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The interwar period

  • J. A. H. de Beaufort Wijnholds
Part of the Publication of the Netherlands Institute of Bankers and Stock Brokers book series (PIBS, volume 31)

Abstract

This chapter covers the analysis of the problem of the need for reserves as it was developed during the two decades between the First and Second World Wars. In section i the structural changes which influenced thinking on this issue during the interwar period are briefly described. The development of reserve need theory up to the suspension of the gold standard1 is discussed in section ii. A brief outline of the circumstances and theories leading to the view that there was a shortage of gold, to which many economists subscribed in the late twenties and early thirties, is given in section iii. In section iv the transition of a large part of the world in the thirties to floating exchange rates and its effects on the reserve situation are discussed. Section ν records the state of reserve need theory at the end of the interwar period.

Keywords

Monetary Authority International Reserve Float Exchange Rate Interwar Period Gold Parity 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Literatur

  1. 1.
    After the suspension of the gold standard by the United Kingdom in September 1931, many countries followed its example. The United States suspended the gold standard in April 1933, but returned to it at a new gold parity in January 1934.Google Scholar
  2. 2a.
    The first authoritive description of these changes is that by Nurkse; cf. League of Nations, International Currency Experience: Lessons of the Inter-War Period, Geneva, 1944. Bloomfield has shown that adherence to the “rules of the game” before 1914 was already far less rigid than had usually been thought;Google Scholar
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    A discussion of this literature is contained in Charles O. Hardy, Is There Enough Gold?, Brookings Institution, Washington, 1936, chapter II and part II. For a fundamental rejection of these theories,Google Scholar
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    cf. Michael A. Heilperin, International Monetary Economics, London, 1939, chapter III. 1 See pp. 20, 21 above.Google Scholar
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  41. 1.
    Under the Tripartite Agreement of September 1936, the United States, the United Kingdom and France undertook to conduct their monetary affairs in such a manner as to “maintain the greatest possible equilibrium in the system of international exchanges”. Joined shortly afterwards by Belgium, the Netherlands and Switzerland, an arrangement followed according to which the participating countries undertook to supply gold in exchange for their own currency when acquired by any of the others. Any of the participants could, however, cancel the agreement at twenty-four hours notice. Cf. R.G. Hawtrey, The Gold Standard in Theory and Practice, fifth edition, London, 1947, p. 220.Google Scholar
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  43. 1.
    Private western gold hoarding between January 1931 and September 1936 (date of the devaluation of the gold-bloc currencies) was estimated at between $1.5 and $2 billion (at $35 per ounce). Cf. Federal Reserve Bulletin, August 1937, and Bank for International Settlements, eighth Annual Report, Basle, 1938.Google Scholar
  44. 1.
    Cf. Charles R. Whittlesey, International Monetary Issues, New York, 1937, p. 216.Google Scholar
  45. 1.
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Copyright information

© Springer Science+Business Media New York 1977

Authors and Affiliations

  • J. A. H. de Beaufort Wijnholds

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