The Gold Exchange Standard Is Inflationary Because the Same Gold Reserve Serves to Permit Expansion of Money and Credit in Two Countries

The gold exchange standard is a device whose purpose is to save the use of gold. It is an inflationary system because the same gold reserve serves to permit expansion of money and credit in two countries. It brought about the collapse of the pound when the foreign countries withdrew their deposits in the British banks and it was greatly responsible for the depth and length of the Great Depression of 1929/1933. The gold exchange standard considerably reduces the reactions which tend to correct imbalances of international payments.

--Philip Cortney, introduction to The Triumph of Gold, by Charles Rist (New York: Philosophical Library, 1961), 30.