In Transcripts

The McAlvany Weekly Commentary
with David McAlvany and Kevin Orrick


Kevin: I’m here along with David McAlvany and his father, Don McAlvany. Dave, one of the things that you really saw as you traveled around the western half of the United States was the theme that you wrote the book about – legacy. You were there with your father, Don McAlvany. You were there with your kids. You have four kids, and each conference you had one of them with you. I think it’s a treasure when I get to see or listen to three generations of McAlvanys, just conversing together, and this is a very deliberate family. You deliberately travel to educate the kids. You deliberately look at the economy. I know that you and your dad had fabulous conversations the six weeks that you were on the conference tour, but now you’re in Europe, and I’m looking forward to listening in.

David: Meeting with old friends in Germany has been absolutely fantastic, and we’ve been able to have some of the most magnificent open water swims imaginable, hiked to places that look like the Sound of Music all over again, traveled from countryside to countryside in a nine-passenger van, experiencing the food, the culture, discussing intensely the history, both present tense and medieval history. It’s the kind of thing that I want my kids to experience, the gravity and the benefit of what it is to be a McAlvany, with parents that care about them, with grandparents that care about them, and with parents and grandparents that think as deeply as we know how about politics, economics, finance, business, and culture. And to engage with them in those ways, and to give them a model for seeing things as they are, growing and experiencing, giving them the tools so that they can continue these conversations their entire lives.

Kevin: What an amazing blessing, your dad can run me ragged. This is a man – I’m not going to say on the air what age he is because he probably wouldn’t appreciate that, but let’s just put it this way. He is your father, and he is older than you. He lifts weights three or four times a week. I think he is actually a weight-lifting coach there at the orphanage. So what a blessing for you to be able to travel with a dad that, honestly, even though you’re an ironman athlete, you would have to say that your dad is pretty close, athletically, and in health, to you.

David: Again, I think it’s what our kids see that becomes a model for what they understand as normal. I think at 42-43, that’s what I see in my dad. It’s just a given that as I get older I want to keep and maintain my health.

Kevin: Well, he wore me out. Let’s just put it this way. We would go until midnight and then he would say, “Hey, has anybody eaten?”

David: Well, the way we wear our kids out is by going on a ten-mile hike around Berlin. And we want them to understand the history of the Stasi, we want them to walk past Checkpoint Charlie, we want them to close their eyes and imagine what it’s like to have guns turned inward on you with a wall erected to keep you in, not to keep the bad guys out. We want them to see and experience everything, from visiting the headquarters of the European Central Bank to going through Weimar, Germany and appreciating what happened between 1919 and 1924, and ultimately, the value of our family business being in gold where this is an asset that preserves value through currency turmoil.

Again, to bring that alive and to see, these are people who had to mortgage and re-mortgage and re-mortgage homes. Why? Because their currency went defunct. Why did that happen? Who was Haverstein? How was he a genius, and why are Ph.D.s treated as if they can do no wrong, when in fact, history say that they are the ones that do the most harm?

Kevin: Not to mention, Dave, probably one of the more significant times in our lifetime was the falling of the Berlin Wall. I think this is the first time that you and your father are both going to be able to see the Berlin Wall after it came down.

David: In fact, it is his first time to Berlin.

*     *     *

Our family is in Germany as we speak, and this is a place that has seen a massive amount of change. This is one of the most pivotal places on the planet in terms of the 20th century. Today we spent time at the Eltz Castle. It has been in the same family for 33 generations, and in spite of all the things that have changed through time the family has maintained a unity and a vision of something that they can share, which is really unique, if you think about the things that last through time, and the consequences of change.

I’m interested, just kind of in general, what your thoughts are, Dad, on other things that you see that have enduring value, things that have lasted through time. Can you think of families, can you think of institutions, that have stood the test of time? We’re talking a family that from about 1050 forward has been active here. The Castle actually was built by three brothers who decided that they wanted to have separate abodes but on the same ground, in 1236, and those families are still here. It’s remarkable to me.

Don: I think, David, there is an interesting contrast in Germany between, let’s say, Germany of the last century where you had two major world wars, where you had the Weimar Republic, hyperinflation, all centered around this country that we’re in right now, which is Germany. So an incredible amount of conflict in a whole century. And then you go back and look at this family and what they carved with their little castle in this area here, in stability, and the stability that they had over 800 plus years versus the instability that we saw in the last 100 years in the same country. It’s pretty incredible. Obviously, this family was operating on some strengths, and maybe some strategies, philosophies, a way of looking at life that we didn’t see in the last century. So how did they hold it together for 800 years – a family, a castle? It’s very interesting, and I think we got some glimpses of that today.

David: As you know, having reflected on legacy, some of these things are a real big deal to me. Talking with one of the historians here on the site he said three things defined their togetherness. Diplomacy – most of the families of the era were defined by the battles that they fought and won, and the people that they conquered. The Eltz family, by contrast, was known for diplomacy, known for who they knew, what they negotiated, how they decisively – they critically married at certain points. That played a big role in the family connections. So diplomacy was one of the defining factors in their success.

Don: And the opposite of that, David, is throughout the last eight to ten centuries here, including the last century we already alluded to, a lack of diplomacy led to war. In fact, many wars. There were wars all over Germany and all over Europe. So, again, what this family did with diplomacy stands in stark contrast to what was the norm throughout Europe and throughout Germany.

David: When we spoke with Otmar Issing, who was one of the longest-standing members of the European Central Bank, on our Weekly Commentary many years ago, he said that his first day at the job he sat with a French colleague at lunch, and they reflected on their family histories. Otmar Issing’s father had been a guard at a camp where this man’s father had died. And they sat there looking at their project and realized that they would do anything within their power to avoid conflict, because conflict had defined Europe in the 20th century, and in many respects in the 19th and 18th centuries, as well. And those conflicts had not only destroyed lives and families, but certainly the continuity that you hope for within a family, or within a country. So it is just fascinating, you’re right, it’s conflict which has defined Europe. It’s conflict which has redefined the map that we know as Europe. We looked at a series of maps, you and I, just the other day, and looked at how many borders changed between 1939 and 1945. The Germans pressed out and they pressed north and they pressed south, and the Russians pressed west, and there is ground that is captured and recaptured. It is fascinating to see the amount of conflict, again, which you said, the opposite of diplomacy. So that was one of the marks that this gentleman we spoke with today, when we discussed when we had some time, just the two of us.

Don: David, most of that conflict was triggered by very power-hungry, I would say in most instances, very wealthy, elite people, who stood to benefit a great deal from that conflict, either in the expansion of their power, the expansion of their lands, the expansion of their financial outreach. So behind all of that conflict were people who basically were not good at heart, if you will. That’s a strange way to put it.

David: And this idea of over-extension. Like this land that we visited today, in the Eltz Burg, or the Eltz castle. It’s fascinating. It’s the best example of medieval architecture, and the most complete castle in all of Europe, with all of the original family artifacts, some of the artifacts dating back 600-700 years, actual furniture that the family used then. And they were not defined by over-extension. They were not defined by pushing the boundaries. They were defined by acknowledging boundaries and trying to keep what was good enough. They didn’t have to over-reach and so even though they were a powerful family, and a well-connected family, connected to the Archbishop in Trier, connected deeply into the Catholic Church, they A) avoid conflicted and B) were not given to over-reach, as we have understood their history.

Don: They were no power hungry and greedy, which describes so many of the rulers of those days, and maybe our day today.

David: And if they were power hungry and greedy, they at least knew some limits, or some way to moderate that in a way that didn’t put them at risk.

The second thing which I thought was interesting just in terms of the internal dynamics of the family is that they practiced civility. So not only did they have external diplomacy, a position that the family would take, their position – this is who we are in the world and this is what we are trying to maintain, as it is sort of our juxtaposition with the world, but they also understood how they related to each other.

Again, from 1236 forward, three brothers decided that they needed their own space, but they shared the same castle. So you had three houses in one castle, and they did not fight. From the 12th century forward, there was no infighting, there were no massive scuffles, no breaking of trust, no breaking of loyalty. They facilitated civility within their family, a kindness and a generosity one to another, a certain respect and dignity was conferred from one family to the other, and it allowed for them to be in a space that wasn’t contentious. So not only did they not create conflict outside of the castle, but they kept peace within the castle, as well.

And honestly, that is one of the most remarkable things I can think of as a defining factor and maybe something that has application to every family today. Frankly, we don’t have a castle to defend, or diplomacy to practice in the same way that they did, so perhaps that first mark loses any real relevance for our family or others listening, but civility and the practice of kindness, cultivating certain character qualities within individuals and adopting that as a way of existing. You can see so often and so easily how there would have been conflict, and how very quickly this space would have become very small and caused divisions, and ultimately the dissolution of the family. This is the only castle that I know of in Europe that is like this. More common is the route toward incivility than maintaining that tie that binds.

Don: I think, also, what you call that civility, or kindness, extended outside the family, outside the castle. They were obviously a powerful, influential, and quite rich family, and yet they were surrounded by very poor serfs, if you will – very, very poor people in the communities all around them. And yet, they managed to keep peace with these people, they managed to be generous, and so I think the kindness that we found inside the family that kept things together for eight centuries, I think it also extended outside of the castle walls, which I think is admirable.

David: The last thing this historian we spoke with said is that they cultivated sentimental connection. He said that not only is this common in the 19th and 20th century, that part of the legacy of this family today and in recent times, but it seems to have been the case looking back, as well – as simple as, “Will we maintain this property, or will we let it go? Will we replace the roof beams when they are needed, or will be let it go? Will we stay on top of maintenance and invest in this thing we call our home and which is so much a part of our family identity? There was, in his opinion, a sentimental connection with who they were, what they had, what their life was, what they shared, and what they were a part of.

I think that is a really big thing, as I look at legacy and the ideas which take one generation to the next, you and mom are about something more than yourselves. And we look at life through that same lens. We see that we are a part of something bigger than ourselves. And that, in itself, is a powerful – it’s almost prophylaxis for such individuality and selfishness that one generation somehow thinks that it is more important than it actually is, or the contribution is so much greater than what came before, or what could ever come after.

When you get that self-focus, instead of reflecting on the past and seeing that you are, in fact, a part of something bigger than yourself, or anticipating the future and saying, “We may be putting something in motion today which bears fruit for 100 years or 1,000 years, and it is bigger than we are.” We need to be careful of what we are cultivating. That sentimental connection, I think, ties directly to being about, as a family, something more than just yourself, being tied to something bigger in the grand scheme of things.

Don: Family unity, as you and I have discussed many times, and I think you discuss in your legacy book, usually falls apart after two or three generations. Especially if there was wealth that can ultimately be quarreled over and divided in many different directions. To see a family that has stayed in unity for 33-34 generations and stayed together, and yes, part of their legacy was this castle. You have to believe that they probably had a lot bigger legacy than just this castle, but it is pretty amazing that a family could be so united in purpose, and undivided, if you will, that they could keep something going for 33 or 34 generations, which is 850 years, that is not something we normally see in our world today. So I think if we could study the anatomy of this family over that 850 years, we could all probably learn a lot from it. It certainly fits very much into your concept of legacy and what we can pass down to the next, and the next, and the next generation.

David: It was interesting, one of the largest rooms where we spent a good bit of time was in the room where the family met together. They had family meetings and they discussed things together as a family. So again, you’re talking about three families, if you will, sharing the same name, living in the same castle with their own separate households, separate kitchens, living quarters, everything else. But here is this meeting room, and this feasting room, and they met and they talked, and they met and they feasted.

That says something, too, about what was part of the glue that held them together. It is one thing to have sentimental connection to people that you enjoy being with, that you feast with, that you share a life with, that you create things to be sentimental about. But what if they never feasted together? And then this issue of sentimental connection and continuity through time because you’re interested in what has been done for decades and centuries leading up to your turn in history. Where is the sentimental connection if you don’t actually cultivate things that are sentiment-creating in themselves?

I don’t know of too many people in the world that are any more sentimental than you and I. I remember being a young man and traveling from Northern California all the way to Southern California where we ate at our favorite restaurant of all time. We would drive six hours just to sit and eat at the same place that we had always eaten at, which is one example of sentimentality. What we do through the Christmas holidays, the things that are a consistent, repetitive routine, the things we look forward to as a family – they are our defining ways. It’s interesting that we have our own iterations and our own examples of what creates sentiment for us.

But the meeting and feasting room really connected with me because I look at food and wine as a way of organizing family memories. It’s a catalog. What did we eat? What did we talk about? What did we drink? Where did the conversation go? What were we wearing? How do we tie these multi-century experiences into something that ultimately becomes the fabric of family life that feeds that sentimental connection. That, again, I think was one of the critical elements of their 33-34 generational continuity.

Don: I think another point is that in 33-34 generations you know there must have been conflict within the family because we can see that in one generation, three generations in our day, and so forth. And yet, somehow or other, they overcame the conflict. They overcame whatever their differences were, and you see that unity won out over whatever the conflicts may have been. So I think that kind of tenaciousness, if you will, to fight for your family legacy over a number of generations, and in this instance, over eight centuries, I think that is very, very admirable. Somehow or other, as our friend Winston Churchill would have said, “They never, never, never gave up on one another.”

David: That’s it. It’s commitment. It’s commitment to getting beyond the current moment of crisis, and not allowing the current moment of crisis to ultimately be defining, but to take it in stride, to acknowledge it, not to ignore it, because as you know, if you take a crisis and try to sweep it under the carpet it only re-emerges as a future monster twice to five times the size. So it’s not ignoring problems, but dealing with crises, and also, I think, seeing them in their proper perspective.

Isn’t it interesting that we tend to think of family legacy in terms of two generations, three generations, four generations, and in this case you’re talking about 34 generations. When you look back at the conflicts, as you say, that the family invariably faced – they had to have faced – with that history behind you, doesn’t it suggest that all the conflicts and all the problems are actually smaller than you think they are in the moment? It’s only in the moment that they are kind of blown out of proportion and you feel like they’re so big that this is the point at which we depart, the point at which we no longer forgive, the point at which we choose our separate ways? There is something about time that allows you to see things from a different perspective.

You and mom have been married close to 50 years. You are almost at your 50th anniversary. Can you believe that?

Don: (laughs) Time marches on.

David: Don’t you think that is accurate? What you might have experienced as a crisis in your first year of marriage, after 50 years you look back and say, “That’s not a real big deal – not really.”

Don: Yes. You grow. In time, we all grow. Either we move forward by growing, or we deteriorate and move backwards. That’s where you see family breakups, that’s where you see conflict, a war between families, etc. So you have to keep pushing on, you have to determine, and you have a goal to continue to grow. And I think with this particular family and their castle, there must have been some long-term goals that they had, that they were just going to continue to make it happen. And they did – century after century after century.

David: That’s amazing. Well, this is Europe. This is a place that has been defined by conflict, particularly in the 20th century.

Don: Especially in Germany.

David: And a part of our reason for being here is to explore the changes and the impact that Martin Luther had in the 16th century, 1517 being the anniversary of him nailing his protests to the door of Wittenberg and saying, “You know, some things have to change.” And seeing the political wranglings that occurred, you had the German city-states, even at the time, where regional powers were trying to jockey against and opposed to the Catholic Church. They wanted to re-establish regional dominance and take back power that was being ceded to the local archbishops, and Protestantism gave them that opportunity. And Protestantism, for them, may not have been any sort of a theological commitment, or a change in perspective when it came to things spiritual, but in fact a way of rallying people to their political cause, and a use, if you will, of religion as a tool for rallying people. But again, from the 16th century forward – conflict, conflict, conflict, conflict.

We have to figure out what it looks like to march through disturbance, whether it is economic disturbance, health disturbance, family disappointment and disturbance that comes from individual choices that have ramifications for a small community. How do we march forward, look back with respect, and also look forward with a sense of obligation to the generations that lie ahead? This, at least, is one place where you and I have been reminded of that, and I don’t know how I even open my mind to aspiring to a legacy that lasts 33 generations. It is simply mind-boggling to me.

Don: (laughs) It really is. It is actually very inspiring. In a land of perpetual conflict, it is interesting to see an aberration, to see something that was so different from the norm over the last 800-900 years, and especially the last 100 years, in Germany. So this family, and these people, who kept it together for so long, we could probably learn a lot from them. So, it’s really been fun walking through their dwelling, their beautiful castle, and seeing the product of 850 years of hanging together.

David: I know that the Commentary oftentimes deals with things of a political, economic, sociological nature. This maybe encompasses some of those things from a different perspective – insights, lessons and reflections that are, perhaps, less academic and related to this week’s up and down in the NASDAQ and the S&P and the price of gold. But nevertheless, we’re interested in things of enduring value. And that may be a precious metals portfolio, or that may be the values which a family holds to which allow for continuity from one generation to the next, and that certainly is a part of our exploration today through boots on the ground in Germany. Thanks for joining us on this week’s Commentary.

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