The Gold Standard — Money in the Age of Gold (1717–1973)
The rise and fall of the monetary system that tied the world's major currencies to gold, from Britain's de facto adoption in the eighteenth century through the classical gold standard era, the shocks of the Depression, and the final break with gold in the 1970s.
Events
Newton Fixes the Guinea's Value
As Master of the Mint, Isaac Newton set the guinea's value in silver at a ratio that accidentally overvalued gold, causing silver to flow out of Britain. The country drifted onto a de facto gold standard over the following decades, with gold becoming the reference for the pound's value.
Location: London, England
The Coinage Act of 1816
Parliament passed the Coinage Act of 1816, formally defining the pound sterling in terms of gold (113.0016 grains of fine gold per sovereign) and reducing silver coins to token status. Britain became the first major economy to adopt an official monometallic gold standard.
Location: London, England
The Classical Gold Standard Era
Germany's new unified state adopted gold after receiving French indemnity payments in gold following the Franco-Prussian War. Over the following decades most major economies joined, and by the 1870s a global classical gold standard linked currencies at fixed parities, enabling an era of expanding international trade and capital flows.
Location: Berlin, Germany
The United States Formally Adopts Gold
The Gold Standard Act of 1900 defined the US dollar as 23.22 grains of pure gold, formally confirming gold as the sole standard after decades of political battles between gold and silver supporters, including William Jennings Bryan's 1896 "Cross of Gold" campaign.
Location: Washington, D.C., USA
The First World War Suspends Convertibility
On the outbreak of World War I, belligerent nations suspended gold convertibility to finance the war through money creation. The classical gold standard era ended; after the war, Britain struggled with inflation and a weakened external position that made a return to gold difficult.
Location: Europe
Britain Returns to Gold at the Old Parity
Chancellor Winston Churchill returned Britain to a gold bullion standard at the prewar parity, a decision that effectively overvalued the pound. Critics including John Maynard Keynes argued the overvaluation forced deflation and unemployment on the British economy; supporters defended it as a restoration of financial credibility.
Location: London, England
Britain Abandons Gold in the Depression
Amid the Great Depression and speculative attacks on the pound, Britain suspended gold convertibility, and the pound fell sharply. More than twenty countries followed within months. Advocates of gold warned of inflation and monetary disorder; economists who had criticized the return to gold saw the departure as an overdue correction that allowed interest rates to fall.
Location: London, England
The United States Ends Domestic Gold Convertibility
During the banking crisis of 1933, President Franklin Roosevelt ordered the end of private gold holdings and domestic dollar-gold convertibility. The Gold Reserve Act of 1934 revalued gold to 35 dollars per ounce, devaluing the dollar and centralizing US gold reserves under the Treasury.
Location: Washington, D.C., USA
Bretton Woods — Gold at the Center of a New Order
Delegates from 44 nations agreed to a postwar monetary system in which currencies were fixed to the US dollar, convertible to gold at 35 dollars per ounce by foreign governments and central banks. The system made the dollar the world's reserve currency and created the IMF and World Bank.
Location: Bretton Woods, New Hampshire, USA
The Nixon Shock
Citing trade deficits and gold outflows, President Richard Nixon suspended the dollar's convertibility into gold, ending the Bretton Woods system's anchor. The Smithsonian Agreement's attempted fixed-rate fix collapsed by 1973, when the major economies moved to floating exchange rates — the monetary world that persisted into the modern era.
Location: Washington, D.C., USA