Who Owned The Most Gold In History?

Hello and Happy New Year. Hope you all enjoyed the holidays. Welcome back to Breaking the Dollar. I'm Everett Millman and this episode is going to look into a bit of trivia that I had often heard and read in headlines but I never confirmed if it was true.

So the claim is that the wealthiest person in human history was an African king. And I saw this and thought, hmm, I've never heard about that or learned about that in school so might as well check it out. And what I discovered was actually a little more interesting than I had even expected. So I'm going to share that investigation and we're going to examine something interesting we can learn about economics from the story as well.

So this story takes place in the 14th century. So we're talking about the 1300s in West Africa. And the person in question is Musa the First or often known as Mansa Musa. "Mansa" being a title like Emperor or Conqueror. So he was the king or Emperor of Mali, the Malian Empire. Which at this time in the early 1300s ended up taking over much of Western Africa. Mali even conquered or absorbed the neighboring Empire of Ghana which gave it an ample supply of gold. To this day gold is one of the leading exports from this part of Western Africa. So as the empire expanded, Mali became more and more wealthy, more and more prosperous. By all accounts it was a society where the arts and sciences, religion and culture, all of these things flourished.

And here I'll stop for a moment to point out that most history books and most histories of the world tend to overlook this time period. It's right in the middle of what is often called the Dark Ages. The whole idea of a time period called the Dark Ages really is based off of only focusing on Europe. Throughout that entire period, which we also call medieval times, throughout the medieval period the Islamic world really was carrying on all of the classical aspects of civilization that were supposedly lost in Europe during the Dark Ages. These Islamic empires then spread all throughout Central Asia and mainly North Africa and obviously even as far West as the Empire of Mali.

So after about a decade into the reign of Mansa Musa, Mali has this great empire building up and they're an Islamic empire. So naturally Musa is a Muslim. Also in the year 1324 he makes his hajj to Mecca. That is a pilgrimage to the holy city of Mecca in Saudi Arabia. Being an emperor he took an entire entourage with him on this journey. This included soldiers, servants, slaves, medics, builders, anything you can think of because this was nearly a two-year trip going to the Arabian peninsula and back all the way from the western portion of Africa. So you can imagine they had a lot of provisions. There were supposedly a whole team of camels to carry all of their supplies and all of these historical accounts explained that the emperor brought an incredible amount of gold with him on this trip. The Malian Empire itself was known for being rather opulent and displaying its wealth. So this same principle applied for the trip that Musa was taking. It was sort of a signal to the entire world of how wealthy and vast his empire was. Now there are statistics or numbers of how much gold and how many people Mansa Musa brought with him on this journey.

One caveat is that during medieval times and certainly during ancient history the scholars and historians were notorious for exaggerating the numbers of things. You often cannot rely on the numbers given by historians in Egypt and Greece for example because they were very prone to inflating the numbers to make something seem bigger than it was. Nonetheless, there are these historical stories that on his journey Mansa Musa had thousands of people with him, he had dozens of camels, some accounts say as many as 80 camels and all of these people and all of these camels were each carrying several pounds of gold that came in the form of gold bars, bags of gold dust. There were even some eyewitness accounts that many of the men in his entourage were carrying golden staffs. I'm also sure there was gold jewelry involved. So anything that could be made out of gold and displayed was brought with them on this trip.

Now as I said this story may be embellished a bit but what I found in my research is that it is an absolutely true account and this actually did happen. And what's fascinating is that all along the way traveling across northern Africa and into the Arabian Peninsula Mansa Musa was spending a lot of his gold. He was trading it with people for services, he was giving it away as gifts and whether or not we can trust the exact numbers that historians give us about how much gold he had, one clue is the actual economic impact that his spending of gold had on these regions he visited. So believe it or not, the amount of gold that was flowing into these areas just because of Musa's entourage and his spending of gold caused a massive recession in the gold price in these cities. What I mean by that is the price of gold plummeted because it was now so widely available, much more so than it had been before. And of course remember that at this time gold was used as money, as currency. So if you have a lot more gold coming in, each gram or ounce or unit of gold is now going to be worth less and less. And if gold is money, well that means everything else is seeing its price increase. In other words, it requires more gold to buy the same amount of something as it did before. This is literally what we call inflation nowadays.

And so this devaluing of the price of gold in all the places that Mansa Musa visited demonstrates one of the principles about money. And it is that the value of money operates in part on it being scarce, on there being some scarcity of the money. Otherwise, if there is too much of the money supply, well then each bit of money is clearly not worth as much as it was when there was less money. Again, it's very interesting to me to find out that this same phenomenon has been going on for centuries, probably as far back in human history as we have any record of. In this case, the inflation of the gold price was so severe, or I should say the inflation of prices in gold was so severe that it caused a recession in the economy of, for instance, Egypt and its major city Cairo for up to 10 years.

Now to add another layer of intrigue to this story, we could speculate that the emperor did this on purpose. There are two bits of evidence that support this idea. First, Musa clearly saw what was going on because it is reported that on his way back on this journey, so heading back home towards Mali, he was taking a loan to buy up as much gold as possible, seeing that prices were depressed. In some sense, it's almost as if he was buying back the gold he spent at a lower price. And then the second development was that the gold market in Cairo in Egypt was really the gold trading center of the world at this time. After the recession in the gold price caused by Mansa Musa, that trading hub for gold moved all the way over to the Mali Empire, moving to the city of Timbuktu. So not only did he end up with much of his gold back because he was able to acquire it at a cheaper price, but once prices recovered, now the Mali Empire had great control over the gold trade and over the price of gold, rather than allowing Cairo to dictate that. So perhaps this entire affair was done on purpose with that in mind.

There is also the possibility that it wasn't the original plan and it happened organically, but that Musa took advantage of this once he saw it going on. Now if we look at the claim that this vast amount of gold made Mansa Musa the wealthiest man in history, that is a little bit trickier to determine. Not only because of what I mentioned before with the numbers not being that reliable from ancient and medieval sources. We can make a reasonable assumption that they were likely exaggerated. And even aside from that, we can't quite capture how much wealth an individual from that time period has relative to now because so much of the world has changed. So many of the items that have value now -- think of important technologies or access to infrastructure like highways and motor vehicles -- none of that existed back in 1325 or even back in 1725 for that matter. So those developments of the Industrial Revolution and new technologies, they make it very difficult to make an apples-to-apples comparison of levels of wealth that far back in history. Now however you slice it, just based off of having hundreds of pounds of gold and being the ruler of a vast and minerally rich empire, we could certainly say that Mansa Musa compares favorably to the richest individuals in the world today. He would certainly have hundreds of billions of dollars. I think I saw one estimate of $400 billion. That's more than double the wealthiest person on planet Earth today.

But putting that claim aside, it is also interesting that Mansa Musa was the first put the Malian Empire on the map. And I mean that pretty literally. The very first atlas of the world was made in 1375. It included a pretty prominent description of Mali and of their empire in a way that people elsewhere in the known world during the 14th century would not have known about. Certainly not without the exploits of Mansa Musa. And part of the reason that that's significant is because an atlas in 1375 was not likely to be used for actual navigation. Virtually no one was traveling around the world at that time. Remember this is more than 100 years before Christopher Columbus's voyage. So instead an atlas was really a map to show how much knowledge people had of the known world. It was for people who become educated and do scholarship. So the fact that Mali is referenced here in this atlas goes to show that the creators thought it was important enough for educated people to know about back in 1375. Moreover I think it is also a cool little lesson about economics to see how the inflation of prices relative to gold that happened many times over back during the past is a very similar phenomenon to what we see with inflation and the money supply in our modern economies.

So I hope you found that story as eye opening and entertaining as I did. I will move on to this episode's question from the listeners. This one they just say F so this one comes from F in Savannah, Georgia. They ask why is Bitcoin price at the all time high? That is a recent development, very timely, and I have to say there's no one good answer. I think that quite a few people are kind of rushing out of the US dollar. That's one development that might be related to the rise in the Bitcoin price because we have seen the dollar get quite a bit weaker over the second half of 2020. But the Bitcoin price may also be a reflection of some changing dynamics in international relations. We haven't seen any resolution or changes on the trade front. We still have countries behaving very protectionist and alliances between countries are kind of falling apart. Everyone wants to undermine the supremacy of the dollar. So I'm not necessarily saying that Bitcoin solves all of those issues. I merely think it is the most logical alternative right now. I think that's the reasoning behind why more people are investing in Bitcoin and holding Bitcoins and also why we've seen more trading in cryptocurrency in general. It's part of a larger shift. But when it comes to the short term, especially with how volatile the Bitcoin price is, I have no real explanation for why it's at its all time high right now. I take more of a longer term outlook on these things. So that's how I read that situation. But always a good question. Maybe something to keep our eye on moving into the future.

I sincerely hope you enjoyed today's show. I always want to say thank you to all the listeners out there. We really appreciate you tuning in. Don't miss our next episode where I explain what are the different types of silver you can buy and why do those differences matter?