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

Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 67As a result of both doctrinal stances, scholars came tobelieve that the “irregularity” in the monetary irregulardeposit referred not to the deposit of a certain quantity of afungible good (the units of which were indistinguishable fromothers of the same type and the tantundem of which was to bekept continually available to the depositor), but rather to theirregularity of always disguising loans as deposits. 49 Furthermore,bankers, who had used the depositum confessatum to disguiseloans as deposits and to justify the illegal payment ofinterest, eventually realized that the doctrine which held thatdeposits always concealed loans could also be extremely profitableto them, because they could employ it to defend eventhe misappropriation of money which had actually beenplaced into demand deposits and had not been loaned. Thus,49 Canonists’ equation of the monetary irregular deposit with themutuum or loan contract led experts to search for a common juridicalfeature between the two contracts. They soon realized that in the depositof a fungible good, “ownership” of the individual units deposited is“transferred,” since the depositary is only obliged to safeguard, maintain,and return upon demand the tantundem. This transfer of ownershipappears to coincide with that of the loan or mutuum contract, so it wasnatural for scholars to automatically assume that all monetary irregulardeposits were loans, since both include a “transfer” of “ownership” fromthe depositor to the depositary. Hence, theorists overlooked the essentialdifference (see chapter 1) between the monetary irregular deposit andthe mutuum or loan: the main purpose of the irregular deposit is the custodyand safekeeping of the good, and while “ownership” is in a sense“transferred,” availability is not, and the tantundem must be kept continuallyavailable to the depositor. In contrast, a loan entails the transfer offull availability, apart from ownership (in fact, present goods areexchanged for future goods) and involves this fundamental element: aterm during which the goods cease to be available to the lender. Irregulardeposits do not include such a term. In short, since the canonical prohibitionof interest gave rise to the fraudulent and spurious institution ofthe depositum confessatum, it was indirectly responsible for the loss of clarityin the distinction between the monetary irregular deposit and themutuum. This confusion is clearly behind the wrong 1342 final courtdecision on the Isabetta Querini vs. The Bank of Marino Vendelino case,mentioned by Reinhold C. Mueller in The Venetian Money Market: Banks,Panics, and the Public Debt, 1200–1500 (Baltimore: Johns Hopkins UniversityPress, 1997), pp. 12–13.