Gold? It's History, Says the Prime Minister Another Good Reason to Have Some

By Fildes, Christopher | The Spectator, May 15, 1999 | Go to article overview

Gold? It's History, Says the Prime Minister Another Good Reason to Have Some


Fildes, Christopher, The Spectator


Tony Blair uses history as a term of abuse. First there was history, but now there is New Labour, so we all know better now or have no excuse not to. This limit on his perspective is apt to mislead him, and now he seems to have decided that gold is history, too. It may date from the creation of the world (4004 BC, according to Archbishop Ussher) but the Bank of England (established 1694) has been told to clear it out. How can his country look shiny and new if its reserves of wealth are held in these archaic yellow ingots? How much more modern to hold promises to pay, signed by our friends and neighbours! A myopic glance back into history would have taught him that another modernising Labour government had the same idea a generation earlier, and cleared out much of our gold at $35 an ounce, just before the price took off. A perspective that stretched back as far as the century would show how little other people's paper promises have proved to be worth - and our own, for that matter. As late as 1931 a pound note was as good as a gold sovereign. Today's price for a sovereign is 41, so what was a dead-heat is now a race won by a distance. Gold is a store of value whose worth does not depend on anybody's promise, least of all the promises of central bankers or of politicians. For the last two decades, Western governments and their allies at the International Monetary Fund have been trying to drive the price down and, now we have joined in, it must be near the floor. With any luck, gold will be at its cheapest at the end of the year, when Value Added Tax comes off, and I shall be round at the Bank of England with my shopping basket. Not to know what happened before you were born, as Cicero said, is to be a child all your life - but no doubt the Prime Minister would say that Cicero was history.

Send a gunboat

LOUIS Franck, the greatest bullion banker of his day, used gold as a weapon of war. This was the Banque de France's gold, which in 1940 had been shipped to Martinique in the West Indies, escaping the German invaders but coming under the control of their collaborative friends in France's Vichy government. (History was going on at the time, and so was the second world war, and we were in danger of losing it.) Franck, who was then in the Special Operations Executive, persuaded Churchill to make the Admiralty send a warship to Martinique and train its guns on the vault where the gold was. The Americans could then be told that this gold was being held to the British government's orders, and could be used to pay or to guarantee payment for the arms and ammunition that we desperately needed. Memo to Tony Blair: you couldn't do that with a tin box full of promises to pay, denominated in euros.

Barclays' choice

THE spectacle may be unseemly, but I enjoy watching the staid old Royal Bank of Scotland as she hoists her kilt higher and higher in the hope of catching Barclays' eye. She means to catch Barclays on the rebound between chief executives. Sir George Mathewson, the Royal Bank's ambitious chieftain, fancies the idea of rolling the two banks together. …

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