I am a huge fan of economic history, especially because it’s the part of history that gets overshadowed the plights of kings and generals, and the glories and tragedies of wars and revolutions, but often forms an undercurrent that explain the root causes of those wars and revolutions, among a ton of other things. A subgenre within economic history are these books that just focus on a single commodity, and weave a multilayered story around how societies have used it and the lengths that people have gone to over the years to acquire, hoard, rob, steal and invent things with it. There are books about everything from opium, salt, cod, oil, cotton, sugar, and uranium just to name a few.
So when I saw this book about the history of silver, I couldn’t resist picking it up, especially because I already knew bits and bobs of how that precious metal has been responsible for crazy fascinating stories across history. I was particularly hoping for the book to dig into episodes like how the little town of Potosi in Bolivia became the most extravagant and opulent cities by a “silver mountain” exploited by the Spanish conquistadors in the 16th century, or how that same New World sources of silver cemented the Spanish “piece of eight” as the predominant global currency for hundreds of years, long before we threw around globalization as a buzzword.
Unfortunately, as the title implies the book doesn’t go that far back in time, nor does it cover the whole world in scope—next time I should read the title in full before excitedly digging into a book. It’s limited mostly to what happened in the United States, and even then I feel like it’s focus was much more on the events and characters that drove the big price fluctuations in the price of the metal, instead of the rich multifaceted history that wove in stories of colorful characters with detailed explanations from social, political, and economic perspectives—at least not as much as I would have liked.
Well, it did have a political undertone: one that was annoyingly conservative, in the US political spectrum sense, and the author 1) has a distrust of central banking and has a soft spot for ye olden days when money was backed by gold and silver, and 2) has personal distaste for a lot of Democratic presidents, FDR and JFK especially, much more than actual grifters like the Hunt brothers who he spends quite a few chapters on.
William Silber, the author, is an economist who teaches at the NYU business school and seems to be well respected, so I have to get past my mental block of thinking “conservative intellectual” is an oxymoron.
There were definitely some parts that really hit that spot for me of feeling “OMG wow look at how all things completely far off things tie together”. Most notably the story of how the US government’s guaranteed purchases of silver to gain political support from a few silver mining states like Nevada in the 1930s caused a catastrophic economic crisis in China, that undermined the republican government of Chiang Kai Shek and paved the way to Japanese militarism and eventual full scale invasion. So, in the 1930s, China was on the silver standard and the US pumping up its price caused Chinese exports to become uncompetitive because it appreciated their currency, and for massive amounts of silver to be exported or smuggled out of the country, dwindling the monetary base and causing deflation. Silber writes this as a cautionary tale for US politicians to be aware of how domestic policies can have far reaching international effects, and in this case he pins it all on FDR.
Then there were other parts where I felt like I learned a lot about things that I might have only heard of cursorily before, like how the bi-metallic gold and silver standard rose and fell, and how there was a political divide in the 19th and early 20th centuries in the US between the East Coast banking elites who wanted just a gold standard, and the rural population in the West who wanted a bimetallic standard. Basically the rich people favored deflation and because gold was scarce that means as the economy grew there’s less of it to pay for more goods and services (think bitcoin), whereas common folks wanted the money supply to expand by also adding silver to the monetary base so that there can be more inflation, and they didn’t have savings that were going to be wiped out by inflation anyways. Instead they would be more likely to be holding debt, which inflation will make it cheaper to repay.
I also learned about how up until 1964, there were two types of dollar bills circulating in the US. There were the usual Federal Reserve Notes, which we still have today, that aren’t backed by anything, but back then they also had “Silver Certificates”, which looked like ordinary dollar bills, but they were actually exchangeable for actual silver. JFK brought an end to that, and Silber did not like that move either. He blames the high inflation of the 70s to this move, discounting in my opinion, the oil shocks. He was a fan of Volcker though, and wrote a biography of the Fed chair, but worries that if central bank independence gets eroded, we would be at the mercy of spendthrift governments who would be all like “money printer go brrr…” as succinctly captured by the famous meme.
Nearly the third of the book is about stories of famous speculators who all seemed like rich assholes to me so it didn’t really interest me all that much. There were these guys called the Hunt brothers who first got rich from oil fields in Libya, and when Gadaffi kicked out foreign oil companies, decided to team up with Saudi princes to try to corner the world market for silver, driving it up to an all time high and then getting bankrupt when the inevitable crash came in 1980. Crypto bros are unfortunately just the latest in a long tradition of douchebag grifters who think they are too clever for their own good.
One thing this book did make me think of was how in our lifetimes, the thought that you can take your literal money and make it into dinnerware, electrical wire or camera film seems absurd, but only recently, people would have balked at the idea that money had no intrinsic worth other than the fact that you trusted the government that printed it to not make money printer go brrr. In fact, that line of thought is not just what bitcoiners and goldbugs believe but instead has a long tradition since the beginning of money as a thing. Definitely makes me want to read more about the history of money and currency.