Gold. The very word conjures up a multitude of emotions, ranging from joy to despair, with some avarice and a lust for power kicked in for good measure. How did this precious metal become so historically significant, shaping the destiny of humanity from the dawn of civilization? In The Power of Gold, economic expert and bestselling author Peter L. Bernstein explores the timeless appeal and tremendous impact held by this unique element.
For insights, Bernstein begins with ancient Egypt, where gold was used exclusively for adornment, and the Old Testament, noting Jehovah's command to Moses to decorate his tabernacle with "pure gold." After probing gold's roles in matters both mystical and reverent, he traces its transformation into the practical world of real money without sacrificing any of its allure and magic.
From Midas's fabled woes to the Forty-Niners of the American Gold Rush, The Power of Gold intertwines the story of this universal phenomenon with a resounding morality tale. Spanning the centuries and continents, Bernstein reveals how gold, in its glowing beauty and endurance, offers a glimpse of immortality along with the force to inspire and destroy.
From the glorious art works of the Scythians to the alchemy-devoted Isaac Newton, from the Byzantines to Bretton Woods, The Power of Gold presents a fascinating look at how one metal has changed the world. What is the ultimate price of gold? Peter Bernstein's dazzling book will force you to ponder this question as never before.
Wall Street Journal
Mr. Bernstein has turned this storynot an obvious golden opportunity for even a writer of Mr. Bernstein's skillinto a real page-turner.
Bernstein's volume is a tour de force with a satisfying conclusion: The characters in this drama prove themselves 'fools for gold, chasing an illusion.
New York Times
There are sugarplums throughout the book....The pleasure of the book is in its sheer number of unknown places and interesting episodes.
The triumph of Peter Bernstein's book is that in the end you understand why and how it happened that the golden dog no longer barks. Bernstein is America's greatest living economic journalist."
Bernstein . . . does full justice to his material. Almost every chapter contains some detail to surprise or delight.
The range of research evident throughout the book is staggering.... Bernstein's ear for the telling quote is pitch perfect.
Gold is the ultimate in tangibility. Bright and shockingly heavy, for centuries the stuff was the physical manifestation of value. The opposite, in other words, of the Internet. Indeed, as Peter L Bernstein points out in his illuminating new book. The Power of Gold, as an exchange medium, gold isn't much different from the 4-ton stone coins famously spent by the Micronesian people of Yap. Bernstein recalls, as a young economist, being shown the basement full of bullion held by the New York Federal Reserve Bank on behalf of several European nations. When one country wanted to pay another, the Fed simply lugged a few bricks from one closet to another. Such efforts are clearly on the way out. The story of gold-and money-is one of increasing abstraction from bricks and coins to national chits, checks and now cybercash. This is just fine with the pragmatic Bernstein, author of the much- praised Against the Gods: The Remarkable Story of Risk. "The most striking feature of this long history," Bernstein writes, "is that gold led most of the protagonists of the drama into the ditch."
Bernstein vividly tells us how this happened, from the grisly death of Roman politician and bon vivant Marcus Licinius Crassus - down whose throat a vengeful (and ironic Parthian reportedly poured molten gold - to the gold-induced global economic death spiral that followed World War 1.
Along the way he treats us to interesting historical nuggets. "Cash" is the Tamil word for money, for instance, and was used to refer to some Chinese coins more than 2,000 years ago. Bernstein also reminds us that some scholars view L. Frank Baum's 1900 novel The Wizard of Oz as a parable condemning America's 1873abandonment of bimetallism-that is, a silver and gold standard - for the yellow brick road of an exclusively gold standard.
Boston Sunday Globe
It is hard enough trying to explain to American youths today what it's like being in the Army, or what's so unpleasant about inflation. Try telling them about gold. With war threatening last week in the Middle East and an attack on a US warship in the Persian Gulf, the price of gold barely twitched, climbing $4 to $277 an ounce in London last Thursday on the news. As one trader said, "Gold is the dog that no longer barks." Yet only 20 years ago the price of gold soared to S850 an ounce. Two or three pounds of it would buy a good house, and common stocks were priced so low that all the stocks listed in the New York Stock Exchange were worth no more than the sum total of all the world's monetary gold. By 1990, as paper assets boomed in value, gold had fallen to $400 an ounce; to $300 by mid-1997; and below that (though never lower than $250 ever since. Is 20 years long enough to declare the end of an epoch of several thousand years' duration in the history of the human race? That is the question at the bottom of "The Power of Gold: The History of an Obsession," a new book by Peter Bernstein. And the answer he gives is tentative. But the steady accretion of detail in this astonishing book gives the distinct impression that Bernstein thinks the epoch is ended indeed. Bernstein is America's greatest living economic journalist. He had the good fortune to take his economics courses at Harvard College (class of '40 just as the Keynesian Revolution was getting underway.
History of gold It defileth not WHAT is the eternal lure of gold? Peter Bernstein is rather unpoetic on the Subject. He tell us of its "stubborn resistance to oxidation, unusual density, and ready malleability", claiming that these simple physical attributes explain everything we would want to know about the element's romance. Perhaps he is right. But consider the words of an early 17th-century English merchant, Gerard de Malynes, saying more or less the same, but in quite different tones:
"Such is the qualitie of fine Gold that the fire doth not consume it...neither is it subject to any other Element...it is easily spread in leaves of marvellous thinnesse; in colour it resembleth the Celestiall bodies, it defileth not the thing it toucheth; it is not stinking in smell; the spirit of it can by art be extracted." Malynes had the bug, Mr Bernstein doesn't. Because gold's allure is rather lost on him, the author underplays the universality of its attraction, dwelling instead on the curse that has frequently befallen its admirers-from Crassus, a Roman plutocrat who died when Parthians poured molten gold down his throat, to Montagu Norman, the highly-strung governor of the Bank of England at the time of Britain's return to the gold standard in 1925.
Mr. Bernstein's sympathies lie rather with John Maynard Keynes, who famously denounced gold as the "barbarous relic", and with Benjamin Disraeli, who once declared that the "gold standard is not the cause, but the consequence of our commercial prosperity." Mr. Bernstein cites this comment more than once. But is it true? Could the credit and trade of the British empire have been established on any other monetary standard? The answeris probably not. Once gold protected people against the depredations of tyrants. However, the age of democracy has legitimised flat currencies. This explains why John Law failed to impose a paper currency in France in the early 18th century (this key moment in the history of gold is strangely overlooked by Mr. Bernstein. By the 20th century, gold had become an anachronism, as Keynes correctly recognized. It took others longer to release themselves intellectually from their "golden fetters". The populace of Britain suffered for this in the 1920s, as did the Americans in the early years of the 1930s depression. Today gold is simply an adornment. Long may it remain so.
This book is a delight. It is informative, thought provoking and relevant...April 2001
Daily Post Wales
This is a fascinating story. No one who even scans the pages will fail to be interested by this most fascinating of metals.
The story of gold over the last 5,000 years is a fascinating one, which Peter Bernstein relates with verve and wit.
This is a 24-carat book on a subject close to all our hearts.
There may have been more academically rigorous histories of gold written, but few more erudite or entertaining.
This is a fine piece of economic history. A well-documented, authoritative read, this is also entertaining. ...will enlighten & enthrall.
Scotland on Sunday
The research is excellent.
Bernstein has done well to get such an exciting story together in one volume, and gold is fortunate to have such an erudite and fascinating storyteller. This book is easy to read and full of wonderful nuggets of information.
This book is an eloquent, brilliantly written historical review of how gold has influenced the evolution of monetary systems and trade, from early civilizations to the present day. Bernstein succeeds in presenting an enormous amount of research in a format as easy to read and as captivating as the best murder mystery.
This is incredibly well researched and in-depth, a fascinating glimpse into the past and present of a commodity that has caused as much misery as it has happiness. This is truly a history of an obsession, and is well worth reading.
Bernstein's meticulous account highlights the way in which man's struggle for gold has consistently stimulated economic thought and debate.
Glasgow & Edinburgh List
Bernstein has taken base elements - history, politics and economics - and created a gem. He writes with passion and a certain amount of irreverence; the numerous flippant asides keep the tone light and engaging. What could so easily have been a dreary tome in less capable hands is fascinating to the end.
Eastern Daily Press
This is altogether a fascinating read.
Bernstein writes with style and verve and all human life is in there. Thoroughly enjoyable.
Independent Friday Book
...readers with an interest in history or finance will welcome Bernstein's interesting history of gold and money in the West.
Good Book Guide
This accessible book will appeal to numismatists, economists and anyone with an interest in general history: it is both enjoyable to dip into and a good read from cover to cover.
Bernstein brings this story to life as a gripping, exciting and insightful work that combines many strands of history, politics and finance into a book of universal appeal.
...entertainingly tells the history of humankind's great obsession.
...History, myth and metaphor combine to produce an entertaining study of the dangers inherent in bullion worship. ... The book's real charm lies in its detail.
This is incredibly well researched and in-depth, a fascinating glimpse into the past and present of a commodity that has caused as much misery as it has happiness. This is truly a history of an obsession, and well worth reading.
The book furnishes a pleasantly glided backcloth to the current fashion for economic history.
This book contains enough history, politics and finance to be of serious academic worth.
Publishers Weekly - Publisher's Weekly
"[T]he quest for gold" has been "gluttonous," says Bernstein, tracing the metal's impact on human myth and history: gold has inspired art, battles, conquests and discoveries, including Columbus's trip to the New World, where he hoped to secure enough gold to buy back the Holy Sepulcher from the Muslims. Bernstein makes clear the metal's virtues: it's so malleable that one ounce can be stretched into a 50-foot wire or pounded into 100 square feet, and it lasts forever (4,500-year-old Egyptian dental work, he notes, is good enough for today's mouths). Bernstein's gift for storytelling--with just the right touch of acerbic wit (on the myth of Jason and the Golden Fleece, he summarizes, "The story does not have a happy ending, because Jason was a compulsive social climber")--and his presentation of the paradox of how and why such a soft and simple metal has been afforded such value help make this work a winning account of human obsession, comprehensive, entertaining and enlightening. A knowledge of economics might help during the last third of the book, when Bernstein moves from ancient times to modern day and describes the economic chaos that followed WWI. By then gold was no longer the domain of legend; it had become a commodity, the standard against which powerful nations measure their wealth. But Bernstein, author of the bestselling Against the Gods: The Remarkable Story of Risk, livens up his intricate economic discussion with tales such as the one about the Harvard Business School professor who got into trouble with his dean for withdrawing his gold from the Harvard Trust Company during a gold standard-related panic in 1933. As the title promises, Bernstein does deliver a page-turning history of the not-so-heavy metal and its influence on people through the ages. $250,000 ad/promo; first serial to Worth. (Oct.) Copyright 2000 Cahners Business Information.|
A master historian at the peak of his art here recounts the timeless story of our obsession with gold. Mixing myth, legend, and historical fact, Bernstein (Against the Gods presents an enthralling look at the people, places, and events that have evoked desperation and frustration in human behavior. Starting with a broad palette of colorful characters, Pharaoh Hatshepsut, King Midas, Alexander the Great, Emperor Justinian, the Inca Emperor Atahualpa, Martin Luther, Kublai Khan, Sir Isaac Newton, and Charles De Gaulle, the author recounts the sequence of events that led to gold becoming the international monetary standard in the 19th Century only to fall to obscurity amid the collapse of the Bretton Woods System in 1971. At its root, this is the story of people so blinded in their pursuit of gold that they could not comprehend the difference between useless metal and real wealth. Recommended for both public and academic libraries.
Though he proceeds in roughly chronological order, US Historian and economist Bernstein aspires neither to a complete history of the precious metal nor a systematic analysis of its role in economics and culture. Rather he explores those events and stories involving gold that most appeal to him as illustrative of the desperation and ultimate frustrations that have inflamed human behavior. Annotation c. Book News, Inc., Portland, OR (booknews.com)
The book is that rarity among popularized histories that neither insults the most informed reader nor dismays the least. Even more of a rarity is its cool, agnostic and knowledgeable treatment of a subject that too often has been claimed by apocalyptic types with loony agendas. And, rarest of all, perhaps, it's a financial book that doesn’t promise to make you rich. It might make you wiser, though.The New York Times
A lively, detailed account of civilization's star-crossed relationship
with this most fascinating of metals. Undoubtedly the only economics book
ever written that could honestly be described as fascinating.
With the same lively writing and sharp focus that distinguished his previous work, Against the Gods: The Remarkable Story of Risk, Bernstein shows how gold emerged as the manifestation of mankind's longing for power, beauty, and immortality. This is world history on a grand scale, with gold appearing as a focal point at every major juncture.Business Week
Michelle V. Rafter
Gold is the ultimate in tangibility. Bright and shockingly heavy, for centuries the stuff was the physical manifestation of value. The opposite, in other words, of the Internet.
Indeed, as Peter L. Bernstein points out in his illuminating new book, The Power of Gold, as an exchange medium, gold isn't much different from the 4-ton stone coins famously spent by the Micronesian people of Yap. Bernstein recalls, as a young economist, being shown the basement full of bullion held by the New York Federal Reserve Bank on behalf of several European nations. When one country wanted to pay another, the Fed simply lugged a few bricks from one closet to another.
Such efforts are clearly on the way out. The story of gold - and money - is one of increasing abstraction from bricks and coins to national chits, checks and now cybercash. This is just fine with the pragmatic Bernstein, author of the much-praised Against the Gods: The Remarkable Story of Risk. "The most striking feature of this long history," Bernstein writes, "is that gold led most of the protagonists of the drama into the ditch."
Bernstein vividly tells us how this happened, from the grisly death of Roman politician and bon vivant Marcus Licinius Crassus - down whose throat a vengeful (and ironic) Parthian reportedly poured molten gold - to the gold-induced global economic death spiral that followed World War I.
Along the way he treats us to interesting historical nuggets. "Cash" is the Tamil word for money, for instance, and was used to refer to some Chinese coins more than 2,000 years ago. Bernstein also reminds us that some scholars view L. Frank Baum's 1900 novel The Wizard of Oz as a parable condemning America's 1873 abandonment of bimetallism - that is, a silver and gold standard - for the yellow brick road of an exclusively gold standard. (The hard-money East was pro-gold, while debt-laden farmers in places like Kansas advocated the looser monetary policies associated with plentiful silver.)
Interestingly, Bernstein also observes that gold itself was an early medium used to abstract worth, citing the Lydian invention of gold coins around 650 B.C. "The transformation of gold into money democratized it," he writes. "Thanks to coinage, the ownership and use of gold after Lydia was no longer a royal prerogative. It was now literally in the hands of common citizens, even if only the most wealthy."
That was, of course, the beginning of the end for gold, since its weight and relative scarcity would make it grossly insufficient as currency in the technological age of mass affluence that was to come. Growth and democracy inevitably required more money and risk-taking than gold could support. As the author notes, "Financial rectitude, though much admired, has never been a sure road to prosperity."
Although written with verve, The Power of Gold is not a light read. It assumes a little too much understanding on the part of the reader of the complex interplay between foreign exchange, interest rates, price levels and fiscal policy, and gets bogged down for too long in the feuds of the Middle Ages. If you want a more rounded and accessible work, try Jack Weatherford's The History of Money: From Sandstone to Cyberspace.
But Bernstein has other fish to fry. Perhaps in keeping with his earlier book, his message here is that there is no real haven from uncertainty in life. Gold is no safe harbor, and in the longest of runs the dollar is unlikely to be safe, either.
To Bernstein, though, abandoning gold has at least meant growing up and getting comfortable with the risks of life. Wars, plagues and economic turmoil drove people to gold in the past. The question now is whether the risks posed by networked computers, hackers, esoteric financial derivatives and the sheer velocity of money will do the same.
From the Publisher
"Bernstein's book is a fascinating read, especially in light of the recent run-up in the price of gold. Should gold once again be viewed as a currency, as so many commentators have suggested? Were he still alive, Bernstein might laconically answer, 'Read my book.'" (Seeking Alpha, May 2012)
Read an Excerpt
THE POWER OF GOLD
THE HISTORY OF OBSESSION
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
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.