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

140 Money, Bank Credit, and Economic Cyclesmutuum or loan contract. As we know, the legal cause or purposeof this contract is radically different (it entails not onlythe transfer of ownership and power to use the goods, but alsothe transfer of the availability of the goods, which is simultaneouslylost to the lender). Therefore, and according to Coppa-Zuccari, the claim that supposed authorization (express ortacit) from the depositor converts the irregular deposit contractinto a loan or mutuum is both unnecessary and inaccurate. It isunnecessary in the sense that all irregular deposit contracts,due to their very nature, involve the transfer of ownershipand of the power to use the good (which is compatible, as islogical, with the fundamental obligation to maintain 100 percentof the tantundem in reserve). And it is inaccurate, since eventhough the power to use the deposited good is transferred, inno way does this alter the original purpose of the contract,which is none other than the custody and safekeeping of thetantundem. 25 In fact, three logical possibilities exist with respectto the supposed authorization (express or tacit) to use thedeposited good. Let us consider each one separately.First, we may suppose that the vast majority of depositorsare not aware that by depositing their money in a bank, they atthe same time authorize the banker to use the money for hisown profit in private business deals. It is certain that when theoverwhelming majority of depositors make a demanddeposit, they are under the honest impression that they are infact doing just that: entering into an irregular deposit contract,the essential purpose of which is to transfer the custody orsafekeeping of their money to the banker. In all cases, thebanker simultaneously receives the money as if it were a loanor mutuum; that is, he considers that the full availability of thegood is transferred to him and that he is therefore authorizedto use it in his own business deals. It is obvious that the causeor purpose of each party’s participation in the contract doesnot coincide with the objective of the other party: one entersinto the contract believing it to be a deposit and hands overthe money based on that assumption, and the other receivesthe money as if it were a loan or mutuum and based on that25 Coppa-Zuccari, Il deposito irregolare, p. 132.