The Secret History of Gold summary

Many great civilizations have come and gone before us. But whichever one you look at, be it Sumerian, Assyrian, Babylonian or Egyptian – they all have something in common – they used gold and coveted it. This was true for the Ancient Greeks as well. Just consider the famous myth of Midas, the King whose touch turned any substance into gold. 

Midas did actually exist, as did most figures of Greek mythology. He was probably King Mita of Mushki, who ruled during the late eighth century BCE. His superpower is likely an embellishment, but his descendants really did revolutionize our relationship to gold. 

Some 200 years after Midas’ reign, Alyattes I, King of Lydia, became the first western king to mint coins. They were made from electrum, an alluvial gold-silver alloy. Alyattes’ son, Croesus, took things further: he separated the silver from the gold, and reminted them as different coins, with a design of a lion and a bull on the front and punch marks on the back showing the value of the coin.

Croesus’s base denomination was divided into smaller thirds, sixths and twelfths, which evolved into the 24-carat standard that we still use today. His system was the first ever imperial currency, and his bimetallic standard of silver and gold would form the backbone of money for more than two millennia. The rises and falls of the empires that followed were all intricately linked to the precious metals. 

Alexander the Great battled and conquered his way to one of the largest empires ever known, spanning from Greece and Egypt through Persia all the way to Pakistan. In thirteen years of rule, he never lost a battle. He also made sure he passed through all of Persia’s principal gold-supplying regions as he conquered it. Loyalty, after all, doesn’t come for free. 

The same logic applied to the Roman Empire. At its peak, it housed as many as 50 million citizens, and they needed to be kept in check by a massive army. This meant dishing out tonnes of hard cash: gold and silver. The Roman silver coin, the denarius, still lives in many languages today. The Spanish word for money is ‘dinero’, for example, and the currency of many Arab nations is the dinar.

But the Roman currency is perhaps most famous for the way it was relentlessly debased by consecutive emperors. The denarius started at 95-98 percent pure silver. By 275 CE, it was below one percent. The gold aureus coin, meanwhile, was gradually reduced in size, going from weighing 8g to 5.5g before being replaced altogether. As a result, inflation skyrocketed, multiplying tenfold between 260 and 270 CE. The emperor Diocletian even had to resort to price controls.

The reason for this trend was simple; the gold and silver mines the Romans controlled in Spain and Macedonia were being depleted, but the Romans still had bills to pay. They were forced to use less-precious metals in their coinage and the results were catastrophic. In fact, this was one crucial reason for the empire’s eventual disintegration, though it is often overlooked.