The World of the Gold Standard

A06　—　A General History ⑥ — From 1816 to 1914

What did a world that used gold as its yardstick gain, and what did it build without a firefighter?

Supervised by: Mitsuru Hayama　／　Reading time (main text): course text ~10 min + textbook ~128 min = ~138 min　／　Beyond the text: 6 exercises · 1 coins · 3 readings

What this course teaches you to do

• Can state that establishing only gold as the standard and deciding how much paper money can be issued are separate tasks.
• Can state in order how one indemnity and one law in 1873 affected the world's silver.
• Can explain, with examples from three countries, that the gold standard was not about prestige but a qualification for borrowing from abroad.
• Explain why the role of 'lender of last resort' was articulated and formalized at the end of the nineteenth century.

TEXTBOOK

Lessons (8)

1. 1816 — A Law for Gold Alone, and the Apparatus of Four NationsThe starting point of the gold standard world was not a gold coin, but a single law in 1816. Four nations answered the same question with different apparatuses.
2. How much paper money can be issued? — Peel's Act and the forest of banknotesA restrictive law was loosened in times of crisis, while unrestricted freedom yielded thousands of types of paper money and financial panics. Bagehot put into words the three conditions for the lender of last resort.
3. Correction and Fortune from the Earth — An Era of Unification, and the Countries Where Gold Came and Did NotTo unify means to standardize weights and conversions. In the countries where gold came, the scales tipped; in those where it did not, face values were inflated a hundredfold.
4. The World's Standard and the Paper of War — Descendants of the 8 Reales, and GreenbacksTrust resided not in the issuer, but in the unchanging content. Wartime paper money was valued in gold by the market, and peace demanded a reckoning.
5. The Union and 1873 — Uniform specifications, reparations, and the collapse of silverA single war indemnity created the gold mark, and the released silver collapsed the world price of silver. One nation's choice of monetary standard reverberated in the wallets of a distant country.
6. From the Silver Side — Closing the MintsWhen the door closed, silver became a mere commodity. The rupee was linked on paper not to gold but to the pound, creating the model known as the gold exchange standard.
7. A License to Borrow, and the Empire of the LedgerThe order of adopting the gold standard differed by country. Qualified nations borrowed; for those unable to repay, it was not the sword but double-entry bookkeeping that took root.
8. 1913 — The House Without a FiremanA house without a lender of last resort calmed a panic in a private citizen's library. Twelve banks were built to structure fear, and the following summer, the cloth was halted.

Case studies — applied in the materials (3)

• The sovereign is born　Britain　1816　Westminster, the Parliament
  The starting point of this volume. A single law that established only gold as the standard.
• Reparations — becoming a paying country　France　1873　The mints of Berlin and Paris
  Five billion francs become gold marks, breaking the back of the union. The crux of Chapter 8.
• The Gold Never Came　India　1898–1913　The Reality of Circulation
  The gold never came. A form of the gold exchange standard, tied to the pound on the books.

Assessment

6 exercises in this course (4 check, 0 compare, 2 written). Progress is recorded by self-assessment.