Gold Standard, a monetary standard under which gold is the exclusive basis of value. When a country is on the gold standard the monetary unit (the dollar, for example) is defined by law as a definite weight of gold, and other forms of money (silver coins, paper bills, etc.) can always be exchanged for a stated amount of gold. The use of gold as a standard is an example of monometallism, the use of a single metal as the basis of value. The use of both gold and silver as standards of value is called bimetallism.
Until the 19th century most countries used bimetallism. In 1816 Great Britain set up the gold standard, and after 1870 most other European countries followed. In 1873 the United States adopted what in effect was the gold standard, but in 1878 Congress provided for a limited coinage of silver. Bimetallism was a political issue until 1900, when Congress passed the Gold Standard Act. The gold standard was then almost universal.
The system for maintaining the gold standard quickly collapsed after the outbreak of World War I in 1914 because the demand for gold exceeded the supply. After the war the gold standard was gradually restored, but the system broke down again during the economic depression that began in 1929. The United States abandoned the gold standard in 1933. Under the Gold Reserve Act of 1934 the United States adopted a gold bullion standard for use in international trade. Within a few years not a single country was on the true gold standard.
In 1944, representatives of 44 nations met at Bretton Woods, New Hampshire, and set up a new international monetary system based on a gold-exchange standard. Gold was valued at 35 United States dollars per ounce (28.35 g), and other currencies were valued in terms of the dollar. With the growth of international trade following World War II, the gold-exchange standard became increasingly difficult to maintain as the official price of gold ceased to reflect its rising value and scarcity. In 1971 the United States stopped redeeming dollars for gold, thus ending the gold-exchange standard. Most nations, however, continued to regard gold as an unofficial standard of value.