Gold During Periods of Conflict
The comments above & below is an edited and abridged synopsis of an article by James Steel
The search for gold and silver played a key part in shaping the modern world. Wars waged over the possession of gold and silver, and territories rich in those metals, influenced the conquest and colonization of the Americas, Australasia and Southern Africa, to name a few.
Steel discusses the Spanish experience; the French and Napoleonic wars (the first crack in the gold standard); the American Civil War (gold helped finance victory); the Russian Revolution (gold paid the bill); and the World Wars (gold mattered in both).
In conclusion, Steel writes: “Gold and silver are not just spoils of war, they have been the means by which wars and conflicts can be financed and prosecuted. Gold has played a central role in conflicts ancient and modern. However, it is not simply a question of which side has the most gold, but which sides utilizes it most judiciously. In the case of Britain in the French and Napoleonic wars, the efficient mobilization of bullion played a role in the financing of a score of European coalitions against France, despite repeated victories by Napoleon and France’s retention of a bimetallic standard. Gold helped overcome a broad-based financial embargo on Russia in the early days of the revolution. Gold was an important economic agent in both world wars, with the Allies at great advantage. Financing in periods of conflict is linked to investor confidence and the side with gold often commanded more confidence. Domestic currencies, which often come under strain during conflict, can be supported by gold and credit extended to belligerents based on their gold reserves. Similarly, unchecked outflows of gold can also be an effective bellwether for the losing side. While not a guarantor of victory, it can be a powerful indicator.”