<P> The British Gold Standard Act 1925 both introduced the gold bullion standard and simultaneously repealed the gold specie standard . The new standard ended the circulation of gold specie coins . Instead, the law compelled the authorities to sell gold bullion on demand at a fixed price, but "only in the form of bars containing approximately four hundred ounces troy (12 kg) of fine gold". John Maynard Keynes, citing deflationary dangers, argued against resumption of the gold standard . By fixing the price at the pre-war rate of $4.86, Churchill is argued to have made an error that led to depression, unemployment and the 1926 general strike . The decision was described by Andrew Turnbull as a "historic mistake". </P> <P> Many other countries followed Britain in returning to the gold standard, this was followed by a period of relative stability but also deflation . This state of affairs lasted until the Great Depression (1929--1939) forced countries off the gold standard . In September 19, 1931, speculative attacks on the pound forced Britain to abandon the gold standard . Loans from American and French Central Banks of £ 50,000,000 were insufficient and exhausted in a matter of weeks, due to large gold outflows across the Atlantic . The British benefited from this departure . They could now use monetary policy to stimulate the economy . Australia and New Zealand had already left the standard and Canada quickly followed suit . </P> <P> The interwar partially backed gold standard was inherently unstable, because of the conflict between the expansion of liabilities to foreign central banks and the resulting deterioration in the Bank of England's reserve ratio . France was then attempting to make Paris a world class financial center, and it received large gold flows as well . </P> <P> In May 1931 a run on Austria's largest commercial bank caused it to fail . The run spread to Germany, where the central bank also collapsed . International financial assistance was too late and in July 1931 Germany adopted exchange controls, followed by Austria in October . The Austrian and German experiences, as well as British budgetary and political difficulties, were among the factors that destroyed confidence in sterling, which occurred in mid-July 1931 . Runs ensued and the Bank of England lost much of its reserves . </P>

When did the federal reserve stop using gold