21st September 1931: Britain abandons the gold standard after Parliament passes the an Amendment Act

Описание: The gold standard was a system where the value of a country’s currency was directly linked to a specific quantity of gold. Britain had used the system for centuries, but the impact of First World War and the later Great Depression placed immense pressure on the country’s financial stability.

By September 1931, Britain’s economic situation had deteriorated to a critical point. Foreign investors had been converting pounds into gold, depleting the country’s reserves. The Labour government, led by Prime Minister Ramsay MacDonald, responded by taking unprecedented action. After consultations with the Bank of England, the Treasury issued a statement announcing its intention to suspend the gold standard on Sunday 20 September, and parliament approved the Bill the next day.

Britain’s departure from the gold standard had immediate and lasting consequences. Almost immediately, the pound sterling experienced devaluation. This made British goods more competitively priced on international markets and provided a boost to the country’s export industries that had been suffering as a result of the Great Depression, but meant that foreign investments in Britain lost value.

The government’s decision to abandon the gold standard was soon adopted by other countries. This signalled a major shift in the nature of global economics and gave more opportunities for flexible exchange rates and increased government intervention in monetary policy. These in turn became crucial tools for managing economic crises in subsequent decades, and since 2013 there hasn’t been a single country that continues to use the gold standard.