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A Special Substance

Gold! I want this gold. The source of all wealth, it will make me rich.

This heavy yellow metal has been treasured since the dawn of civilization. It is the metal of kings. Golden objects have been found in Ur, in Pharaonic Egypt, in Persia, in India, in Rome and Greece, in Celtic Ireland, in Aztec Mexico and Peru’s Inca empire.

Gold is everywhere on earth. It is dissolved in the seas. It is in rivers and at the bottom of creeks. You find it mixed with the sand or in quartz veins deep in the earth. This precious metal is alloyed with copper, with silver, or with platinum, nickel, or zinc. But sometimes it appears in pure nuggets: 24 carat gold.

King Midas of Phrygia asked the god Dionysus to grant him a wish. He wished that everything he touched would turn to gold. When the food that Midas ate became an indigestible metal, the king realized he had made a mistake. He asked Dionysus to release him from the gift. He was allowed to wash away his special power in the Pactolus river. And that's why golden flakes are today found in that river, some say.

“Eureka!” shouted Archimedes. “I have found it.” Archimedes had found that objects made of silver and gold displace different quantities of water because the two metals have different densities. And that discovery, in turn, allowed him to propose important new theories relating to hydraulics. It was a discovery of lasting value, better than gold.

Medieval alchemists tried to turn base metals into gold by use of solvents and elixirs. Theirs was a science tinged with magic, a search for the Philosopher’s stone. The idea that all could be produced from a single substance went back more than a thousand years. The transmutation of one substance into another became a theme of modern chemistry. It began in the search for gold.

North Africa was and is rich in gold. In 1324-25, the king of Mali traveled to Mecca with a large retinue, spending liberally along the way. So much additional gold was put in circulation by this monarch that it depressed gold prices in Cairo for a generation. The word spread that Africa was a place to find gold. That led to African trade in both gold and slaves, begun by the Portuguese.

Spain Strikes it Rich (or does it?)

There was a theory about that time that, contrary to church teachings, the earth was round. The Indes, far distant from Europe by the overland route, were known to be a place of fabulous wealth. Gold and silver, previous gems and fine silk, and various spices were available in those lands through trade. And so Columbus conceived the idea of circumventing the hazardous journey along the Silk Route. He would go east by sailing west. Only the Americas stood in his way of reaching the Orient by sea.

There was gold in the Americas, more gold than anyone could have imagined. Columbus claimed it all for Spain. Setting up a colony on the island of Hispaniola, the great admiral sailed to other of the Caribbean islands, looking for a passage farther west. His companions left in Hispaniola were only interested in gold. There was a revolt against Columbus’ attempt to restore discipline. Some of the colonists seized ships and sailed back to Spain to complain. In 1500, a newly appointed governor sent Columbus back in chains after observing wretched conditions in the colony. The “discoverer of America” died nearly forgotten six years later.

Beyond those islands, in central America, lay the great Aztec empire. Hernando Cortes sailed to the Yucatan peninsula in the spring of 1519 where he learned of this empire and of political dissension threatening the Aztec ruler, Montezuma. Allied with dissident peoples, Cortes and his force of soldiers marched to Tenochtitlan, the Aztec capital city, to parley with the emperor. By fortunate chance, he arrived on the same day in the Aztec calendar when the god Quetzalcoatl was expected to return. Montezuma was taken hostage. Over a two-year period, the Spanish force numbering in the hundreds but equipped with horses, steel armor, and gunpowder was able to defeat and subdue the much more numerous indigenous peoples of Mexico.

Along the Pacific coast of South America lay another empire, the Inca. Another conquistador, Francisco Pizarro, sailed to Peru with a small force in 1532, ascended the Andean plain, and marched to Cajamarca where the Inca emperor, Atahualpo, greeted him. Here again political divisions played a part in the conquest. Atahualpo had recently overthrown the previous ruler’s son and legitimate heir, Huascar, who still had a strong following. Pretending to be a friend, Pizarro seized Atahualpo. As ransom, he demanded a room filled with gold. After the ransom was delivered, Pizarro treacherously executed the Inca ruler. The Spanish consolidated their rule following capture of the mountain stronghold of Cuzco.

The Spanish colonies in Mexico and Peru yielded much silver and gold. They used mainly Indian slave labor. As large quantities of precious metals were shipped back to Europe, it had a major effect on the European economy. The price of other commodities, denominated in silver and gold, increased. The Spanish crown found that it was becoming poorer with each galleon of precious metals received.

The cost of shipping and mining operations, protection of the galleons, and loss of revenues to private mine owners exceeded the value of the treasure. There was a growing threat from pirates. Spanish agriculture was in ruins. The Spanish government imposed restrictions on specie shipments and on trade with its colonies and suspended payments to its creditors. Eventually, Spain went bankrupt. This caused people to reconsider the concept of national wealth.

Searching Elsewhere in the Americas

Even so, other European nations were inspired by the Spanish experience of finding gold and silver in the New World. In the 1580s, some Englishmen prospected for gold near Roanoke island in Virginia. They pestered the Indians with questions about possible waterways to the Pacific. None of those hopes materialized.

In 1595, Sir Walter Raleigh and a companion set out on an unsuccessful expedition to find “El Dorado” in the interior of South America. A Spanish explorer, Francisco Vasquez de Coronado, had previously traveled through the arid lands of the North American southwest to investigate rumors of the Seven Cities of Cibola, somewhere north of Mexico, said to be fabulously wealthy. He found only modest Indian villages. Gold was on everyone’s mind, but the search for it remained elusive.

There was gold in the North American west, plenty of gold, but its discovery would have to wait for several centuries. Meanwhile, the English colonies of North America became involved in a flourishing trade with the mother country. Tobacco, sugar, and coffee, and later cotton, grown on North American and Caribbean plantations, were exported to Europe in exchange for manufactured goods.

There was actually a three-way trade also including Africa. European traders exchanged manufactured goods with the Africans for human slaves, who were then shipped across the Atlantic ocean as laborers to work the plantations. The plantation produce then came back to Europe. Starting in the 18th century, transatlantic trade surpassed European trade with the Orient.

Gold became a medium of exchange in international trade. To foster business confidence and stable prices, England went on the “Gold Standard” in 1821. This meant that British currency could be exchanged for gold upon demand. The paper certificate, issued by a bank, was a more convenient means of conducting business than handling bars of gold, but substantially the same.

Other nations practiced “bimetallism” which meant that both gold and silver could be used for exchange. In this type of system, the free-market price for the precious metal affected general price levels. The quantity of gold and silver in circulation was a determining factor in their price. That, in turn, depended upon mining operations. If there were new discoveries of gold or silver, the price of the metal would drop. If economic activity grew faster than than the supply of precious metals, metal prices would rise.

The California Gold Rush of 1849

And so it was of more than passing interest when a new discovery of gold was made in California in 1848. James Marshall discovered gold in a river at Coloma (near Sacramento) when he was building a sawmill for John Sutter. The news electrified the nation. California had recently been acquired from Mexico in the Treaty of Guadalupe Hidalgo settling the war. It set off a mass migration known as the ‘49 Gold Rush to California.

Young men in the east left their wives and children at home to go west in search of gold, expecting to return some day as a wealthy man. Shop keepers abandoned their shops, military people deserted their ranks, farmers left their crops unharvested - all went west to strike it rich. They went overland to California in covered wagons, or by ship to the Isthmus of Panama and then across to the Pacific, or in Clipper ships around Cape Horn at the southern tip of Argentina. Within a year, the population of San Francisco had grown to 40,000.

Vast new quantities of gold were discovered and mined. Discoveries on the east slope of the Sierra Nevada mountain range set off a second wave of migration. Between 1849 and 1853, more than $200 million worth of gold was extracted and shipped to commercial centers. The miners, mostly bachelors, were a hard-working bunch who put up with shoveling gravel, digging mine shafts, or building sluices in expectation of becoming rich from discovering and processing gold.

Some did become rich from working their claims; many did not. It gradually became clear that persons engaged in selling merchandise, operating hotels or saloons, or supplying other goods and services to the miners stood a better chance of profiting from the newly discovered gold than did the miners themselves. Indeed, the main effect of the Gold Rush was to bring many people to California. The “Golden State” is today the most populous state in the union.

California was the first, but not the last, site of a “gold rush” in modern times. Australia experienced a similar phenomenon between 1851 and 1853. In 1884 came the Witwatersrand gold rush in South Africa. The Klondike province in northwestern Canada saw an influx of gold miners in the late 1890s. Then the search for gold spilled over into Alaska near Fairbanks.

We remember those events from the works of famous novelists such as Bret Harte and Jack London. Mark Twain also started writing when he accompanied a relative to the Nevada territory in the 1860s and observed life in the silver-mining camps. It was a life of rough-and-ready miners, gamblers, prostitutes, saloon entertainers, and other colorful individuals.

In Deadwood, South Dakota, not far from a gold mine, “Wild Bill” Hickok was shot in the back in 1876 while engaged in a poker game. His friend, “Calamity Jane” (Canary), who was in show business, requested that she be buried next to him in the Mt. Moriah Cemetery. This is what people remember.

If Francisco Coronado had walked a few hundred miles farther, he might have come across gold in the Black Hills of South Dakota or the Rocky Mountains of Colorado. As with California, it was gold which first brought masses of white Americans into those western states, often at the American Indian’s expense. The discovery of gold brought settlers to Colorado in the 1860s. A boom in silver mining occurred a decade later.

The doomed general, George A. Custer, led a military expedition into the Black Hills to investigate rumors of gold deposits there. (The rumors were true.) Other western states such as Idaho and Montana also became centers of gold or silver-mining operations. Gold was discovered in Goldfield, Nevada, just across the border from California, in 1902. Mining operations flourished for several years and then died following a miners’ strike in 1907, broken by federal troops. Today it is a ghost town like so many others in the Old West.

We know that gold played an important role in the politics of the United States in the late 19th and early 20th centuries. The union that organized the mines of Goldfield, Nevada, was agitating for an eight-hour day. Although that particular campaign was defeated, the objective was won a decade later. The International Workers of the World (IWW) and the Western Federation of Miners (WFM), both active in that struggle in the mining camps, are colorful relics of the labor movement.

The Populist movement of the 1890s was concerned with the increasing debt incurred by grain farmers as the banks and railroads became rich off their business. The “free coinage of silver” following vast new supplies of that metal extracted from the western silver mines would allow farmers to pay off their debts in cheap money. The moneyed classes, naturally, wanted “sound money” which meant adhering to the Gold Standard. Who can forget the Democratic Presidential candidate, William Jennings Bryan, when he said at the 1896 nominating convention in Chicago: “You shall not crucify mankind on a Cross of Gold.”

More gold was mined in the second half of the 19th century than in the previous five-hundred years. In fact, it was twice as much. Previously, about $10 million worth of gold was mined per year. By 1930, its total stock exceeded $11 billion. President Franklin D. Roosevelt set an official price for gold at $35 for each troy ounce. Gold coins were taken out of circulation. The United States Government continued to hold a reserve of gold bullion at Fort Knox and other places.

Later, under President Nixon, the United States went off the gold standard. Paper currency cannot be redeemed in quantities of this metal. Yet, gold continues to serve a monetary function as a medium of international exchange.

The Search for a Greater Reality

So we think of gold today as a relic of our more conservative past, when money actually meant something. In times of crisis, people hoard this substance. The search for gold is a search for reality, a search for greater substance in a world of increasing illusion.

But, of course, gold’s real value is whatever people choose to give it. Gold itself is just an inert metal, useful for certain purposes. It is highly malleable. It conducts electricity moderately well. It does not rust. Its relative scarcity compared with demand makes it worth something in monetary terms. Many people think gold objects are beautiful. Gold is a beautiful color, I think.

As life goes on, the symbolic value of gold remains in our hearts. Its ideal motivates people to do certain things. The California Gold Rush produced a certain quantity of gold bullion but, more importantly, it spurred a mass migration of Americans to the west coast. That boom town of San Francisco became, a century later, site of the 1945 conference which organized the United Nations. The Golden Gate bridge is one of the world’s engineering marvels.

And beyond its obvious features are the people and the culture of California. Silicon Valley, down the peninsula from San Francisco, was the creative center of the computer industry after personal computers replaced the big mainframe machines. Several hundred miles down the Pacific coast are Los Angeles and Hollywood, capital of the American entertainment industry.

In searching for gold, one would have to think of the suffering in the U.S. Civil War. The new state of California materially aided the Union. But more importantly, we had a tremendous growth in industry and in related inventions after that war. Think of how the transcontinental railroad connected both coast with quick transportation. Think of how Thomas Edison turned on the first light bulb. Scenes, once dark, were illuminated with light of a golden hue. Beyond this are his phonograph and motion-picture machines. And then come radio and television, products of 20th century genius.

Who in the 18th or 19th centuries could have imagined “tin pan alley”? It is Golconda, a place rich in diamonds, that confers immediate wealth and fame on people. By a particular kind of voice, or an appealing face, an otherwise ordinary woman or man is catapulted into the upper regions of popular culture, there to become famous and rich. To think that all those songs recycled on the radio are the basis of a multi-billion dollar industry is quite mind-boggling. There is gold in those songs, and in those films, and in those recorded television programs. This is Golconda, a new place of wealth.

So what is the true gold? It must be more than a certain stock of metals stacked in pallets at Fort Knox (or perhaps held by Japan’s or China’s central bank). Oil in the ground is sometimes called “black gold”. We do need it more than precious metals. We need fresh air, clean water, and nutritious food; and metallic gold you cannot breathe, drink, or eat. An old Roman proverb says that, unlike spices, gold does not smell. It just sits there looking pretty.

What is ultimately valuable to you is you. It is your body, mind, and spirit, starting with what you have in your genes. It is also, however, the world around you that enables healthy life to continue. It was the robust American spirit that sent thousands in search of California gold in the late 1840s. In the late 1960s, the same spirit and ingenuity sent a crew of human beings to the moon. A few aspiring athletes win gold medals at the Olympics every four years. It’s the highest honor that can be attained in that field of endeavor.

So the spirit of gold begins with restless energy and ambition, striving to climb to a better place. Sometimes tawdry, it is also human. Gold is not modest. Its quest is an expression of life.

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