ABSTRACT
The primary reason for the violent changes in value was the low demand for gold when most of Europe stopped bidding for it—followed by excessive demand when the world returned to the gold standard. In order to make comparison between prices in England and the United States, an index number including the same commodities with the same weights was prepared for the United States. Prices in gold in the two countries have been about the same since the United Kingdom returned to the gold standard in 1925. The price of an individual commodity may rise or fall because of changes in the supply of it or demand for it, but the average price of commodities cannot change materially without a world-wide change in the value of gold. Prices can be adjusted to a doubled price level fairly quickly because wages, taxes, debts, and other slow-moving charges are increased fairly promptly.
