The Power of Gold: The History of an Obsession
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Those people who survived the endless agonies of the fourteenth century must have been convinced that the darkness of their age would never lift. Yet as this terrible century finally drew to an end and the new century dawned, conditions in Europe began to improve. Peace provided opportunity to put abandoned farmlands back into use, and the lower prices for food that resulted led to an expanding population. After losing six million people from 1350 to 1400, the population of Europe grew by fifteen million-about a third-during the next fifty years and gained another nine million between 1450 and 1500. Improving food supplies also facilitated a return to urbanization, which in turn enabled commerce and industry to revive.34
Progress was not uniform across Europe. Italy fared best among the major European countries, and there the greatest glory of the fifteenth century was in Venice, although Florence also became a great center of commerce, industry, finance-and art-during this period. Venice remained the most important station for the great volume of trade with the lands to the east, but the city was not just a group of charming islands in the Adriatic. By the end of the century, Venice controlled most of the cities within a radius of around one hundred miles from Saint Mark's Square-including such centers as Verona, Vicenza, Ferrara, and Bologna-as well as the Mediterranean islands of Corfu, Cyprus, and Crete.
That kind of power gains gold. The territories remitted a million gold ducats a year to the Venetians, which paid for many of the palaces that are now so familiar on the Grand Canal, including the Ca d'Oro or House of Gold, whose exterior ornamentation was once generously covered with gold. This lovely edifice is familiar to millions of modern tourists, who deposit their own good money there for the pleasure of the visit.
Probably the most revolutionary developments in the course of the fifteenth century took place in an area that had been a sideshow to the Middle Ages in Europe: Iberia. The marriage of Ferdinand of Aragon to Isabella of Castile in 1469 united Spain. Under their leadership, the Spaniards finally expelled the Moors and, while they were at it, the Jews. Ferdinand and Isabella also launched a commanding dynasty that would deploy Spanish power across the entire European landscape and, in time, in the Americas as well. One daughter was married to the king of England, the other, Joanna the Mad, to the oldest son of the Holy Roman Emperor. Poor Joanna earned her name because she carted her husband's cadaver around with her for many years after his death. The contribution of Ferdinand and Isabella and the Spanish to the history of the Americas needs no elaboration.
Meanwhile, the little country of Portugal was also stirring. The Portuguese had always been great sailors; as early as 1300, they had established a navy trained by Genoese and Venetians. King John I, crowned in 1385, was an enlightened ruler who found ways to transform a thirdrate nation of only one million people (one-sixth the population of Morocco) into a world power.3' John signed an alliance with the English that was to last into perpetuity and is still in effect; he then cemented the deal by marrying a granddaughter of Edward III, whose brother, Henry Bolingbroke, would soon usurp the English throne from Richard II.' John's third son, Henry the Navigator, an ascetic who never married, was encouraged by his father to motivate the great explorations of his century. These explorations would lead to the discovery of the sea route to the Far East around the Cape of Good Hope, the discovery of America, and Magellan's triumphant discovery of the sea passage from the Atlantic to the Pacific during his ships' circumnavigation of the globe. The Portuguese were so turned on by their successes in exploration that the country was significantly depopulated of men of working age, unable to resist the temptation to join in. Many of these men either settled in far-off lands or disappeared in shipwrecks.
European output of gold during the fifteenth century was smaller than ever relative to the needs of the times. According to one authoritative estimate, domestic gold production in Europe in 1400 was no more than four tons.36 In money, that works out to about one million ducats." It is estimated that the Venetians alone exported the equivalent of a ton of gold a year in the form of ducats during the fifteenth century, significantly reducing the available supply of gold.36 Economic historian Charles Kindleberger cites estimates that as much as 5 percent a year of the coinage also disappeared due to ordinary wear, hoarding, shipwreck, and movement into plating for decorative purposes.*39
After some three thousand years of developing civilization, the total amount of gold in Europe in 1500 in all forms-coins, hoards, and every manner of adornment and decoration-could have been fashioned into a cube only two meters in each dimension. This modest supply meant that even small discoveries or transfers had a magnified effect on the gold market.411
The economic historian John Day, in an essay titled "The Great Bullion Famine of the Fifteenth Century," cites striking examples of the shortage of gold coins that developed during the fifteenth century as well as the fruitless efforts by governmental authorities to do something about it. "In 1409, the Paris money-changers protested in chorus that they had no bullion for the mint at any price. The civil war years (1411-35) witnessed the rapid decline of the influential goldsmiths' guild of Paris for lack of metal, lack of clients, and because of new restrictions on the manufacture of gold and silver artifacts, which were intended `to prevent the destruction of the king's coinage.' "41 An ordinance issued at the port of Bruges in 1401 required merchants to settle all foreign exchange transactions entirely in gold; the ordinance was repealed eight months later because so few paid attention to it.42 The mints of the Estates of Flanders were shut down from 1402 to 1410.43 The output of the Tower Mint in London, which averaged around £5000 in gold coins in the 1460s, fell to X2000 from 1476 to 1485 and then virtually came to a halt over the next ten years. Silver coinage shows similar trends.4 Day estimates that total bullion reserves in Europe shrank by 50 percent between about 1340 and 1460.41
The dearth of both silver and gold provoked a reversion to barter in many communities, especially for local payments. Pepper, worth more than its weight in gold, was the most popular commodity enlisted for this purpose; German princes even called their bankers "peppermen."ab Although this kind of improvised money served a purpose, the import flow of such commodities as pepper was uneven, which made their prices uncomfortably volatile. A few bags of pepper unloaded in Amsterdam or London could quickly depress its price. Not so a few bags of gold or silver. As a result, paper currencies-essentially promissory notes issued by high-quality borrowers-began to circulate, but Day argues that "The circulation remained overwhelmingly metallic. Even in mid-eighteenth-century England, on the threshold of the industrial revolution, it was estimated that minted coin accounted for 90 percent of all the money in circulation.... As late as 1861, Italian circulation consisted of 75 percent coin."47
When money is in short supply, people try to economize on the amount they spend for goods and services. The usual result is a declining price level. That is precisely what happened during the fifteenth century. Reliable estimates indicate that prices for commodities throughout western Europe fell by anywhere from 20 percent to 50 percent between 1400 and 1500. In Aragon, for example, the index of prices fell about 20 percent." The price of English wheat fell by half between 1360 and 1500, while the price of rye in Frankfurt dropped even faster.49 Similar trends in the Low Countries and Italy demonstrate that this was a universal phenomenon in fifteenth-century Europe.
At the same time, however, the demand for gold was so great that its price moved in the opposite direction. In England, where developments were typical of trends throughout Europe, the price of gold climbed slowly but almost without interruption from 23 shillings an ounce in 1345 to 40 shillings by 1492."' The resulting increase in the purchasing power of gold meant that the volume of commodities that an ounce of gold could buy doubled, at the very least, between the beginning and the end of the fifteenth century. As a consequence, this was one of the few periods in history when gold was spent instead of hoarded.
Gold has always been a valuable prize, but the alluring combination
of falling commodity prices and rising gold prices promised tempting rewards for those who could find new sources. In that setting, the great explorations of the fifteenth century appear to have been an inevitable response.
Or was it inevitable? One might argue that the forces of raw economics were only an incidental cause of the passion for exploration across the seas in the 1400s. Perhaps these enterprising voyages to reach the ends of the earth were just one more manifestation of the spirit of the Renaissance, a new age that broke with the more rigid mindsets that religion had imposed on the Dark Ages and the Middle Ages, a time that encouraged bold experimentation in art, culture, and science. Progress in navigation and the expansion of geographical knowledge were natural by-products of the important innovations during the Renaissance in mathematics, in measurement, and in perspective. The discovery of the world was what the Renaissance was all about. Between 1492 and 1500, the size of the world known to Europeans more than doubled; 25 years later, it had more than tripled."
At first glance, this explanation appears to make sense, but the contention that the great explorations could not have happened in an earlier age leads to two strange and counterintuitive conclusions. First, if the surge in the purchasing power of gold had occurred during a less innovative era, there would have been no one like Henry the Navigator, Columbus, or Magellan-explorers who were unable to resist the temptation of extraordinarily profitable rewards from hunting for gold across the seas. Sailors would have gone along traveling the traditional routes as though nothing had happened to the market for gold. Second, if the great explorations were purely a consequence of the adventurous spirit of the Renaissance, these voyages would have taken place even if the price of gold was falling while the price of commodities was rising. Neither of these possibilities makes much sense.
The argument need not end there, however. The search for gold was not the only motivation for these remarkable adventures. Dreams of glory and, perhaps even more important, the zeal to convert heathens to Christianity were also part of the inspiration. However, dreams of glory and the enthusiasm for turning heathens into Christians were surely not unique to the Renaissance. Men have always fantasized great deeds, and Christians have always been eager proselytizers.
The burning hunger for gold remains as the critical stimulant. The hunger for gold is always "burning," but it burned especially bright in the fifteenth century. The Spaniards and the Portuguese, and, later on, the English, the Dutch, and the French, conveniently managed to blur the distinction between the desire to do good works in the name of God and the desire to fatten their purses. The effort to become rich and powerful and to bring the blessings of Christianity to the great unwashed are characteristically presented with a blended rationale that must have been a source of o eat self-satisfaction.
Columbus summed it up well when he wrote to Ferdinand and Isabella about his early encounters with the natives of the lands he discovered:
So your highness should resolve to make them Christians, for I believe that ... you will achieve the conversion to our holy faith of a great number of peoples, with the acquisition of great lordships and riches and all their inhabitants for Spain. For without doubt there is in these lands a very great amount of gold. 12
efore railroads crossed the United States, you could reach San Francisco faster and cheaper by water from China than by land from Saint Louis.' This simple fact explains why the greatest challenge to western Europeans seeking gold and expanded trade in the fifteenth century was to find a direct sea route to India and the Far East. Success in that venture would replace the strenuous and hazardous overland paths that for hundreds of years had carried cargo and humans on horseback or mule or on foot.
The Portuguese were the first to step out and lead the way to the Discovery of the World. This was no coincidence. Portugal is such a narrow country that, relative to its small population, it ranks first in Europe in coastline facing the sea. Portugal was also one of the poorest countries in Europe at the end of the Middle Ages, which meant that even small, profitable discoveries could make a big difference. Political disturbances and monetary depreciation in the dark days of the fourteenth century had ruined the gentry and galvanized them to seek new fortunes in foreign undertakings. The whole environment provided the perfect setting for Prince Henry the Navigator's single-minded zeal for using the seas to expand Portugal's power and influence.
Gold was the primary objective of the Portuguese explorations, but that was not all. All the fifteenth-century explorers claimed that they were on a new crusade to smite the infidels and convert them to Christianity. When the inhabitants of distant lands turned out to have dark skins, the Portuguese soon convinced themselves that taking these poor souls as slaves was a great convenience that facilitated the process of religious conversion while incidentally satisfying the pressing demand for low-cost labor. Slavery was thus an afterthought, a by-product of the search for metallic treasures, but it became increasingly important.
Prince Henry's immediate goal was to contain the threat to Portugal itself from the Moorish pirates who preyed on shipping in the western Mediterranean. These pirates, later known as the Barbary Pirates, would still be a danger to trade and travel when John Paul Jones pursued them nearly four hundred years later. Henry opened his campaign in 1415 by capturing the Moorish city of Ceuta, just east of the Straits of Gibraltar on the north coast of Africa. Ceuta was an immensely wealthy city that served as the main Mediterranean port for the goods that Arab traders brought from Africa and Asia. In particular, Ceuta was the primary port for the caravans that brought African gold across the desert for shipment to Europe. As the Portuguese troops ravaged every corner of Ceuta, they found plenty of evidence of the golden resources of West Africa.
The capture of Ceuta opened up a compelling strategy to Henry and his men: if they could transport the output of the African mines by sea to their own shores, they could outflank the rest of Europe by circumventing the tedious and expensive voyage by camel across the Sahara desert to the northern Mediterranean trading posts. The arithmetic involved is worth setting forth in detail.
Depending upon its quality and endurance, a camel can carry between 120 and 200 kilograms of cargo across the desert for eight to twelve hours a day at 2.5 to 5.0 miles an hour. Let us take the average camel-carrying 160 kilograms for ten hours at, say, 3.5 miles an hour. That camel would cover 35 miles a day. The distance from the Mediterranean coast at Morocco to the gold country is nearly two thousand miles-roughly the distance from New York to Las Vegas, or from one end of the Mediterranean to the other-which means that the camel would have to spend about 55 days in travel (although there was a wide range around this average as well). Upon completing the trip, we should note, the camel had to be given an extended rest period to recover from his labors. A man could usually manage four camels at a time. As the caravans numbered from as low as three hundred camels to as many as 3500, the crews would vary from 75 to nearly nine hundred men; even the smaller caravans wending their way across the sands must have been quite a sight. A caravan of one thousand camels, each carrying 160 kilograms, would have transported a total of 160 metric tons of cargo.
A ship at sea moves more slowly than a camel, at approximately 60 percent of the camel's speed. However, a ship travels 24 hours a day; the camel caravans had to travel at the pace of the slowest camel and for only a third to one-half of a 24-hour day. Consequently, a ship can readily cover more than twice as much distance as a camel in one day. As the distance by sea from Gibraltar to the gold country is at most twice the distance across the desert, the ship has a modest advantage in travel time-even though, like the camel, it needs refitting after long voyages. The big advantage is manpower. The arithmetic above indicates that, at four camels per man and 160 kilograms per camel, a man was responsible for about 0.7 tons of cargo. On a ship, depending on the size of the vessel and the crew required, a man could be responsible for anywhere from three tons to fourteen tons.2 The ship is vulnerable to loss in stor
ms or to piracy, but camels could fall ill and entire caravans could be attacked by Berbers and other nomads.
These fifteenth-century ships incorporated the lateen sail, a remarkable technological innovation that had been developed in the eastern Mediterranean as early as the second century AD but came into wide use only in the Middle Ages. Unlike conventional square sails, which were positioned horizontally and limited the movement of a ship almost entirely to running ahead of the wind, the lateen sail was triangular and positioned vertically to the length of the ship. It could swing from port to starboard and back again, which for the first time made tacking possible for larger ships, so they could take the wind on either side. This innovation significantly extended the range of the sailing shipswithout it, Columbus could never have discovered America.
Prince Henry and his men began by launching a systematic policy of aggression against Moroccan cities, first on the Mediterranean side and then on the western, Atlantic side. The payoff came in short order, in the form of a rapidly growing traffic in slaves, indigo, and sugar between Africa and Portugal. Gold began to flow as well, but the volume appeared to the Portuguese to be no more than a trickle compared with their grandiose expectations. They were convinced that somewhere down the western coast of Africa they would discover the rio d'oro, a river of gold in both a literal and figurative sense. They had to keep pushing farther.