My One Paragraph Summary of the Gold Standard

Here is the conclusion of an essay I am working on for a macroeconomics anthology/textbook. The essay is essentially a less technical summary of my "Good as Gold?" paper, currently under review at the Financial History Review.

Both during and after the classical gold standard, policies of governments and central banks were responsible for unusual changes in prices. First, with the demonetization of silver during the 1870s, prices fell as demand for gold outpaced the growth of the gold stock. The increase in demand, however, was not so severe as to cause an international depression. By the end of the classical era, changes in policies had a much greater impact on prices. Instead of exerting a persistent, but shallow, downward effect on prices, prices in terms of gold became unhinged. Rising rapidly during and shortly after the war, then falling dramatically in two stages. Each of these swings was accompanied by substantial changes in gold holdings by central banks.  When central banks had finally consolidated nearly all of the world’s monetary gold stock at the end of the 1920s, increased demand for gold pushed down prices persistently enough to initiate the Great Depression. By this logic, it appears that the Great Depression was not a glitch, but was the logical end of a monometallic standard. The elimination of metallic base money substitutes by governments and sweeping consolidation of gold made the international monetary system increasingly fragile until, in 1929, it broke.