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

Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 85Saravia de la Calle and published in Medina del Campo in1544. Saravia de la Calle criticizes bankers harshly, callingthem “voracious gluttons who swallow everything, destroyeverything, confuse everything, steal and soil everything, likethe harpies of Phineus.” 77 He says bankers “go out into thestreet and square with their table and chair and cash-box andbook, like harlots to the brothel with their chair,” and havingobtained the necessary license and guarantee required by thelaws of the kingdom, they set about acquiring deposits fromclients, to whom they offer bookkeeping and cashier services,making payments from clients’ accounts as ordered and evenpaying interest on such deposits.With sound legal reasoning, Saravia de la Calle indicatesthat interest is incompatible with the nature of the monetarydeposit, and that in any case, the banker should receive a feefor the custody and safekeeping of the money. He evenseverely rebukes customers who enter into such deals withbankers, and states:And if you say, merchant, that you do not lend the money,but that you deposit it, that is a greater mockery; for whoever saw the depositary pay? He is usually paid for the troubleof safeguarding the deposit. Furthermore, if you nowentrust your money to the profiteer as a loan or deposit, justas you receive a part of the profit , you also earn a portion ofguilt, even a greater portion. 78In chapter 12 of his book, Saravia de la Calle makes a neatdistinction between the two radically different operations(Madrid: Editora Nacional, 1981), esp. pp. 33–34. This version of thedoctrine, according to which some members of the School of Salamancaaccepted fractional-reserve banking, has been greatly influenced by anarticle by Francisco Belda, S.J., entitled “Ética de la creación de créditossegún la doctrina de Molina, Lessio y Lugo,” published in Pensamiento19 (1963): 53–89. For the reasons indicated in the text, we disagree withthe interpretation these authors make of the doctrine of the School ofSalamanca with respect to banking. We will consider these objections ingreater detail in section 1 of chapter 8.77 Saravia de la Calle, Instrucción de mercaderes, p. 180.78 Ibid., p. 181.