Read an Excerpt
THE POWER OF GOLD
THE HISTORY OF OBSESSION
Prologue
The Supreme Possession
About one hundred years ago, John Ruskin told the story of a man who boarded a ship carrying his entire wealth in a
large bag of gold coins. A terrible storm came up a few days into the voyage and the alarm went off to abandon ship.
Strapping the bag around his waist, the man went up on deck, jumped overboard, and promptly sank to the bottom of
the sea. Asks Ruskin: "Now, as he was sinking, had he the gold? Or had the gold him?"
This book tells the story of how people have become intoxicated,
obsessed, haunted, humbled, and exalted over pieces of metal called
gold. Gold has motivated entire societies, torn economies to shreds,
determined the fate of kings and emperors, inspired the most beautiful
works of art, provoked horrible acts by one people against another, and
driven men to endure intense hardship in the hope of finding instant
wealth and annihilating uncertainty.
"Oh, most excellent gold!" observed Columbus while on his first
voyage to America. "Who has gold has a treasure [that] even helps souls
to paradise." As gold's unquenchable beauty shines like the sun, people
have turned to it to protect themselves against the darkness ahead.
Yet we shall see at every point that Ruskin's paradox arises and challenges
us anew. Whether it is Perseus in search of the Golden Fleece,
the Jews dancing around the golden calf, Croesus fingering his golden
coins, Crassus murdered by molten gold poured down his throat, Basil
Bulgaroctonus with over two hundred thousand pounds of gold, Pizarro
surrounded by gold when slain by his henchmen, Sutter whose millstream
launched the California gold rush, or modern leaders such as
Charles de Gaulle who deluded themselves with a vision of an economy
made stable, sure, and superior by the ownership of gold--they all had
gold, but the gold had them all.
When Pindar in the fifth century BC described gold as "a child of
Zeus, neither moth or rust devoureth it, but the mind of man is
devoured by this supreme possession," he set forth the whole story in
one sentence. John Stuart Mill nicely paraphrased this view in 1848,
when he wrote "Gold thou mayst safely touch; but if it stick/Unto thy
hands, it woundeth to the quick." Indeed, gold is a mass of contradictions.
People believe that gold is a refuge until it is taken seriously; then
it becomes a curse.
Nations have scoured the earth for gold in order to control others
only to find that gold has controlled their own fate. The gold at the end
of the rainbow is ultimate happiness, but the gold at the bottom of the
mine emerges from hell. Gold has inspired some of humanity's greatest
achievements and provoked some of its worst crimes. When we use
gold to symbolize eternity, it elevates people to greater dignity--royalty,
religion, formality; when gold is regarded as life everlasting, it drives
people to death.
Gold's most mysterious incongruity is within the metal itself. It is
so malleable that you can shape it in any way you wish; even the most
primitive of people were able to create beautiful objects out of gold.
Moreover, gold is imperishable. You can do anything you want with it
and to it, but you cannot make it disappear. Iron ore, cow's milk, sand,
and even computer blips are all convertible into something so different
from their original state as to be unrecognizable. This is not the case with
gold. Every piece of gold reflects the same qualities. The gold in the
earring, the gold applied to the halo in a fresco, the gold on the dome
of the Massachusetts State House, the gold flecks on Notre Dame's
football helmets, and the gold bars hidden away in America's official
cookie jar at Fort Knox are all made of the same stuff.
Despite the complex obsessions it has created, gold is wonderfully
simple in its essence. Its chemical symbol AU derives from aurora, which
means "shining dawn," but despite the glamorous suggestion of AU,
gold is chemically inert. That explains why its radiance is forever. In
Cairo, you will find a tooth bridge made of gold for an Egyptian 4500
years ago, its condition good enough to go into your mouth today.
Gold is extraordinarily dense; a cubic foot of it weighs half a ton. In
1875, the English economist Stanley Jevons observed that the £20 million
in transactions that cleared the London Bankers' Clearing House
each day would weigh about 157 tons if paid in gold coin "and would
require eighty horses for conveyance." The density of gold means that
even very small amounts can function as money of large denominations.
Gold is almost as soft as putty. The gold on Venetian glasses was hammered
down to as little as five-millionths of an inch--a process known
as gilding. In an unusually creative use of gilding, King Ptolemy II of
Egypt (285-246 BC) had a polar bear from his zoo lead festive processions
in which the bear was preceded by a group of men carrying a
gilded phallus 180 feet tall. You could draw an ounce of gold into a
wire fifty miles in length, or, if you prefer, you could beat that ounce
into a sheet that would cover one hundred square feet.
Unlike any other element on earth, almost all the gold ever mined
is still around, much of it now in museums bedecking statues of the
ancient gods and their furniture or in numismatic displays, some on the
pages of illustrated manuscripts, some in gleaming bars buried in the dark
cellars of central banks, a lot of it on fingers, ears, and teeth. There is a
residue that rests quietly in shipwrecks at the bottom of the seas. If you
piled all this gold in one solid cube, you could fit it aboard any of
today's great oil tankers; 8 its total weight would amount to approximately
125,000 tons, 9 an insignificant volume that the U. S. steel industry turns
out in just a few hours; the industry has the capacity to turn out 120
million tons a year. The ton of steel commands $550--2¢ an ounce--but the 125,000 tons or so of gold would be worth a trillion dollars at
today's prices.
Is that not strange? Out of steel, we can build office towers, ships,
automobiles, containers, and machinery of all types; out of gold, we can
build nothing. And yet it is gold that we call the precious metal. We
yearn for gold and yawn at steel. When all the steel has rusted and rotted,
and forever after that, your great cube of gold will still look like
new. That is the kind of longevity we all dream of.
Stubborn resistance to oxidation, unusual density, and ready
malleability--these simple natural attributes explain all there is to the
romance of gold (even the word gold is nothing fancy: it derives from
the Old English gelo, the word for "yellow"). This uncomplicated
chemistry reveals that gold is so beautiful it was Jehovah's first choice
for the decoration of his tabernacle: "Thou shalt overlay it with pure
gold," He instructs Moses on Mount Sinai, "within and without shalt
thou overlay it, and shalt make upon it a crown of gold round about."
That was just the beginning: God ordered that even the furniture, the
fixtures, and all decorative items such as cherubs were also to be covered
in pure gold.
God issued those orders many thousands of years ago. What is the
place of gold in the modern world of abstract art, designer jeans, complex
insurance strategies, computerized money, and the labyrinths of
the Internet? Does gold carry any significance in an era where traditions
and formality are constantly crumbling beyond recognition? In a global
economy managed increasingly by central bankers and international
institutions, does gold matter at all?
Only time can tell whether gold as a store of monetary value is truly
dead and buried, but one thing is certain: the motivations of greed and
fear, as well as the longings for power and for beauty, that drive the stories
that follow are alive and well at this very moment. Consequently,
the story of gold is as much the story of our own time as it is a tale out
of the past. From poor King Midas who was overwhelmed by it to the
Aly Khan who gave away his weight in gold every year, from the dank
mines of South Africa to the antiseptic cellars at Fort Knox, from the
gorgeous artworks of the Scythians to the Corichancha of the Incas,
from the street markets of Bengal to the financial markets in the City of
London, gold reflects the universal quest for eternal life--the ultimate
certainty and escape from risk.
The key to the whole tale is the irony that even gold cannot fulfill
that quest. Like Ruskin's traveler jumping off the boat, people take the
symbolism of gold too seriously. Blinded by its light, they cashier themselves
for an illusion.
The following chapters proceed in roughly chronological order,
but the story is neither a complete history of gold nor a systematic
analysis of its role in economics and culture; detailed histories of money
and banking abound. Instead, I explore those events and stories involving
gold that most appealed to me because they display the desperation
and ultimate frustrations that have inflamed human behavior. Beginning
with the magical and religious attributes of gold, the history proceeds to
the transformation of gold into money. As that transformation progresses,
however, we shall never lose sight of the magical qualities of
gold or the ironies of its impact on humanity.
My hope is that what I have chosen to include will illuminate and
occasionally infuriate the reader about how the fascination, obsession,
and aggression provoked by this strange and unique metal have shaped
the destiny of humanity through the ages.
