Was Adherence to the Gold Standard a "Good Housekeeping Seal of Approval" During the Interwar Period?
World War I dramatically altered the world's financial landscape. Most countries left the gold standard, and New York replaced London as the major lender in world capital markets. This paper discusses how the gold exchange standard was reconstructed in the 1920s. We show that the U.S. capital market viewed returning to the gold standard as a signal of financial rectitude, what we have referred to in other work as a 'Good Housekeeping Seal of Approval.' When countries returned to gold, especially when they did so at the prewar parity, they were rewarded with the ability to borrow at substantially lower interest rates. Other signals of financial rectitude, such as small fiscal deficits, apparently carried little weight with lenders.
|Date of creation:||Jun 1999|
|Publication status:||published as Engerman, Stanley L., Philip T. Hoffman, Jean-Laurent Rosenthal, and Kenneth Sokoloff (eds.) Finance, Intermediaries, and Economic Development. New York: Cambridge University Press, 2003.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Bordo Michael D. & Kydland Finn E., 1995. "The Gold Standard As a Rule: An Essay in Exploration," Explorations in Economic History, Elsevier, vol. 32(4), pages 423-464, October.
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National Bureau of Economic Research, Inc.
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"The Gold Standard as a "Good Housekeeping Seal of Approval","
Departmental Working Papers
199528, Rutgers University, Department of Economics.
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- Michael D. Bordo, 1995. "The Gold Standard as a `Good Housekeeping Seal of Approval'," NBER Working Papers 5340, National Bureau of Economic Research, Inc.
- Michael D. Bordo & Barry Eichengreen, 1998. "The Rise and Fall of a Barbarous Relic: The Role of Gold in the International Monetary SYstem," NBER Working Papers 6436, National Bureau of Economic Research, Inc.
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