was already limited in its use as legal tender, was then put in the position of a second tier metal useful only for coins.
The United States used both silver and gold to back its currency, with the result that whichever metal offered more favorable exchange rates was the metal of choice until the mid-1800s. The Act of 1853 reduced the weight of silver coin, and the Gold Standard Act of 1900 effectively brought the gold standard into common use with regard to American currency. For the next 15 years, most industrialized and economically important nations were on the gold standard.
World War I brought an end to the unrestricted gold standard as nations found themselves unable to move gold around freely. Monetary standards were based on paper currency, or on a reduced, not unrestricted, gold standard. The gold standard returned to the world stage by the end of the 1920s, but redemption was often limited, not unrestricted as in pre-World War I times.
During the depression of the 1930s, a number of nations left the gold standard. There was a large influx of gold to the United States, and the nation increased the monetary price of gold from just over $20 to $35 per ounce. World War II resulted in the cessation of the flight of gold to the United States (Munn, Garcia, & Woelfel 467).
After World War II, international monetary relations became of primary importance to the world economy. The International Monetary Fund (IMF) sought to reduce and eliminate restrictive trade and financial policies, and also tried to maintain foreign exchange stability. The result was a restricted gold exchange standard where the American dollar served as a key currency as a world monetary reserve.
In 1971, President Nixon took the nation of the gold standard by suspending the international gold convertibility for the dollar. As a result, the dollar floated in foreign exchange markets.
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