GOLD CHAPTER 3
GOLD Gold is money. Everything else is credit. —J.P. Morgan
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t was a hot summer day when the six-horse Union Army wagon carrying gold transited through the plains. As the wagon rolled down a dusty Missouri road, the sound of hoofbeats could be heard in the distance. A gang of dusty cowboys emerged from the surrounding woods, guns blazing. Ambushed, the paymaster and his men were no match for the seasoned bandits, who had carefully planned the heist for weeks. The soldiers were caught off guard and quickly overwhelmed by the sheer force of the attack. With the paymaster’s men lying wounded or dead on the ground, the thieves quickly rifled through the wagon, grabbing bags of gold coins and bars. They stuffed their saddlebags with as much gold as they could carry and rode off into the wilderness.
GOLD IS MONEY John Piermont Morgan was an American financier who invested heavily in infrastructure in the early 1900s. J.P. Morgan’s companies sold steel to railroads, invested in General Electric just as electricity was coming online, and sold gold to the US Government in 1895 to keep the Federal Treasury solvent. Financial firms that bear his family name include JP Morgan Chase Bank; Morgan, Harjes & Company of Paris; Morgan, Grenfell & Company of London; Morgan Guaranty Trust; and Morgan Stanley. J.P. Morgan once said, “Gold is Money. Everything else is credit.” What prompted J.P. Morgan to differentiate between gold and credit? This concise statement profoundly captures the nature of the modern banking system. This chapter explains why the first sentence is true; a later chapter explains why the second sentence is true. These two simple sentences are critically important to the creation and use of Bitcoin. Gold, because of its unique qualities, has been the one material that is universally accepted in exchange for goods and services for
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