Between 1900 to 1950, while the Bahamas had its own economic problems, it almost paled in comparison to what was happening in Britain, the Mother Country, to which its currency, the Bahamian Pound, was pegged.
Trouble in the stability of the Sterling meant trouble for its colonies like the Bahamas. If Sterling was being destabilised, so was the currency standard of its pegged colonies.
By 1947, the Bahamas Assembly and the Chamber of Commerce, were attempting to preempt a potential currency disaster. Britain had a tremendous war debt, which was causing problems in the value of Sterling.
For England, major economic shocks had hit its currency standard. In first half of the 20th century, the country had fought two devastating world wars.
By 1925, a six month coal strike, then a general strike, coupled with a prolonged period of unemployment, all culminated in a run on the Sterling in 1931.
By 1930 to 1933, the world witnessed the collapse of the gold standard. This left Britain’s currency overvalued.
By 1943, the Nazis were attempting to destabilise the British Pound by printing millions in counterfeit currency. The Germans were producing 500,000 banknotes a month. Despite a majority of the fake notes falling into the hands of the allied forces and burnt, for years afterwards German made fake pounds were causing major headaches for the Bank of England.
Through all the upheaval in Europe, the strength of US industry heralded the new dawn of the growing global dominance of the US Dollar.
By 1947, less than two years after the end of WW2, the Bahamas had a serious decision to make. Would it continue having its currency, then the Pound pegged to the British Pound or would pegging it to another, more stable, currency be the answer.
In 1947, the Bahamas was considering pegging its money with Canada.
