Gold Standard Dbq

Most countries around the world wanted to regulate transactions between countries within the world trade market around the mid to late-1800’s. For this reason, the gold standard was implemented. The gold standard specified that the government would exchange any amount of paper money for its worth in gold. This meant transactions no longer had to be done with heavy gold bars or coins, and could be easily handled with paper transactions. Countries had to separately elect to follow the rules of the gold standard system. This agreement, between participating countries, measured the value of one country’s national currency per an ounce of gold, to the value of the other participating countries’, which made it possible to create the exchange rates between the currencies. This allowed for a common reference point for prices across countries, and there was no need to negotiate currency values or payments as part of trade.
During the gold standard, the value of currencies was fixed. Nations agreed to limit the amount of currency they would issue, to the amount of gold they held in reserve so they could back up their currency. The significance of this is that a nation could not print money, or spend more than what they had. In addition, it meant that the exchange rates could not adjust to differences in trade …show more content…
But, after WWI, nations began printing money, lowering the value of money. Later in 1929 came the great depression, which lowered many assets across the globe, and was a big setback to the gold standard. Then, during WWII, countries began spending on military hardware again, without having enough money to spend on military goods. They began to print money and lowered the value of their currencies even more, which lead to the creation of the Bretton Woods