NEW BOOK: THE STORY OF SILVER

Silver may play second fiddle to gold, its flashier, more expensive cousin. But the white metal has commanded a leading role in shaping the world's economies from ancient Egypt to modern America. It was mandated as legal tender in the United States in 1789 as part of the Constitution, and the first mint was in Philadelphia. It was also an element of military conflict, which helped Japan become a global power before World War II.

William Silber, professor of finance and economics at New York University's Stern School of Business, is the author of The Story of Silver: How the White Metal Has Shaped America and the Modern World. He visited with the Knowledge@Wharton radio show on SiriusXM to talk about silver's enduring importance. (Listen to the podcast at the top of this page.)

An edited transcript of the conversation follows.

Knowledge@Wharton: Silver was designated as U.S. legal tender in 1789, but how far back is its transactional history?

William Silber: Silver was the main unit of money going back 5,000 years. In fact, if you go back to biblical Egypt, it was silver that was used in transactions. There wasn't enough gold to be used by most people, so silver for thousands of years was the main medium of exchange. Only in the 19th century did we switch over to the gold standard. Britain led the world in that. But silver had been the main currency of the world for thousands of years.

Knowledge@Wharton: Do people see its value as important or close to gold, even today?

Silber: Certainly. People look to precious metals, especially during periods of catastrophe or potential catastrophe. Go back to the great inflation in the 1970s, the Great Recession — both gold and silver were bought by many people. In fact, silver responded to those events twice as much as gold. It has been a source of protection, if you want, insurance against declines in other assets.

Knowledge@Wharton: Can you tell us more about the Coinage Act of 1873 and how we came to have this reliance on gold as the value standard?

Silber: Before I get to 1873, let me start with Alexander Hamilton. He established the U.S. dollar, in terms of both gold and silver. He worried about having gold only because it was too scarce. There wasn't enough of it to support a growing economy. You would need a lot of money in order to just grease the wheels of transactions, so he established both gold and silver because gold was too scarce.

We had discoveries of gold in the United States, but also in Australia and in Russia. And suddenly gold became much more plentiful. That's what led the world, as a whole, to begin to adopt the gold standard. In 1873, the United States passed a law that eliminated the silver dollar as currency. It was called The Crime of 1873 primarily by western mining states that did not like the fact that silver was no longer part of the U.S. monetary system.

To read the complete article, see:
White Hot: How Silver Forged the World's Economy (https://knowledge.wharton.upenn.edu/article/the-story-of-silver-book/)

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