Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion Read Free Page A

Britain was such a dominant economic power that other countries had no choice but to follow its lead. That gold system became the foundation of world trade and fostered economic prosperity. The U.S. dollar in that era was worth 23.22 grams of gold. From the 1830s to the 1930s, the international price of gold was about $20 an ounce. 9 During that time, Britain was the international lender of last resort and helped countries out of financial troubles. The system had credibility and fostered close cooperation among the leading nations as well as widespread prosperity. If a country followed irresponsible economic policies, it had to devalue its currency by decreasing its gold value. It was a humiliating and painful process that nations fought hard to avoid.
    Governments often ignored the gold standard in times of war, but they returned to it in peacetime. Britain and other nations suspended it during World War I. In April 1925, though, Chancellor of the Exchequer Winston Churchill put his country back on the gold standard at the pre-war level. 10 It was an unrealistic price that fostered the world depression. Nonetheless, Joseph Schumpeter, the great Austrian-American economist of the mid-twentieth century, praised gold as an automatic system that reacted quickly to changing conditions, writing, “Gold imposes restrictions upon governments or bureaucracies that are much more powerful than is parliamentary criticism. It is both the badge and guarantee of bourgeois freedom—of freedom not simply of the bourgeois interest, but of freedom in the bourgeois sense.” 11 Robert Mundell, the winner of the Nobel Prize for Economics, has said, “Gold will be part of the international monetary system in the twenty-first century.” 12 George Bernard Shaw, the playwright, in
The Intelligent Woman’s Guide to Socialism and Capitalism
, wrote, “You have to choose between trusting the natural stability of gold and the honesty and intelligence of members of the government. And, with due respect for those gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold” 13
    On January 24, 1848, James W. Marshall discovered a few flakes of gold at the sawmill he owned with John Sutter in Northern California. Ambitious miners from around the world rushed to California by land and sea to seek their fortune, and in the process helped settle the nation from sea to shining sea. When the Union Pacific and Central Pacific railroads met on May 10, 1869 at Promontory Summit in the Utah Territory, a golden spike completed the job. The United States had become a global power.
    Gold has always been the last refuge of people in times of crisis. In July 1864, Confederate military units invaded the District of Columbia and were within sight of the nation’s capital. Union Secretary of War William Stanton took $5,000 in government bonds and $400 in gold belonging to his wife Ellen out of his safe at the War Department next door to the White House, gave them to his secretary, and told her to go to his home and hide the valuables in his mattress. 14
    In
Lords of Finance
, which recounts the history of central banking between the two world wars, Liaquat Ahamed wrote that Montagu Norman, the governor of the Bank of England, the predominant banker in that period, considered gold to be “one of the pillars of a free society like property rights or habeas corpus, which had evolved in the Western liberal world to limit the power of government.” 15
    At the beginning of World War II, when nations fell in a matter of days and millions of refugees flooded the roads to escape the conflict, people turned to gold as their last hope for survival. In June 1940, twelve-year-old Felix Rohatyn, who would later become the chairman of the international financial giant Lazard Frères and rescue New York City from bankruptcy in 1975, was one of millions of European Jews trying to escape from the Nazis in France. His mother instructed him to empty tubes of