The Growing Similarities Between the International Monetary Developments of 1958-1961 and the Latter Part of 1926-1929

Some will no doubt be surprised that in 1961, practically alone in the world, I had the audacity to call attention to the dangers inherent in the international monetary system as it existed then. I must, however, pay a tribute here to my friend Professor Robert Triffin of Yale University, who also diagnosed the threat of the gold-exchange standard to the stability of the Western world. But while we agreed on the diagnosis, we differed widely as to the remedy to be applied. On the other hand, the late Professor Michael Heilperin, of the Graduate Institute of International Studies in Geneva, held a position in every respect close to mine.

My fears at the time were based essentially on the growing similarities between the international monetary developments of the years 1958-1961 and those of the latter part of the 1926-1929 period. There was the same accumulation of Anglo-Saxon currencies in the monetary reserves of European countries, in particular France, and the same inflation in creditor countries.

In both periods the monetary system was characterized by the widespread application of a specific, adventitious procedure that Anglo-Saxon countries termed the gold-exchange standard. . . .

Between 1930 and 1934 I was Financial Attaché in the French Embassy in London. In that capacity, I had noted day after day the dramatic sequence of events that turned the 1929 cyclical downturn into the Great Depression of 1931-1934. I knew that this tragedy was due to disruption of the international monetary system as a result of requests for reimbursement in gold of the dollar and sterling balances that had been so inconsiderately accumulated.

--Jacques Rueff, The Monetary Sin of the West, trans. Roger Glémet (New York: The Macmillan Company, 1972), 15-16.