ECON 372 Chapter 4: The Transmission of the great depression

• School: Simon Fraser University
• Department: Economics
• Course: ECON 372
• Professor: David Jacks

Document Summary

I(cid:374) the a(cid:396)ticle, (cid:862)the t(cid:396)a(cid:374)s(cid:373)issio(cid:374) of the g(cid:396)eat dep(cid:396)essio(cid:374),(cid:863) the autho(cid:396) elo(cid:395)ue(cid:374)tly outli(cid:374)es the relationship between the gold standard and the great depression. This article explores how the gold standard created a ripple like effect, where the great depression, which originated in the. United states of america, caused financial crises in nations that also had currencies tied to the gold standard. Historically, the gold standard was a system by which nations tied the value of the currency to its equated weight in gold. This system relied on the country setting a fixed price at which their currency could be bought and sold, in terms of gold. This system, according to the author, was the reason financial crises spread so rapidly and profoundly across international economies. The popularity and trust in the gold standard was its crutch which allowed it to operate prior to the great depression. However, the gold standard was dependant on international cooperation.