The Power of Gold: The History of an Obsession

by Peter L. Bernstein

  Substantial sources of salt did exist about one thousand miles to the north, where the salt miners, many of them black-skinned slaves, worked under extremely harsh conditions. They were nearly a twenty-day journey from the nearest towns, were often blinded by desert winds, and on occasion even starved to death because of delays in the arrival of the traders who would bring them food and fresh water to swap for the salt."

  Most of the salt was transported south in camel-driven caravans. At many points, however, where pasturage was so scarce that the camels could proceed no further, the great slabs of salt had to be broken into small pieces that were then placed on men's heads for the rest of the trip. One fifteenth-century traveler from Portugal described what happened next:

  Each man carries one piece, and thus they form a great army of men on foot, who transport it a great distance ... until they reach certain waters.... All those who have the salt pile it in rows, each marking his own. Having made these piles, the whole caravan retires half a day's journey. Then there come another race of blacks who do not wish to be seen or to speak.... Seeking the salt, they place a quantity of gold opposite each pile, and then turn back, leaving salt and gold."

  This story is not just a matter of curiosity. It has a deeper meaning. Salt was so precious to the gold diggers that many of them would trade their gold only in return for salt. In many transactions, an ounce of gold exchanged for an ounce of salt. Bovill asserts that "Salt was so infinitely the more important [compared to gold], that it is no overstatement to say that gold was valued by the Sudanese almost entirely for its purchasing power in salt.... It was the basis of their domestic, as it was of their foreign, trade, neither of which can be comprehended without an understanding of how starved they were of this essential to the well-being of man."15 Look at it the other way, however. If an ounce of salt could acquire an ounce or more of gold, fetching the gold must have been an enormously profitable operation.

  Thanks to the practice of dumb barter, the uncongenial geography of the gold fields, and the natural reticence of the natives, Europeans and Arabs were frustrated for centuries in their search for the source of the African gold. The whole area acquired a kind of mysterious glow among the peoples to the north.

  During the fifteenth century, Europeans developed the custom of calling the gold-bearing areas Guinea (which the British persisted for a long time in spelling "Ginney"). Indeed, the Portuguese, who were the first to explore the territory, received permission from the pope in 1481 to call their king Lord of Guinea, a title that survived until the twentieth century. In 1662, the English began to use gold imported from West Africa by the African Company to mint a coin that they called the guinea, an interesting innovation in coinage that will soon occupy our attention.

  Controversy persists over the source of the name of Guinea, because no such place existed in Africa at that time. No doubt the word is a corruption of something that sounded like Guinea. A likely candidate is Ghana, but Bovill insists, convincingly, that Guinea is derived from the name of the trading post of Jenne, situated on a tributary of the Niger River about three hundred miles southwest of Timbuktu, toward the gold-mining areas.'6

  Although not well known, Jenne must have been a remarkable city. Founded in the thirteenth century, it was located in a populous region with a set of waterways that were rare for the African continent but that made Jenne easily accessible. The city was not only a commercial center of importance but a major attraction for men of letters as well. Unlike Timbuktu, where political tensions and turnover were frequent, Jenne was a peaceful place that spread the culture of the Mediterranean throughout western Africa. According to Es-Sadi, a distinguished seventeenth-century author who was born and raised in rival Timbuktu, Jenne was "a blessed town."17 Let us hope that Bovill had it right: such a place deserves to lend its name to a country.

  As our story has wound its way from golden palaces and religious icons, from bezants to dinars, from golden balls to golden tribute, and finally to the dumb barter of gold for slabs of salt in darkest Africa, a disturbing question comes to the surface: Where is value? For the Europeans, the Byzantines, and the Arabs, gold was the magical focal point of their material desires. Not so for the Africans.

  To the Africans toiling for gold but starving for salt, the salt standard was a force far more powerful and durable than anything that the gold standard stood for in the sophisticated civilizations everywhere else on the globe. What must those poor diggers have thought of the funny people from the north country who swapped inestimable salt for stuff whose only role on earth was to give men pride and pleasure by letting them see its lustre?

  The question reverberates into our own time.

  s the long stagnation that followed the fall of Rome yielded to a meaningful pace of economic development after the first millennium, the search for the meaning of value became a focus of increasing study and debate in Europe. A great debate developed among the scholastics and the monks in the universities over the definition of a "just price." Saint Thomas Aquinas himself, in the thirteenth century, acknowledged that "It is true that money is subordinated to something else as its end; still, to the extent that it is useful in the quest for all material goods by its power, it somehow contains them all.... This is how it has some likeness to beatitude."' Gold is a fountain of beatitude.

  Commercialization and trade cannot take place without money. Creating new monetary systems from the ground up is no simple matter, for nothing can function as money unless it comes in a format that will be acceptable to everyone who uses it. No decree establishing a system can work unless the arrangements match the values, traditions, and needs of the community. The history of money-and much else affected by money-is a long and tortuous tale of how people have tried to deal with these difficulties under widely varying circumstances.

  When all money is hard-when all payments are in bullion and coin-the process is especially intricate, because supplies of gold and silver are determined by nature rather than by the humans who use them. Mines can be exhausted, countries can gain or lose from plunder, and supplies can move across borders when trade is unbalanced. But human decisions matter, too. People can hoard rather than spend their coins, which was a common practice in the political and economic turbulence of the Middle Ages.' Gold is a hedge against the risks of chaos, and persuading people to bring their treasure back into circulation as money is no simple matter in a world where money in transit is often plundered by robbers or lost in shipwrecks, and the insatiable demands of the state are a constant threat.

  The impact of frequent changes in the relative supplies of gold and silver complicated matters throughout the Middle Ages, and would continue to mess up monetary systems in both Europe and America until well into the second half of the nineteenth century. When the amount of available gold began to exceed the supply of silver, or vice versa, the prices that determined coinage rates of each metal at the mint would vary from the prices at which people could buy or sell the precious metals in the marketplace. Under those circumstances, one or the other of the metals was likely to disappear from circulation or to be exported to countries where the opposite state of affairs happened to exist.

  Nevertheless, in spite of these obstacles, and without any theoretical or even much historical background to guide them, monarchs and their citizens during the Middle Ages, and even at certain moments before 1000, succeeded in evolving-indeed, inventing-monetary systems that have developed over time into the financial world around us today. None of these systems worked without disruption for very long, but reversion to the moneyless and tradeless society of the early days after the fall of Rome was never an issue.

  One of the most striking features of the great sweep of European history up to World War I was how the Europeans managed to integrate gold into their monetary systems even though Europe's indigenous supply of gold was always minimal. As a French economist writing in the early 1930s described it, "There is something strange to see these countries, which, from the end of the
Middle Ages to our own time, would become the most vital forces of the world economy, while barely privileged by nature with the material that a great tradition-today more imperious than ever-obliges us to accept as the sign and receptacle of all wealth. "3 To an increasing extent, as our story moves forward, the issues in Europe shift away from a focus on the supply of gold as such and toward which nation would manage to accumulate the gold that was available and employ it to enhance their power and wealth.

  The wonderful thing about gold is that its achievements in its critical role as the prototype of wealth and money did nothing to diminish its equally vital role as adornment and a radiant form of beauty. Unlike other forms of money, gold has never lost its poetic quality. It has always been both sacred and profane.

  During the first one thousand years after the fall of Rome, gold's role in Europe was much less important than it had been in Byzantium or in the domains of the Muslims. That difference was not a matter of choice for the Europeans. They simply had less gold available to them. Europe had no mines that could match the copious natural supplies that were available to the Byzantines and the Muslims. The Europeans also had an insatiable desire for the spices, silks, and-in the absence of central heating-furs and rugs that the peoples to the east were only too happy to sell them. As an unfortunate result, human slaves became one of Europe's primary exports, especially to the Muslims!

  The Europeans left themselves with no choice but to reject the Byzantine fashion of covering everything in sight with gold. On many occasions, gold was in such short supply that religious ornamental objects such as crucifixes and chalices were sacrificed to the melting pots at the mints to be transformed into coins. David Hackett Fischer, in The Great Wave, cites a theologian, Fulbert of Chartres, who justified the practice of melting religious objects into coinage "with the causuistry that it was better to sell sacred vessels to Christians than to pawn them in the hands of the Jews. "4

  You will not find the gold mosaics of the Byzantine churches on Romanesque and Gothic churches, which have austere interiors and only stone carvings on the exterior. Their color comes instead from stained glass and small work by goldsmiths on reliquaries, the chalices on the altar, and the cloaks and mitres of the higher-ranking priests. When, for example, the Benedictine Abbe Suger, the great architect and regent of France, began building the first Gothic cathedral at Saint Denis in 1137 as the resting place of France's patron saint, there was no way he could emulate Justinian's extravagance at Saint Sophia. Even the fragile work of the goldsmiths scandalized Saint Bernard. Suger was not about to back down: "If the ancient law ordained that cups of gold should be used for libations and to receive the blood of rams," he retorted, "how much rather should we devote gold ... to vessels designed to hold the blood of our Lord?"5 How, one wonders, would Saint Bernard have reacted if it had been he rather than Moses who descended from Mount Sinai to find his people worshipping the golden calf?

  The Europeans did follow the Byzantines in the delicate use of gold known as chrysography, in which a small amount of powdered gold was suspended either in egg white or gum. In this form, the gold was then applied in the illustration of books as calligraphy, which the Europeans developed into art of exceptional beauty. The technique itself had first come into use as far back as the second century AD via Egypt and Greece to satisfy the Roman demand for luxurious articles, but it was Charlemagne who launched the European art that has come down to us as the illuminated manuscript.

  Charlemagne insisted on the highest standard for books produced during his reign and gave primary responsibility for that task to an English cleric, Alcuin of York. The most famous of the books produced under Alcuin's supervision were the Godescalc Gospels, which were written in 783 for Charlemagne, and the Saint-Methard Gospel Books, both of which now reside at the Bibliotheque Nationale in Paris. The SaintMethard books were written entirely in gold calligraphy, illuminated with full miniatures in gold and silver on purple ground. The lettering was designed with great care, much of it adapted from Roman writing at the time of Virgil, with the letters formed deliberately and always taking the identical form. The cursive writing that we learn in school today is a direct descendant of Alcuin's golden script of twelve hundred years ago. We write faster in modern times, however: just one initial letter in chrysography took more than a full day to execute, which made carrying out these tasks a full-time job for the monk artists assigned to them.

  The most significant development in the story of post-Roman money in Europe took place in Britain, which was at that time divided into a number of small kingdoms. Credit for this innovation goes to Offa (757-796), king of Mercia, a powerful ruler, and a contemporary of Charlemagne. Offa's domain extended through central England as far north as the Ouse and Trent Rivers around today's York and Manchester and as far south as Kent, Essex, and Sussex. This territory was large enough, and sufficiently integrated into one large community by Offa, for some modest amount of trade to start. In addition, Offa had large armies to maintain, and armies in those days were made up of mercenaries who would not fight unless they had received in advance the money payments due them.

  When Offa took over Kent, he found three outstanding designers and producers of silver coins, known as moneyers, who had the delightful names of Eoba, Babba, and Udd. They sound like part of a Victorian poem for children, but the combination would also have made a fine name for an eighth-century London law firm. Eoba, Babba, and Udd were master moneyers in silver and they inaugurated the longstanding leadership of Englishmen in that role.6 England has minimal local sources of gold, but Cornwall was rich in silver deposits whose output was now fashioned into a growing quantity of coins. The English did issue gold coins for about seventy years around AD 700, but they soon began to add silver alloy and then converted all their high-denomination coins into silver, with copper or brass for subsidiary coins.

  The purity of the silver pennies produced by Eoba, Babba, and Udd was so well maintained that the coins were soon circulating throughout Europe, even out to the Volga and the Don. Smaller denominations were created when people cut the pennies into halves or quarters. Later on, shillings would come into being; the word means "a piece cut off."'

  An abundant flow of Offa's pennies was soon coming out of the mints. Offa was so busy issuing pennies that he had to add eighteen additional moneyers to his original three-man staff. The production of Offa's fine silver pennies ran into the millions-a powerful commentary on how rapidly the demand for money would increase as countries groped their way out of the Dark Ages. An even greater demand for coins lay just ahead, as the English had to arm themselves against Viking invasions and, from time to time, had to offer huge sums to these Scandinavian invaders in an effort to buy them offs By the year 1000, England's coinage was the most advanced in Europe, produced by a network of more than seventy local mints spread around the country.9

  In the year 800, not long after Offa had started minting his pennies, Charlemagne, king of the Franks and victor over the Lombards, traveled to Rome so that the pope could crown him emperor of the Holy Roman Empire as a reward. A short while earlier, in 798, Charlemagne and Emperor Irene of Byzantium had opened diplomatic relations; Charlemagne contemplated marriage with her, undeterred by Irene's lust for power. In view of Charlemagne's impending coronation, this would have been the greatest merger and acquisition in history. One of Irene's favorites frustrated the match, and two years later she was on her way to exile as a spinster.

  Charlemagne took the Byzantine emperors as his model by focusing on gold rather than silver. It was probably Irene who stimulated his interest in coinage, although he was also a friend and admirer of Offa. Charlemagne must have had much more gold available to him than other European rulers who either preceded or followed him for a long time afterward. He reopened the old gold mines in Saxony and Silesia and attracted goldsmiths from Byzantium to his capital at Aix. He worked on a golden desk with a map of the universe etched on its top. He had many villas, each of which had its local
goldsmith. When he died, he was embalmed and buried sitting on a great gold and ivory throne that he had imported from Constantinople, together with a gold scepter, shield, and sword. Plundering gold from beaten enemies, as always, was important as a source of gold for these luxuries. For example, when Charlemagne defeated the Avars in 796, an Asian tribe who had founded the first Mongol empire in AD 407,1 he needed fifteen wagons, each pulled by four oxen, to carry the captured booty of gold and jewels."

  All that splendor would have been incomplete without a gold coinage. Charlemagne set his pound equal to twenty shillings and 240 pence and a pound weight of twelve ounces-like the Romans before him and like the system the English were later to follow. Charlemagne's coinage was to enjoy only a brief life span, however, despite the longevity of his system of denominations and weights.t2 His progeny spent as much time fighting among themselves as they spent in defending their domains, and his kingdom broke apart. Yet the difficulty was due only in part to his failure to establish a line of succession that would sustain the integrity of his domains. The evidence suggests that the process of recycling old gold for monetary purposes had reached a limit that could not be breached without the introduction of new gold supplies from some source beyond Europe.

  Offa's silver coinage fared better than Charlemagne's gold coins, even though Offa's English kingdom also fragmented after his death. Offa's coins situated the penny as the core of the English monetary system: until about the end of the thirteenth century, five hundred years after Offa's innovation, pennies were the primary means of payment. Offa's penny was so well established when the Normans arrived on the scene in 1066 that William the Conqueror rejected a policy of debasement for the English money.