when did we get off the gold standard
Gold standard
Higher interest rates intensified the deflationary pressure on the dollar and reduced investment in U.S. banks . Commercial banks converted Federal Reserve Notes to gold in 1931 , reducing its gold reserves and forcing a corresponding reduction in the amount of currency in circulation . This speculative attack created a panic in the U.S. banking system . Fearing imminent devaluation many depositors withdrew funds from U.S. banks . As bank runs grew , a reverse multiplier effect caused a contraction in the money supply . Additionally the New York Fed had loaned over $150 million in gold ( over 240 tons ) to European Central Banks . This transfer contracted the US money supply . The foreign loans became questionable once Britain , Germany , Austria and other European countries went off the gold standard in 1931 and weakened confidence in the dollar .
Higher interest rates intensified the deflationary pressure on the dollar and reduced investment in U.S. banks . Commercial banks converted Federal Reserve Notes to gold in 1931 , reducing its gold reserves and forcing a corresponding reduction in the amount of currency in circulation . This speculative attack created a panic in the U.S. banking system . Fearing imminent devaluation many depositors withdrew funds from U.S. banks . As bank runs grew , a reverse multiplier effect caused a contraction in the money supply . Additionally the New York Fed had loaned over $150 million in gold ( over 240 tons ) to European Central Banks . This transfer contracted the US money supply . The foreign loans became questionable once Britain , Germany , Austria and other European countries went off the gold standard in 1931 and weakened confidence in the dollar .