Published by EH.Net (January 2020)

William L. Silber, The Story of Silver: How the White Metal Shaped America and the Modern World. Princeton: Princeton University Press, 2019. xx + 340 pp. $30 (cloth), ISBN: 978-0-691-17538-6.

Reviewed for EH.Net by Gary Richardson, Department of Economics, University of California at Irvine.


Silver’s “power to provoke passion and fury in the American heartland” should have convinced the Warren Commission to investigate whether John F. Kennedy was assassinated “for downgrading the silver subsidy” (p. 104). This provocative point and a series of stories about the precious metal appear in William Silber’s The Story of Silver: How the White Metal Shaped America and the Modern World.

Silber’s book on silver is entertaining and enlightening. It is published by a university press and has the apparatus of a technical tome, including 64 pages of footnotes and nine pages of bibliography. It should, however, appeal to a wide audience, including anyone interested in American or financial history or who likes to read a well-written story. Silber is an amazing architect of palatable prose. He grabs readers’ attention and keeps them turning pages by incessantly inserting 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, including Europe from the fifteenth through eighteenth centuries and China and the Middle East well into the twentieth century. Debates about silver’s monetary use played a large role in the history of the United States, beginning before the founding of the republic and continuing through Great Depression. Silber’s book focuses on the U.S. experience.

The first tenth of the text takes the tale from Alexander Hamilton through William Jennings Bryan. As the first Secretary of Treasury, Hamilton took the lead among the Founding Fathers constructing the U.S. monetary system. He established a bimetallic standard, in which gold and silver served as legal tender. He hoped both gold and silver would circulate. The latter’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 the yellow metal, Gresham’s law, the Coinage Act of 1873, and the Gold Standard Act of 1900, however, meant that gold served as the medium of exchange in America throughout the nineteenth century and twentieth centuries.

William Jennings Bryan was the most famous of the politicians who urged returning to a bimetallic standard. Byran 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 July 1896 asserted that free coinage of silver would promote prosperity for the common man and free the U.S. from subservience to the gold-standard nations in Europe.

Silber’s concise coverage of nineteenth-century American monetary history is fun to read. I have decided to assign these chapters to the undergraduates in my class on 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 second storyline spans Chapters 4 through 8, or about one-fifth of the book. It involves China, Japan, and the Roosevelt administration’s monetary policies. The historical information in these chapters is novel. You will not find the story told completely, or at all, in books and articles about this era or in widely used textbooks on American history. The story is also important, because it illuminates a clear case where political institutions set up long ago profoundly influenced world events in ways which could not have been anticipated at the moment of creation.

Franklin 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 his promise, Roosevelt needed to resuscitate the banking system and expand the money supply, which would, in turn, raise prices, lower interest rates, encourage consumption, and increase investment. Roosevelt’s efforts focused on the financial system, the Federal Reserve, and the gold standard. Silber’s depiction of these events resembles that in standard history textbooks, although he keeps his account lively by gossiping about the personal lives of the protagonists. Roosevelt, for example, after being stricken with polio in 1921 and withdrawing from public life to battle the disease, failed at “a number of business ventures during the 1920s, but the outcomes were as predictable as if a crown prince were running a flea market. FDR’s misadventures included investing in a fleet of blimps to fly passengers from New York to Chicago, introducing vending machines that dispensed premoistened postage stamps, trading in the German mark, and trying to corner the live lobster market. His losses in lobsters should have restrained his foray into manipulating the silver market after he was elected president in 1932, but he never made the connection” (p. 39). In my opinion, self-adhesive stamps were actually a good idea, although perhaps ahead of their time. Given the difficulties of devising glue with suitable properties, the United States Postal Service introduced the its first successful self-adhesive stamp in 1989.

During Roosevelt’s race to resuscitate the American economy, silver was a sideshow. Roosevelt signed the Silver Purchase Act, which authorized the Treasury to buy huge quantities of the metal at gradually increasing prices, and then to use that silver to back currency in circulation. These purchases may have marginally increased the money supply but were not necessary for resuscitating the monetary system. 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. These senators had political influence in Washington, where they chaired key Congressional subcommittees and controlled votes needed to pass the New Deal through Congress.

High school and college history textbooks mention Roosevelt’s silver policies in passing, if at all. The same is true for most scholarship on the subject. Silber shows that this minor event in America played a central role in world affairs and had a huge impact on the lives of one-quarter of humanity. Silver was the foundation of China’s monetary system. China’s 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 price of silver on the world market. Silver’s skyrocketing price deflated China’s economy. High silver prices encouraged investors to withdraw silver from Chinese banks and sell it in London. China’s money supply declined, as did prices and incomes. Rising silver prices also increased the value of China’s currency, 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. China’s economy could not bear the strain from the silver drain. China’s central bank and financial system lacked the skills and knowledge to alleviate the affliction. China’s economic depression deepened. Unrest spread. China’s 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. 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 such as William Jennings Bryan, would weaken China and facilitate Japan’s expansion. Domestic politics, however, overrode international possibilities. 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 United States 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 take-away point is that silver conducts electricity well. The United States had lots of silver stockpiled at the United States Military Academy at West Point, New York. The Treasury lent much of this metal to the Manhattan District of the Corps of Engineers to help produce atomic bombs. So, Roosevelt’s silver purchase policies, which induced silver to flow from Beijing to New York and London, weakened China, and facilitated 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.

After the book discusses the demonetization of silver during the Kennedy administration and the role this had in the Kennedy assassination, the tone changes. The book stops discussing silver’s use as a means of payment and begins discussing its use as a speculative asset. A lot of information is packed in this portion of the text, which spans about forty percent 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, some of the richest men in America, who tried and failed to get even richer by cornering the market for silver. Another notable character 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. These chapters remind me of the novel 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 Warren Buffett, who just has good sense). Another apt comparison would be the television franchise Real Housewives, but with a focus on rich husbands, their over-the-top investment antics, and their conspicuous consumption.

Overall, the book is entertaining, contains novel insights, and is well researched. I will recommend it to friends and assign portions to my undergraduate students. 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 twentieth 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 theory that Kennedy was murdered because he demonetized silver.” 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?” (p. 118). Or not what, I wonder. The only place in this universe where the silver-policies-killed-Kennedy conspiracy theory exists is in the eleventh chapter of this book. The book cites no historical evidence of the idea. A footnote indicates the Warren Commission did not mention the theory among its catalogue 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. One, the author knows what is true and what is not. He indicates spuriousness with adverbs expressing uncertainty, such as perhaps, probably, and possibly. So, readers should be skeptical of all claims in sentences with adverbs like that. These claims are often false. Two, the author keeps readers’ attention by constructing paragraphs whose last sentences 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 second-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 these 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 widely read, particularly the chapters on Roosevelt’s silver policies and their impact 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.

Gary Richardson is the author (with Mark Carlson and Kris Mitchener) of “Arresting Banking Panics: Federal Reserve Liquidity Provision and the Forgotten Panic of 1929,” Journal of Political Economy.

This review was originally published in Regulation, Summer 2019.