Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

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Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 55Refutatio omnium haeresium, a work attributed to Hippolytusand found in a convent on Mount Athos in 1844, reportsCallistus’s bankruptcy in detail. 29 Like the recurring criseswhich plagued Greece, the bankruptcy of Callistus occurredafter a pronounced inflationary boom followed by a seriousconfidence crisis, a drop in the value of money and the failureof multiple financial and commercial firms. These events tookplace between 185 and 190 A.D. under the rule of the EmperorCommodus.Hippolytus relates how Callistus, at the time a slave to hisfellow Christian Carpophorus, started a banking business inhis name and took in deposits mainly from widows andChristians (a group that was already increasing in influenceand membership). Nevertheless, Callistus deceitfully appropriatedthe money, and, as he was unable to return it upondemand, tried to escape by sea and even attempted suicide.After a series of adventures, he was flogged and sentenced tohard labor in the mines of Sardinia. Finally, he was miraculouslyreleased when Marcia, concubine of the Emperor Commodusand a Christian herself, used her influence. Thirty yearslater, a freedman, he was chosen the seventeenth Pope in theyear 217 and eventually died a martyr when thrown into a wellby pagans during a public riot on October 14, 222 A.D. 30We can now understand why even the Holy Fathers intheir Apostolic Constitutions have admonished bankers to behonest and to resist their many temptations. 31 These moralexhortations warning bankers against temptation and remindingthem of their duties were used constantly among earlyChristians, and some have even tried to trace them back to theHoly Scriptures.29 Hippolytus, Hippolytus Wercke, vol. 2: Refutatio omnium haeresium(Leipzig: P. Wendland), 1916.30 Juan de Churruca, “La quiebra de la banca del cristiano Calisto (c.a.185–190),” Seminarios complutenses de derecho romano, February–May 1991(Madrid, 1992), pp. 61–86.31 “Gínesthe trapézitai dókimoi” (“bankers, you must be honest!”). See“Orígenes y movimiento histórico de los bancos,” in Enciclopedia universalilustrada europeo-americana (Madrid: Espasa Calpe, 1973), vol. 7, p. 478.
56 Money, Bank Credit, and Economic CyclesTHE SOCIETATES ARGENTARIAEBanker associations or societates argentariae were a peculiarityof banking in the Roman world. Financial contributionsfrom members supplied the capital to form them, and thiscapital was relied upon to pay debts. However, as banks wereof particular public interest, Roman law established thatmembers of the societates argentariae must guarantee depositswith all of their assets. 32 Hence, members’ joint, unlimitedliability was a general principle of Roman law, intended tominimize the effects of fraud and abuse by bankers and toprotect depositors’ right to recover their money at any time. 3332 See Manuel J. García-Garrido, “La sociedad de los banqueros (societasargentaria),” in Studi in onore di Arnaldo Biscardi (Milan 1988), vol. 3, esp.pp. 380–83. The unlimited liability of banker association members underRoman law was established, among other places, in the aforementionedtext by Ulpian (Digest, 16, 3, 7, 2–3) and also in a passage by Papinian(Digest, 16, 3, 8), where he dictates that money to repay the debts offraudulent bankers be drawn not only from “deposited funds foundamong the banker’s assets, but from all the defrauder’s assets” (Cuerpode derecho civil romano, vol. 1, p. 837). Some present-day authors havealso proposed a return to the principle of unlimited liability for bankers,as an incentive for them to manage money prudently. However, thisrequirement is not necessary to achieve a solvent banking system, norwould it be a sufficient measure. It is not necessary, since a 100-percentreserve requirement would eliminate banking crises and economicrecessions more effectively. It is not sufficient, because even if banks’stockholders had unlimited liability, bank crises and economic recessionswould still inevitably recur when a fractional reserve is used.33 Under the Roman Empire, some large, influential temples continuedto double as banks. Among these were the temples at Delos, Delphi,Sardis (Artemis), and most importantly, Jerusalem, where Hebrews, richand poor, traditionally deposited their money. This is the context inwhich we must interpret Jesus’s expulsion of the money changers fromthe temple in Jerusalem, as described in the New Testament. In Matthew21:12–16 we read that Jesus, entering the temple,overturned the tables of the money changers and the benchesof those selling doves. “It is written,” he said to them, “Myhouse will be called a house of prayer,” but you are making ita “den of robbers.”Mark 11:15–17 offers an almost identical text. John 2:14–16 is a bit moreexplicit and tells us how, after entering the temple courts,
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MONEY,BANK CREDIT,ANDECONOMIC CYCLE
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CONTENTSPREFACE TO THE THIRD ENGLIS
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xiiMoney, Bank Credit, and Economic
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xivMoney, Bank Credit, and Economic
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xviMoney, Bank Credit, and Economic
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xviiiMoney, Bank Credit, and Econom
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PREFACE TO THESECOND ENGLISH EDITIO
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PREFACE TOTHE THIRDSPANISH EDITIONI
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xliiMoney, Bank Credit, and Economi
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INTRODUCTIONThe economic analysis o
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Introductionxlviiand foreign exchan
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IntroductionxlixThis book comprises
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Introductionrecurrent phenomenon. I
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Introductionand Professors Hans-Her
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4THE CREDITEXPANSION PROCESSThis ch
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6ADDITIONALCONSIDERATIONSON THE THE
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7A CRITIQUE OFMONETARIST ANDKEYNESI
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8CENTRAL AND FREEBANKING THEORYThis
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9A PROPOSAL FOR BANKINGREFORM: THE
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BIBLIOGRAPHYAbrams, M.A., Money in
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Bibliography 815Bajo Fernández, M.
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Bibliography 817Borch, K.H., Econom
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Bibliography 819Coronel de Palma, L
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Bibliography 821N. Durlauf and Lawr
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Bibliography 823Galiani, F., Della
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Bibliography 825Graham, F.D., “Pa
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Bibliography 827——, Prices and
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Bibliography 829translation by N. K
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Bibliography 831——, “Keynes
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Bibliography 833Russian edition by
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Bibliography 835Keeler, J., “Empi
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Bibliography 837——, “On Crisi
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Bibliography 839——, “Professo
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Bibliography 841Miller, H.E., Banki
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Bibliography 843Neira, Alonzo, M.A.
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Bibliography 845Raguet, C., “Repo
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Bibliography 847——, “The Myth
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Bibliography 849——, “Banking
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Bibliography 851M.C. Marcuzzo (Chel
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Bibliography 853——, “A Critiq
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Bibliography 855Walker, A., The Sci
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INDEX OF SUBJECTSAccelerator princi
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Index of Subjects 859Banking reform
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Index of Subjects 861objection to t
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Index of Subjects 863Goal, concept
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Index of Subjects 865See also Fract
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Index of Subjects 867Plan, definiti
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Index of Subjects 869Tragedy of the
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