Gold Bullion Standard

Britain’s compromise return to the gold standard in 1925 was initiated by Winston Churchill, then Chancellor of the Exchequer. Gold coins did not circulate freely and notes could be redeemed only for 400 ounce good delivery bars.

The real mistake of this attempt to revive the gold standard was that sterling was maintained at the traditional gold price of £4.4.11½ d, which had prevailed since 1717. This was a considerable over-valuation after the trauma of World War I that gave the pound far too high an exchange rate against the dollar. It lasted for only six years until Britain abandoned gold in 1931.