Other countries of Europe followed the example while the Scandinavian Switzerland, France and countries restored the gold standard in 1928. But the international gold standard of the decade of 1920 was not more than painting of labial pencil in a pig. The same countries that revived the gold standard damaged it. They did exchanging it to the supply of domestic credit (through the interest rates) and in the same proportion that the entrances and exits of gold. This pushed the rates of change of other countries that retaliated. By the same author: john k castle. Our own Federal Reserve of the United States, for example, secretly maintained some golds of the country outside the base of credit by means of the gold certificate emission. The Bank of England also ” esteriliz” the effects of the stream golds.
Nobody of the government could follow ” reglas” of the gold standard. This means that the automatic economic adjustment of the gold standard that everybody wanted could not work. The Great Depression created the financial crisis that it completely took the banking system in collapse. When the economy relaxed in 1929 of the policies of bad loans that go from the mortgages of only interest to operations with margin action; the banks of Austria, Germany and EE.UU underwent forts fallen in the value. The confidence collapse and the people hurried to retire their deposits, which caused the execution of the banks. Meanwhile, the gold left Great Britain of a chronic deficit of the balance of payment and the lack of confidence in the pound sterling.
In 1931, Everything Wine Down by Peso de Oro! The countries were united to rescue the pound but the British gold reserves were reduced until the point in which the country could not maintain the gold standard. In September of 1931, the British government suspended the gold payments and let float the pound. At the end of the year, Canada, Sweden, Austria and Japan did not have gold. In April of 1933, with the collapse of the banking system from the EE.UU to our country they left gold. For the last one resistance, France, left the gold standard in 1936 due to the lack of confidence in the franc like stable currency. This was an answer justified to the socialist government of the Popular Front directed by the induction of Blum Leon that was in the economic and political instability. For the first time, the fiduciary currency, we have as it nowadays, in the form of paper money without the endorsement of a little good, arose. The lesson of the inter-war period is that when it does not have reasonable and applied international monetary systems, the result is the economic nationalism, the political and economic instability, the banking bankruptcies, and the flights of panic of capital through the borders. This destroys the commerce and international investment, the wealth of the nations and its people. This it is the time in which the dollar of EE.UU arose as the dominant currency in the world doing to a side the pound sterling.