Gold, France, and the Great Depression, 1919-1932

Description

H. Clark Johnson develops a convincing and original narrative of the events that led to the major economic catastrophe of the twentieth century. He identifies the undervaluation and consequent shortage of world gold reserves after World War I as the underlying cause of a sustained international price deflation that brought the Great Depression. And, he argues, the reserve-hoarding policies of central banks—particularly the Bank of France—were its proximate cause. The book presents a detailed history of the events that culminated in the depression, highlighting the role of specific economic incidents, national decisions, and individuals. Johnson’s analysis of how French domestic politics, diplomacy, economic ideology, and monetary policy contributed to the international deflation is new in the literature. He reaches provocative conclusions about the functioning of the pre-1914 gold standard, the spectacular postwar movement of gold to India, the return of sterling to prewar parity in 1925, the German reparations controversy, the stock market crash of 1929, the Smoot-Hawley tariff of 1930, the central European banking crisis of 1931, and the end of sterling convertibility in 1931. The book also provides a nuanced picture of Keynes during the years before his General Theory and deals at length with the history of economic thought in order to explain the failure of recent scholarship to adequately account for the Great Depression. Contents Acknowledgments Introduction 1. Deflation and Depression 2. The Prewar Gold Standard 3. The Postwar Undervaluation of Gold 4. The Postwar Gold Exchange Standard 5. The French Inflation, 1921–26 6. German and French Capital Inflows, 1924-31 7. The British and German Deflations, 1924–27 8. The French Stabilization, 1926–28 9. The French Deflation, 1928–32 10. The American Deflation, 1928–32 11. Why Did the Great Depression Happen? Appendix: Gold in Central Banks and Treasuries, December 1926–June 1932 Notes Glossary Bibliography Index