My Amazon Review of William L. Silber's "The Story of Silver: How the White Metal Shaped America and the Modern World"

Silver Bull

N.Y.U.  Economic historian William Silber has a real fondness for silver as a monetary metal. He starts his story in ancient times but his history really begins with Alexander Hamilton establishing a bi-metal standard in 1793 valuing silver at 1/16^th of an ounce of gold, creating the 16-1 gold/silver ratio that would legally stand until 1873. That standard valued silver at $1.29/ounce.

He is not happy about the “Crime of 1873” where Senator John Sherman demonetizes silver and puts the United States on the road to the gold standard which occurs in 1879. By using the then populist slogan, he puts himself squarely on the of the pro-silver/pro-inflation forces extant in the country at the time. Unfortunately Silber fails to distinguish between a good deflation caused by rapid increases in productivity and a bad deflation distinguished by a collapse in aggregate demand. The 19^th Century silver wars culminate with William Jennings Bryan’s “Cross of Gold” speech at the 1896 Democratic Convention. By then gold becomes more plentiful and the U.S. enjoys the full benefits of the gold standard.

One of Silber’s heroes is Nevada Senator Key Pitman who leads the silver bloc in the Senate which counted fourteen senators among the seven mining states. In the 1930s Pitman convinces Roosevelt to raise the price of silver through huge treasury purchases. That ripples across the Pacific breaking China, then on the silver standard, leading to a flood of illegal exports that cause a credit contraction thereby weakening the economy. That in turn will make it easier for first Japan and then Mao’s Communists to take over the country.

Silber’s most interesting character is Henry Jarecki, a Yale psychiatrist who become enamored of silver. Jarecki sees that silver is undervalued and buys up as much coin and silver certificate currency to redeem at the U.S. Mint at $1.29/ounce. Soon the mint runs out of silver and the price explodes. Jarecki would leave Yale and found Mocatta Metals, a leading precious metals trading company.

Silber spends most of the book in excruciating detail describing the Texas Hunt Brothers corner on the silver market in 1980. An operation that nearly bankrupts Wall Street and triggers Fed action. To me, he is way too sympathetic to the Hunt Brothers.

Simply put Silber describes silver as a dual functioning metal. It is both an industrial commodity and a store of value. He makes his case on the store of value proposition when the price of silver surges with gold amidst the short inflation scare that existed following the financial crisis of 2007-2010. In essence it seems Silber has more faith in metals than the fiat currency of the Central Banks.

Though not as good as his earlier books on Paul Volcker and the 1914 closure of the stock market, “The Story of Silver” is a good read for those interested in economic history.

The full Amazon URL appears at: https://www.amazon.com/review/R291D01TPCA1DW/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv