How Gold Became the Gold Standard for Trade
06 April 2012
This is the VOA Special English Economics Report.
The best example of something is often called the "gold standard." It sets the standard against which other things are measured. In economics, the term describes how major trading nations once used gold to set currency values and exchange rates. Many nations continued to use the gold standard until the last century.
In the United States, people could exchange paper money for gold from the eighteen seventies until nineteen thirty-three. Then-President Richard Nixon finally disconnected the dollar from the value of gold in nineteen seventy-one. From time to time, some politicians call for a return to the gold standard.
But in nineteen seventy eight, the International Monetary Fund ended an official gold price. The IMF also ended the required use of gold in transactions with its member countries.
Since that time, gold prices have grown. But the growth was uneven. Prices -- uncorrected for inflation – continue near record highs. Gold is trading above one thousand six hundred dollars an ounce. An ounce is about twenty-eight grams.
But people keep buying. Some people are "gold bugs." These are investors who say people should buy gold to protect against inflation.
People have valued gold for thousands of years. The soft, dense metal polishes to a bright yellow shine and resists most chemical reactions. It makes a good material for money, political power -- and, more recently, electrical power. If you own a device like a mobile phone or a computer, you might own a little gold in the wiring.
The gold standard was the subject of one of the best-known speeches in American political history. It took place at the eighteen ninety-six Democratic National Convention in Chicago.
William Jennings Bryan wanted the country to use both gold and silver as money. The idea was to devalue the dollar and make it easier for farmers to pay their debts. Here is Bryan reading his speech much later, in nineteen twenty-one.
WILLIAM JENNINGS BRYAN: "You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold."
The speech made William Jennings Bryan famous. He was a presidential candidate three times. But he never won.
And that's the VOA Special English Economics Report, written by Mario Ritter. To read and hear news and information for people learning English, and for transcripts go to voaspecialenglish.com. You can also find MP3s and now PDFs of our programs for e-readers. And follow us on Facebook, YouTube and iTunes at VOA Learning English. I'm Christopher Cruise.