ABSTRACT
Great Britain emerged victorious from its travail in World War I, but its economy, and particularly its currency, lay in shambles. All the warring countries had financed their massive four-year war effort by monetizing their deficits, most of them doubling, tripling, or quadrupling their money supplies, with equivalent impacts upon their prices. The massive influx of government paper money forced these warring governments to go rapidly off the gold standard. Furthermore, to stress only the few decades before 1914 as the age of the gold standard ignores the fact that gold and silver have been the world’s most often chosen monetary metals throughout history. Even influential Treasury official Ralph Hawtrey—a friend and fellow Cambridge colleague of Keynes, an equally ardent inflationist and critic of gold, and chief architect of the European gold-exchange standard of the 1920s—favored a return to gold at 4.86 Dollars in 1925.
