ABSTRACT
The policy of returning to the gold standard was that of the Treasury and the Bank of England, and it had the general support of banking opinion, to which there were, however, important qualifications and exceptions. The causes which raised the value of the pound sterling in terms of dollars concurrently increased its gold value, since the American dollar was throughout convertible into gold. Prices in the US, indeed, advanced, but they remained all the time gold prices. The desirability of the gold standard in itself was hardly questioned prior to the war, and post-war experience has confirmed that opinion. A gold basis to a currency, again, is a far simpler arrangement than would be the basing of currency on the exchange value of wheat or other commodities. The adverse balance of trade should have led by way of restricted credit and an outflow of gold, to lower prices and wages at home, and thus ultimately have remedied the situation.
