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

Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 95Tratado sobre los cambios (Treatise on exchanges) (1597), heupholds the medieval doctrine that the irregular deposit is aloan or mutuum contract in favor of the banker, a contract inwhich not only ownership is transferred, but full availability ofthe tantundem as well, which means the banker can legitimatelyuse the money in his own interest, in the form of loans or in anyother manner. Let us see how he presents his argument:Because these bankers, like all the others, are true owners ofthe money deposited in their banks, and they differ greatly inthis way from other depositaries . . . so they receive the moneyas a precarious loan and hence, at their own risk.Further on he indicates even more clearly thatsuch a deposit is really a loan, as has been said, and ownershipof the money deposited is transferred to the banker, so if it islost it is lost to the banker. 98This position conflicts with the doctrine Luis de Molinahimself upholds in Tratado sobre los préstamos y la usura (Treatiseon loans and usury), where he indicates that a term is an essentialelement of all loan contracts, and that if the duration of aloan has not been expressly stipulated and a date for its returnset, “it will be necessary to accept the decision of the judge asto the loan’s duration.” 99 Moreover, Luis de Molina ignores allof the arguments presented in chapter 1 to demonstrate thatthe irregular deposit contract has nothing in common, inSchool of Salamanca: “The inclusion of Molina in the School seems tome now to be more dubious.” Marjorie Grice-Hutchinson, “The Conceptof the School of Salamanca: Its Origins and Development,” chapter 2 ofEconomic Thought in Spain: Selected Essays of Marjorie Grice-Hutchinson, p.25. It seems clear that the core members of the School of Salamanca wereDominican, and at least on banking matters it is necessary to separatethem from Jesuit theologians, a deviationist and much less rigorousgroup.98 Luis de Molina, Tratado sobre los cambios, edited and introduced byFrancisco Gómez Camacho (Madrid: Instituto de Estudios Fiscales,1991), pp. 137–40. The original edition was published in Cuenca in 1597.99 Luis de Molina, Tratado sobre los préstamos y la usura, edited and introducedby Francisco Gómez Camacho (Madrid: Instituto de Estudios Fiscales,1989), p. 13. The original edition was published in Cuenca in 1597.