Fiona Munro
The gold standard began (unofficially) with the introduction of the Guinea in the 17th century..... The guinea under valued gold vs silver... when compared to the pound, which lead to english merchants buying things with silver,.. and selling things for gold... The result was that England was more or less on a gold standard pretty early. Shortages in gold and silver caused by them being the basis of currency, meant that at many times, tokens were used instead of silver coins..... and the issuing of bank notes. The gold standard was good, because it meant you could directly compare the value of currencies. It was bad, because it meant countries needed to keep a strategic reserve of gold to make sure they could "honour" their currency. During the depression, there simply wasn't enough gold to honour the gold standard, and a flat exchange of 1pound to 4 - 5 USD was set up.... In 1949 it was devalued, and all through the 60s, there was pressure that the pound was... "too high" vs the USD. In 1971 the pound floated against the USD which ended a lot of weird inter-currency issues......;) Officially the pound (and any first world currency) no longer has a fixed promissary value for a resource.