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

58 Money, Bank Credit, and Economic Cyclescalled mensarii, after the mensa or counter where they originallycarried out their money-changing activities. Much liketoday’s banking licenses, the mensa could be transferred. InRome, however, as the state owned the premises where bankingtook place, it was the right to operate (granted by the state)that was transmitted. A transfer could include all furnitureand implements of the taverna, as well as financial assets andliabilities. In addition, bankers formed a guild to defend theircommon interests and obtained significant privileges fromemperors, especially Justinian. Some of these privilegesappear in the Corpus Juris Civilis. 35The economic and social disintegration of the RomanEmpire resulted from inflationary government policies whichdevalued the currency, and from the establishment of maximumprices for essential goods, which in turn caused a generalshortage of these goods, the financial ruin of merchantsand the disappearance of trade between different areas of theEmpire. This was also the end for banking. Most banks failedduring the successive economic crises of the third and fourthcenturies A.D. In an attempt to contain the social and economicdecay of the Empire, additional coercive, interventionistmeasures were taken, further accelerating the process ofdisintegration and enabling the barbarians (whom Romanlegions had defeated repeatedly and kept at bay for years) todevastate and conquer the remains of the ancient, thrivingRoman Empire. The fall of the classical Roman world beganthe long medieval period, and it was nearly eight hundredyears later that banking was rediscovered in the Italian citiesof the late Middle Ages. 3635 See, for instance, New Constitution 126 on “Bank Contracts,” edict 7(“Decree and Regulation Governing Bank Contracts”) and edict 9, “OnBank Contracts,” all by Justinian and included in the Novellae (see Cuerpode derecho civil romano, vol. 6, pp. 479–83, 539–44 and 547–51).36 A superb overview of the causes of the fall of the Roman Empireappears in Ludwig von Mises’s work, Human Action: A Treatise on Economics,Scholar’s Edition (Auburn, Ala.: Ludwig von Mises Institute,1998), pp. 161–63. We will also quote Mises’s Human Action by the morewidespread third edition (Chicago: Henry Regnery, 1966), pp. 767–69.