Gold prices - yesterday and today
There was a time when the state-owned banks of a number of countries guaranteed the exchange of their banknotes into gold at a certain price - sometimes the mass of gold pointed directly at the banknote.
In 1717, Newton, who, in addition to all his scientific achievements, was also governor of the Royal Mint, de facto introduced the gold standard by setting a fixed rate of pound sterling to gold. At that time, the first central banks already existed: the Amsterdam Bank (1609), the Bank of England (1694), the French Banque Generale (1716). Although Newton tied the value of the pound to gold in 1717, the gold standard was not officially introduced in England until 100 years later, in 1816, after the victory over Napoleon.
There was a time when the state-owned banks of a number of countries guaranteed the exchange of their banknotes into gold at a certain price - sometimes the mass of gold pointed directly at the banknote.
In 1717, Newton, who, in addition to all his scientific achievements, was also governor of the Royal Mint, de facto introduced the gold standard by setting a fixed rate of pound sterling to gold. At that time, the first central banks already existed: the Amsterdam Bank (1609), the Bank of England (1694), the French Banque Generale (1716). Although Newton tied the value of the pound to gold in 1717, the gold standard was not officially introduced in England until 100 years later, in 1816, after the victory over Napoleon.
The British pound sterling was then considered the most stable currency in the world. And this was justified, because at any time the pound sterling could be handed over to the bank and in return receive full-fledged gold without losing its quantity.
The USA then took over the obligation to secure the banknotes in gold. The US Congress set the price of gold in 1792, but later obliged to exchange banknotes for gold.
In other countries, too, attempts were made to add gold to paper money in order to declare their sustainability. These states included Belgium, Great Britain, Germany, the Netherlands, Russia (introduced the golden ruble in 1897-1899), France and Switzerland.
They formed a gold block and agreed on a single gold price for them. This made it easy to recalculate exchange rates and carry out mutual settlements.
However, not all countries were constantly able to secure the gold content of their money. Russia withdrew from the Golden Pool in 1914 due to the outbreak of the First World War, Great Britain in 1931, the USA in 1971 (see Table 1).
1971 is the actual end date of the gold standard period. The governments of all countries refrained from securing their money in gold. At the same time, a conditional gold price of 35 US dollars per ounce was used for mutual settlements between the countries of the gold block.
In 1976, the general decision of the participants of the gold bloc stopped considering gold as a measure of the value of currencies, its price was no longer maintained artificially. As a result, gold was sold as an ordinary exchange-traded commodity, and its price began to rise rapidly.
