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War and Gold: A Five-Hundred-Year History of Empires, Adventures and Debt

Kwasi Kwarteng

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In the sixteenth century, Spanish conquistadors discovered the New World. The vast quantities of gold and silver would make their country rich, yet the new wealth, which was plunged into multiple wars, would eventually lead to the economic ruin of their empire. Here, historian and politician Kwasi Kwarteng shows that this moment in world history has been echoed many times, from the French Revolution to both World Wars, right up to the present day, when our own financial crisis saw many of our great nations slip into financial trouble. Kwarteng reveals a pattern of war-waging, financial debt and fluctuations between paper money and the gold standard, and creates a compelling study of the powerful relationship that has shaped the world as we know it, that between war and gold.

GenresHistoryEconomicsNonfictionPolitics

432 pages, Paperback

First published March 25, 2014

About the author

Kwasi Kwarteng

12 books16 followers

Kwasi Alfred Addo Kwarteng is a British politician and historian. A member of the Conservative Party, he has served as a member of parliament (MP) since 2010, representing the constituency of Spelthorne in Surrey.

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5 stars

34 (19%)

4 stars

66 (38%)

3 stars

42 (24%)

2 stars

21 (12%)

1 star

8 (4%)

Displaying 1 - 20 of 20 reviews

Mike

1,192 reviews163 followers

September 3, 2023

The main impact of this book is that I should buy gold and silver in anticipation of the collapse of the currency--an insurance policy that has paid off in the past. The book has good coverage of central banks and what are good and bad practices. The book gets tedious with names, dates and locations. Depressing in that we have and don't seem to be able to resist money schemers. We don't seem to have long memories. 2 StarsI wouldn't rush out to get a copy.

The author’s thesis is that the modern financial system dates from the conquest of Mexico and Peru (which was much larger than the current country of Peru). The immense increase in precious metals:

The Spanish Crown did not own, or manage, mines directly. The Habsburgs’ share of the profits from the mineral wealth of the New World took the form of a tax, the quinto real, or royal fifth. As its name implied, this was a 20 per cent royalty fee imposed on every ounce of gold and silver extracted from the New World which came into Seville, the only permissible entry port into Europe for the Spanish treasures from further west. In a period just short of 160 years, from 1503 to 1660, it has been estimated that 16,000 metric tonnes of silver arrived at Seville, enough to triple the existing silver resources of Europe, while only 185 metric tonnes of gold entered Seville from the New World during the same period, which increased Europe's gold supplies by only a fifth. Silver was the key element of the imaginary wealth of Spain.

Spain did not use its new-found wealth to build any infrastructure, or to increase its long-term productive potential. Rather, it ‘dissipated its New World-based wealth on the first global war’. New World silver was used to pay for troops to wage war successively against the French, the Turks, the German Protestant princes and the Dutch. Habsburg Spain was perpetually at war, and the resources of the New World were expended lavishly to pay for these campaigns.

Misdirection, you can see it still on any financial news network:

As with many financiers since, (Sir Henry) Furnese’s great strength lay in his wide network of contacts and the information he gathered from it. Throughout Holland, Flanders, France, and Germany, he maintained a complete and perfect train of intelligence. So great was his advantage in this respect that, in many instances, the ‘temptation to deceive was too great ... He fabricated news; he insinuated false intelligence.’ According to the same account, written in 1850, Furnese ‘was the originator of some of those plans which at a later period were managed to much effect by [Nathan] Rothschild’ in the early nineteenth century. If Furnese ‘wished to buy, his brokers were ordered to look gloomy and mysterious, hint at important news, and after a time sell’. All the eyes of the exchange would be on Furnese’s movements and prices would be lowered if he and his brokers looked in any way downhearted. At this point, Furnese ‘would reap the benefit by employing different brokers to purchase as much as possible at the reduced price’.

John Law, a Scotsman, was very interesting and had influence in Italy and France, after being invited to leave Scotland. His ideas still have influence today:

To most contemporaries, money meant gold and silver and nothing else. The Spanish had plundered the New World in their search for these precious commodities, which they regarded as the ultimate symbol of wealth. Against these principles, (John) Law advanced the novel idea that paper was ‘more qualified for the use of money, than silver’.’

The benefit of paper money, according to Law, was that it could stimulate trade. His pamphlet was published in Edinburgh because it had been written to persuade the Scottish Parliament of the potential advantage to be derived from paper credit or paper money. Scotland, in Law’s opinion, had a ‘very inconsiderable Trade, because she has but a very small part of the money’. Naturally enough, if the stock of money was increased, trade would increase with it. Law attributed the paucity of trade to the scarcity of money. In his own words, very simply put, ‘A greater Quantity [of money] employs more People than a lesser Quantity.? Another central component of Law’s thinking was that more economic activity would lead to an export surplus. This latter conclusion has not been endorsed by modern economists, but Law’s suggestion that the level of output, or ‘trade’ in his terminology, was related to the quantity of money is an idea which has been persistently espoused by later economists. Indeed, the modern advocates of ‘quantitative easing’, whereby a central bank prints more money to sustain economic activity, are the intellectual descendants of John Law.

business europe history

Keith McGowan

Author 0 books

June 22, 2015

A nice summary of the relationship between excessive government spending (usually to finance a war) and the demand for gold (standard value often used to evaluate fiat paper money.

According to the author, governments have engaged in deficit spending for short periods of time (to finance a war) and then balance their budgets (by returning to a gold standard). Governments that tried to perpetually engage in deficit spending (Spain, France) did so at their eventual peril.

Where the book breaks down is in failing to extrapolate from past history to current events. The author only hints about the possible effects on the demand for gold that the extraordinary deficit spending modern governments are engaging in to prop up their economies. Citizens have been willing to sacrifice during times of war; will they be so willing today?

A disconcerting habit of the author was to quote Time magazine as an authoritative source. In an otherwise scholarly treatise? Time? Really?

economics finance history

Colin

228 reviews641 followers

January 25, 2018

Kudos to whichever editor came up with this title, which greatly oversells the contents. The book is actually something of a general history of monetary policymaking (primarily that of the UK and US), loosely organized around the use and abandonment of the gold standard. Forced myself to finish it, but too dry and disjointed for me to get much out of.

econ-taxes-trade-finance politics-and-history reviewed-books

Peter Tillman

3,795 reviews433 followers

January 4, 2023

This one got good reviews, sounded like my sort of book, and I tried hard to read it. Bogged down pretty early. Not for me!

Richard Saunders

39 reviews1 follower

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September 19, 2016

Finished the book after being distracted through the entire summer. Excellent summary of national policy, concentrating heavily on the 20th century and particularly the post-war period. Takes matters up to 2014. The good chapter on the American revolution and Civil War is something I will probably use as a reading the next history class I teach, because it gets outside the patriot stories of North and South and deals with the concept of fiscal nation-building--an interesting view. I can recommend the book for casual readers, though you'll profit from an interest in economics. I found the book fascinating reading.

Pasi

21 reviews

May 25, 2020

Well written, but personally I was sad how 80% of the book is based on the events of past 100 years. When cover already refers to history of 500 years, I was hoping for more text about those first 400..

Liam Ostermann

2,808 reviews90 followers

February 3, 2023

This is very much a politicians book written in response to the economic crisis of 2008 but if he was trying to tie together past and present he does a poor job. It is mostly a look at UK/USA economic policy - the title is misleading in all sorts of ways. It wasn't a great book when I read in 2015 and honestly I don't think anyone would have a reason to read it now (2023).

disappointing-rubbish-1 history-economic history-uk

patrick Lorelli

3,575 reviews32 followers

July 14, 2014

This book starts with the explorers and the discovery of gold and silver from the South American Indians who were killed. He later explains how silver at one time was more valuable than gold and how all of these explores really were doing were looking for riches for their country or government for their next war. It seemed that early on that is what most countries were doing was fighting or trying to take over one another. He then explains how banking got started and how some of the biggest banks of today were started over 100s of years ago based on who was going to win a war or a big battle. They would send people out to observe and then report back so the bank could such money before the rest of the population knew the outcome. The Battle of Waterloo was one example. He then goes into how taxes came about and how after gold was discovered in California, it started to replace silver as the more valuable commodity. Things really started to change for at the beginning of World War one, or better the day the Prince and his Wife were assonated. The stock exchange in London and Germany closed and the one in London stayed closed for the rest of the year. This is when the U.S. had extreme growth from 1915 to 1917 over 1 billion dollars’ worth of gold was deposited into American banks while loans that Germany had taken out were not paid back and were never going to be. He then goes into how by the beginning of the 20s credit started not just by the banks but also GM. This is just one reason for the crash there are many others. But the U.S. still by then was a big player in the world and Europe was now feeling as well. After WWII he goes into another period of growth and how we got off the gold standard and then he leads us into today with China being a big player in the World. Overall a good big lots of information some parts drag a little but not all of history kind be exciting. A good book. I got this book from net galley.

Void lon iXaarii

214 reviews97 followers

August 25, 2014

A very interesting book! Great walk through the last five centuries, right up to modern times. My favorite section was the one on the French revolution and it's currency experiments, as well as insights about the old Spanish and British empire. If there's anything not so awesome (but still great) that I can say about the book is that I felt it tricked me a bit with the title, I was expecting more of a history of correlations between the state of government coffers and debts and international conflicts. I mean that was in there, and with great insights too, just that it felt more like a history of currencies and great political movements (even right up to modern times the recent depression in the US and great insights about the euro project & issues). However I'm not at all complaining, that's a fantastic "problem" to have as the subject is fascinating and treated very elegantly. Overall very interesting book for those who want to learn history while trying to understand the bigger incentive flows and reasons.

Patrick

18 reviews

January 2, 2017

War and Gold tells the story of government money from the time of Cortez and Pizarro working for Spain through the current economic struggles related to world banking, mortgage backed securities and overall government debt. The author provides much factual information related to the development of currency and the varying level of successes that governments have had in balancing the printing of money with keeping its value over time. Up until the 1970's, when major currencies gave up their linkage to gold, governments would go into debt over war and use intervening years to reduce or eliminate debt. Once the gold standard was dropped, substantial printing of money and permanent government debt have resulted. Unlike many books written on money, the economy and politics, War and Gold does not preach. It provides sufficient information that one is able to understand the complexities of balancing economic growth with inflation concerns.

Daniel Polansky

Author 29 books1,214 followers

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March 17, 2015

a perfectly acceptable history of 20th century finance, breezily written, coherent to a reasonably attentive reader without much prior knowledge of economics. In and of itself an admirable, if not particularly ambitious work. Lamentably, this is not at all how the book is marketed or presents itself. The first four hundred years alluded to in the subtitle are dispensed with in about fifty pages, and it really could not be said to deal with war to any particular degree, nor finance as an aspect of war. Still, I learned some things I didn't know before hand. Were there sword fights? No, it was not that sort of book.

!Tæmbuŝu

1,513 reviews

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August 12, 2016

KOBOBOOKS

Reviewed by The Independent (26 Apr 2014)

history social-cultural world

Jap Hengky

452 reviews8 followers

May 25, 2017

Kwarteng makes sense of the main moments of global and (specifically, but not exclusively) western monetary history, from the consequences of the first world war to the boom and bust of the 1920s; from the financial consequences of the second world war to the extraordinary achievements of the Bretton Woods conference. Held in July 1944, Bretton Woods established a new world financial order, created the IMF and the precursor of the World Bank, but kept gold as the stabilising factor.

in-the-shelf

Reza Amiri Praramadhan

536 reviews33 followers

July 6, 2016

Basically, it is all about whether to keep a balanced budget, or to keep on spending. also discussed are the influences of factors such as gold, war, and debt, and how these three factors are intertwined to each other. A quite informative account on this matter. As for me, I prefer the sound and balanced money.

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Jose Papo

260 reviews152 followers

June 29, 2014

A great book about the link of war and economics, gold, inflation, bonds and debt. Very interesting to understand how innovations in debt and finance were usually created and made available with the needs of war and warrior states.

Justin

4 reviews2 followers

January 22, 2015

The first 75% of this book from the early history of gold and specie up to M. Thatcher and Ronald Reagan is very good (4.5) . Wow, after that it starts to drag. The final 100 pages took me--for--ev--er to finish.

Sergio Nebot

28 reviews2 followers

January 26, 2016

Muy interesante para comprender los grandes hitos de la economía de occidente y los procesos que están sucediendo ahora. Únicamente le sobra el primer capítulo, por repetir topicazos y prejuicios de la leyenda negra española.

John Stepek

Author 1 book1 follower

April 5, 2016

Good readable overview of a complex topic. Kwarteng obviously has his own particular take on things but it's a decent kicking off point from which those interested in learning more can do their own further reading.

Nick Harriss

356 reviews4 followers

March 18, 2021

I loved this book. It gives a wide historical sweep of monetary history, in a similar mould to "Debt - The first 5000 years" and "This Time is Different", but this is by far my favourite of the three. Entertainingly written, but never lacking in detail, I would highly recommend it.

economics general-history