This is one for Goldfinger - a lovely piece from Paul Johnson in last week's Spectator. Please forgive the long posting, but it is the right thread for it and I think worthwhile. Enjoy:
When the skies darken, the glow of gold is always welcome
‘When markets are unsteady and investors are nervous, you can’t beat gold.’ That was my grandfather’s saying, common enough, I daresay, in late Victorian Manchester. Jimmy Goldsmith was another believer. ‘You know what the Aztecs called it,’ he would say with relish, ‘they had a special word for it — the excrement of the gods.’ Jimmy was a great buyer of gold, especially towards the end of his life. He bought bullion — gold bars — and would inspect them in the bank vault where they were kept. ‘Like visiting Fort Knox,’ he’d say. He also bought shares in gold mines, the simplest way to invest in gold. But he liked gold coins too, such as the famous American ‘Two-headed Eagle’, worth ten dollars when first minted. Or the Maria Theresa thaler, still circulating as currency in East Africa when I first went there in the 1950s. Above all he liked the Krugerrand, a splendid coin worth £100 in those days. He liked to have a few about him to rattle in his pocket, which reminded me of Tennyson’s lines from ‘Locksley Hall’:
But the jingling of the guinea helps the hurt that Honour feels, ...
It is a well-attested fact that really rich men, for no sound economic reason other than intuition or gut instinct, like to keep a stock of gold coins. I hear that these come-lately Russian billionaires are particularly fond of them, especially the 100-kopek gold coins minted by the last tsars. I daresay Warren Buffet has his little stock of gold coins, and even Bill Gates too. A typical case was the so-called Bad Earl of Lonsdale, head of the powerful Lowther family who dominated Lake District politics at the end of the 18th century. Although an immensely rich borough-monger, who controlled up to a dozen seats in the House of Commons, he was also mean and dishonest. He behaved very badly to poor gullible Boswell, and even worse to Wordsworth’s father, who acted as his steward and was not paid for many years. Wordsworth and his siblings had to wait until the Bad Earl died and was succeeded by the Good Earl before they got their inheritance. The Bad Earl collected gold guineas which he kept in leather bags according to the quality of the gold and the finish of the coins, some of which were over a century old. What fun the old Scrooge must have had sorting them, and inspecting them on a dark night with all the doors locked and bolted, his treasure glittering in the light of a single wax candle.
Another case was the 15th Earl of Derby, son of the prime minister, and himself foreign secretary in Disraeli’s famous administration. He had 70,000 acres in Lancashire alone, owned much of Liverpool, and ran his estates with parsimonious efficiency. But he loved gold. His diaries (well worth reading and well edited by John Vincent), record that he bought himself an iron strongbox, portable, but so heavy he calculated that a thief, even if he knew where it was kept, could not make off with it without disturbing the whole household. This box had a slit in it, and Derby would pop in a gold sovereign from time to time. At his death in 1893 when the box was opened, it was found to contain over 6,000 sovereigns.
The two earls, being of different generations, collected different coins. The point is worth examining, since I find that even well-educated people confuse guineas and sovereigns. England traditionally had a silver standard coinage, though some beautiful gold coins were minted in the Middle Ages and under the Tudors. Then, in 1663, with Charles II on the throne, a new gold coin was minted. It was called a guinea because the gold came from the West African coast where it was mined and brought to England by a chartered company. On one side of the coin was an elephant, the company’s stamp. Then in 1675 a castle was added — hence the many pub signs of elephant and castle, for the guinea proved popular. Originally worth one pound, it had risen in value to 30 shillings by 1694. William III’s currency reform tried to peg it at 21s 6d, and it was finally fixed at 21 shillings in 1717.
There it remained for a century, but even by English illogical standards it was an anomaly, especially when paper pound notes became common. So the last guinea was minted in 1813. It was replaced four years later by the sovereign, worth from the start exactly 20 shillings or a pound. The tail-side, in the form of St George and the Dragon, was designed by a great numismatic artist, Benedetto Pistrucci, master of this difficult skill. His design was so successful and practical that it has lasted two centuries. But the guinea did not disappear — far from it. In Rowlandson’s beautiful drawing of the Duchess of Devonshire and her sister gambling, Lady Bessborough is shown getting coins out of her filigree-net purse, while the duchess shakes the dice vigorously. Those coins were guineas, the standard unit when stakes were high. And guineas continued to be used in Brooks’s and gambling halls, even after the sovereign came in. It was considered vulgar (we would say non-U) to play in pounds.€
So genteel England developed a double standard coinage of account. Guineas gradually ceased to circulate. But bills were still presented in guineas by professional men: architects, lawyers, doctors and other people who liked to think themselves gentlemen. Indeed tradesmen who were far from being genteel continued to charge in guineas for a century more. I remember the first suit I ordered and paid for myself cost £7.7s — seven guineas — and some tailors and shoemakers continued to charge in guineas until quite recently. Horse-coping, that dark and devilish trade, was another conducted in guineas until the end of the 19th century, as we learn from the stories of Surtees and Somerville and Ross. When buying a horse there was always a chance of getting the seller to knock off the shillings and charge in pounds — a discount of 5 per cent. This applied to the art trade too.
I regret the physical disappearance of coins like the sovereign, which I glimpsed occasionally in my childhood. When I was born we were still on the Gold Standard, the best guarantee, to my mind, that there is against the horrendous scourge of economic life, inflation. Now our currency is strong we should go back on it, and mint a splendid new gold coin, to be called a Thatcher, with her as Britannia on one side and the Queen’s head on the other. It would sell at a premium.
Gold is always reassuring and usually pretty too. It is a marvellous metal to work. Its malleability is such that it can be beaten into a leaf four millionths of an inch thick. Its ductability is even more remarkable. The smallest measurable quantity, one grain, may be drawn into a wire 500 feet long. Every bride wants a gold wedding ring: no other metal will do. In India the womenfolk want a good deal more — Indian households own nearly twice the amount of gold held by the US central bank, much of it around the necks and arms, wrists and ankles of 500 million ladies of the subcontinent who love and cherish their baubles.
A great believer in gold was old General de Gaulle, who used it to put France on her feet again after he returned to power in 1958. He had a special rhapsody about gold which he would trot out on solemn occasions, in a sonorous tone, as if reciting a psalm. Gold was above ideology and politics, beyond personality and prejudice, the only totally independent and objective standard of value, inflexible, incorrupt and incorruptible, cruelly honest and as valid as life itself. True, when you think about it.