Dogmatic and Pragmatic Approaches to International Monetary Relations

The author begins this paper by outlining the tendencies of money evolution and the role of gold in the 19th century. On the basis of the processes of these changes, he shows the role of the British pragmatic approach reducing the gold system restrictions. Because of that pragmatic approach the gold system was modified. Simultaneous with those changes was the change of circulation and coverage of money. There was an emergence of a clear cut predominance of credit issued currency over gold currency, and significant reduction of coverage of all money in circulation. With the help of economic development, accompanied by the creation of credit currency, the rigorous nature of the gold system was demolished. A further decline of the role of gold, and the even increase of the significance of credit issued currency, appeared in th first half of the 20th century. This resulted from economic intervention. The elimination of gold currency from the internal monetary system occurred first in the Anglo-Saxon countries, and subsequently in others. The decline of function of gold in International Monetary Relationships appeared in the years 1968-1975. The Bretton Woods System collapsed because of the severence of the monetary exchange between the dollar and gold, and because of the termination of dollar convertability in 1971. In spite of this, the dollar continued to sustain the role of key currency because of its Universal demand. On the basis of these changes, two monetary ideologies flourished: Anglo-Saxon and West German pragmatism, and French dogmatism. French dogmatism was a result of traditional approach to money. France insisted on the restoration on the gold system. The difference in monetary doctrines precipitated an extended period of American-French controversy. Finally, the pragmatic approach dominated International Monetary Relationship. The return of gold to the International Monetary System is illusionary.Digitalizacja i deponowanie archiwalnych zeszytów RPEiS sfinansowane przez MNiSW w ramach realizacji umowy nr 541/P-DUN/201