THE GOLD STANDARD AS A GOOD HOUSEKEEPING SEAL OF APPROVAL

In this article we argue that during the period from 1870 to 1914 adhe rence to the gold standard was a signal of financial rectitude, a ''go od housekeeping seal of approval,'' that facilitated access by periphe ral countries to capital from the core countries of western Europe. Ex amination of data from nine widely different capital-importing countri es, using a model inspired by the Capital Asset Pricing Model, reveals that countries with poor records of adherence were charged considerab ly more than those with good records, enough to explain the determined effort to stay on gold made by a number of capital-importing countrie s.