ABSTRACT
The golden era of the gold standard was 1880–1914, when it was recognised and subscribed to by most of the industrialised world. The widespread acceptance of the gold standard and its appeal even amongst some economists is attributable to the standard's alleged ease of operation and the automatic nature of its balance of payments adjustment mechanism. The dominant characteristic of this standard, which might be expected to apply to underdeveloped economies such as existed in pre-industrial days, is that currency in circulation consists of gold coins whose intrinsic value and nominal or face value are equal. More sophisticated economies are likely to adopt the gold-bullion standard, in which money is not confined to gold coins but includes notes and bank deposit liabilities, both of which are backed in varying degrees by gold. The principal advantages of an efficient gold standard are that it provides stable exchange rates and automatic balance of payments adjustment through price changes.
