<P> Countries that left the gold standard earlier than other countries recovered from the Great Depression sooner . For example, Great Britain and the Scandinavian countries, which left the gold standard in 1931, recovered much earlier than France and Belgium, which remained on gold much longer . Countries such as China, which had a silver standard, almost entirely avoided the depression (due to the fact it was then barely integrated into the global economy). The connection between leaving the gold standard and the severity and duration of the depression was consistent for dozens of countries, including developing countries . This may explain why the experience and length of the depression differed between national economies . </P> <P> A full or 100% - reserve gold standard exists when the monetary authority holds sufficient gold to convert all the circulating representative money into gold at the promised exchange rate . It is sometimes referred to as the gold specie standard to more easily distinguish it . Opponents of a full standard consider it difficult to implement, saying that the quantity of gold in the world is too small to sustain worldwide economic activity at or near current gold prices; implementation would entail a many-fold increase in the price of gold . Gold standard proponents have said, "Once a money is established, any stock of money becomes compatible with any amount of employment and real income ." While prices would necessarily adjust to the supply of gold, the process may involve considerable economic disruption, as was experienced during earlier attempts to maintain gold standards . </P> <P> In an international gold - standard system (which is necessarily based on an internal gold standard in the countries concerned), gold or a currency that is convertible into gold at a fixed price is used to make international payments . Under such a system, when exchange rates rise above or fall below the fixed mint rate by more than the cost of shipping gold, inflows or outflows occur until rates return to the official level . International gold standards often limit which entities have the right to redeem currency for gold . </P> <Ul> <Li> Long - term price stability has been described as one of the virtues of the gold standard . The gold standard makes it difficult for governments to inflate prices through expanding the money supply . Under the gold standard, significant inflation is rare, and hyperinflation is essentially impossible because the money supply can only grow at the rate that the gold supply increases . High inflation under a gold standard is seen only when warfare destroys a large part of an economy, reducing the production of goods, or when a major new gold source becomes available . In the U.S., inflation occurred during the Civil War, which destroyed the economy of the South . Inflation also followed the California Gold Rush that made large amounts of gold available for minting . Historical data shows that the magnitude of short run swings in prices were far higher under the gold standard . </Li> <Li> The gold standard provides fixed international exchange rates between participating countries and thus reduces uncertainty in international trade . Historically, imbalances between price levels were offset by a balance - of - payment adjustment mechanism called the "price--specie flow mechanism". Gold used to pay for imports reduces the money supply of importing nations, causing deflation, which makes them more competitive, while the importation of gold by net exporters serves to increase their money supply, causing inflation, making them less competitive . </Li> <Li> A gold standard does not allow some types of financial repression . Financial repression acts as a mechanism to transfer wealth from creditors to debtors, particularly the governments that practice it . Financial repression is most successful in reducing debt when accompanied by inflation and can be considered a form of taxation . In 1966 Alan Greenspan wrote "Deficit spending is simply a scheme for the confiscation of wealth . Gold stands in the way of this insidious process . It stands as a protector of property rights . If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard ." </Li> </Ul>

Why did britain's abandonment of the gold standard not aid its recovery