Britain Abandons the Gold Standard
A run on the pound forces London off gold, and recovery follows
Quick facts
- Date
- September 20, 1931 (announcement)
- Suspended
- Gold Standard Act of 1925
- Trigger
- Accelerating withdrawals of foreign balances
- Effect
- Devaluation of the pound, start of recovery
What happened
By the summer of 1931 investors in Paris and New York had lost confidence in the pound, and the Bank of England was losing gold at an alarming rate. On September 20, 1931, the Treasury announced that Britain had decided, after consultation with the Bank of England, to suspend the Gold Standard Act of 1925, which had required the Bank to sell gold at a fixed price. The Treasury press notice explained that in the last few days the withdrawals of foreign balances had accelerated so sharply that the government felt bound to act. Freed from defending a fixed gold price, the pound fell in value.
Why it matters
Leaving gold let Britain loosen monetary policy and let its currency fall, and studies find this devaluation, coming ahead of the United States and France, decisively benefited the British economy and started its recovery from the Depression. The episode is central to a broader argument in economic history: the countries that broke with gold earliest tended to recover soonest, because the gold standard had been transmitting deflation from one nation to the next.
How we know
The decision is documented in the original Treasury press notice held by the National Archives of the United Kingdom, and its effect on recovery is analyzed in economic research published through the Centre for Economic Policy Research.
Sources
- The National Archives (United Kingdom). Going off gold: Treasury statement for the Press on Britain leaving the Gold Standard, 20th September 1931 · Primary source (author-declared)nationalarchives.gov.uk · Cited as a "primary" source (no stronger domain match). · Link is live and its text matches the event's key terms (Jul 2026)
- Centre for Economic Policy Research (VoxEU). The end of the gold standard and the beginning of the recovery from the Great Depression · General sourcecepr.org · Cited as a "reference" source (no stronger domain match).
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