The Hunt brothers’ speculation caused the price of silver to spike by over 800%, from $6 an ounce in early 1979, to over $50 by early 1980. The rich siblings grew even richer, and made about $4 billion in paper profits. In reality, however, they had simply created a huge asset bubble that was bound to burst sooner or later. The Hunts’ speculation created a global silver craze. As silver prices doubled, trebled, quadrupled, and continued to rise, people around the world began melting silverware.
Thieves went on a silver stealing spree. Tiffany’s ran ads that attacked the brothers’ speculation for making silver unaffordable to consumers. The Hunts created a bubble market for silver. It was a bubble in which they themselves, as the world’s biggest silver hoarders, were most at risk. The Federal Reserve, whose mission includes averting such bubbles, stepped in and issued a rule specifically targeted against the Hunts. It banned banks from lending to precious metal speculators. As a result, the bubble swiftly burst.
The Hunt brothers’ bubble market burst on March 27th, 1980, which came to be known as “Silver Thursday”. Prices collapsed, and the Hunts almost immediately lost over a billion dollars. Their family fortune survived, however, and the brothers pledged most of it as collateral for a rescue loan package. Unfortunately for them, the value of their family assets declined steadily throughout the 1980s. By 1985, their net wealth had dipped from over $5 billion just before Silver Thursday, to less than a billion. Still rich, but things were not headed in the right direction for them.
Then things got worse, especially for the genius behind the silver hoarding plan, Nelson Hunt. The brothers hung on throughout much of the 1980s, but their luck ran out in 1988. That year, they lost a lawsuit that accused them of conspiracy related to their silver speculation, and were hit with hundreds of millions in liability and fines. Nelson Hunt was hardest hit, and he broke the record for the biggest personal bankruptcy in America’s history. His assets were seized and sold to satisfy creditors, including his oil fields, house, bowling alley, and a $12 million coin collection.
In the ancient and classical Greco-Roman world, when people wanted to say that somebody was really wealthy they would say he was “as rich as Croesus“, after the sixth-century BC Lydian king who had been the first to mint coins. In the late Roman Republic, one man, Marcus Licinius Crassus (115 – 53 BC) had grown so wealthy that people began to change the phrase, and pun that somebody was “as rich as Crassus” to denote that somebody was quite prosperous.
Whether he had ever grown as rich as Croesus – and it is quite possible that he might have become even richer than the Lydian monarch – Crassus was the late Roman Republic’s wealthiest man and one of its leading figures. He used his deep pockets to amass power, and sponsored politicians. Their numbers included Julius Caesar, whose political rise Crassus financed. With him and Pompey the Great, Crassus entered into a power-sharing agreement known as “The First Triumvirate”, which effectively made the trio the masters of the Roman Republic.
Crassus became fabulously rich because he was a shrewd businessman, and a notoriously avaricious one. He got started on the road to fabulous wealth through an alliance with the dictator Sulla. Crassus bought the confiscated properties of executed enemies of the state in rigged auctions for a fraction of their value. He even arranged to have the names of those whose properties he coveted added to the lists of the proscribed, slated for execution and confiscation of property. He made even more money through other unscrupulous methods.
Rome in his day was full of fire-prone buildings, and fires were a common occurrence. However, the city had no public firefighters, so Crassus formed a private firefighting company manned by his slaves. When a fire broke out, he would rush to the scene with his firefighters, and on the spot, offer to buy the burning building or those nearby that were threatened by the flames at literally fire-sale knock-down prices. To get at least something for their property was preferable to nothing if it was reduced to ashes, so the distressed owners often agreed. Through such shady methods, Crassus became Rome’s greatest property owner.
By the 70s BC, Crassus had established himself as Rome’s richest man. H leveraged his wealth into power and entered into the First Triumvirate, with Caesar and Pompey, to divvy up the Roman Republic. However, Crassus wanted to be more than just a rich man. He also craved military glory such as that enjoyed by his partners. Unlike them, Crassus’ main military accomplishment had been to defeat Spartacus’ slave rebellion. In Roman eyes, defeating slaves paled in comparison to Pompey’s and Caesar’s deeds. To win the glory of his own, Crassus decided to invade Parthia, a newly established wealthy kingdom that ruled Persia and Mesopotamia.
Parthia did not seem a difficult nut to crack. A decade earlier, Pompey had easily defeated other eastern kingdoms, and there was little reason to assume the Parthians would be any tougher. With an army of 50,000, Crassus went to war against Parthia in 53 BC. Things went wrong from the start. His guide, secretly in Parthian pay, took Crassus on an arid route that left his army parched and exhausted by the time they reached the town of Carrhae in today’s Turkey. There, they encountered a Parthian army of 1000 armored heavy cavalry and 9000 horse archers. It did not go well for Crassus.
Although they greatly outnumbered the Parthians, the Romans were demoralized by the rigors of the march and by Crassus’ poor leadership. Parthian archers whittled the Romans with arrows from a safe standoff distance, and used the superior mobility afforded them by their horses to retreat to safety whenever the Romans advanced on foot. Morale plummeted as casualties mounted. Crassus finally ordered his son to drive off the horse archers with the Roman cavalry and an infantry detachment. The Parthians feigned retreat, Crassus’ son rashly pursued and was slaughtered with all his men.
The Parthians returned, and taunted the Roman army and Crassus with his son’s head mounted on a spear. Crassus retreated, abandoning thousands of his wounded. The Parthians invited him to parley, and offered safe retreat in exchange for Roman territorial concessions. Crassus was reluctant, but his army threatened to mutiny if he did not negotiate. The parley went badly, violence broke out, and Crassus was killed. To mock his greed, the Parthians poured molten gold down the rich Roman’s throat. Out of his 50,000 man army, only 10,000 made it back to Roman territory.
Where Did We Find This Stuff? Some Sources and Further Reading