F.—ECONOMIC SCIENCE AND STATISTICS III 
broad sense it was accepted on all sides as not merely inevitable but also 
desirable. 
Then came the war, with the usual economic consequences of war. 
The gold standard was abandoned by nearly every country and currencies 
were left to the mercy of needy Governments. The inevitable war-time 
inflation was followed by the customary post-war boom and the process 
of inflation was carried a stage farther. The subsequent period of 
depression and falling prices imposed a searching test of economic policy 
and revealed the degree of exhaustion from which the various countries 
suffered. Currency instability and trade depression were associated in the 
minds of people as cause (or part cause) and effect. It was assumed 
that if and when currency stability was restored the world would have 
a chance of recovery: without such stability recovery was impossible. 
It was known, even at that time, that stability was a term that begged 
most of the questions at issue, but such a detail was of no consequence 
at a time when people longed for the restoration of pre-war conditions. 
The world that disappeared in 1914 appeared, in retrospect, something 
like our picture of Paradise. The financial leaders were strongly sup- 
ported by public opinion when they pressed for a return to the gold 
standard. 
The world returned to gold. The defeated countries, whose currencies 
had been destroyed by inflation pursued to its logical end (though not 
in obedience to logic), created new currencies linked to gold. After 
* looking the dollar in the face ’ for a couple of years we restored the gold 
standard in 1925 at the pre-war rate. In the following year France and 
Belgium stabilised their currencies in relation to gold and in 1928 restored 
the gold standard, France fixing her currency at about one-fifth the 
pre-war gold value. Meanwhile most other countries had joined the 
gold standard group. Within the space of four years the gold standard 
had been restored, and it remained in office—though not always in 
power—until 1931, when it was again destroyed. From 1924 to 1929 
most of the currencies of the world were stable, and the economic 
world made rapid progress, although, for reasons that will presently be 
noted, Great Britain did not enjoy a reasonable share of that progress. 
The depression in trade after 1929 imposed too heavy a strain upon 
our own country and in 1931 we again suspended specie payment. Our 
example was followed at intervals by a large number of other countries 
and now the world is divided into two parts, the group of countries that 
have abandoned the gold standard and those that still, in fact or in theory, 
have clung to it. When, a few months ago, the United States joined the 
former, it became evident that the influence of gold was weaker than it 
had been at any time since the war. 
In this country the gold standard had appeared to act as a strait-jacket. 
The paper pound had been given such a high gold value that our free- 
dom was severely restricted. In spite of pessimistic predictions before 
the step was taken the feeling engendered by the suspension of gold in 
1931 was one of newly found freedom. The fall in the external value 
of our currency actually stimulated trade. We found, however, that 
we were merely enjoying a larger individual share of a diminishing total. 
