ABSTRACT
Despite Keynes’s emphatic concern to maintain the convertibility of sterling into gold throughout the period of the First World War, in March 1919 the UK formally abandoned the gold standard, an entirely understandable consequence of four years of unprecedented total war. But by this time, its central military purpose of helping to maintain the financial stability of the wartime Allied powers was no longer required, so it had served its function very well. In consequence of the uncoupling of the link to gold, in the year following, sterling declined against the dollar by around 25 per cent. However, this still left the question of the long-term nature of the UK monetary system unresolved. Should the UK at some point in the future return to a traditional form of the gold standard, or would it be better to institute a completely new form of paper currency system?
