Posted on 08/31/2020 10:14:57 PM PDT by SunkenCiv
Modern banking has its auspicious beginnings in the early to mid Middle Ages. Primitive banking transactions existed before, but until the economic revival of the thirteenth century they were limited in scope and occurrence. By the dawn of the twelfth and thirteenth centuries, bankers were grouped into three distinct categories: the pawnbrokers, the moneychangers, and the merchant bankers. But with these economic specializations came religious denunciation and backlash. However, these bankers persevered and a new industry was born.
After the collapse of the Roman Empire in the late fifth century, there followed centuries of deep economic depression, sharp deflation of prices and sluggish monetary circulation. By the end of the thirteenth century, with its economic resurgence, three classes of credit agents became distinguishable: the pawnbroker, the moneychangers and deposit bankers, and the merchant bankers. The latter were the new elite of the profession, unprecedented in antiquity and in the early Middle Ages. Wealthy commercial entrepreneurs, uncrowned governors of city-states, lenders to monarchs, relatives of popes, they were in no way embarrassed by canonical strictures. At the opposite level of the profession, the pawnbrokers were degraded successors of the early medieval usurers. They were deliberate public sinners, likened to prostitutes, and hence tolerated on earth but earmarked for hell unless they repented and made full restitution of their 'accursed' gains...
Records have survived about a merchant Genoese company involved in banking from 1244 to 1259: the Leccacorvo company. From its records, a picture of a typical merchant-banking organization can be studied... The Leccacorvo bank did most of its business with established merchants, bankers, and government officials, including the communes of Genoa and Piacenza, the king of France and the Pope.
(Excerpt) Read more at ehistory.osu.edu ...
Defender of Capitalism
In 1508 Emperor Maximilian I attempted to force his bankers to invest in bonds to support another of his wars. Fugger was furious at this, and wrote a letter back to the Emperor. Steinmetz explains:Fugger started with what he said was obvious. Companies like his benefitted every level of society, producing jobs and wealth for all. Business could only work its magic if the government left it alone. If politicians threw up roadblocks and killed the profit motive, business had no chance. Merchants and bankers were good citizens, he argued. They treated each other and their customers fairly. Sure, self-interest propelled them. But they knew better than to cheat customers. Reputation was everything and the need for credibility checked the urge to lie, gouge and steal. Hinting at the allure of tax havens (the Swiss border was only sixty miles away), he declared that other countries show businessmen more respect. He blasted those who condemned commerce and enterprise. They failed to understand that "it is for the common good that honourable, brave and honest companies are in the realm. For it is not disreputable but rather it is wonderful jewel that such companies are in the kingdom."It is no surprise that when the German Peasants' War broke out in 1524, that wealthy men like Jakob Fugger were accused by the people of corruption and stealing from the poor. At one point during that year Jakob had to flee his home in Augsburg because of the threats from protestors. Fugger did all that he could to support the nobles trying to put down the revolt, which would only end after 100,000 people were dead.
When Jakob Fugger died on 30 December 1525, he bequeathed the company to his nephews, leaving them with the assets worth 2,032,652 guilders - a study done in 2016 estimates that the current value of that fortune would be around $400 billion US, or 350 billion euros. The Fugger family has carried on, with several branches still existing - some are nobility, others own business, and a few castles are still under their ownership.5 Things to Know about the Richest Person in History | December 2, 2018 | by Medievalists.net -- Where the Middle Ages Begin
"The Richest Man Who Ever Lived," a new book by veteran journalist Greg Steinmetz, shows that it's hard to overstate the effect Jacob Fugger had on the world, both during his time and in the centuries since.
Born to merchants, not royalty, Fugger could be seen as the world's first true capitalist, as his pursuit of wealth solely for wealth's sake -- as opposed to desire to rule, or to fulfill perceived religious destiny, or to simply escape from poverty -- was, according to Steinmetz, virtually unheard of at the time.
Fugger created a fortune that, by his death in 1525, equaled "just under 2 percent of European economic output." No other man, no Vanderbilt or Gates, has controlled that pivotal a fortune.
He was the first documented millionaire, and the first businessman to compile a comprehensive financial statement for his business. He also created the world's first news service, as a way to ensure he had important information before his rivals, a half-century before the advent of the newspaper.
He funded the appointments of kings and popes then backed their wars, and took the Habsburg family from royalty's second tier to a dynasty that would lord over Europe for hundreds of years.
His loan to Albrecht directly led to the creation of Protestantism, and, according to Steinmetz, he "most likely funded Magellan's circumnavigation of the globe."
Such was Fugger's power that, in a letter seeking repayment of money he had loaned to King Charles V -- the Holy Roman emperor, king of Spain, Naples and Jerusalem and "lord of Asia and Africa" -- he had no qualms about reminding the all-powerful king, in an era when kings put people to death with a wave of a hand, that, "without me your majesty might not have acquired the imperial crown" and demanding payment "without further delay."Meet the world's richest man who changed Christianity | Larry Getlen | New York Post | July 26, 2015
“If politicians threw up roadblocks and killed the profit motive, business had no chance.”
Some things never change.
The reason we have banking to this day is, the bankers of the Middle Ages did their due diligence, continuing to audit the businesses to which money had been lent. The practice juiced growth, which increased incomes, changed the ways in which livings were earned, and of course led to some measure of control (ahem) over the monarchs both grand and mean. Whatever was good for business was good for the bankers, and for the overall economy, so there was a check on otherwise unfettered absolutism.
The politicians attach themselves to anything that has money in it like leaches.
Fascinating and an abuse of history by omitting the Templars, who invented the check book and banking as we know and the moral bankruptcy of the Catholic Church under edict from Pope Clement IV and that Hobbit Philip IV king of France both of whom were in debt to not only to the Templars but, many other nations and prominent peoples of then europe.
“Fugger created a fortune that, by his death in 1525, equaled “just under 2 percent of European economic output.” No other man, no Vanderbilt or Gates, has controlled that pivotal a fortune.”
I’ll wait for the movie, working title “Meet the Fuggers” LOL
I think that the Templars were omitted because they did not make their money through ordinary business and banking transactions in Europe and left no clear successors. In contrast, Jakob Fugger did just that, to his immense benefit and helping his progeny, his customers, and commerce in Europe to prosper.
That appears to fit with my suspicion that banking was connected to or even arose from the Medieval trading houses.
Medieval ideas of usury IIRC come from Plato who wrote that money is “sterile” and therefore interest is impossible. Lots of neo-Platonism in the Medieval Catholic intellectual world.
Calvin was largely responsible for legalizing the payment of interest in the Protestant Reformation, pointing out that the Biblical prohibitions against interest were talking specifically about loans given to the very poor.
It depends on who is writing the definition, the bankers or the truth.
I think it was one of Terry Jones’ documentaries where I saw the etymology of the the term bankrupt.
Early money-men would have a stone bench (banca) in the market square where they would ply their trade. If they were found to be guilty of malfeasance or other failure of their trade, officials would smash (rupture) their their work place -
“Banca rupta”
Granted, despite the handicap of being an order of monks with a vow of poverty, the Templars developed a lucrative line in letters of credit that permitted pilgrims to draw on their wealth while traveling. And they were adept at financing their campaigns, generating income from donations of land, and profitably lending to Europe’s monarchs. Yet even in the cumulative, the Templars did much less than the accomplishments of Jakob Fuggars and his colleagues in establishing the beginnings of a European banking system.
1459-1525
[snip] Temple Church is not just an important architectural, historical and religious site. It is also London’s first bank... A pilgrim could leave his cash at Temple Church in London, and withdraw it in Jerusalem. Instead of carrying money, he would carry a letter of credit. The Knights Templar were the Western Union of the crusades. We don’t actually know how the Templars made this system work and protected themselves against fraud. Was there a secret code verifying the document and the traveller’s identity? [/snip]
https://www.bbc.com/news/business-38499883
IIRC come from Plato who wrote that money is “sterile” and therefore interest is impossible.
Thanks Pelham. The notion of interest tramples the idea of "hard money" to death, so it figures that Plato and many of his time (and thereafter) would have that idea fixed in their noggins.
Interesting.
(now the late) Terry Jones - History Documentaries - YouTube
https://www.youtube.com/playlist?list=PLugdQwSXQ0wDCfeI3xkMbCy2vsMG_2UAU
That is what I referred to as Templar letters of credit, which is an important banking function but not a complete manifestation of what banks could and would do. The much greater accomplishment of Jakob Fuggar in finance was to contrive awidely available system of reliable and trustworthy merchant banking that provided credit, moneychanging, and much more throughout Europe’s major commercial centers. This led to an expansion of trade, transportation, and innovation that helped spur Europe’s age of discovery and expansion and rise to global power.
Politicians cling to anything that ensures continued power. Money's a biggie.
Cell phones -- at least after Friday the 13, October, 1307. ;^D
This posting is a good example of why the world has always improved under capitalism. The mindless Marxists of today say that capitalism is a failure; it is Marxism that always fails.
I sometimes post a reminder of Nabta Playa, a wet region around 8,000 BC of the now Sahara Desert of southern Egypt. There is evidence that there was extensive livestock herding in the region and that some trading was done with Mesopotamia --- a perfect example of early capitalism.
Another example of early capitalism is the ancient Silk Route. The risks of these long distance trading enterprises indicate that civilization has grown and thrived on capitalism, even high risk capitalism.
IMO Marxism continues to intrude upon civilization - despite constant failures - due to Darwin's evolution claims. We moderns are conditioned to believe that society is evolving on to a higher plain - and Marxist egalitarianism is the logical outcome {but never achieved}. However, even under Soviet Marxism capitalism intruded, usually illegally or 'black market' style, sometimes with the elite ruling class wetting their beaks on the profits.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
