Erosion of the Gold Standard (Old Type)

It is expedient once again to make a retrospect. The gold standard was maintained in Britain during the First World War. The gold points widened very considerably, owing to the rise of insurance charges in consequence of the submarine menace. Sterling was pegged at $4.75, which was above the then gold export point. This was effected with the assistance of loans from the United States negotiated by J. P. Morgan. In 1922/23 Baldwin, the British Prime Minister, got a settlement on the terms for the repayment of these loans, and instalments were paid for a number of years. On one of the occasions of renewed negotiations about the division of German reparations, the British waived their claim to a proportionate assignment of them, viz. in accordance with damage suffered, and said that they would take no more than was required to meet their annual payments to the United States for interest on and amortisation of the war loans previously received. Thus, in a sense, they stood aside from the whole post-war settlement, their share of the German reparations simply by-passing them and going direct to the United States. During the great world slump President Hoover negotiated a moratorium in regard to German reparation payments, and in that year the British praetermitted their American debt payment.