Book Reviews

Worth Its Weight?

How gold has captured the imagination of prospectors, conspiracy theorists, and politicians for centuries.

By Annie Lowrey

Tagged Goldmonetary policy

One Nation Under Gold: How One Precious Metal Has Dominated the American Imagination for Four Centuries by James Ledbetter • Liveright • 2017 • 400 pages • $28.95

A few months ago, I took a vacation in the red-rocked new-age bastion of Sedona. I hiked. I rock-climbed. I soaked. I star-gazed. I had my aura read (orange and balanced, thank you very much). And I shopped, which, Sedona being what it is, meant learning about the healing or catalytic capabilities of different crystals, feeling their vibrations in my palm, and letting them tell me which ones I needed.

I thought about this experience a lot as I read One Nation Under Gold, a rollicking political history by the journalist James Ledbetter. We humans have a strange tendency to assign emotional and religious value to the things we dig out of the ground. The chakra-and-kombucha types out in Sedona believe that onyx increases self-control, and that holding a pair of sandstone balls in your hands will balance your male and female energies. Not dissimilarly, many Americans believe that gold is a divine substance, a worthy investment, and the soundest basis for the dollar.

These beliefs tend to surge in times of turbulence and crisis. With the country reeling from the Great Recession, Glenn Beck warned of a potential economic collapse and urged his viewers to practice the “three G system,” meaning “God, gold, and guns.” A number of state legislators proposed minting their own gold and silver currencies, too. But even now, with the economy near full employment, the expansion nearing its 100th month, and inflation stable, the desire to ditch the fiat currency and cling to gold persists. The 2016 Republican platform included a proposal to study the gold standard, without mentioning it by name. “As we face the task of cleaning up the wreckage of the current administration’s policies, we propose a similar commission to investigate possible ways to set a fixed value for the dollar,” it read. President Trump has said that bringing it back would be “very hard to do, but, boy, would it be wonderful.” A number of his advisers, including hedge-fund billionaire Robert Mercer and Housing and Urban Development Secretary Ben Carson, support it too.

Yet history and economics push against this faith in gold, and hard. The Great Depression was “great,” in part, because President Hoover refused to end the gold standard. With banks failing and the economy faltering, the dollar’s convertibility to gold forced the government to keep interest rates high, snuffed out economic activity, and fostered deflation, as well as helping to transmit the recession overseas. Common sense pushes against it too. Tying the dollar to gold would mean that the discovery of a mine or the wreckage of a cargo ship could cause currency fluctuations. As the famed behavioral economist Richard Thaler once quipped, “Why tie to gold? Why not ’82 Bordeaux?”

One Nation Under Gold gives an answer to that question, an explanation for why we cling to the substance so feverishly. Our belief in gold is not so much irrational as arational. It is a religion, steeped in history, suffused with emotion, forged by experience, characterized by dogma, rooted in faith. And American faith is hard to shake.

Gold is plentiful but not too plentiful, does not corrode or rust or degrade, is easily molded into things like coins and jewelry, and is beautiful. For these reasons, the glittery substance has been used as a medium of exchange and a store of wealth since time immemorial. “Part of gold’s appeal is universal,” Ledbetter writes. It “ties us to ancient civilizations and religions, and it connects us to countless cultural guideposts, from the Bible to Shakespeare to Kanye West.”

But here, its appeal is also particular, he shows. In colonial America, a time of burgeoning prosperity and intense financial insecurity, people used a “crazy quilt” of fiat paper currencies, foreign coins, and wampum to save and to trade. Paper money caused particular problems. States, and later the Continental Congress, would print “bills of credit” to pay their debts, retiring them by taking them back as tax payments. But overprinting often led to Zimbabwean-type bouts of inflation, with people finding that their notes were worth less and less. George Washington, for one, got so fed up with paper money that he paid people in produce.

Thus, the first Americans learned the perils of fiat money—meaning money that is not tied to or convertible to another substance—and came to see gold as a kind of financial security blanket. The Founding Fathers became obsessed with trying to craft a stable, sound currency. Gold and silver were part of the answer, substances endowed with a divine, noble, and enduring quality, no less. The Constitution required the states to make payment in gold or silver coin, rather than bills; gave the federal government the power to make those coins; and made gold and silver the legal tender of the land.

For the following 200 years, presidents, financiers, diplomats, industrialists, and politicians fiercely debated what our money should be. Should it be convertible to gold, or gold and silver? Part of an international fixed-exchange-rate system linked to gold? A fiat currency pegged to nothing at all? Andrew Jackson pushed aggressively for the first, using arguments that “became increasingly indistinguishable from those favoring states’ rights, secession, and slaveholding,” as a gold standard limits the spending power of the government. William Jennings Bryan backed bimetallism, an argument crystallized in his famed “Cross of Gold” speech and commemorated in The Wonderful Wizard of Oz. (In L. Frank Baum’s children’s book, Dorothy lands in Oz, the abbreviation for “ounce,” wearing not ruby slippers but silver shoes.) It took Richard Nixon—a man “most of the time not even indifferent to the question of gold’s relationship to the dollar,” unlike many presidents before him—to sever the dollar’s ties to gold completely and, one hopes, permanently.

Still, America’s obsession with gold was not always primarily intermediated by its obsession with what money should and could be: Gold is about wealth, not just currency. Christopher Columbus and his Spanish backers were bitterly disappointed that he did not find the gold he sought in the New World. It turned out he was just on the wrong side of the continent. In the late 1840s, miners struck a vein at Sutter’s Mill in California, and the country went from being a negligible producer to pumping out half the world’s supply in just a few short years.

There are 400 years of reasons to explain why our body politic continues to have a devotion to gold. It is a security blanket and a sacred relic.

This led to a tremendous economic boom, spurring the development of the west coast and the displacement and death of an untold number of Native Americans. California’s population jumped from 14,000 in 1848 to nearly a quarter million by the end of 1853, with thousands of workers digging metal out of the ground and tens of thousands more supplying them with clothing, tools, transportation, banking, company, and so on. Americans came to see gold as a sign of God’s love. “Americans in the Third Great Awakening believed that gold and silver were deliberately placed beneath the Earth’s surface by a benevolent God,” Ledbetter writes. “It of course followed from that premise that mining and using those riches to create American wealth was part of His plan that Americans had an obligation to fulfill.”

Gold acted as a proxy for national wealth and well-being in the twentieth century too. The government worrying about its stocks and extending prohibitions on the private ownership of gold helped foster a culture of “obsession” in the 1950s and 1960s, Ledbetter writes. Drive-in restaurants put up shimmering roofs; advertisers used gold to hawk breakfast cereal; James Bond uncovered Auric Goldfinger’s plot to contaminate Fort Knox on screen. The Treasury and Justice departments spent “tens of thousands” of man-hours investigating and seizing a golden rooster statue used as a marketing gimmick at a casino in Sparks, Nevada. Perhaps the most delicious story from this era is that of “Operation Goldfinger,” a secret attempt by the government to boost its gold reserves. The Johnson Administration spent millions of dollars trying to wrest gold out of strange places, like seawater and meteorites and deer antlers; to synthesize it with a particle accelerator; even to mine it with nuclear detonations. (The effort seems to have come to naught.)

In One Nation Under Gold, the substance acts as a cipher for American history. It certainly helps to know some history and economics before reading the book; it is engaging and easy to read, but not at all elementary. That said, it makes for a compelling examination of the animal spirits, greed, obsession, and passion that have so driven American politics.

And for a meticulously researched tome on partisan politics and monetary policy, it reads a lot like a romp. It illuminates our history of slavery, imperialism, and westward expansion, as well as the advent of modern monetary policy and the development of international markets. It touches on advertising, pop culture, propaganda, and religion. It pits farmers against bankers against politicians. It includes courtroom and Congressional battles, as well as a memorable bit of chicanery that happened while President Grant was enjoying breakfast one morning. (He told his dining companion, his brother-in-law Abel Corbin, that he planned to keep the price of gold high. Corbin excused himself to give Jay Gould, the Gilded Age robber baron, the insider information.)

And the book itself acts as a cipher for our sticky latter-day obsession with the substance. Wars have tended to act as a financial crucible, forcing Americans to reevaluate the dollar’s relationship with gold at the same time as they confront the trauma of bloodshed and the question of the country’s deepest priorities. The Founding Fathers wanted a stable currency in the wake of the Revolution and looked to gold; Abraham Lincoln ditched gold and printed fiat currency in his effort to save the republic; World War II was still raging when the Allied nations gathered in New Hampshire to create the International Monetary Fund and the Bretton Woods gold standard; questions about the country’s gold supply intensified the debate in Congress about the recklessness of the Vietnam War. Banking panics and recessions have done the same, fusing the substance with fraught questions of stability and security. For centuries—and for some of us still today—gold is where “the monetary realm [meets the] moral and psychological realms,” Ledbetter shows.

At this point, of course, there is no good reason that President Trump should support tying the dollar to gold. There is no need to hoard gold to protect your family from coming hyperinflation and societal instability. There is no argument that the dollar is unmoored and unsound. A gold standard would prevent the Federal Reserve from combatting any future recession with stimulative monetary policy. It would also prevent the federal government from combatting any future recession with stimulative fiscal policy. All this for some putative price stability, when prices are already stable? No wonder not a single prominent economist supported the idea of returning to the gold standard in a recent poll. No wonder no comparable economy uses one. And no wonder the country faced a wrenching series of financial panics and recessions when it was on the gold standard.

Yet there are 400 years of reasons to explain why our body politic continues to have a religious devotion to the substance. It is a security blanket, an object of desire, a sacred relic, a sign of soundness and stability. It is a mark of wealth, if not taste, as any photo of Trump’s Manhattan apartment proves. That gives it its strange power, one I cannot imagine us shaking as time goes on.

I might have snorted at the crystal stores in Sedona, by the way. But I am writing this review while staring at a particularly beautiful orb of lapis lazuli.

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Annie Lowrey is a contributing editor at The Atlantic and the author of a forthcoming book on universal basic incomes for Crown.

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