page_title: History of the United States dollar
section_title: Gold standard
hierarchical_section_title: History of the United States dollar / Gold standard
context_page_description: The history of the United States Dollar refers to more than 240 years since the Continental Congress of the United States authorized the issuance of Continental Currency in 1775. On April 2, 1792, the United States Congress created the United States dollar as the country's standard unit of money. The term dollar had already been in common usage since the colonial period when it referred to eight-real coin used by the Spanish throughout New Spain.
context_section_description: Bimetallism persisted until March 14, 1900, with the passage of the Gold Standard Act, which provided that:
  ... the dollar consisting of twenty-five and eight-tenths grains of gold nine-tenths fine, as established by section thirty-five hundred and eleven of the Revised Statutes of the United States, shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard ...
  Thus the United States moved to a gold standard, making both gold and silver the legal-tender coinage of the United States, and guaranteed the dollar as convertible to 25.8 grains (1.672 grams, 0.05375 troy ounces) of gold, or a little over $18.60 per ounce.
  The gold standard was suspended twice during World War I, once fully and then for foreign exchange. At the onset of the war, U.S. corporations had large debts payable to European entities who began liquidating their debts in gold. With debts to Europe falling due, the dollar to (British) pound sterling exchange rate reached as high as $6.75:£1, far above the nominal (gold) parity of 4.8665:1. This caused large gold outflows until July 31, 1914, when the New York Stock Exchange closed and the gold standard was temporarily suspended. In order to defend the exchange rate of the dollar, the US Treasury Department authorized state and nationally chartered banks to issue emergency currency under the Aldrich-Vreeland Act, and the newly created Federal Reserve organized a fund to assure debts to foreign creditors. These efforts were largely successful, and the Aldrich-Vreeland notes were retired starting in November and the gold standard was restored when the New York Stock Exchange re-opened in December 1914.
  For as long as the United States remained neutral in the war, it remained the only country to maintain its gold standard, doing so without restriction on import or export of gold from 1915 to 1917. When the United States became a belligerent in the war, President Wilson banned gold export, thereby suspending the gold standard for foreign exchange. After the war, European countries slowly returned to their gold standards, though in somewhat altered form.
  During the Great Depression, every major currency abandoned the gold standard. Among the earliest, the Bank of England abandoned the gold standard in 1931 as speculators demanded gold in exchange for currency notes or in settlement of debts, threatening the solvency of the British monetary system. This pattern repeated throughout Europe and North America. In the United States, the Federal Reserve was forced to raise interest rates in order to protect the gold standard for the US dollar, worsening already severe domestic economic pressures. After bank runs became more pronounced in early 1933, people began to hoard gold coins as distrust for banks led to distrust for paper money, worsening deflation and depleting gold reserves.
caption: A gold-standard 1928 one-dollar bill. It is identified as a "United States Note" rather than a Federal Reserve note and by the words "Will Pay to the Bearer on Demand", which do not appear on today's currency. This clause became obsolete in 1933 but remained on new notes for 30 years thereafter.
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