Gold Bullion Standard
Under the bold bullion standard, the value of the currency is fixed in terms of gold by making such currency convertible into gold (bullion not coin), and vice avers. But gold does not circulate as coins. In the United Kingdom. under the Gold Bullion Standard, the Bank of England was willing to buy any amount of gold at £3 9d. per ounce 11112 fine and to sell minimum amount of 400 ounces,at £3 17s. lOtd. This was the same rate as before 1914. Gold was allowed freely to move into or out site the country. As a measure of economy. no gold coins circulated in the country. But gold was made available for foreign payments. The Gold Bullion. Standard was adopted in India in 1927 on the recommendation of the Hilton Young Commission. The currency aunt authority was pis ed under an obligation to buy or sell gold at announced beforehand of 400 ozs. of gold. The Hilton m Ion claimed that it had all standard minus its (II. advantage . (i) It is economic alimented and put into CI I the public use a cheap ther paper money or rupe It makes for nation pre nge, because gold IS made freely available hot f r usc m ide the country and for exporting it abroad an n merely for exchange purposes as under the gold change standard. (iii) The paper under gold bulliung standard, has a more tangible and solid backing, It is have to be In their daily dealm of exchange, convertible into gold. But, under the gold exchange standard, one token money (currency note) is convertible into another token money (rupee), (h’) It is also claimed that, under this system, an automatic mechanism for expansion and contraction of currency is maintained. The currency will be expanded when gold is sold to the currency authority, . and it will be contracted when gold is purchased by the public. (I’) It is considered Ihat gold kcpt as a reserve in the central bank is much more useful, d gives more valuable support to thc national currency than gold put into circulation, This is provided under the gold bullion standard. (I’) The gold bullion standard provided fur the public the facility to obtain gold and liberty to melt or export it. But these merits of the r Id bullion standard arc more or less theoretical: atat any rate. they turned out to best in the case of India. For the average man. the convertibility of notes into gold was a farce, for who could bring sufficient paper obey to purchase 400 oz. gold (400 oz. = 1.065 ? Thu . under gold standard, automatic expansion and contraction of currency a not brought about Gold.In England off the g Id standard and so did India. The gold bullion I made an exit ‘nontenured and Gold Exchange The first cry 10 dopt gold exchange standard seems to ha e been Holl d. which did in 1877. Russia Ho I nd 111 ad piing it in 1894. Austria I dopt d It t the same time. The credit, hove er, of perfecting it and working it effectively belongs to India where it started See “International Currency Experience. The gold standard broke down ill country after country soon alter it rehabilitalioll during the povt- IlJ14-18 war decade. There were several forthedevelopment: (i) Gold was vcry unevenly distributed al110ng the countries in the inter-war period. Whilc the and France came to possess the bulk of it, other COUIltries did II0t have enough to maintain a mouctary S)~- tcm based in gold. a habit arose 011 the part uf certain Continental countries to keep their funds for short period:foreignccnu al banks, especially in Great Hritain. Thec Iundv were liable to be wirhdr.r« 11,It the carhcst dungcr signal. Withdrawal of such j und It 1;) Oil the parileu 10 gold fonuc: cuuniry [lIgland could not allord 1quantitics al xuch a short notice. (i1) International obligauo» rations and war debts .
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