In 1925, Chancellor of the Exchequer Winston Churchill returned Britain to the gold standard at the pre-war exchange rate. It was a point of national pride and a disaster of economic policy: the old parity badly overvalued the pound, throttling British exports and forcing years of painful deflation. John Maynard Keynes attacked it in a pamphlet titled "The Economic Consequences of Mr. Churchill." The strain would prove unsustainable, and Britain would abandon gold in 1931.
Key events of 1925
- 1925-04-28
Britain returns to gold
Churchill restores the pre-war gold parity; Keynes warns it will force a deflationary slump.