History seemed to teach that reestablishing convertibility between British pounds and gold at the prewar rate was the key to British economic recovery, as well as protecting the status of the pound as the world’s most reliable currency.
But not everyone agreed—in particular, John Maynard Keynes, an intellectual gadfly who argued that the role of central banks should not be to preserve gold convertibility, but to regulate the money supply to keep prices steady.
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The Klondike, Witwatersand, etc. got all the press, but the big boost to the gold supply came from a quiet technological revolution: the invention of the cyanide process ca. 1890, as described by Otis E. Young (_Western Mining_, Univ. OK Press, 1977,. pp. 283 ff.) As he puts it, “Cyanidation set off a gold rush contemporary with, perhaps greater than, but infinitely less well known than the Yukon or Witwatersrand booms… it was devoid of what the public considers glamor. There was no prospecting except by attorneys among the dusty patents of defunct mining companies. … It was a very dull business…all it did was double the world’s annual production of gold.”
There’s a historical novel I’ll never have a chance to write about a young, college-trained engineer versed in the new technology who buys up old mining claims in the 1890s, to the amusement of the old-timers. They think they’ve hornswoggled the city slicker–
I also have an unpublished essay on how cyanide kept William Jennings Bryan out of the White House, because the river of new gold staved off the liquidity crisis… at least for the time being… 😉
Wow!… so good that I listened to this episode twice. I think you did a fantastic job of explaining some simple concepts of Central Banking and the historical problems they try to combat. As I say at the end of every episode, “Why didn’t they teach me this in high school?!”