Start hereDictionarySearch
English
日本語English中文ItalianoFrançaisDeutschEspañol
Sign in Fees and how to study
NOMISMA
Read history Money history: the world and JapanBubbles, frauds and financial crisesPeople who changed moneyReadingsSee all of Read history
Understand how money works Banks and depositsInterest, prices and exchange ratesCash and digital paymentsHistory's lessons for today's decisionsSee all of Understand how money works
Look at coins Browse by photoImages, letters and materialsCare, storage and tradingSee all of Look at coins
Start hereDictionarySearch
Fees and how to study Sign in
Language
日本語English中文ItalianoFrançaisDeutschEspañol
NOMISMA
COURSE C11

The People Who Linked and Severed
Gold and Paper Money

The Life and Death of the Gold Standard — From Newton's Ratio to Nixon's Sunday

Source photo
Guinea gold coin

Guinea gold coin, 1663–1814. In 1717, Isaac Newton, Master of the Mint, fixed the value of this gold coin at twenty-one shillings. After this valuation, silver left the island and gold remained — the gold standard began not by declaration, but by sliding into place from the valuation of this single coin. Whether this was Newton's intention is still debated.
Source: Lewis Pingo / CC0 (from NOMISMA's specimen ledger Guinea)

TEXTBOOK 05 ／ First Edition（2026）
BIG QUESTION

When is a system born,
and when does it die?

This volume in 3 minutes

  • The gold standard did not begin with a declaration. After the bimetallic ratio was set in 1717, silver flowed out and gold remained. Whether that was Newton's intention is still debated.
  • The law stating that "gold shall be the standard" was written a century later (1816). The beginning was ambiguous, the end was clear — the life of a system usually takes this form.
  • The theory (Ricardo) was not written before the system, but while convertibility was suspended. The theory was written after the problem arose.
  • The question was not "whether to return" but how to return. The old parity was a declaration of confidence — both Churchill's Britain and Inoue's Japan made the same choice and faced the same consequences.
  • The consequences for Japan were the gravest in this chain. Hamaguchi was shot at Tokyo Station, and Inoue was killed in the League of Blood Incident — an era when monetary policy was a matter of life and death.
  • In 1944, the gold standard did not die but was entrusted to a single country. One ounce of gold = 35 dollars. The guardian was in a position where the longer it stood watch, the more credibility it lost.
  • The end came not on a battlefield or in a parliament, but during a weekend at a mountain retreat. On Sunday evening, August 15, 1971, the gold window was closed on television.
  • The gold standard was never an ideology. Calculation, memory, and the reality of power successively gave it shape.

Table of Contents

  1. PROLOGUETwo Dates
  2. 1The Man Who Set the Ratio Was a Physicist
  3. 2The Theory Was Written During the Suspension
  4. 3What Happened in the Year of the Return
  5. 4At the Old Parity — The Door of Inoue Junnosuke
  6. 5Not for the Glory of the Currency — Keynes's Opposition
  7. 6Entrusting Gold to One Country — The Thirty-Five-Dollar Design
  8. 7A Weekend at the Mountain Retreat — August 1971
  9. 8A Life in One Line
  10. EPILOGUEIt Was Never an Ideology
  11. CASE STUDIESA View from Outside the Chain (4 articles)
  12. BACK MATTEROBJECTS / PEOPLE / GLOSSARY / TIMELINE / DATA / SOURCES
PROLOGUE

Two Dates

We frame the life of a single system between two dates.

1717 — At the mint in London, a physicist submits a report on the bimetallic ratio of gold and silver. The value of the guinea is twenty-one shillings.

Sunday evening, August 15, 1971 — In Washington, a president addresses the nation from a television screen. The window for exchanging dollars for gold is to be closed.

The starting date has no ceremony, no declaration. It is just a pricing decision. The ending date has a specific time. The beginning is ambiguous, the end is clear — the life of the system known as the gold standard is this asymmetry itself.

This book is a textbook for Axis C, "The Chain of People." It traces the system not through its articles, but through the people who decided, wrote, restored, and closed it. A physicist, a merchant-turned-economist, two finance ministers and an economist, the architect of a conference, and a weekend president — the chain is also marked by two deaths.

When is a system born, and when does it die?
Positioning of this book: Whereas Volume 4, 'Comparing the Origins of Money,' dealt with the birth of money, this fifth volume deals with the life and death of a system. The tools from Volume 1 (the endings of transmitted accounts, a way of reading that does not fixate on a single cause) are at work throughout. The discipline for numbers and citations is the same — noted in the sources at the end of each chapter and in the SOURCES section at the back.
Sources — NOMISMA C11 Syllabus / British Section "Newton's Great Recoinage" & American Section "August 15, 1971" stops.
CHAPTER 1

The Man Who Set the Ratio Was a Physicist

This chapter in 3 lines
  • The gold standard did not begin with a declaration. It remained as a result of the bimetallic ratio being fixed, which caused undervalued silver to flow out.
  • What Newton did was recommend a bimetallic ratio. Whether he intended to establish a gold standard is debated.
  • Legal enactment came a century later in 1816 — systems are built from an accumulation of consequences rather than from a single person's blueprint.

In 1696, England's silver coinage was at its limit. The old hammered coins were clipped at the edges and underweight. The Great Recoinage — as we saw in Volume 3, Chapter 8, the unexpected figure appointed to oversee this operation was the scientist Isaac Newton.

Then, in 1717, Newton, who had become Master of the Mint, submitted a report on the bimetallic ratio of gold and silver, and the value of the guinea was fixed at twenty-one shillings. This fixed the value of the guinea, which had long fluctuated.

However, this decision had a sequel. Under this ratio, gold was overvalued and silver was undervalued in England. What happened then? Good-quality silver coins were taken abroad, silver flowed out of the island, and what remained in the country was gold. The system did not choose gold. Gold remained as a result of people taking silver out.

Until the Gold Standard Became a System — Four Stages in England 1696Great Recoinage 1717Report on the RatioGuinea = 21 shillings 1774Restriction on Silver CoinsNo longer legal tender for large payments 1816Legal Enactment of the Gold Standard 1717 is not "the year the gold standard was created" — as a result of the ratio, silver flowed out and only gold remained. The law came a century later.
Figure F-1: The Gold Standard Slides In. The red dot (the pricing) and the law a century later. To say "the gold standard began in 1717" is an incomplete statement — all we can say is that from that point, a movement began in which only gold remained.Source: British Section "Newton's Great Recoinage" stop, NOMISMA C11 Lecture 1

This is as far as the textbook goes — he made a recommendation on the bimetallic ratio, after which silver flowed out and gold remained. Whether this was what Newton intended is still debated. We cannot definitively say that he "designed the gold standard" or that he "created it unintentionally."

Regarding Newton, who is often called the "father" of the gold standard, what we can say is that a single calculation shifted the foundation of the nation's money. Whether he intended to create it or it just turned out that way continues to be debated among researchers.

Key Points So Far

  • The 1717 ratio undervalued silver, causing it to flow out and gold to remain — the actions of individuals created the system.
  • Newton's job was to make a recommendation. Whether he intended to establish a gold standard is debated.
  • Legal enactment (1816) came a century later. The starting date cannot, in fact, be chosen.
In a word, the gold standard was not built, but what remained after silver flowed out.
How would you think about it? Recall an explanation that says, "That system was created by so-and-so." Was it by design, or was it a consequence? What evidence is there for either case?
Sources — British Section, 'Newton's Great Recoinage,' 2 stops (1696 Great Recoinage / 1717 Bimetallic Ratio and Refutation of Common Myths) / Course C11 Lecture 1 (sections on 1774 and 1816)
From here on

This is the end of the free sample

What follows — The theory was written while it was suspended, What happened in the year it was restored?, At the same old value—the door of Inoue Junnosuke, Not the glory of the currency — Keynes's objection, Entrusting gold to a single country — the thirty-five-dollar design, The weekend at the mountain lodge — August 1971, Writing a life in one line, It was never an ideal., Seeing from outside the chain — is for purchasers (the reference section too).

Price →

Is It Really True? Checking History (free in full)

← The People Who Linked and Severed Gold and Paper Money — course page

← To the list of books

Ask about the text or how this book works →