Throughout much of the past century, the idea of a gold standard for national currencies has been routinely linked with laissez-faire economics and “classical liberalism”—also known as “libertarianism.” It’s not difficult to see why. During the second half of the nineteenth century—as free-market liberalism was especially influential in much of Western Europe—it was the liberals who pushed for the adoption of the system we now know as the classical gold standard (CGS), which reigned supreme in Europe from approximately 1870 to 1914.
The liberals pushed for this change at the time for several reasons. The liberals believed that the CGS would facilitate globalization and international trade while reducing so-called transaction costs. The CGS also created a more transparent monetary system in the sense that national currencies were explicitly tied to specific amounts of gold. Moreover, the CGS eliminated the alleged inefficiencies of bimetallism.
