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Why Did The United States Follow The Gold Standard?

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Before the Great Depression, the United States was one of the many industrialized countries that followed the gold standard, very different than what it is today. This enabled countries to conduct trade and exchange their products because others followed the same monetary system. In order to sustain the value of a dollar, countries had to follow the same system, however, as the Great Depression happened and countries began to leave the system of the gold standard because of reasons such as having an economy that is unable to keep up with the official system. For exapmle, after the First World War, the economy of Germany wasn't able to go on because of the immense debt that they owed. In the case of the United States, the Federal Reserve decided to sustain stability internationally instead of focusing on the prosperity of their country.

The United States was having difficulty continuing to follow a policy that used the gold standard. Eventually, during the early 1970s, the country eventually stopped following the gold standard. The US was increasing …show more content…

Since this act was passed during Roosevelt's presidency, the president was able to negotiate with other countries in order to reduce the tariffs. These changes made from the Hoover Republicans to the Roosevelt Democrats created an inconsistency of the government. During Hoover's time in power, he had allowed Congress to increase the rates of tariffs to points that could be immensely dangerous to the United States. Roosevelt on the other hand had worked alongside with Congress in order to ensure lower tariffs by creating a trade policy that would allow to do so. These barriers set to the US' trade would primarily be decided by the President. Overall, this inconsistency would negatively affect the United States economy because of the constant shift in it's

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Though he was not able to be as progressive as much as he wanted due to WWI, he was still able to make a change and benefit the general welfare of the citizens. During Wilson’s presidency he made passage of the Revenue Act and the Clayton Anti-Trust Act, under the Revenue Act it was a tariff reform that lowered tariff rates and changed the federal income tax. And in the Clayton Anti-Trust Act it promoted the competition between businesses and discouragement for the formation of large businesses. This act included the prohibition of price favoritism, price fixing, and any other unfair business practices that may arise. Following the development of these two acts, during his second term Wilson established the Federal Trade Commission, an agency that would regularly regulate trade.

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President Roosevelt passed so many acts during this time like, the Meat Inspection Act. This required the federal to checked the meat first before it is shipped across to another state. The Pure Food and Drug Act is a act that don't allow manufacture, sale, or transportation of food if it contains bad ingredients, or harmful that will result in

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For one, he passed the Underwood Tariff, which significantly reduced duties on imports, but put a graduated income tax on the richest five percent of Americans in its place (721). Wilson exempted labor unions from antitrust laws and guaranteed workers the right to strike with passage of the Clayton Act of 1914. The president then also child labor in the manufacture of interstate goods and established an eight-hour workday on the nation’s railroads (722). Similar to how Republican Taft supported the graduated income tax that had once been proposed by the Populists, Wilson supported the Warehouse Act, which extended credit to farmers when they stored their crops in federally licensed warehouses – another Populist idea. But perhaps the greatest evidence of Wilson’s expansion of the government in economic affairs was the creation of the Federal Reserve System in 1913 to regulate currency and promote economic growth, and the Federal Trade Commission to investigate and prohibit “unfair” business activities such as cooperative price-fixing and other monopolistic

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One of Roosevelt's dominant views was that the government had the right to control big business to protect the welfare of society. Mr. Roosevelt kept that philosophy in mind and Congress passed the Sherman Antitrust Act in 1890, whereas former Presidents had only used it carefully. Sherman Antitrust Act prohibits certain business activities that federal government overseers deem to be anti-competitive, and requires the federal government to investigate and pursue trusts. (U-S-History.com, 2017). During Roosevelts presidency, J. P Morgan was dismantled because it violated the Sherman Antitrust Act.

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There were also many errors in the Monetary Policy making process. Central banks, including the United States Federal Reserve, made a few mistakes in a few policies that caused just enough noise that it dramatically contributed to the economic downturn. This panic amongst the Federal Reserve caused the government to raise interest greatly in the early 1930s to defend the gold standard, or the system by which the value of currency was defined in terms of gold, for which the currency could be exchanged. This process reduced the money supply and exacerbated the deflationary pressures on the economy as a

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The gold standard, which had long served as the basis for national currencies and their exchange rates, had to be temporarily suspended in order to recover from the costs of the Great War, but the United States, European nations, and Japan put forth great effort to reestablish it by the end of the decade. The key factor in turning national economic difficulties into worldwide Depression seems to have been a lack of international coordination as most governments and financial institutions turned inwards. Great Britain, which had long underwritten the global financial system and had led the return to the gold standard, was unable to play its former role and became the first to drop off the standard in 1931. The United States, preoccupied with its own economic difficulties, did not step in to replace Great Britain as the creditor of last resort and dropped off the gold standard in 1933. The Great Depression caused the United States Government to pull back from major international involvement during the 1930s, but in the long run it contributed to the emergence of the United States as a world leader

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Other presidents were also able to establish antitrust reforms. President Woodrow Wilson established the Federal Trade Commission Act, aimed to prevent monopoly, and the Clayton Antitrust Bill. As Document E illustrates, the Clayton Antitrust Bill claims it unlawful to "lessen competition” or “tend to create a monopoly in any line of commerce". Although Presidents Roosevelt and Wilson established reforms to stop monopoly, they still had many holes in their trust-busting campaign which severely limited the full effects of

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The country was vulnerable to a run on gold and there was a loss of confidence in the US government’s ability

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Roosevelt signed the Reciprocal Trade Agreements Act which lowered tariffs. Overall, the United States learned that government regulation is crucial to prevent the same economic downturn to

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America may not be the greatest country in the world, but it has some aspects that make it exceptional. One of the aspects being America's economy, which is the largest, in nominal terms, in the world. America’s economy represents 22% of global GDP and 17% of gross world product. The U.S. dollar makes up the most frequently used currency in international transactions, due to the Bretton Woods System and the 1944 Agreement, which used the U.S. dollar as the global currency and taking the world off of the gold standard. The United States is also the world's most prominent reserve currency.

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Meaning they were exporting more goods than they were exporting. The American currency was stronger because the dollar was linked to the goal, which led to America producing more expensive goods. Nixon tried to solve this problem by taking the U.S. off the gold standard. In the hope of making American goods cheaper aboard, as well as reducing

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It all started when President Nixon ended an agreement that pegged the US dollar at the same price as gold, making the price of gold soaring and the price of the dollar to plummet.

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This caused the United States to become the new financial leader causing the value of the dollar to become the leading currency of the world. This is when the term monetary policy was created. Monetary policy is the power of the Federal Reserve to create or take away money. This way they have the ability to control the economy. If the Federal Reserve was to decide to take money out of the reserve this would cause interest rates to rise.

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In a scholarly journal written by Paul Evans, Iftekhar Hasan, and Ellis W. Tallman. They argued that aggressive open market operations or the departure from the gold standard could have avoided the aggregate collapse in 1929-39. The the Gold Standard was a system where the value of the currency was backed by gold. By detaching from the Gold Standard the value of money decreased exponentially. Also the open market operations sold large amounts of government securities which destabilized the government.

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During the 1960's through the 1970's (around the start of the Vietnam War) the US dollar started to become known as the world's currency. During this time the US dollar rose about $96 billion dollars. Because of this the US dollar started to be supplied and demanded by commercial banks, foreign governments, and multinationals. With the rise of the US dollar, the American government was able to thrive during this period of time. Because of the Vietnam War, American manufacturing was able to benefit and allowed the government to have a prime role in world exchanges.

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