Introduction: The ‘Deflationary Bias’ of the Interwar Gold Standard

Although the world’s Greatest Depression’ may be justly be regarded as a unique event, the lack of comparable historical events has not prevented scholarly explanation of it from arriving at a unanimity that is almost equally rare in the annals of historiography. This is now the approximate status of the thesis of Peter Temin (1989) and Barry Eichengreen (see especially 1992a) regarding the relationship between the gold standard and the Great Depression. The several chapters of this book were commissioned to review the Depression experiences of various countries in the light of their international monetary relations and broadly in the light of the Eichengreen-Temin thesis. None of them seriously dissents from what (begging their pardons) I will acronymize as the ET thesis. However, their varying emphases do add up to quite an illuminating commentary on it. This introduction firstly summarizes the ET thesis, and secondly seeks to comment on the substantive chapters, in such a way as to examine the roles of (a) diplomatic conflict, especially in relation to Reparations, (b) of the enlarged demand for gold as a consequence of interwar monetary uncertainties, and (c) of ideologies (note the plural) in the history of the gold standard and the Great Depression.