Interwar Phase 2. The London Conference and the Gold Standard Collapse

An attempt to put order in the international monetary system is promoted by the League of Nations, with an economic and monetary conference in London. But what emerges is the Roosevelt’s decision to unilaterally devalue the dollar, in order to promote recovery from the Depression. Central banks react to that decision with a general perplexity. This attitude is followed by different paths: the U.K. pound joins the U.S. dollar; other currencies, as France’s and Italy’s, stick to their old gold parity—the “Gold Bloc”—but in the end have to follow the same route. In the collapse of the gold standard, the dollar becomes the pivot of the system, a role that will be maintained and enhanced after the Second World War. On the banking side, the legacy of the Great Depression is a series of bank collapses that are related to their deep involvement in financial and industrial concerns. In several countries, this is accompanied by public bail-outs and important regulatory reforms of banking structures and regulation.