What Is The Gold Standard?

The gold standard, by commonly accepted definition, is a monetary system in which the standard economic unit of account is a fixed weight of gold. Three distinct kinds of gold standards can be identified:

There are three distinct categories of gold standards, which are identified as following:

* The gold specie standard. * The gold exchange standard. * The gold bullion standard.

The United States started using the American Gold Eagle as their unit, and Germany introduced the New Gold Mark, while Canada opted for a dual system based on both the American Gold Eagle and the British Gold Sovereign. Other countries also adopting this standard were Australia, New Zealand and the British West Indies. Newfoundland was the only British Empire territory to introduce its own gold coin as a standard.

Sir Isaac Newton In the year 1717, who was well-known as the master of the Royal Mint, time-honoured a novel standard mint ratio between silver and gold that, in consequence, drove silver out of exchange and made England to be amongst the top on a gold standard. Following the introduction of the gold sovereign coin in the year 1821, the United Kingdom was officially put on a gold specie standard. It was soon followed by numerous countries around the globe, starting from Canada in the year 1853, Newfoundland in the year 1865, USA and Germany "de jure", in the year 1873.

The Gold Bullion Standard The gold specie standard ended in the United Kingdom and the rest of the British Empire at the start of the First World War. Treasury notes replaced the circulation of the gold sovereigns and gold half sovereigns. Legally, the gold specie standard was not repealed at the time.

The Gold Exchange Standard Many of the remaining countries, which still had the silver standard, began to exchange their silver coins unit to gold standards, similar to the U.K and the U.S around the end of the nineteenth century. The British India exchanged the silver rupee to the pound sterling at a fixed rate of 1s 4d in the year 1898, while the Straits Settlements agreed upon a gold exchange standard against the pound sterling with the silver Straits dollar being fixed at 2s 4d, in the year 1906. Approximately in the start of the 20th century, the Philippines exchanged the silver Peso/dollar to the US dollar at 50 cents. Around the same time, a similar exchange at 50 cents was initiated with the silver peso of Mexico, and the same was also done for the silver yen of Japan.

During the introduction of the gold bullion standard in 1925, The British act of Parliament repealed the gold specie standard at the same time.