The gold standard was a very popular, political value. And it prevailed for almost a hundred years of the most fantastic economic growth in the history of the world.
Why? Because it was decided and controlled by the people. It was a popular decision.
This of course, like elections, was annoying to elites.
You can not say, that the Fed is a champion of dollar value? We’ve lost 99 percent of what stayed steady for a hundred years. If anything the Fed’s standard is constant anti-standard.
In short, money is too important to be in government hands.
The period to which you refer was produced by the explosive productive capabilities of the Industrial Revolution and it was held back by the Gold Standard for the short time it existed. England went off of convertibility for a large part of that period, the US for the Civil War period, so it didn’t even really exist.
The monetary standard was imposed by Great Britain for its benefit and was renounced when it no longer served its benefit.
The “People” had nothing to do with the Gold Standard’s adoption or removal. Although it was a popular campaign issue as the West demanded Silver and across the nation there were Greenback movements after the Civil War.
The Fed is a private corporation.
Even gold would still be in the governments’ hands as they would manipulating coinage, and reserve levels to affect trade. Governments could subsidize or restrict gold mining and exploration. Governments could do many things to affect the level of gold production and consumption.
But you are correct that the Fed’s goal is not the protection of the dollar per se. The value of the dollar is the result of many non-monetary influences as well as monetary ones. Congress passed a law decades ago making it target employment and economic growth not the value of the dollar.
Those are goals which the “People” wanted set.