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

84 Money, Bank Credit, and Economic CyclesChronologically speaking, the first work to consider,and perhaps the most relevant to our thesis, is Instrucción demercaderes (Instruction to merchants), written by Doctor Luispolítica (Madrid: Unión Editorial, 1996), pp. 234–54; Marjorie Grice-Hutchinson, The School of Salamanca: Readings in Spanish Monetary Theory1544–1605 (Oxford: Clarendon Press, 1952), Early Economic Thought inSpain 1177–1740 (London: George Allen and Unwin, 1978), and EconomicThought in Spain: Selected Essays of Marjorie Grice-Hutchinson, Laurence S.Moss and Christopher K. Ryan, eds. (Aldershot, England: Edward Elgar,1993); Alejandro A. Chafuen, Christians for Freedom: Late-Scholastic Economics(San Francisco: Ignatius Press, 1986); and Huerta de Soto, “NewLight on the Prehistory of the Theory of Banking and the School of Salamanca,”pp. 59–81. The intellectual influence of the School of Salamancaon the Austrian School is not a mere coincidence or quirk of history, buta consequence of the close historical, political and cultural connectionsestablished between Spain and Austria during the time of Charles V andhis brother Ferdinand I. These ties lasted for several centuries, and Italyplayed a crucial role in them, acting as a true cultural, economic andfinancial link between the two furthermost tips of the Empire (Spain andVienna). (On this subject, we recommend Jean Bérenger’s interestingbook, A History of the Habsburg Empire, 1273–1700, C.A. Simpson, trans.[London: Longman, 1994, pp. 133–35]). Nevertheless, the scholastics’doctrine on banking has been largely overlooked in the above writings.Marjorie Grice-Hutchinson does touch upon the topic with a near verbatimreproduction of Ramón Carande’s brief contribution to the matter(see The School of Salamanca, pp. 7–8). Ramón Carande, in turn, simplycites (on pp. 297–98 of volume 1 of his book, Carlos V y sus banqueros)Tomás de Mercado’s reflections on banking. A more profound examinationis made by Alejandro A. Chafuen, who at least reports Luis deMolina’s views on banking and considers the extent to which the Schoolof Salamanca approved or disapproved of fractional-reserve banking.Another relevant source is Restituto Sierra Bravo’s work, El pensamientosocial y económico de la Escolástica desde sus orígenes al comienzo del catolicismosocial (Madrid: Consejo Superior de Investigaciones Científicas,Instituto de Sociología “Balmes,” 1975). Volume 1, pp. 214–37 includes arather biased interpretation of the views of members of the School ofSalamanca on the banking business. According to Sierra Bravo, someamong the School’s theorists (including Domingo de Soto, Luis deMolina, and even Tomás de Mercado) tended to accept fractionalreservebanking. However, he ignores the writings of other members ofthe School who, on firmer theoretical grounds, held a radically opposingview. The same criticism can be applied to references Francisco G.Camacho makes in his prefaces to the Spanish translations of Molina’sworks, particularly his “Introduction” to La teoría del justo precio