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

144 Money, Bank Credit, and Economic CyclesIt would be difficult to express more accurately and succinctlythe fundamental incompatibility and the insolublelogical contradiction between the monetary irregular-depositcontract and the loan contract. Clemente de Diego concludesby criticizingattempts to convert that radical opposition (between theirregular-deposit contract and the loan contract) into a singleunit that would make up a new contract, which wouldneither be one nor the other, but instead would be both atthe same time; this is impossible, as its terms are mutuallyexclusive.Such a contract is simply ontologically impossible.To conclude our comments on this second possibility, wemust add that the contradiction is so obvious that bankers, intheir contracts, general conditions, and forms, are alwaysreluctant to specify the precise nature of the agreement and ofthe safekeeping obligation they acquire, and whether or notthey have been authorized by the depositor to investdeposited funds for their own profit. Everything is expressedin a vague and confusing manner, and therefore it would notbe rash to claim that depositors’ complete and perfect consentis missing, because the ambiguity, complexity and obscurityof the contract undoubtedly deceive customers, who in goodfaith believe they are entering into a true deposit contract. Ifvalores de Barcelona, pp. 370–71. It is true that Felipe Clemente de Diegomakes this comment in response to the argument of bankers whowished to defend the validity of the contract of irregular deposit of securities,with a fractional-reserve ratio, in which the depositary would bepermitted to freely use the deposited goods, like in the monetary irregular-depositcontract. Yet as we have already mentioned, the argumentsfor and against either institution are identical, as both are contracts ofthe irregular deposit of fungible goods, whose legal nature, cause, purposeand circumstances are the same. Pasquale Coppa-Zuccari alsohighlights the contradictory nature of the monetary bank-deposit contractwhich, in the form in which it has been “legalized” by governments,is neither a deposit nor a loan, “La natura giuridica del depositobancario,” Archivio giuridico “Filippo Serafini,” Modena n.s. 9 (1902):441–72.