The Gold Standard and Modern Conditions

Synopsis

The standard on which the currency of this country is based is of importance to actuaries on account of (a) its bearing on the future real value of the currency in which life assurance contracts are made, and (b) its influence on the relative values of various currencies as affecting investment policy.

The advantages of the gold standard and the assumptions underlying it are examined, and it is shown how the validity of these assumptions has been undermined by the gradual development of various factors. It is suggested that there is little ground for anticipating that the presence of these disturbing factors will be temporary.

The present monetary position and the greatly changed position as regards the world's gold supplies both in amount and value are discussed and the case for the readoption of the gold standard is outlined. Two types of modified gold standard, (a) a partial gold standard, and (b) a managed gold standard, are considered.

The difficulties of a managed standard and the limitations of a common standard are reviewed and several conclusions reached.