Introduction

The gold standard was reconstructed at considerable cost and effort after World War I. The selection from the First Interim Report of Britain’s Cunliffe Committee provides a definitive statement of the prevailing view of the system’s indispensability. After little more than a decade, it was recognized, however, that the interwar system was not functioning as anticipated. The extract from the Report of the British Macmillan Committee describes these problems as seen by informed contemporaries. Heavily influenced by Keynes and written on the eve of the 1931 financial crisis, among the destabilizing factors it emphasizes are wage and price rigidities, actions of central banks to offset the impact of international gold flows, and the tendency to accumulate foreign exchange reserves. The third selection, written by Ragnar Nurkse for the League of Nations, remains even today the most influential account of the collapse of the monetary system.