ABSTRACT
The twentieth century marked an unprecedented shift in monetary history: the abandonment of a largely commodity standard in favour of a ‘fiat money’ system, where the creation of money is submitted to the sole will, or discretion, of the sovereign. The convoluted monetary history of the United States in the nineteenth century is marked by a gradual shift from bimetallism to the gold standard and the absence of a central bank until the very eve of the First World War. In this chapter, the authors describe the ‘model’ of the gold standard, and answer another intriguing question: whether the actual behaviour of policy-makers was coherent with that model. They consider three countries: The United States, Italy, and Britain. By adopting a restrictive monetary stance, and by devaluing the dollar, the United States consolidated its growing hegemonic position but, by so doing, gave an important contribution to the gold standard collapse.
