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-A New History of Rome," Spectator 102 (January 2, 1909), pp. 20-21.
'Where in the world did the Pharaoh of Egypt obtain a bear, much less a polar bear, over two hundred years before the birth of Christ? My source cites "the contemporary Greek writer Athenaeus, who grew up in Egypt."
*In most instances, I have calibrated weights of gold in metric tons, even though convention more frequently uses millions of ounces. It is not difficult to conceive of a few thousand tons-about as large as the numbers get-whereas millions of ounces convey little meaning.
*Furness spelled it Uap.
'Americans are in the same boat. In the process of doing research for this book, I tried to obtain access to the U.S. official gold reserve at Fort Knox, Kentucky. I was told that it is an army base and no visitors are allowed. The U.S. Treasury reports that we own $11 billion in gold, but if nobody can get down there to have a look, how do we know that the gold is really there?
*1 am grateful for this insight to a sprightly and illuminating unpublished manuscript by Andrew Meadows, the curator of Greek coins at the British Museum.
`For a fascinating description of the great burial mounds of Alyattes and possibly of Gyges, see Tassel, 1998.
'Was this the equivalent of Napoleon's derogatory characterization of the English as a nation of shopkeepers?
*A century later, a Greek philosopher named Chillon observed that "Gold is tried with a touchstone, and men by gold" (Kemmerer, 1944, p. 178).
*Slaves really mattered. At its height, the population of Athens amounted to about five hundred thousand people, of whom 350,000 were slaves.
*The British made a stab at decimalization in 1847, when they introduced a two-shilling coin called the florin; the florin was thus one-tenth of a pound. This coin continued to circulate along with its slightly larger near-cousin, the half crown, which was equal to two shillings sixpence. There were no crown coins at that time or thereafter.
`Gibbon indicates that alchemy existed as early as the Egyptian Empire. He goes on to comment that Diocletian's act is "the first authentic event in the history of alchemy" (Vol. I, p. 411).
&n
bsp; *Gold is so soft and malleable that some of it disappears, especially when in the form of coins, simply from constant rubbing as it passes from hand to hand.
*Readers with a fondness for colorful names should note that the name of Alboin's predecessor was Wachho.
*Those relationships have indeed lasted: during the late 1990s, the Sudan was a favorite hiding place for well-known Muslim terrorists.
*There is a functioning kingdom today in southern Ghana, known as Asante. The king sits on a golden stool instead of a throne; ceremonial appearances are marked by large quantities of golden ornaments. When the British arrived as colonizers in the late nineteenth century, the natives hid the golden stool. In 1896, the British governor general of the Gold Coast colony wanted to sit on the stool as the representative of Queen Victoria, but the tribal elders refused permission and kept it in hiding (New York Times, March 4, 1999).
*Charles Kindleberger points out the countries to the east of the Europeans-all the way to China and Japan-were what economists call "low absorbers." That is, the incomes earned from their export activities failed to generate a commensurate demand for imports.
The Wall Street Journal for May 6, 1999, page A24, reports that "legend has it" that F. W. Woolworth paid in nickels and dimes the $13 million bill for the construction of the Woolworth Building in New York City.
`This episode may pale in relation to the contemporary problem of the Europeans in eliminating all national currencies in favor of the euro. Destroying paper money is simple, but what of the millions of coins? The Dutch-one of the smaller economies involved-are reported to have sought space equivalent to over two football fields as an interim solution! (Personal correspondence from James Howell of Atherton, California. Probably from the Financial Times of November or December 1998.)
tGold coins never circulated in the same way as conventional small change. When my grandfather in the 1920s gave me a $5 gold piece for Christmas, I waited a couple of years before I could bring myself to spend the money.
*For a more detailed description of the Trials of the Pyx and their place in the history of statistical sampling, see Stigler, 1977.
`Even that was not the last of the bad weather: the Baltic Sea froze over in 1316, Florence suffered one of the worst floods in its history in 1333, ferocious North Sea storms assaulted the coasts four times between 1316 and 1404, and a Norwegian priest in Greenland reported in 1350 that "the breakup of advancing glaciers made it impossible to follow the ancient sea lanes" (see Day, 1978, p. 187).
The Treaty of Methuen in 1703 admitted Portuguese wines to Britain at duties one-third less than on French wines, while Portugal agreed to import from Britain a variety of goods that the Portuguese were unable to supply to Brazil. Brazilian gold sailed to Britain to pay for what the sales of Portuguese wines could not cover; Brazilian gold coins were common currency in England at the time. Some scholars believe that this treaty converted Portugal into an English colony (see Kindleberger, 1996c, p. 71).
*Even this could be an understatement. See Day 3, footnote 8.
The edition in my possession was published by the Heritage Press, New York, in 1957. It contains a fascinating biography of Prescott by the great naval scholar Samuel Eliot Morison.
*Prescott spells the name of this city and other Inca cities with an x, whereas modern writers tend to use a j instead. I have adhered to his spelling system.
*A visit to the Jan Mirchell collection at the Metropolitan Museum of Art in New York is an unforgettable experience.
'Estimates of the production and shipment volumes of precious metals vary widely. Good data are available on how much actually crossed the ocean; discussions of the differences in the estimates revolve primarily around how much gold and silver was smuggled and escaped from official routes. Suffice it to say that the volume was enormous relative to the amount of gold and silver treasure in Europe at the end of the fifteenth century. Most studies either accept or take as their starting point the meticulous and comprehensive work of Earl Hamilton (see Hamilton, 1934), subsequently updated by Morineau, 1985, and Attman, 1962. Readers wishing to pursue this subject in detail should surely consult those works.
*These warships were also authorized to carry cargo. On one occasion, a galleon was so heavily loaded that her lower gun ports were under water (Parry, 1967, p. 202).
'For a detailed and fully documented study of the Spanish Navy and the entire process of Spanish shipping from the New World, from construction to sailing, see Phillips, 1986.
As the best estimates depend only on official data, differences of opinion exist as to precisely how much seventeenth-century imports fell below shipments during the 1500s. The surging growth, however, did come to an end by 1600 (see Kindleberger, 1989, p. 28).
*This is a simplified version of the example in Kindleberger, 1993, p. 41.
*During the go-go days of the 1960s, some of the dubious debt issued by highly leveraged conglomerates was referred to facetiously as "Chinese paper."
*The English Commonwealth was the government headed by Oliver Cromwell that assumed the rule of Britain after Charles I was beheaded at Whitehall on January 30, 1649. The monarchy, under Charles's son Charles II, was restored in 1660.
*The Dutch East India Company, founded in 1602, was the first permanent joint stock company. Commercial banking firms with limited liability developed much more rapidly in the United States than in Britain during the first half of the nineteenth century.
tSee Bernstein (1996), Chapter 5, for an extended discussion of English economic and financial development in the 1600s, including the establishment of Lloyd's insurance.
*The discussion that follows is necessarily compressed. Much of the controversy focused on what to do about the official price of silver, which is largely omitted below. For an authoritative and lively account of the disputes and the decisions-in these matters, see Li (1963), pp. 83-107.
*The issues involved are complex and go to the very roots of what we mean by money and the "standard." For a full discussion of both sides of the matter, see the passages in Li (1963) cited above, pp. 83-107.
The English continue to refer to World War I as the Great War.
`From this point forward, I use the convention for expressing prices in English style, with s for shillings and d for pence.
The figure 63 17s 10% d was derived by translating the 129.4 grains of gold in the guinea into its money price of 21 shillings.
*Thane of Cawdor was the title to which King Duncan raised Macbeth-as the three witches had predicted-on the very evening that Macbeth and his wife were to murder the king. There is still a Lord Cawdor at the present time.
tMy source for the details of this adventure, Yahoo.com, "Wales on Britannia: History Timeline 1793-," adds that the French troops were drunk, which made overcoming them all the easier. There is also evidence that the French troops were merely convicts put into uniform. The Welsh name for Fishguard is Abergwaun, and the local Royal Oak Inn has a copy of the treaty that ended the French invasion.
*In 1816, Parliament ruled that silver coins henceforth were tokens that would be acceptable based only on their face value, not their metallic content.
*Shifts in the relative price of gold and silver might have led to the establishment of a silver standard in Britain, but the attachment to gold was so strong that coinage of silver was suspended in 1798, and silver never again became legal tender except for payments not exceeding X25 (see Jevons, 1875, p. 69).
*Chevalier did concede that the process, though inevitable, would be retarded by the offset of French exports of silver to India, a "parachute" to slow the fall in the value of gold. This observation hardly does justice to a complicated and often fascinating story related, as centuries earlier, to the ability of the East to absorb huge quantities of the precious metals. See, especially, Flandreau, 1996, and Kindleberger, 1989.
'A technical statement of this point in economist-speak would be as follows: "Box Jenkins procedures at both quarterly and annual
frequencies identify the price level over 1870-1914 as a random walk with little drift, and inflation consequently as approximately zero-mean white noise, in both the United States and the United Kingdom" (see Barsky and DeLong, 1991, p. 824).
'The French did not pay the indemnity in specie. They issued a perpetual bond (a bond with no maturity), skillfully underwritten by the Rothschilds, that had many buyers outside of France. The resulting foreign exchange was transferred to Germany.
*As it takes almost five hundred grains to add up to one ounce, we can see that the difference between 24.68 grains and 22.85 grains is tiny indeed. The dollar was originally defined in 1795 relative to 371.25 grains of silver instead of being defined directly in gold.
`Ricardo changed his mind in 1819 and came out for gold, because of a concern that new mining machinery in the silver mines would result in a glut that would cause an "alteration" in silver's value, "whilst the same cause is not likely to operate upon the value of gold" (see Friedman, 1992, p. 153). He should have had an opportunity to discuss the matter with Chevalier after 1848!
*See Wirth, 1893, pp. 219-229, for a vivid description of the derrings-do. For a more scholarly and technical analysis of the events leading up to the Barings crisis, the tensions between the Bank and the Treasury, and the uncertain and uneasy development of the art of central banking, see Pressnell, 1968, especially pp. 167-193.
The description of events that follows relies heavily on Milton Friedman's elegant and charming discussion of this matter in Friedman, 1992, Chapter 3, especially pp. 51-61.
`Belmont, born Schoenberg, was the only Jew whom Morgan was willing to accept on a business basis without complaint.
'When the Gold Standard Act of 1900 was passed, it provided for a reserve of $150 million against redemption of paper notes, to be replenished back to $150 million any time that the reserve might fall below $100 million.
In accordance with precedent set by the Bank of England, presidents of the Federal Reserve banks in those days had the title of "Governor."
The Power of Gold: The History of an Obsession Page 47