Power of Gold: The History of an Obsession

Amazon.com
In the first chapter of his book The Power of Gold, Peter Bernstein quotes the immortal words of King Ferdinand of Spain, who once declared: "Get gold, humanely if possible, but at all hazards--get gold." As ensuing chapters reveal, man's obsession with finding, keeping, selling, and evaluating gold has rarely been a humane adventure and has always been a hazardous one. Digging deeply into history's treasury of torrid tales and complicated deals, Bernstein examines gold's lure with an economist's passion for quantification, a historian's eye for detail, and a sociologist's feel for its consequence.

Useless as a metal for most practical purposes, gold originally held value as decoration and adornment for the wealthy ancients. Later, it was minted and used as coins by the Lydians in 635 B.C. That, Bernstein goes on to reveal, put gold on a path from the concrete to the abstract, from evidence of wealth to the standard behind wealth in other forms, and finally to the tenuous place it holds in today's virtual world of credit cards and computer chips. Along the way lie wild stories of lives destroyed, fortunes won and quickly lost, and values transformed: the massacre by the Spanish invader Pizarro, whose small band of men decimated the formidable army of Emperor Atahualpa, "the Inca," through more duplicity than military skill; the roller-coaster ride of the 1890s, when the rippling impact of the Baring Brothers bank crisis in Britain sent the isolated United States into an economic meltdown; and the surplus of the Gold Coast natives of Timbuktu, who willingly traded their gold for much-needed salt, ounce for ounce.

FROM OUR EDITORS

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.

FROM THE PUBLISHER

In this exciting new book, Peter L. Bernstein, who chronicled the evolution of risk in his recent bestseller, Against the Gods, tells the story of history's most coveted, celebrated, and inglorious asset: gold. From the ancient fascinations of Moses and Midas through the modern convulsions caused by the gold standard and its aftermath, gold has led many of its most eager and proud possessors to a bad end. Gold had them, rather than the other way around. And while the same cycle of obsession and desperation may reverberate in today's fast-moving, electronically-driven stock markets, the role of gold in shaping human history is the striking feature of this tumultuous tale. Such is the power of gold.

This fascinating account begins with the magical, religious, and artistic qualities of gold and progresses to the invention of coinage, the transformation of gold into money, and the gold standard. The more important gold becomes as money, the more loudly it speaks of power—even more loudly than when it served as an entry to Heaven or a symbol of omnipotence. Ultimately, the book confronts the future of gold in a world where it appears to have been relegated to the periphery of global finance.

From the Bible to the Gold Rush era to modern day Fort Knox and beyond, unforgettable characters stride through these pages. Contemplate gold from the diverse perspectives of monarchs and moneyers, potentates and politicians, men of legendary wealth and others of more plebeian beginnings; from Asia Minor's King Croesus to Rome's noted speculator Crassus, to Byzantine emperors and humble miners, Venice's Marco Polo and Spain's Francisco Pizarro, to Charlemagne and Charles de Gaulle, Richard I and Richard Nixon, Isaac Newton and Winston Churchill, Britain's economists David Ricardo and John Maynard Keynes, and Christopher Columbus and the Forty-Niners. Perhaps most remarkable are the frantic speculators who pushed gold to $850.00 an ounce in 1980 just as their counterparts twenty years later drove Internet stocks to exorbitant heights.

Whether it is Egyptian pharaohs with depraved tastes, the luxury-mad survivors of the Black Death, the Chinese inventor of paper money, the pirates on the Spanish Main, or the hardnosed believers in the international gold standard like the United States' President Herbert Hoover, gold has been the supreme possession. It has been an icon for greed and an emblem of rectitude, as well as a vehicle for vanity and a badge of power that has shaped the destiny of humanity through the ages. As Bernstein muses, "The joke is that nothing is as useless and useful all at the same time."

Far more than a tale of romantic myths, daring explorations, and the history of money and power struggles, The Power of Gold suggests that the true significance of this infamous element may lie in the timeless passions it continues to evoke, and what this reveals about ourselves.

About the Author:
PETER L. BERNSTEIN combines the zest of a historian with the meticulous analytical powers of an economist. He is the author of seven books in economics and finance, including Against the Gods: The Remarkable Story of Risk and Capital Ideas: The Improbable Origins of Modern Wall Street. He is also President of Peter L. Bernstein, Inc., an economic consultancy to institutional investors, which he founded in 1973 after many years of managing billions of dollars in individual and institutional portfolios. He has lectured widely throughout the U.S. and abroad and has received the highest honors from his peers in the investment profession.

FROM THE CRITICS

Economist

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.

Business Week

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.

Wall Street Journal

Mr. Bernstein has turned this story–not an obvious golden opportunity for even a writer of Mr. Bernstein’s skill–into a real page-turner.

Lady

This is a 24-carat book on a subject close to all our hearts. Read all 40 "From The Critics" >

WHAT PEOPLE ARE SAYING

Admirably written . . . a wonderfully interesting view—not alone of gold but of the greater economic history. Like other of his work, it is assured of a wide readership. — (John Kenneth Galbraith Professor of Economics Emeritus, Harvard University)

This book is a noble treatment of the most noble of elements. The Power of Gold is a brilliant and unexpected tale of three thousand years of a metal as virtual reality. — (Steve Jones author, Darwin's Ghost: The Origin of Species Updated)

Hats off! We are in the presence of a master . . . to read with such delight in its manner as to pass too quickly over the subtlety of its understanding and the astonishing width and depth of Bernstein's knowledge. — (Roger G. Kennedy Director Emeritus, National Museum of American History)

The story of gold-in all its splendor and mythology, its fascination for individuals and nations alike. . . . Peter Bernstein is up to the challenge. His spritely exposition is a fine read even as it makes us think and reflect. — (Paul A. Volcker, Former Chairman of the Federal Reserve)

. . . a fascinating story . . . wittily written, and full of original insights . . . Peter Bernstein has once more written a brilliant book, both highly instructive and entertaining. — (Pierre Keller former senior partner, Lombard Odier & Cie, Geneva)