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The remarkable story of mining, money and power

By November 27, 2014 April 28th, 2016 No Comments

Do you want to know the link between the grandfather of Christ, the discovery of radiation and the origins of money as we know it?

Toss in Nazi and Russian nuclear scientists, Melbourne’s prominent Baillieu family, death by radiation poisoning, wealthy mining barons and the beginnings of the Great Depression and this is a finance story even the most disinterested in financial matters should find worth reading. Dan Brown eat your heart out!

As we watch the Australian economy today, we should remember that mining, money and power have always gone hand in hand. Whatever your view of mining in Australia, undoubtedly the immense wealth of the miners such as Gina Rinehart and her peers has helped influence the debate. What’s more, the continued strength of Australia’s employment and economic success goes hand in hand with the strength of the mining sector.

If you look overseas, we see Iran’s push for nuclear weapons and the US’s (and others’) desire to halt this with economic sanctions. Or we see India seeking to expand its economic growth and status with increased demand for
Australian uranium (which Australia only recently allowed it to buy). The message from each is simple – money, mining and power are inextricably linked.

Believe it or not, the links between mining, money and power can all trace their modern origins back to one small spa town in the wooded hills of 16th century Bohemia, in modern day Czech Republic.

In 16th century Europe most silver came from mines in Bohemia, close to the border with modern Germany. One such mine was located in a spa town named Joachimsthal which in English means ‘Joachim’s Valley’ (Joachim was supposedly the Father of Mary and grandfather of Jesus). The mine was rich in silver and with a mysterious glowing ore which they called pitchblende (we’ll come to that later).

The ruler of that area, the Count of Slik turned much of his silver into high quality, large silver coins which were named Joachimsthalers or ‘thalers’ for short, the likes of which the world had never seen.

Merchants adored these valuable new coins and within decades Slik’s fellow European rulers followed suit. Before long, there were 1,500 imitation ‘thaler’ coins within the Holy Roman Empire alone and the last ‘thalers’ were not withdrawn from circulation in Germany until 1908.

The most important imitator was the Count of Slik’s overlord, the Hapsburg Holy Roman Emperor, Charles V. He was ruler of Spain, Germany, Netherlands, Burgundy, much of Italy and the whole of America (via his kingship of Spain). Silver ‘thalers’ spread across his empire and the word shifted in pronunciation to daalder and daler. Today we know the word  ‘thaler’ as the Anglicised ‘dollar’.

In 1792 the newly independent United States of America followed the Joachimsthal trend and adopted the dollar as its currency as a clear break from English rule.

As an aside, you probably didn’t know that English dollars were minted for a period by the Bank of England, back in 1804. A severe shortage of silver in England resulted in the Bank of England re-branding their reserves of Spanish silver thalers as Bank of England Five Shilling Dollars.

Later, some of England’s reserves of Spanish coins were shipped to NSW in 1812 and used by Governor Macquarie to create the Holey Dollar, Australia’s first official currency (which is now the logo of Macquarie Bank).

In addition to its fame for silver mining, Joachimsthal was renowned for its ore mining and smelting works. This attracted the scientific attention of the local town doctor Georg Bauer in the late 1520s, who based his pioneering
metallurgical book on his observations made in his home town. His book was the bible of mining techniques right up until the 20th century.

Bauer’s book from Joachimsthal was translated into English in 1912 by an American classicist Lou Hoover and her mining engineer husband. Her husband had been employed in Western Australia at the Sons of Gwalia
mine where, as a union busting manager, he hired imported labour and became the then most highly paid employee in the world.

While in Australia, Lou’s future husband was co-founder (with the prominent Melbourne Baillieu family of stockbroking and political fame) of Zinc Corporation which we today know as Rio Tinto. From Australia, the newly
married Hoovers were posted to China take charge of the firm’s mines and were subsequently caught up in the 1900 Boxer Rebellion. The Chinese thought Hoover was a swindler and he was undoubtedly capable of sharp dealing. In Australia, Hoover had even advocated lying about monthly mine output in order to mislead investors.

Lou’s husband Herbert Hoover went on to become the 31st President of the USA and famously declared on 25 Oct 1929 “The fundamental business of the country, that is, production and distribution of commodities, is on a sound and prosperous basis.” Four days later the market crashed, the Great Depression began and Hoover became a national joke. Hoover was the last President under whom Americans could convert their dollars into gold (this ceased in 1929).

As well as links to the dollar and an American President, Joachimsthal had one other major link to mining, power and money. Long after the silver was depleted, the town’s mines still provided a mysterious substance known as
pitchblende. In the early 1900’s, another husband and wife team were given 100kg of this substance from the same Joachimsthal mine that had given the world the first thalers. They were Pierre and Marie Curie and from the Joachimsthal ore they discovered and coined the term ‘radiation’ and discovered the elements radium and polonium, for which both were awarded a Nobel Prize in Physics (Marie later won another Nobel Prize in Chemistry, a prize which Marie and Pierre’s daughter and son-in-law also both won).

Today pitchblende is known as uraninite, a major ore of uranium and it was unprotected exposure to this then unknown substance from the Joachimsthal mine that gave Marie Curie leukaemia and eventually killed her. As a postscript, uranium-rich Joachimsthal became the base for the Nazi’s atomic tests which the Russians continued post 1945.

So there you have it – a small town in Bohemia gave the world dollars, provided world leading mining techniques, established the credibility of a miner who went on as US President to break the link between money and gold, and provided the key ingredients and testing for modern nuclear power and weapons. In the small town of Joachimsthal we see mining, money and power inextricably interwoven.

Source: Greenback by Jason Goodwin, Penguin 2003


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