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

Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 83Of international relevance were the long-standing relationsbetween Charles V and members of the prominent Fuggerbanking family (known in Spain as the Fúcares). The Fuggersof Augsburg started out as wool and silver merchants andalso traded spices between their city and Venice. Later theyconcentrated on banking, and in their heyday they operatedeighteen branches in different parts of Europe. They grantedloans to help finance the election of Charles V as emperor andlater funded his exploits on many occasions, receiving as collateralboth the silver shipments from the Americas and theauthorization to collect taxes. Their business came to a standstilland barely escaped bankruptcy in 1557 when Philip II defacto suspended payments, and in fact they continued to leasethe lands belonging to military orders until 1634. 75THE SCHOOL OF SALAMANCA AND THE BANKING BUSINESSThese financial and banking phenomena did not go unnoticedby the illustrious minds of members of the School ofSalamanca who, according to the most reliable research,paved the way for the modern subjectivist theory of value,developed by the Austrian School of economics. 7675 The best source on the relations between the Fugger Bank and CharlesV is arguably Ramón Carande’s Carlos V y sus banqueros. Also deservingmention is a study by Rafael Termes Carreró, entitled Carlos V y uno desus banqueros: Jacobo Fugger (Madrid: Asociación de Caballeros delMonasterio de Yuste, 1993). Rafael Termes makes an interesting observationabout the Fuggers’ dominance in Spain, pointing out thatthere is a street in Madrid named after the Fuggers. Calle deFúcar, between Atocha and Moratín streets, bears the hispanizedversion of their last name. In addition, the wordfúcar is listed even today as meaning “rich and wealthy person”in the Diccionario of the Spanish Royal Academy. (p. 25)76 The following authors, among others, have recently examined thecontributions of Spanish scholastics to economic theory: Murray N.Rothbard, “New Light on the Prehistory of the Austrian School,” in TheFoundations of Modern Austrian Economics, Edwin G. Dolan, ed. (KansasCity, Mo.: Sheed and Ward, 1976), pp. 52–74, and Economic ThoughtBefore Adam Smith, chap. 4, pp. 97–133; Lucas Beltrán, “Sobre los orígeneshispanos de la economía de mercado,” in Ensayos de economía