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

68 Money, Bank Credit, and Economic Cyclesthe canonical ban on interest had the unexpected effect ofobscuring Roman jurists’ clear, legal definition of the monetaryirregular-deposit contract. Many capitalized on the ensuingconfusion in an attempt to legally justify fraudulent bankingand the misappropriation of demand deposits. Expertsfailed to clear up the resulting legal chaos until the end of thenineteenth century. 50Let us now examine three particular cases which togetherillustrate the development of medieval banking: Florentinebanks in the fourteenth century; Barcelona’s Bank of Deposit,the Taula de Canvi, in the fifteenth century and later; and theMedici Bank. These banks, like all of the most importantbanks in the late Middle Ages, consistently displayed the patternwe saw in Greece and Rome: banks initially respected thetraditional legal principles found in the Corpus Juris Civilis,i.e., they operated with a 100-percent reserve ratio whichguaranteed the safekeeping of the tantundem and its constantavailability to the depositor. Then, gradually, due to bankers’greed and rulers’ complicity, these principles began to be violated,and bankers started to loan money from demand50 In fact, Pasquale Coppa-Zuccari, whose work we have already cited, wasthe first to begin to reconstruct the complete legal theory of the monetaryirregular deposit, starting from the same premise as the classical Romanscholars and again revealing the illegitimacy of banks’ misappropriation ofdemand deposits. Regarding the effects of the depositum confessatum onthe theoretical treatment of the juridical institution of irregular deposit,Coppa-Zuccari concludes thatle condizioni legislative dei tempi rendevano fertile il terrenoin cui il seme della discordia dottrinale cadeva. Il divietodegli interessi nel mutuo non valeva pel deposito irregolare.Qual meraviglia dunque se chi aveva denaro da impiegarefruttuosamente lo desse a deposito irregolare, confessatum seoccorreva, e non a mutuo? Quel divieto degli interessi, chetanto addestrò il commercio a frodare la legge e la cui efficaciaera nulla di fronte ad un mutuo dissimulato, conservò invita questo ibrido instituto, e fece sì che il nome di depositovenissi imposto al mutuo, che non poteva chiamarsi col proprionome, perchè esso avrebbe importato la nullità del pattorelativo agli interessi. (Coppa-Zuccari, Il deposito irregolare,pp. 59–60)