Why did people abandon the gold standard?

The answer might depend on which gold standard period you refer too. However, reading “”British Monetary Policy 1924–1931″ you discover this nice explanation in the conclusion:

Now,where a country looms large in world trade, its currency will tend to be demanded for both transactions and asset-accumulation purposes. Even if wealth owners are uncertain as to their future commodity consumption patterns, the country offering the widest range of goods and services provides a useful first approximation to their possible future needs, subject to the principle of diversification to minimize risk. If this large trading country's currency possess certain other advantages, over and above reductions in transactions costs resulting from the large volume of its foreign trade, it will tend to be still more favored.. If it's financial markets are extensive, risk-averting investors will prefer it, for the probabilities of loss resulting from asset sales of a given size are lower than in a smaller market . If, in addition, its currency is not expected to fluctuate wildly or to depreciate in the long run, it will be preferred to other markets where this expectation is somewhat stronger.

"This approach goes far to suggest why Sterling developed as a vehicle and a reserve currency prior to 1914. The roots of the development lay in Britain's trading position, her Empire, her policy of free trade and her dominance in world shipping and commodity transactions. To that base, over time she had evolved a financial system providing asset holders with a wide variety of assets, all easily traded in extensive markets, banking links the domestic currency arrangements of many countries and a major currency which was never scarce. Lastly, London's role as the major international capital market and almost a century of currency stability aided this process." Page 232 and 233.

In a nutshell I would argue that the gold standard before the war was “successful” only in so far as the global economic stability and direction was aligned to Britain’s, and so growing countries aligned to sterling and gold. WWI blew this away.

Between the World War’s Britain’s economic and financial position in the world, already declining and under strain, was exposed and the US was trying to supplant it. The gold exchange standard itself was a failure. WWII blew all that away. Bretton Woods secured the end of sterling and the ascendancy of the dollar.

So the gold standard was a myth in that we cannot “go back” to gold. It just would not work in the current global economy made of up huge trade and exchange reserve imbalances, and lack of coordination of executive macro-policy setting organizations