Gold and the Gold Standard.pdf

GOLD AND THE GOLD STANDARD'
purposes at the limits marked by the gold points,
and while keeping this gold abroad, normally for
the most part in the form of bank deposits, is the
least expensive. The gold-bullion standard provides
no gold for internal circulation and makes it difficult
to obtain gold for hoarding. Its reserves, however, are
held in the form of gold bullion. Therefore, although
requiring less gold than the gold-coin standard, the
gold-bullion standard requires much more than does
the gold-exchange standard. Consequently, it takes an
intermediate position. In general, the richest nations
would probably choose the gold-coin standard, while
the poorest nations, as well as colonies and other
dependencies, would prefer the gold-exchange standard.
Countries in an intermediate position would
prefer the gold-bullion standard.
The shifting from one type of gold standard to
another might .be used as an instrument of international
monetary policy directed toward the stabilizing
of the value of gold. If, for example, a situation
should develop in which gold production was falling
off and the world's supply of monetary gold was
lagging behind the world's demand, it would be desirable
to economize the use of gold. This would
dictate shifts from the gold-coin standard to the goldbullion
and gold-exchange standards. If, on the other
hand, gold production should increase unduly, with a
resulting tendency to gold inRation, there could be
shifts in the opposite direction-i.e., toward the goldcoin
standard-so as to increase the demand for gold.
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