Despite its academic publisher and the apparatus of a technical tome (including 64 pages of footnotes and nine pages of bibliography), the book is entertaining and enlightening. It should appeal to a wide audience, including anyone interested in American or financial history or who simply likes a well-written story. Silber is an architect of palatable prose. He grabs readers’ attention and keeps them turning pages with his intriguing anecdotes and amusing asides.
Silver’s story is worth telling. The white metal serves as a store of value and means of payment. It has important uses in electronics, photography, housewares, and jewelry. Silver coins and bullion formed the monetary foundation for many regions of the world for big chunks of history, including Europe from the 15th through 18th centuries and China and the Middle East well into the 20th century. Debates about its monetary use played a large role in the history of the United States, beginning before the Founding and continuing through the Great Depression. Silber’s book focuses on the U.S. experience.
Bimetal standard / The first tenth of the text takes the tale from Alexander Hamilton through William Jennings Bryan. As the first secretary of the treasury, Hamilton oversaw the construction of the U.S. monetary system. He established a bimetallic standard in which gold and silver served as legal tender, with the hope that both metals would circulate. Silver’s abundance would promote economic growth and price stability in an era when scarcity of coins often generated deflation. Increases in the mint price of gold, Gresham’s law (“Bad money drives out good”), the Coinage Act of 1873, and the Gold Standard Act of 1900, however, meant that the yellow metal served as the medium of exchange in America throughout the 19th and 20th centuries.
Bryan was the most famous of the politicians who urged returning to a bimetallic standard. “The Great Commoner” represented the mass of Americans living west of the Mississippi who believed that more circulating currency would bring higher prices for crops, livestock, and farmland, helping them to pay the mortgages on their farms and machinery. Bryan’s “Cross of Gold” speech at the Democratic Convention in 1896 asserted that free coinage of silver would promote prosperity for the common man and free the United States from subservience to the gold-standard nations in Europe.
Silber’s concise coverage of 19th-century American monetary history is fun to read. I plan to assign these chapters to my undergraduates in American monetary history because many of them refuse to read boring books on the topic. Silber’s treatment covers key historical points, clearly explains the forces underlying the monetary system, and rivets readers’ attention. The material is not novel and requires some caveats that I will discuss later, but nothing this entertaining has been written on the topic since Frank Baum penned The Wizard of Oz as a monetary allegory.
The Depression and WWII / The book’s second storyline spans Chapters 4 through 8, or about one-fifth of the volume. It involves China, Japan, and the Franklin D. Roosevelt administration’s monetary policies. In this section, Silber offers a novel tale; you will not find it told completely—if at all—in books and articles about this era or in widely used textbooks on American history. His story is important because it illuminates a clear case where political institutions set up long ago profoundly influenced world events in ways that could not have been anticipated at the moment of the institutions’ creation.
Roosevelt became president during the depths of the Great Depression. The economy had collapsed because a shortage of money lowered prices, raised interest rates, bankrupted households and firms, and dislocated industry and trade. Roosevelt campaigned on a promise to raise prices back to the level they had been before the onset of the contraction. To fulfill this promise, he needed to resuscitate the banking system and expand the money supply. That, in turn, would raise prices, lower interest rates, encourage consumption, and increase investment. His efforts focused on the financial system, the Federal Reserve, and the gold standard.
In Roosevelt’s race to resuscitate the American economy, silver was a sideshow. He signed the Silver Purchase Act, which authorized the Treasury to buy huge quantities of the metal at gradually increasing prices, and then to use the metal to back currency in circulation. These purchases may have marginally increased the money supply, but they were unnecessary; reforming the gold standard and rescuing the banking system accomplished that task. Silver purchases were, however, necessary to convince senators from Western, silver-mining states to support Roosevelt’s political program. Those senators had political influence in Washington, where they chaired key subcommittees and controlled votes needed to pass the New Deal through Congress.
High-school and college history textbooks scarcely mention Roosevelt’s silver policies, if at all. The same is true for most scholarship on the subject. Silber shows that this policy played a central role in world affairs and had a huge effect on the lives of one-quarter of humanity. Silver was the foundation of China’s monetary system; its currency was backed by silver, not gold as in most of the rest of the world. America’s campaign of massive silver purchases raised the metal’s price on the world market and deflated China’s economy. High silver prices encouraged investors to withdraw silver from Chinese banks and sell it in London. China’s money supply fell, as did prices and incomes. Rising silver prices also increased the value of the yuan in foreign exchange markets, which reduced China’s exports to the rest of the world, where currency was not based on a silver standard.
The silver shock put China in desperate straits. Its economy could not bear the strain from the silver drain. Its central bank and financial system lacked the skills and knowledge to alleviate the affliction. China’s economic depression deepened and civil unrest spread. The central government was already fighting on several fronts: a communist insurrection festered in the hinterland; regional warlords sought to increase their authority at the expense of the national government; and Japanese armies, which already occupied north-eastern China, renewed their advances in coastal, central, and southern China.
The Roosevelt administration was warned that its silver policies, which were put in place to purchase the allegiance of a few senators from silver-mining states and to appeal to Democratic voters who still believed in the mythical powers of silver touted by turn-of-the-century populists like Bryan, would weaken China and facilitate Japan’s expansion. Domestic politics overrode international concerns. Sure enough, China’s weakened condition encouraged Japanese aggression.
To protect China, the Roosevelt administration eventually embargoed shipments of oil and other raw materials destined for Japan. To break the embargo, Japan attacked Pearl Harbor, the Philippines, and U.S. and Allied possessions throughout the Pacific. Japan’s offensive brought the United States into World War II and eventually brought the Communist Party to power in China. This important and insightful story is the heart of Silber’s book. It should be more widely known and taught. The book convinced me that I should include this information in courses that I teach on economic history.
The next chapter discusses silver’s use during World War II. The metal conducts electricity well, making it an important wartime good. The United States had lots of silver stockpiled at West Point, and the Treasury Department lent much of it to the Manhattan Engineering District to help produce atomic bombs. So, Roosevelt’s silver purchase policies, which induced silver to flow from Beijing to New York and London, weakening China and facilitating Japan’s expansion in Asia, also helped the United States build Little Boy and Fat Man, the atomic bombs dropped on Hiroshima and Nagasaki, which convinced Japan to withdraw its troops from China and surrender to the Allied coalition.
Post-war / After the war, industrial demand for silver increased, and its utility as a monetary metal declined. Federal Reserve Notes (the typical dollars that you see today) were backed by gold. There was no need for paper dollars backed by stockpiles of silver. Coins continued to contain silver, but as industries’ demand for silver increased, the silver content of coins declined. There was no sense in minting coins whose silver contents would have greater value as jewelry, or silverware, or computer components. Someone would simply melt down the coins.
There also was no longer a political need to buy off senators from silver-mining states with government-guaranteed purchases of silver at a fixed price. Miners could sell silver for more money to manufacturers and, besides, the senators from silver-mining states could be swayed more cheaply with promises of highway and agriculture funds. The Kennedy administration and Congress recognized the reality of the situation, leading the former to propose and the latter to legislate the repeal of the Silver Purchase Act of 1934.
While the Kennedy-era silver policies seemed sensible and had widespread support, Silber conjectures that they could have been controversial among some small segment of the population. Maybe someone captivated by Bryan’s “Cross of Gold” speech considered Kennedy’s actions inexcusable. Maybe that irate individual shot Kennedy from a hidden vantage point, getting away with murder because Lee Harvey Oswald happened to shoot at Kennedy’s motorcade at the same time. Silber’s conjecture seems insensible, maybe even crazy—but, he asks, is it any crazier than the other conspiracy theories about the assassination? Maybe not.
After the Kennedy assassination, the book’s tone changes. It stops discussing silver as a means of payment and begins discussing it as a speculative asset. A lot of information is packed in this portion of the text, which spans about 40% of the book. These chapters describe how commodity markets function and the strategies of famous men who speculated in silver. They also provide investment advice.
A focus is the Hunt brothers—Nelson, William, and Lamar—who were some of the richest men in America. In the late 1970s and into 1980, they tried and failed to get even richer by cornering the market on silver. Another notable character in these pages is the investment sage from Omaha, Warren Buffett. These chapters are entertaining mainly for their gossip about, and character studies of, famous and infamous investors. The stories remind me of Crazy Rich Asians, but the cast of characters is a bunch of rich white men with colorful backstories, profligate tastes, and more greed than good sense (with the exception of Buffett, who seems to just have good sense). Another apt pop-culture comparison would be Real Housewives, but with a focus on rich husbands, their over-the-top investment antics, and their conspicuous consumption.
Beware playful writing / Overall, the book is entertaining, contains novel insights, and is well researched. I will recommend it to friends and assign portions to my undergraduates. My students may need guidance, however, on how to interpret portions of the text.
The book is filled with metaphors, analogies, funny phrases, wry humor, and outlandish conjectures. Silber writes, for example, that the tension leading to the duel between Aaron Burr and Alexander Hamilton “probably” began because one studied at the College of New Jersey (now Princeton University) and the other studied at King’s College (now Columbia University), making them “natural Ivy League rival[s].” When I read this, I understood it was a joke; respected biographies of Burr and Hamilton do not indicate that college rivalries played a role in their animosity. Silber’s version of events could not be true, literally, since the Ivy League’s existence (and the use of the term) began in the 20th century. An undergraduate with less knowledge of American history, however, might miss the humor, believe the statement, and remember it, because readers tend to remember the provocative over the mundane.
A similar danger lies in the hook that reels readers into the Kennedy chapter. I mentioned it at the beginning of this review. The chapter begins and ends with the theory. The last two sentences are:
However, murder for the sake of silver dollars seems excessive, a primitive response to a commercial conflict, perhaps understandable in the more violent nineteenth century but inconsistent with the more civilized twentieth. Or not?
Or not what, I wonder. The only places in this universe where the silver-policies-killed-Kennedy conspiracy theory exists are in the 11th chapter of this book and on an array of websites, inspired by Jim Marr’s cult conspiracy compendium Crossfire, that proffer a similar senseless story. The book cites no historical evidence for the idea. A footnote indicates the Warren Commission did not mention the theory among its catalog of rumors, contentions, claims about, and potential causes of Kennedy’s assassination. The purpose of this provocative claim is to raise eyebrows and increase readership. It serves that purpose well because it is not just untrue but absurd.
I worry, however, that readers who do not get the humor might take this claim seriously, particularly given its prominence and repetition in an academic book written by a famous scholar. We live in a world where conspiracy theories flourish. Fiction spreads faster than fact. The book contains numerous claims, like the Kennedy conspiracy theory, that could be misconstrued. As a reviewer (and a professor who will assign part of this text to his students), I want to give readers simple rules that will help them separate fact from fiction. I derive the rules from two observations:
First, the author knows what is true and what is not. He indicates spuriousness with adverbs expressing uncertainty, such as “perhaps,” “probably,” and “possibly.” Readers should be skeptical of all claims in sentences with adverbs like that; these claims are often false.
Second, the author keeps readers’ attention by constructing paragraphs with concluding sentences that are intriguing and provocative, so readers should also be wary of claims in the last sentences of paragraphs. They are often hyperboles or embellishments open to misinterpretation. Overall, readers should realize that when the last or next-to-last sentence in a paragraph contains an adverb expressing uncertainty, then the conjectures or claims in those sentences have no basis in fact. Ignore those sentences, I will instruct my students; cross them out.
With that minor caution in mind, Silber’s book is insightful and enjoyable. It deserves to be read widely, particularly the chapters on Roosevelt’s silver policies and their effect on China. These chapters raise questions about the nature of the United States and why our political system at times pursues policies that benefit small groups of our citizens at the expense of not just the rest of our nation but the rest of the world.
