Gold has been used to make coins for centuries. The value of each one of them depended on the weight of the metal that made it, not the denomination given by man. Therefore, gold was never valued and its exchange rate expressed in money was not mentioned. Interestingly, even when countries started to produce their own banknotes, they still relied on the value of gold or silver.
The bimetallic system was first suspended in Europe in 1878. The Latin Monetary Union, which existed for less than 100 years, was introduced at the time. This agreement was aimed at harmonising the value of each currency against gold, and therefore both the Italian lira and the French tailcoat were worth exactly 0.290322 g of gold. In the meantime (1900), the United States passed the Gold Standard Act, which provided for a value of 1 dollar equal to 1,505 g of gold. Unfortunately, in 1929 there was the greatest economic crisis in the history of the world, and the value of the dollar in the USA fell to 0.888 g of gold ($ 35 per ounce). The local authorities also ordered the citizens to confiscate all their gold.
The total collapse of the PLN currency system took place during World War I, because of the amount of paper money produced. States forced to pay soldiers on the fronts and workers in factories of weapons or war machines were issuing more and more money. The gold, which had previously been held in reserves, returned to the market and was used primarily for international transactions. All this has caused enormous inflation, the effects of which in Poland or Germany have been so great that it has been described as hyperinflation.
In the interwar period, some countries tried to return to partial exchange of currencies for gold, but this was difficult to achieve in the case of Poland, for example. In our country, Władysław Grabski's reforms were introduced, and the zloty was based on foreign currencies and gold. Although the official rate remained unchanged (1 zloty = 0.2903 g of gold) until the Second World War, the Polish state was unable to guarantee total interchangeability. In 1933 a new order was established in Betton Woods and the dollar took a leading place among the world currencies. Not only was it fully convertible into gold, but its value also became a reference point for determining the value of other currencies. This has caused further problems and disturbances in monetary matters.
Between 1968 and 1971 the exchange rate of gold against the dollar in the United States changed many times due to the Vietnam War and the oil crisis, resulting in a huge economic crisis. As a result, there was stagflation and so many dollars in circulation that they could not be fully exchanged for gold. On August 15, 1971, the price of an ounce of gold stopped at $42.22, and the definitive end of the Bretton Woods system in 1973 freed the dollar and made it independent of the value of gold. Since then, the price of this gold has been expressed in dollars.