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Today's Headline: South African gold miners strike over 'slave wages in white man's economy' 80,000 miners walk out in industrial action that will cost country £22m a day as government admits it can only plead for solution. This old book might help shed some light on the Yellow Devil.
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A.Anikin THE YELLOW DEVIL ·Gold and Capltall1m . PROGRESS PUBLISHERS MOSCOW Translated from the Russian by K. M. Cook Designed by Yu. Lyuter A. AHHKHH )l(EJITbIVI )J.b51BOJI 30JIOTO H KaITHTaJIH3M Ha aHcAUUCKOM R3btKe © l'fa,LJ;aTeJibCTBO «MOJIO,LJ;aH rnap,n;Irn», 1978 English translation of the revised Russian text © Progress Publishers 1983 Printed in the Union of Soviet Socialist Republics A 10701-031 014(01)-83 72-83 0601000000 CONTENTS I. Introduction. Gold in the Life of Mankind Page 5 20 II. How Gold Became Money· . III. Mining the Yellow Metal 36 IV. Where the Gold Goes 64 104 V. Gold Genocide . 1 22 VI. The Power of Gold . VII. The Gold Standard and Its Agony VIII. The International Monetary System IX. The Fate of the Yellow Metal Notes . . 144 1 70 202 23 7 I. INTRODUCTION. GOLD IN THE LIFE OF MANKIND This book was first published in Russian at the end of 1978. Subsequent events have confirmed its relevance today. Many a time the newspapers of the capitalist world have carried head lines screaming "Gold Panic!", "Gold Rush!" In graphs of gold prices the j agged line on the right suddenly soared up almost at right angles. It soon became impossible to chart them on the same scale, because at the beginning of 1980 the market price of gold in London or New York was almost 25 times higher than it had been only ten years earlier. Then, in 1980- 1982, the price of gold.fell by 50 per cent and was on average about 400 dollars an ounce in the first half of 1982. The main reason was that it was a period of prolonged economic recession, when demand for most commodities dropped and in many capitalist countries there was a reduction in pro duction and capital investment. These sharp fluctuations in the price of gold both reflect and enhance the instability of the capitalist economy. Up to 197 1 the official price of gold was 35 dollars per troy ounce (1 . 1 dollar per gramme ) , but it coul d be obtained legally from the US Treasury at this price only by a single pri· vileged category of buyers-foreign monetary authorities and central banks. At that time this price differed only slightly from the free market price at which it was purchased by jewelers, manufacturers of electronic equipment, and rich investors who thought it prudent to invest part of their capital in gold. Buyers of jewelry and gold coins paid more per ounce of gold, of course : they were covering the cost of manufacturing the j ewelry and coins, the profit of the manufacturers and retailers, and various taxes and surcharges. But the difference was still not very great, prices being in the order of a few dozen dollars per ounce. At the height of the gold rush in mid-January 1980 the whole sale price went up to 840-850 dollars per ounce, approximately 27 dollars a gramme of pure gold. Jewelers did not have time to change the price labels in their glittering shop windows. Demand was vastly in excess of supply. Gold was not alone in this stock j obbing. The prices of silver, platinum and metals of the platinum group also shot up astro nomically. And in the background, influenced by other forces and subjeot to other laws, the price of oil rose steadily. Such was the situation in which capitalism entered the 1980s. There are more important things in the world than the gold rush, of