ABSTRACT
Alec Ford’s The Gold Standard 1880-1914: Britain and Argentina is one of a handful of classics on the gold standard written in the twentieth century. The book made three contributions. First, it elaborated a new model of the balance-of-payments adjustment mechanism. Analysing the experience of Britain, Ford argued that adjustment worked through different channels than the price-specie flow mechanism emphasized by Hume or the interest-rate-induced capital flows emphasized by Whale.1 Ford’s Keynesian model highlighted the tendency of gold outflows to raise interest rates, lower domestic demand, and restore external balance through the reduction of output, employment and import demand.2 Relative price movements, or changes in interest rates induced by central banks playing by the rules of the game, might aid adjustment but their role was subsidiary.
