It's true...worse than during the Great Depression !

eeja

john_s wrote: »

I'm a bear of very little brain. Can you expand on that please?

With pleasure, Sir !
With the pound firmly linked to gold....at £4.19 shillings and sixpence an ounce (if I remember exactly )....everyone from 1925 to 1931 when the gold bar and NOT the gold coin standard was reintroduced ....could turn up at the gold counter at the Bank of England in Threadneedle St with Bank of England notes (...and remember they had both £500 and £1000 pound notes up to 1941/42 when they were withdrawn thanks to forgeries at the Sachsenhausen Concentration Camp) where the promise ''to pay the bearer on demand'' was honoured with one thousand ounce bars of pure gold.....[ gold sovereigns for pound notes were specifically excluded under the 1925 Gold Standard Act ....but unbelievably the promise of exchangability for gold sovereigns remained right throughout the First World War up to the 1925 Act ....just few people knew......those people who actually exercised that legal right were often committed to Homerton Lunatic Asylum for being 'unpatriotic'! Notably a certain Mr Sykes of Hatton Garden ...[see old Times news reports 1917/18]
Presumably only financial institutions and the very wealthy were likely to have £5,000 in cash in those days with houses costing £100 or even less !
Convertibility into gold meant high prices, an immensely strong pound and massive unemployment.
The General Strike of 1926 was a direct result of the reintroduction of the Gold Standard. The abandonment of the Gold Standard on Monday 21 September was communicated to the Governor of the Bank of England Montagu Norman by telegram to his cruise ship just outside Quebec where he was recuperating with the famous code words :
''Old Lady goes off on Monday''.
After we went off gold, the pound dropped precipitously, exports rose massively and employment rose steadily right up to the huge rearmament program undertaken prior to World War II

john_s_2

Thanks for that. Couldn't we have just devalued the pound? Say call it £2 an ounce maybe?

The pound was pegged to the dollar after we left the gold standard, along with most other major currencies I believe? And the dollar could still be exchanged for gold until the 70s I think? (So sterling was still pegged to gold.) Except US citizens couldn't exchange it, only foreigners. And I think someone (Wilson?) devalued the pound against the dollar in the 60s?

I can't remember the details, but I read the Wikipedia page about it a couple of months ago :-)

sabretoothtigger

With the pound firmly linked to gold....at £4.19 shillings and sixpence an ounce (if I remember exactly)

dam how old are you

john_s_2

Good grief I've just realised that when I said:

Couldn't we have just devalued the pound? Say call it £2 an ounce maybe?

Then that would be INcreasing its value. (If £4 bought an oz of gold, then at £2 an oz, £4 would buy 2 ozs!)

How embarrassing... So please re-read my post with a suggestion of £8 an oz ;-)

sabretoothtigger

Currency is confusing, even more now its not fixed to the value of anything

sabretoothtigger

Your from the same town as Mr Schiff?

Best use for money in my experience is security and well being, its unfortunate some are going to lose that maybe but thats why governments should be about providing long term stability in markets not subsidising or replacing them


Conversely, things dont always turn out how people expect. Maybe Americas obesity problem reduces with less easy wealth available, an unlikely positive

Andrew64

Perhaps the Euro is the modern version of the Gold Standard!? If that is the case, it's a good job we're not in it. The Irish Republic had an Emergency Budget yesterday which was a 30's style deflationary one - raise taxes and cut spending. Ireland can't devalue their way out!

eeja

john_s wrote: »

Thanks for that. Couldn't we have just devalued the pound? Say call it £2 an ounce maybe?

The pound was pegged to the dollar after we left the gold standard, along with most other major currencies I believe? And the dollar could still be exchanged for gold until the 70s I think? (So sterling was still pegged to gold.) Except US citizens couldn't exchange it, only foreigners. And I think someone (Wilson?) devalued the pound against the dollar in the 60s?

I can't remember the details, but I read the Wikipedia page about it a couple of months ago :-)

............................


Yes. you are right. The US remained on the full Gold Standard but only until 1935 when Rosevelt passed a draconian law ordering the holding of almost all gold, all banknotes convertible into gold (as most were at the time) by US citizens to be a criminal offence. Only in the 70's ....and I remember the day it happened...were US citizens permitted once more to own, trade and deal in gold.
Again you are right about INTERNATIONAL inter govermental convertibility . That continued until Nixon stopped that due to huge deficits incurred by the Vietnam war.
In fact the Americans put huge pressure on the UK to sell its gold to them at $35 an ounce. Most countries refused ie the French ..de Gaulle told the Americans where to get off ! Only the British under Heath succumbed to the pressure and sold off three quarters of the UK gold reserves to the US at $35 an ounce. [ the amount Gordon Brown sold off twenty five years later was piffling compared to the earlier above mentioned sale...and parliament was never even allowed to debate or vote on that secret sale ...a disgrace ]

RE the UK the situation with gold was even more interesting. It was a criminal offence to own gold under the Exchange Control Act 1939 right up to Nigel Lawson's announcement which I heard on the 6'oclck news in the late 70's suspending the Act . An exception was always made foir coin collectors but even that exemption was wiithdrawn during the 60's by Dennis Healy ( still alive ? ) where all collectors had to register their gold coin collections with the Bank of England (remember that ?) and dealing in Krugerands became a criminal offence.
So often one read in the Evening Standard of police being called to Spinks the Coin Dealers to arrest anyone trying to sell their Krugerrands.

Of course banning anything creates demand and in 1971 I clearly remember buying Krugerrands in Switzerland for £65 and selling them to Spinks for £75 the next day...but doing it carefully one by one to avoid arrest !!
There was a black market in Krugers and sovereigns for around 3 years with prices for gold coins far higher in England than in Continental Europe . This inevitably resulted in smuggling of Krugerrands into the UK with many millionaires being created during those years as well as a few imprisoned .

purch

dam how old are you

My first guess is 148 :eek:......but I might be a couple of years out either way !!!

eeja

purch wrote: »

My first guess is 148 :eek:......but I might be a couple of years out either way !!!

Most of those around in the 60's preferred to rave with the Beatles and the Stones ...others were at the LSE studying Economics and the budding draconian restricted currency markets.
A dangerous time those days as fifty quid in currency per year with the allowance announced in the budget annually was all we Brits were allowed to hold in those days and it was stamped in our passports.
Caught with a anything more, either at home or at Customs and it meant prison enforced by the Currency Control Department inspectors of the Bank of England who were usually ex police officers. ...and yes , the Exchange Control Act was in force a full forty years !!