In 1873, Germany decided to switch from the universally accepted silver standard to gold standard, following Britain that had changed to gold standard in 1816. Scholarly works suggest that this was a decision that drained economies of colonies and made them perennially poor. Will a reversal (presuming that it ever took place) contribute to the developing of economies of the third world?
What do you mean by "Germany" in 1836? The German second empire afopted the gold standard in 1873, long following Britain.
About the adoption of gold (for homeland) vs silver (for colonies) standard, it was surely a tool to exploit colonial surplus, as Keynes showed in Indian Currency (1913).
Today the question should perhaps be rrframed in terms of dollar devaluation/reevaluation, as long as no metallic standard is anymore in force anywhere.
Dear Giovanni,
Thanks for the correction. It was Britain that officially adopted gold standard first in 1816. Germany adopted it in 1873. The last country to follow silver standard was China, till 1935.
You are also right that we should rather think about the dollar than gold/silver. There are two reasons for the question: one, I was trying to re-imagine history, something like traveling back in the time machine. Two, more important, is actually the lessons that history teaches are marvelous. We may have discontinued gold/silver but the forces of free market economy works on the same principle - the more foreign investments, the more goes abroad. Unless the bedrock of domestic economy are strengthened parallely, we will find growing unemployment and lowering of per capita incomes in real terms among the mass of people who subsist on domestic economic activities.
Having generally stated my reasons, I do hope you would appreciate that re-imagining history helps in learning lessons for the future.
Have a great day!!
Dear Srinivasam,
You are right, and it would be really interesting to imagine a different settlement of the monetary system.
What I would say about history is that it repeats itself somehow, but never in the same way. This can be tricky at times. What is more interesting to me is that some people (but monetary authorities still more than others) think themselves historically, and this way their historical culture influences their choices. In the same way, Robespierre and Marat imagined their actions as similar to those of the Gracchi brothers in ancient Rome, or Lenin and Trotzky acted as if they were making the French revolution again. I find the historical role models of decision makers particularly interesting from this point of view.
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