Commodity money systems, based upon gold or silver, provided relative economic stability for centuries. On the other hand, our modern paper money system, based upon unbacked government liabilities, is particularly vulnerable to abuse. The various financial crises during the twentieth century bear witness to that. This paper seeks to explain the mechanics of the former Gold and Silver Standards and provides an overview of America’s experience with its bimetallic system.
John Cooper, senior lecturer in Financial Economics at Glasgow Caledonian University, holds visiting professorships in Hungary, Peru and the USA. Dr Cooper’s research interests include the application of mathematical and statistical methods in financial decision making.