I thought I would make a brief summary of our look into currency histories of the 1913-1941 period. The data is from the Federal Reserve Banking and Monetary Statistics, 1914-1941, available here:
http://fraser.stlouisfed.org/publication/?pid=38
June 22, 2014: Foreign Exchange Rates 1913-1941 #7: Switzerland’s Independence; Turkey Avoids Devaluation
June 1, 2014: Foreign Exchange Rates 1913-1941 #6: Hyperinflation in Poland; Russia’s WWI Decline
May 25, 2014: Foreign Exchange Rates 1913-1941 #5: Devaluations By Japan and France
April 27, 2014: Foreign Exchange Rates 1913-1941 #4: Britain Leads the World Into Currency Chaos
April 20, 2014: Foreign Exchange Rates 1913-1941 #3: The Brief Rebuilding of the World Gold Standard System
April 6, 2014: Foreign Exchange Rates 1913-1941 #2: The Currency Upheavals of the Interwar Period
March 30, 2014: Foreign Exchange Rates 1913-1941: Just Looking At the Data
At the end of the 1920s, most countries had returned to a gold standard system worldwide. Here is a brief summary of currency devaluations from 1929-1941.
We can see that there were many countries that followed Britain’s lead and devalued in 1931, or perhaps in early 1932. This put great pressure on other countries to devalue. Once the premier international currency is devalued, and several other countries follow, the tendency is for all countries to follow eventually. This also happened in the 1970s. Even countries that had no interest in following the U.S.’s devaluation path, like Switzerland, eventually found that they were unable to resist doing so due to trade pressures. The effect of most devaluations, including the U.S. devaluation in 1933, was to return exchange rates to their pre-devaluation levels.
From this, I conclude that Britain’s devaluation in 1931 was a major destabilizing event.
Before 1931
Argentina
Brazil
China (effectively, on silver standard)
Hong Kong
Spain
Uruguay
1931
Britain
Australia
India
Canada
Denmark
Egypt
Finland
Japan
Mexico
New Zealand
Norway
Portugal
Straits Settlements (Singapore)
Sweden
Yugoslavia
1932
Chile
Greece
South Africa
1933
United States
Austria
Colombia
Czechoslovakia
1934
1935
Belgium
Romania
1936
France
Hungary
Italy
Netherlands
Switzerland
Did not devalue
Bulgaria
Germany
Poland
Turkey
