Gold bloc (Ofer Abarbanel online library)

The gold bloc refers to the seven countries led by France[1] that stuck to the gold standard monetary policy during the Great Depression, even though many other countries abandoned it. In addition to France, the gold bloc included Belgium, Luxembourg, the Netherlands, Italy, Poland, and Switzerland.[2]


As the shock from the May 1931 default of Austria’s largest commercial bank, Creditanstalt, spread throughout Europe, several countries, most notably Great Britain in September 1931, abandoned the gold standard.[3] Other countries, including Denmark, Norway, Sweden (September 1931), Finland (October), and Japan (December), also abandoned the gold standard.[4]

But the gold bloc countries recommitted themselves to maintain a stable rate of exchange of their currencies at the 1933 international economic conference in London, by which time 35 countries, including the United States and Italy, had abandoned the gold standard. They thus persisted with deflationary policies—i.e., “while foreswearing exchange controls, they raised tariffs and tightened quotas on imports in an effort to insulate their economies from the downturn and protect their gold reserves”.[1]

The currency crisis continued after the devaluation of the United States dollar in 1934 and the ongoing devaluation of the British pound sterling. The gold bloc countries’ export businesses found it difficult to maintain profitability and suffered from massive capital flight to the United States. Belgium and Luxembourg gave up the gold standard in March 1935 and devalued their currencies. In September 1936, the United States, Great Britain, and France signed the Tripartite Agreement, and finally the remaining gold bloc countries abandoned the gold standard.


Economists writing A Program for Monetary Reform (1939) indicated Scandinavian nations that abandoned the gold standard in 1931 recovered from the Great Depression earlier than the gold bloc countries.


  1. ^ Jump up to:ab Barry Eichengreen; Douglas Irwin (December 2010). “The Slide to Protectionism in the Great Depression: Who Succumbed and Why?” (PDF). Journal of Economic History. 70 (4): 871–897. doi:10.1017/S0022050710000756.
  2. ^Hallwood, Paul; MacDonald, Ronald; Marsh, Ian (June 2007), Did Impending War in Europe Help Destroy the Gold Bloc in 1936?: An Internal Inconsistency Hypothesis (PDF), University of Connecticut, archived from the original (PDF) on 2011-02-06
  3. ^Lars Jonung; Jaakko Kiander; Pentti Vartia (2009). The Great Financial Crisis in Finland and Sweden: The Nordic Experience of Financial Liberalization. Edward Elgar Publishing. p. 169. ISBN 9781849802130.
  4. ^Ben Bernanke; Harold James (January 1991). “The Gold Standard, Deflation, and Financial Crisis in the Great Depression: An International Comparison” (PDF). In Hubbard, R. Glenn (ed.). Financial Markets and Financial Crises. National Bureau of Economic Research Project Report. University of Chicago Press. ISBN 9780226355887.


Ofer Abarbanel online library