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Shocking intellectual austerity: the role of ideas in the demise of the gold standard in Britain

Morrison, James Ashley (2016) Shocking intellectual austerity: the role of ideas in the demise of the gold standard in Britain. International Organization, 70 (1). 175 - 207. ISSN 0020-8183

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Identification Number: 10.1017/S0020818315000314


Britain's 1931 suspension of the gold standard remains one of the most shocking policy shifts of the past century. Conventional explanations focus on changing international conditions alongside the rise of social democracy: when Britons refused to shoulder the increasing costs of defending the exchange rate, the Bank of England was “forced” to abandon the gold standard. This article refocuses attention on policy-makers’ causal ideas at critical moments. Drawing on numerous primary sources held in several archives, it reveals a cleavage within the Bank over the appropriate response to the flight from sterling. Following the nervous collapse of the Bank's governor, the deputy governor shifted the Bank's strategy from making defensive rate hikes to pursuing fiscal austerity. He then “temporarily” suspended gold convertibility in a gambit to forestall the election he (incorrectly) assumed would unseat the gold standard's supporters in Parliament. When the unintended experiment with a managed float proved successful, Keynes was able to persuade policy-makers to embrace the new exchange rate regime.

Item Type: Article
Official URL:
Additional Information: © 2015 The IO Foundation
Divisions: International Relations
Subjects: H Social Sciences > HG Finance
Sets: Departments > International Relations
Date Deposited: 12 Oct 2017 11:09
Last Modified: 20 Jan 2021 06:01

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