantages which,

16:18

in concert and the main advantages

16:21

here say, are

16:23

related to. The six exchange

16:25

rate stability which the gold standard

16:27

brought with it and, more

16:30

than that, they not only stem

16:32

from coast to sell for that basically

16:34

stems from the

16:36

other. Countries which are on the

16:38

system, starting

16:41

in eight and seventy three not

16:43

only Britain but also France

16:46

and Germany were on the gold standard so

16:48

suddenly this three beats

16:51

European. Economic players

16:53

were all on, goals and

16:56

now look at. the typical trade

16:59

account of any

17:01

european country and some up the trench

17:03

share that such a country will have

17:06

Boy Toys Britain france and Germany

17:08

it will typically account for fifty to eighty

17:11

percent of their trades so.

17:14

trade benefit it but likewise

17:16

sink of capital imports

17:19

poorer countries wanted to import

17:21

capital from the richer

17:24

countries and they happen

17:26

to be on the gold standard so

17:28

we see kind offer virtuous

17:30

circle emerging in

17:32

which one seeing brings

17:34

the next and the gold standard

17:37

really comes to stand for that it's

17:39

sort of epitomizes as

17:41

system it is the crucial links

17:44

in this virtuous circle The

17:47

girl, son, and helps.

17:48

It and for it helps ago, Sanders, yes,

17:50

absolutely, the event is also why we like

17:52

looking back so much, especially

17:55

on that gold standard between

17:57

eight and seventy three and World War One.

18:00

'Cause be connected with a period

18:02

in which lot of economically,

18:05

beneficial forces reinforce

18:08

each other countries noticing how the

18:10

bill son and work in practice

18:13

Melvin Nice as the really tricky question and

18:16

database are still going on said

18:18

okay the a few options for. slow

18:20

to define that he met at gold

18:23

standard and you have to be fixing

18:25

your national currency in terms

18:27

of particular weight of gold so you're fixing

18:30

or the value of

18:31

The current Fitna fissile price of.

18:33

gold and leave us alone

18:35

Flow in and out of your country freely, and

18:37

in some way, you can take that your money

18:40

supply should be proportional to your

18:42

gold reserves. That's if you keep those three

18:44

elements in your mind. So

18:46

one of the early ways that people thought the gold

18:48

standard worked is that at

18:50

country.

18:55

It knows it. Then. Nightclub would be sort

18:57

of an outflow of your money and outflow

18:59

of gold, then your money supply will be

19:01

contracting because to cook the gold

19:03

is flowing out of your country. For your prices

19:06

will be constrained and interest rates

19:08

would go up and if would make your

19:10

experts more competitive and it would draw

19:12

capital into your country and felt kind

19:14

of. "Fould it's you out again, so they were

19:16

sort of an automatic mechanism people

19:18

thought in fact, however, their thought a lot

19:20

huge flows of gold and all this kind

19:23

of" Adjustment would take time which we don't actually

19:25

see happening during the heyday of the gold

19:27

standard I'm in eating seventies and eighteen

19:29

eighties so, people third think well

19:32

needed a. Whole system's kind of managed

19:34

by central bankers. and

19:37

when the sense that there was going to be

19:39

at full of gold they increase

19:41

the interest rates and rates precautionary

19:43

way and that and the golden actually flow

19:46

but the it's just that still happens and

19:48

it's of colds sort of at central bankers

19:50

were somehow following rules of the game

19:52

particularity as game at the bank of england's

19:55

and debunked to from

19:56

And we do see that there is cooperation

19:59

among Central Bank.

20:00

Out. And or it and the bearings crisis, for example,

20:02

the Bank of England borrowed gold

20:04

from a bunch of friends to help it out during

20:06

that financial crisis I'm third

20:09

kind. Of aspect which I find a little

20:11

bit more convincing is that the,

20:14

role of goals is partly

20:16

nominal rather than practical

20:19

and in practical terms international trade

20:21

with really. Finance through the city of London

20:24

and settled in sterling and pounds

20:26

sterling the British currency, and

20:28

that was so much credibility so much faith

20:31

in the convertibility app

20:36

Trying to the British economy and because

20:38

of the street. The city of London, the

20:40

family was as good as

20:42

tools in this system, is the

20:44

that allows for the greater liquidity it allows

20:46

of that financing of trade and it

20:48

allows her to settle bad to happen

20:51

over the. lately and they do it by the

20:53

don't feel she had smoked a bowl and

20:55

alas point I'd hate to related

20:57

to that much I thought this is the kind

20:59

of the first globalization is the

21:01

time of unprecedented movement of people

21:04

of goods and up"

21:05

Capital. Around the world and,

21:07

these are these trends are all mutually reinforcing

21:10

and may be underpinned by the gold standard

21:12

that made the gold standard functions AH

21:15

as well as it. Did partly because of beef,

21:17

huge flow of real factors

21:19

of people moving to Canada,

21:22

United States, to grow wheat,

21:24

which comes back out into international

21:26

trade in order to do. That they need

21:28

investment their railways and their infrastructure

21:31

which generates flow of capital. and

21:33

they had these things together increase our

21:36

ville well

21:37

The girl and harmful once and it

21:39

doesn't the world's current scissor as

21:42

has been described are developing and

21:45

and, cut more coming into this discovered

21:47

a club link to the price of girl

21:50

what constraints, did not

21:52

put on. governments well

21:54

here we come into the realm of what's called

21:57

realm try lemme only impossible trinity

22:00

And I have three leave us, one is fixed

22:03

exchange rate that's the gold standard one

22:05

is pre capital movements

22:08

some capital can come in and our country.

22:11

The other one is an indoor pet. That macroeconomic

22:13

policy you, have to hands

22:15

you can choose to hold on to

22:18

these leavers but not the third one

22:20

and you could have various combinations they are off.

22:23

if you've decided to stay

22:26

on the gold standard dan

22:28

and you're giving up your Independent

22:30

macro economic policy if you're also

22:32

going to allow capital.

22:33

Just let me know if your contract. So,

22:36

it's supposed that you decided you wanted to

22:38

low interest rates, could help. Your

22:40

mortgage holders, are your small businesses,

22:42

people who are international

22:45

investors. They think while we

22:47

can get more for a money elsewhere

22:49

because it's sell your currency to

22:51

buy foreign currency and get better That

22:54

would really put downward

22:56

pressure on the value of your But

22:59

if you committed yourself to this exchange

23:02

rate, you've got to and

23:05

you can't stop people. You

23:06

put no Capital controls on. You

23:09

only, then have to

23:11

put your interest rates back up again. Really to

23:13

encourage people to come back. Will

23:16

you have to stop selling foreign car?

23:19

you basically all trapped

23:21

into. A situation a part,

23:24

of the reason why gold standard proponents

23:26

like it you'll tying

23:28

the government's hands on forty two.

23:32

which you don't trust governments it's

23:34

fine but you're being put

23:36

into situation where sometimes your

23:41

In order to maintain your place in the system

23:44

and, as

23:44

Opponents one opponent sensual crucifying

23:47

the mankind on across of colds

23:50

flus would happen to the goes dundas

23:52

during the first World War muscle.

23:55

just about forty years into the go son's life

23:57

world war one of interrupted

24:00

The whole financial

24:02

architecture which had grown

24:05

organically since the

24:07

eighties seventies if not earlier

24:10

so, countries were

24:12

in need of money they were in need of gold so

24:14

the first thing all belligerent

24:16

countries did is they stopped scold

24:19

convertibility. so

24:21

one of the ironies of a godsend really is

24:24

that in the one situations

24:26

where people What want

24:28

to use that reassurance

24:30

that money? Then. Equals gold

24:33

the government's central banks say

24:36

no we can no longer uphold

24:38

this premise so they stop

24:41

cause them to divinity in nineteen fourteen

24:44

as, they all need money. And

24:46

they all print money in

24:48

February large amounts, and

24:51

I think one of the reasons why we

24:53

remember the gold standard so

24:55

fondly is because we, it's kind

24:58

of. We also remember what happened when

25:00

the gold standard gave way

25:02

to something else, so all

25:05

these constraints on governments suddenly

25:07

sell, they printed money in

25:09

very large amounts, inflation

25:11

levels at. During World War

25:14

One but also, in the for

25:17

six or even ten years

25:19

after. world war one were

25:21

very high so what

25:23

were see it after the end of

25:25

the so called classic a gold standard

25:28

after the age and seventy two minds and fourteen

25:30

period is the exact opposite

25:33

of abilities and that in our

25:35

recollection reinforces

25:38

the idea of abilities which

25:40

we associate with the gold standard before

25:42

world war one catherine one

25:44

of them as between catherine was so

25:47

keen to revive the go standards

25:49

I just had babies twit Messiah to said,

25:52

"Don't forget there's an outbreak of war I'm

25:54

so trades between countries ceases

25:56

it's a complete economic dislocation

25:58

sickly between Germany" Then. Rest of Europe,

26:00

so this is sort of the suspension after

26:03

the war ends, and it is horrific

26:06

war was unanticipated, heatedly,

26:08

terrible and term sosa loss

26:10

of life and human. misery as was the political

26:12

dislocation of particularly central

26:15

and western Europe so, after the end

26:17

of the war they're trying to cut piece the

26:19

world back together again. and

26:22

one of the things they think about it being normal

26:25

Having gold standard so.

26:27

despite what i've said about how we as

26:29

historians don't debate about how the gold standard

26:31

actually work to earth or whether it

26:33

did how can depressive affect some

26:36

rather than being stabilizing being

26:38

the into war period does not have

26:40

lot of experience with floating exchange rates

26:42

are having are gold standard is the norm

26:44

and indeed so getting back to normal with

26:46

of william poor sense impetus for

26:49

governments with the dust did that

26:51

Innocence the intensive.

26:54

i'm what became the great depression in the thirties

26:56

late twenties thirties

26:58

Well indeed so it's kind of as it's

27:00

a weird going. back to the picked

27:02

up at great they do have an international conferences

27:05

and woman to twenty two detritus or

27:07

In order me written.

27:08

Then. Pure gold standard, but

27:10

it means a lot of the exchange rates

27:12

that are pets are quite ad hoc, some

27:14

of them are too high, some of them are too low

27:17

the. Ppound, for example, goes back to the gold

27:19

standard at the Pre War Parity Ah,

27:21

which was equivalent to four dollars, eighty six,

27:24

nineteen, twenty five and course the whole.

27:26

ballots of economic power between Britain

27:28

and United States has shifted dramatically

27:30

over the course of the war, so this means

27:32

that the that the pound is really overvalued

27:35

by about ten. "Percent we think

27:37

from the did nineteen twenties onward

27:39

cents on the other hand, those in at much

27:42

lower rates would have lot of inflationary pressure

27:44

immediately for the system's" Not

27:46

very well designed, it's on gold

27:48

exchange standards because there

27:51

isn't enough gold to go around to actually

27:53

have pure gold standard, so

27:55

sterling if again playing. This important

27:57

role, but the British economy is no

27:59

longer. The anchor. Everyone's

28:01

life.

28:02

Alan Ball was the mud wasn't

28:04

much debate about this about the go sanders

28:07

was much awareness in the wider public well

28:09

as Casanova sang the pound

28:12

was. And

28:14

while that does that makes my.

28:19

pretty sexy So.

28:21

What the public actually saw was

28:24

an endless insistence that

28:26

something has to be done to make

28:28

export more competitive by dealing

28:30

with the cost of production and that meant largely

28:35

against. captain was saying those oldest human

28:37

misery and now you've been told you

28:39

now have to work longer hours

28:41

for less money and that has that

28:43

knock on effects of course and your local pawn shop

28:46

for the pub all the little businesses

28:48

as dependent on west Wait

28:51

to. them What

28:53

you're saying is a public actually to pay

28:55

think that aspect of the gold

28:57

standard they, weren't necessarily

29:00

given the economic theory people

29:02

like John Maynard Keynes,. debates

29:08

i think for the general public what was

29:10

happening is you're guessing trade

29:12

union officials you're getting the labour party

29:15

people like that discussing the fact

29:17

that it's just not fair or ethical

29:19

to keep forcing down wages and

29:21

that then These the

29:24

focus of debate but,

29:27

as you probably gathered lot of people

29:29

really didn't understand the

29:31

mechanisms behind the gold standard what it's

29:33

quite an unpaid system. and

29:36

you're just being told that it's important and necessary

29:39

However, the goal set of him, he collapsed,

29:42

seen see nineteen, thirty one and nineteen,

29:44

thirty six or so and Britain leaves the Gulf.

29:46

The hundred and nineteen thirty one and,

29:48

it was considered that the gold standard itself

29:50

that kind of richards fixed exchange

29:53

rate regime spreads the great

29:55

depression broader and be that deeper

29:57

than it would otherwise have been that when

29:59

needed Interesting.

30:01

Then. Nineteen twenty eight, in order for

30:03

country to maintain their picked exchange rates

30:06

to gold and to the U.S. dollar, they

30:08

all had to kind of tighten their money markets as well.

30:10

And this again had Papa at a recessionary

30:13

impact on all these countries that were tightening

30:15

their belts at very difficult time

30:17

for when the United States economy started to go.

30:20

Down, it took all the other economies

30:22

with at who are in the gold standard, so

30:25

kind of spread the recession more globally.

30:27

The knows what we do see the nineteen twenties

30:30

is a conflict between

30:32

domestic discussion and the more

30:35

sort of x ten international risks

30:38

and. as catherine sad detect

30:40

it has become sort of a mainstay

30:43

in the economic system and to check to

30:45

be critical of policymakers and the nineteen twenties

30:48

the fact that for that second at the language

30:50

they use they chills video will face

30:52

full they perceived it so they refer

30:55

to Then. Reestablishment

30:57

of the gold standard as

30:59

the research snuff the gold standard so

31:02

they actually give it name

31:04

which is very cross and, you know,

31:06

the resurrection of Christ the research. Articles

31:08

stand and this is how they viewed it they,

31:10

also call stop calling the

31:12

pre nineteen fourteen gold standard the

31:15

classic the gold standard set with something.

31:17

they want to emulate and yes

31:19

of course they were children That.

31:22

Time, but this explains what they did,

31:24

so they did set up his system,

31:26

which was inherently

31:29

a, deflationary and six

31:32

deflationary tendencies,

31:34

event drew much bigger in

31:36

the late nineteen. twenties months and thirties

31:39

and, to escape

31:41

from the that deflationary spiral

31:44

it actually turns out over

31:46

process of five years

31:48

between thirty one thirty six these

31:51

to untie. from

31:54

the gold standard is that why richard

31:56

nixon put paid to those hundred and ninety seventy

31:58

one Why do we?

32:00

Go! Back to making forty five am

32:02

a good think that after the great depression and all

32:04

the things that with I said I've been saying about

32:06

how it has spread and major.

32:08

Great depression, much worse than it might otherwise

32:10

have been on, that the whole

32:13

idea of gold would be abandoned indeed,

32:15

it was making twenty four teams called it the barbarous

32:18

minute. Ad, that

32:20

is sat there still some hankering

32:22

for having that metallic anchor so

32:25

even as they're planning the postwar international

32:27

monetary system which is for the whole thing has

32:29

been. Designed to avoid another great depression

32:32

after the Second World War, and

32:34

still have a role for goals in that there

32:36

will be par values for values recurrent. see

32:39

it in fact everybody will just be paid to the us

32:41

dollar and it's the us dollar

32:43

primarily. Will then be pegged to gold

32:46

that sort of an indirect role for

32:48

gold, but it's still not gone, I find

32:50

that sort of in that respect suppose it's really.

32:53

Hard to imagine how important having

32:55

that metallic base somewhere

32:57

at the foundation of the system was for

32:59

the planner for Bretton Woods and it's that system

33:02

that operated through until I.

33:04

Didn't leave, you may be nineteen sixty eight, maybe

33:06

nineteen seventy.

33:07

One and we gonna get off the go standards

33:09

in nineteen seventy one and that was Nick The

33:11

on the whole you'd say that was Nixon's doing

33:14

center an average selling can you

33:16

just tell this is how I didn't mind it

33:18

in Wales?

33:19

Then. Eighteen sixties is a lot like making six,

33:21

he says, lot of inflation am in

33:23

the United States that Sunbelt payments

33:25

deficit sits in peg the exchange rate regime,

33:28

but. It's now into deficit Germany,

33:30

it is, and surplus francis accumulating

33:33

gold the system is being pulled apart when

33:35

Nixon, if elected in Nineteen, sixty nine, he's

33:37

not as happy as. International cooperation

33:40

as his predecessors and he

33:42

immediately starts planning for leaving the gold

33:44

standard and leaving goal behind, so how

33:46

does it leave it in August, nineteen, seventy

33:48

one he are? After all this

33:50

planning, he suddenly and else I'm

33:52

worth spending the convert ability of US dollar

33:54

to gold, I'll be want all you

33:57

countries out there to be addressed York

33:59

things. Greats. The US dollar and

34:01

will reset the whole international monetary

34:03

system, which they did few months later in December,

34:05

nineteen, seventy one. Amanpour,

34:07

what what?

34:08

Humans. For the return to the gold standard in

34:10

some form when Nixon was making these

34:12

decisions and when you that represent

34:15

interesting, Lane Richard Nixon as we

34:17

know bugged his own. Offices, and

34:20

very recently a couple of economic historians

34:22

went in and listen to all of the types

34:24

of him speaking to his advisors, some

34:26

of them were pro gold standard. For

34:29

some of the reasons said I'm Catherine'a

34:31

mathias have been, mentioning all

34:33

this, issue about some,

34:35

sort, of connections Flacco

34:38

has coming fall you

34:40

never want. Us to accept says importance

34:42

but you also get people who want,

34:45

of the gold. standard because

34:47

it's barbarous malik and

34:50

what the to economic historians Include

34:53

is that Nixon really didn't follow lot

34:55

of the ins and outs of these discussions but

34:57

what he wanted was to

34:59

get reelected and he wanted control

35:02

over setting his own interest rates

35:04

that was what was going to help him get

35:06

reelected, however, what.

35:09

appeals to people who like the gold

35:11

standard who called gold bugs

35:14

is the notion that somehow gold is just

35:16

obviously has real value

35:19

supposed to people seem

35:21

to somehow Not real or

35:23

even worse intangible currencies

35:26

which are even less real with

35:28

the tangibilitate and the physical way to the

35:30

object is so very important and.

35:33

is mateus to save it's somewhat

35:36

odd that the very thing that gold bugs

35:38

like the idea an old

35:40

is valuable in times of crisis because

35:42

you can rush across the border with

35:44

it as refugee that's

35:46

the very thing that actually that state level

35:49

Doesn't happen that people go off the gold standard

35:52

and, this is called the fallacy of composition this

35:54

conflation between what's good for me as

35:56

an individual or household and

35:58

what's good for an entire Try and

36:01

bad for me to go into that, therefore

36:03

I don't want my government top debts

36:05

have any thoughts if I. Barry

36:08

Gold in my back garden want the state

36:11

to do essentially the same thing by

36:13

having a big vulcan putting gold into that

36:15

eats lot more complicated than that

36:18

there. is big difference between the

36:20

goldberg individual and

36:22

pot succeed best for the state catherine

36:25

muslims they replace they ghost

36:27

hundreds when it comes to go into clinton's

36:30

into global trade and those components

36:32

I'll. Record come up with said the paper goals

36:34

that they could have print on demand, which is the

36:36

str, but that never kind of took off

36:39

on what we talk about now. Is that we're not

36:41

really interested in exchange rates

36:43

anymore that, we just allow those to

36:45

fluctuate the new Orthodoxy from the nineteen

36:48

Nineties onward was the target price

36:50

stability and? Growth in your own domestic

36:52

economy in that if everybody did that exchange

36:55

rates would kind of stabilize and we've had

36:57

nice global I system was indeed we did. but

37:00

it's kind of hold of non system some countries

37:03

are floats like bureau or the

37:05

sterling or the us dollar on

37:07

but others are managed others are basket

37:09

pigs sub you've got the euro which

37:12

was created ninety nine the ultimate

37:14

six exchange rate amongst the european

37:16

nations soda since there's not

37:18

a replacement for gold the whole kind

37:20

of orthodoxy of how money works and

37:22

how international monetary systems work monetary

37:25

has moved beyond

37:27

How would you some of the impact of

37:29

the go sanders and those said, Melissa

37:31

and let's call it a hundred years when two or even

37:34

knows replaced by on the name, how would you sum it up?

37:36

When I think same as the gold standard partly,

37:40

because there is some singing the gold standard

37:43

for everyone so think it

37:45

would like to distinguish at least

37:47

three levels and economic level of

37:49

political level and perhaps even a

37:52

psychological level. so

37:54

on the economic level The gold

37:56

standard. Especially that first

37:58

period eighty seven. Ninety. Fourteen

38:01

cents for every saying that

38:03

economists like about

38:05

globalized economy extends

38:07

form cooperation between countries

38:10

it stands for increased

38:12

trades for capital exports

38:14

so it stands for positive,

38:17

things. , out on

38:20

a political level the gold standard

38:22

still stands for that idea

38:24

of that restraint

38:27

government because when

38:29

you tie your monetary policy

38:31

seems have to go through. Parliament

38:35

they determined, the budget kings

38:38

and later on at later

38:40

governments have tried to wriggle out

38:42

of that and you put that stop

38:44

on that by means. Of, the gold

38:47

standard friend since ago and

38:49

it's so popular with libertarians,

38:52

in the United States and

38:54

then, have certain level and in

38:56

that is popular. Myth of the gold standard

38:58

is the strongest once and that's the

39:00

sort, of the perennial

39:03

quest for stability already

39:07

said that our. ideas how we

39:09

want to secure stability have

39:12

Very much moved away from

39:16

gold, and even some serb exchange

39:18

rates but the idea that

39:20

we want some saying stable.

39:23

is with us As much

39:26

as much or even more so than

39:28

it was in pa spurious

39:30

so whenever. difficult

39:33

times can come upon us vs

39:35

the global financial crisis

39:38

be it's covert now as this

39:40

idea of resurfaces and

39:42

then some people are not all people

39:44

but some people like looking back to the gold standard

39:47

which they thought fulfilled that

39:49

promise

39:50

You're all concerned with economics, junior B.

39:52

A. or a academic life he

39:55

did, she didn't the gold standard, the idea

39:57

of change the way you yourself.

40:00

I taught this discipline.

40:02

It became a really interested in

40:04

an economic history because of the city

40:06

in the Great Depression in the debates about what

40:08

caused that great depression and why it was so deep

40:11

and so prolonged and the

40:13

Gold Standard really plays an important role

40:16

in. that explanation for certainly for me as

40:18

an academic i think it's a really is

40:20

complicated and food and we get there It

40:22

repeated for people to and.

40:24

And in turn could exchange rates and our everyday

40:26

life, and it's important to understand

40:28

the gold standard to understand our the

40:31

waxing and waning of globalization. The

40:33

files.

40:34

The change of you and economics taken

40:37

by those who hundred series

40:39

on it.

40:40

Yes I think it has think is.

40:42

the goal standards

40:43

For. Me, it stands

40:46

for the ambivalence and the differences

40:49

of how contemporaries viewed seems

40:51

compared to us today, so

40:54

when you look of the nineteen twenties

40:56

and for long time the nineteen. Thirties policymakers

40:59

firmly believe they did the right

41:01

things in, restoring

41:04

and then upholding the both that and.

41:07

we think

41:08

The exact opposite so

41:11

I think study the gold standard introduces

41:14

a. certain element of

41:16

It makes your humble it makes you realize

41:19

that we are all children of.

41:21

our time and later generations

41:24

might well see our own actions

41:26

in actions very different light

41:28

And finally Helen I think it's one of those

41:30

issues that seemed somehow counterintuitive

41:33

to start off with when you told culturally.

41:36

the gold is so very important and you see

41:38

how your relatives value

41:40

gold objects that they own to

41:42

suddenly then realize

41:45

that trying your whole

41:47

economy to this slump of muscle

41:49

is not actually a good idea and

41:51

as those insights those

41:54

ah ha moments are actually

41:56

very powerful Well, thank

41:58

you very much, thank you hell and full.

42:00

I'm Catherine Shank and retires more his

42:02

son, dos you do engineer Jackie Marjoram

42:05

next week is the twentieth century French know is

42:07

Collette, author of G.G. and the

42:09

Cloning Stores, thanks for listening?

42:11

And the in all time protocols get some

42:13

extra time now with a few minutes of bonus

42:16

material for Melvin and his guess.

42:18

Would you like to pick up anything that you wish

42:20

you said that you didn't have time to say the program

42:23

is? a legacy I think once

42:26

one'a a interesting to me.

42:27

The coinage circumstances this

42:30

notion around making

42:32

commodity money and certainly

42:34

this entire history of breast

42:36

and African gold and

42:39

stamped with. Not only

42:41

the head of the Monique but also tiny elephant

42:44

stamped on it's just to say this

42:46

is West African bowl sometimes,

42:49

an elephant and castle that appear on

42:51

it. and also it's interesting when

42:53

the green use somebody else is coinage

42:55

and over stamp it so you have

42:58

silver spanish coins with spanish big head

43:01

of the spanish king and it's tiny

43:03

head as king george the third

43:06

stamps on sit in the middle of

43:08

the that kind of use of coins

43:10

and something that is really fascinating

43:13

Don't forget to Chinese symbols stamped

43:15

into Mexican coins because they were circulating

43:17

in China.

43:18

That's. Very interesting so,

43:21

say think see these redesign

43:24

of the gold standard in Bretton Woods

43:26

and preps a little bit different from Catherine

43:28

So, I think what. We

43:30

see after World War Two, is

43:34

an important seem of monetary three in the

43:36

sense that it's, really an issue

43:41

a currency that other countries

43:43

want to have now. The only country

43:46

that emerges victorious from World

43:48

War Two on all levels

43:51

including the economic levels, is

43:53

united states so what we see

43:55

after world war two really

43:57

is that countries increasingly

44:00

Look. At, Julian, julian just,

44:02

and then they realized we had this other

44:04

problem of the interwar period and

44:06

sick of the, quantity and their

44:09

way to square the circle. In Bretton

44:11

Woods and Monday forty four is essentially

44:13

to say well we still want

44:16

stable exchange rates we don't

44:18

have. enough liquidity we have

44:20

one economic How

44:23

are assholes left in the world United

44:26

States, so we let

44:28

this one country? Run

44:30

the gold standard in the U. S.

44:35

Until the next in shock and all

44:37

the rest of the of the world, or at least

44:39

off of the Western economies, comment

44:41

their own currency to that

44:43

one currency and in that sense

44:46

you can also tested. The

44:49

next shot in the following way you can say

44:51

that then suddenly given

44:53

the fiscal expansion

44:56

Z, need to accommodate

44:58

expansionary fiscal policy with inflation

45:01

undercuts the believe in the United

45:04

States, such as you have a couple

45:06

of. york while i'm happy

45:09

with monetary emphasis

45:11

spent in his emphasis did states and they sunday center

45:13

to britain was the so removing the last

45:15

link also is last bit of vote of

45:17

miss confidence into the united

45:19

states

45:21

And I guess take issue with your we're

45:23

to suddenly. Yeah, so.

45:26

You. Could say that the gold standard ended

45:29

or the golds elements of the Britain

45:31

with system and is in Merced making

45:33

sixty eight so, or

45:35

even in making sixty two from. Nineteen

45:37

sixty two armored on the ten

45:40

central banks all had to intervene the market

45:42

to support the thirty five dollars an ounce,

45:45

which was see the gold

45:47

valuation. Of the US dollar and Bretton Woods,

45:49

on and eventually the market the

45:51

it overtook them in march nineteen

45:54

sixty eight and from then on you've

45:56

got a market rate for the us dollar

45:58

which everybody can you switch At

46:00

quite high on in D higher

46:02

than the official rate, which say that thirty five

46:04

dollars an ounce and only have used by central

46:06

banks, so in a sense that had gold

46:09

length of the US dollar is

46:11

broken first in March, nineteen sixty eight.

46:14

And also take you to take issue

46:16

may be with the sudden death of the next and shock

46:19

a know sometimes soft is not surprise

46:22

me. and the discussions bilateral

46:24

and multilateral discussions about ending

46:27

the gold link or revaluing the us

46:29

dollar or changing the

46:31

international monetary system One.

46:37

A. Party think the Nixon announcement,

46:39

but in other thinking, seventy one was also

46:41

a that his domestic audience asked

46:44

if he was introducing wage and price controls in the

46:46

same speech domestically. So he

46:48

had to be seen to be hammering away at

46:50

the up at foreigners who were

46:54

supposedly, against and unfair trade

46:56

practices and had to artificially low

46:58

exchange rates. and but

47:00

even mangled was gone at the smithsonian

47:03

agreements of december nineteen seventy one and

47:05

were real Warning with. years later

47:07

on It resets

47:10

bold value for the US dollar at thirty

47:12

eight dollars an hour but,

47:15

the dollar without convertible at this price

47:17

but they still had par value, so

47:20

in a. sense it's the i want

47:22

kind of

47:23

Introduce an element of gradualism, add

47:25

to this rather than a bra.

47:27

Turning points moves very

47:29

thank you very much a third is helpful I tend

47:31

to ignore Garza realism

47:33

sometimes you. have it is finally

47:36

your mother's your coming back here that actually

47:38

i think would agree with that with that element

47:40

that which catherine calls guys your license

47:43

so license think when we look at this whole period

47:46

from

47:47

The gold findings in California

47:49

and at and Australia

47:52

to the present day we,

47:54

see an international monetary

47:56

system. shifting

47:58

in a very gradual Then. Evolutionary

48:01

Week and I think this

48:03

is what you would expect this is a very

48:06

delicate, edifice which does

48:08

not. withstand

48:10

strong shock so everything needs

48:13

to be moved very gradually

48:15

if we want to keep it safe and of

48:17

course gold rimmed to retains and

48:19

important roles if we just look

48:21

at the very large holdings of gold

48:24

by most central bank so to still not fully

48:26

out of the equation really

48:28

The out an older part of a portfolio yeah

48:30

no sorry not and thank. you very

48:32

much in our time with melvyn bragg

48:34

is produced by simon tillotson The

48:37

lawmakers of the. Of in.

48:40

Of the BBC Radio.

48:42

Well. Do

48:45

you believe in know? have

48:47

you seen them

48:49

Real life stories the supernatural told

48:51

that the people they have presented.

48:54

to me I'm done, Rubin. It

48:56

was a very. Of pure,

49:03

Subscribe the uncanny on

49:05

BBC Sounds.