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

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,