Monetary stringency on such a global scale was decidedly deflationary.
The monetary fluctuations would have fed through to the long rate only if they led to expectations of inflation or disinflation.
We are interested here in the role of money rather than the means by which monetary magnitudes came to be what they were.
The threats of war in the late 1930s were more potent in this respect than the collapse of the international monetary system in 1931.
The years 1870 to 1914 were years of relative monetary tranquillity, the heyday of the classical gold standard.
Monetary control would operate through the effect of interest rate changes on bank lending.
A third factor was a tightening of monetary policy and efforts to slow the growth of public expenditure.
The government also claimed to be able to control inflation through the use of monetary policy.
