Foreign Exchange Rates 1913-1941 #8: A Brief Summary by Nathan Lewis


	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

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