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

Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 43deposits entrusted to his bank by taking advantage of hisdepositor’s difficulties, for which he did not hesitate todeceive, forge, and steal contracts, bribe, etc. In any case, thisspeech is so important to our topic that it is worth our effort toconsider some of its passages in detail.Isocrates begins his arguments by pointing out how hazardousit is to sue a banker, becausedeals with bankers are made without witnesses and theinjured parties must put themselves in jeopardy before suchpeople, who have many friends, handle large amounts of moneyand appear trustworthy due to their profession. 6It is interesting to consider the use bankers have alwaysmade of all of their social influence and power (which is enormous,given the number and status of figures receiving loansfrom them or owing them favors) to defend their privilegesand continue their fraudulent activity. 76 Isocrates, “Sobre un asunto bancario,” in Discursos I, p. 112.7 More than 2200 years after Isocrates, the Pennsylvanian senator CondyRaguet also recognized the great power of bankers and their use of it tointimidate their enemies and to in any way possible discourage depositorsfrom withdrawing their deposits and hinder these withdrawals,with the vain hope, among others, of avoiding crises. Condy Raguetconcluded that the pressure was almost unbearable and thatan independent man, who was neither a stockholder or adebtor who would have ventured to compel the banks to dojustice, would have been persecuted as an enemy of society.See the letter from Raguet to Ricardo dated April 18, 1821, published inDavid Ricardo, Minor Papers on the Currency Question 1805–1823, JacobHollander, ed. (Baltimore: The Johns Hopkins University Press, 1932),pp. 199–201. This same idea had already been expressed almost threecenturies earlier by Saravia de la Calle, who, indicating obstacles createdby bankers to keep depositors from withdrawing their money,obstacles few dared to protest, mentioned theother thousands of humiliations you inflict upon those whogo to withdraw their money from you; you detain them andmake them waste money waiting and threaten to pay them inweak currency. In this way you coerce them to give you allyou want. You have found this way to steal, because when