The Gold Standard: Historical Facts and Future Prospects

GOLD is a hardy perennial. It provides a psychological and material safe haven for people all around the world, and its invocation still produces deep-seated visceral reactions in many. It is not surprising, then, that when economic conditions are unfavorable, proposals to strengthen the role of gold in the monetary system find an audience much wider than the "gold bugs" who have always seen the demise of the gold standard as the negative turning point in Western civilization. The early 1980s is one of these periods. A number of proposals have been put forward to reinstitute some monetary role for gold, varying from window dressing to a full-fledged revival of the gold standard. These proposals are being treated with a seriousness that would have been astonishing twenty, ten, or even five years ago. An official examination of the subject was undertaken by the Gold Commission, which was established by President Reagan in June 1981 and issued its contentious report in March 1982; and several bills have been submitted to Congress with the objective of reviving a monetary role for gold. I