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

88 Money, Bank Credit, and Economic Cyclestheoretical analysis which explains that the expansionaryphase brought on by the artificial expansion of credit grantedby these “profiteers” is inevitably followed by a period ofrecession, during which the non-payment of debts produces achain of bank failures. He adds thatthe merchant does not pay the profiteer, he causes him to gobankrupt, and he suspends payments and all is lost. As iscommon knowledge, these moneylenders are the beginning,occasion and even the cause of all this, because if they did notexist, each person would use his money to the extent he could andno more, and things would cost what they are worth and morethan a fair cash price would not be charged. Therefore it wouldbe very worthwhile for princes to stop tolerating these profiteersin Spain, since no other nation in the world toleratesthem, and to banish this pestilence from their court andkingdom. 84As we know, it is not true that the authorities of othernations had controlled the activity of bankers more successfullythan Spanish authorities. Instead, the same thing happenedmore or less everywhere, and rulers eventually grantedbankers privileges to allow them to make self-interested use oftheir depositors’ money, in exchange for the ability to capitalizeon a banking system which provided much faster and easierfinancing than taxes.To conclude his analysis, Saravia de la Calle affirms thata Christian should under no circumstances give his moneyto these profiteers, because if he sins in doing so, as isalways the case, he should refrain from it to avoid sinning;and if he does not sin, he should refrain to avoid causing themoneylender to sin.Furthermore, he adds that if bankers’ services are not used,the following additional advantage will result: the depositorswill not be shocked if the moneylender suspends payments;if he goes bankrupt, as we see so often and Our Lord God permits,let him and his masters be lost like dishonest gains. 8584 Ibid., p. 190; italics added.85 Ibid., p. 198.