Jacob Fugger

The Rich Merchant and Banker of Augsburg, 1459-1525

Jacob Strieder, Mildred L. Hartsough, N. S. B. Gras

• Publisher: Barakaldo Books
• Year: 2020
• eBook ISBN: 9781839745041
• Topic: History
• Subtopic: 19th Century History
• Index: History

A fascinating biography of Jacob Fugger of the Lily (1459-1525), a major German merchant, mining entrepreneur and banker. He was a descendant of the Fugger merchant family located in the Free Imperial City of Augsburg, where he was born and later also elevated through marriage to Grand Burgher of Augsburg. Within a few decades he expanded the family firm to a business operating in all of Europe. He began his education at the age of 14 in Venice, which also remained his main residence until 1487. At the same time he was a cleric and held several prebendaries, even though he never lived in a monastery. Fugger is held to be one of the wealthiest individuals in modern history, alongside the early 20th century industrialists John D. Rockefeller and Andrew Carnegie."The biography of Fugger by Professor Strieder is a fine example of the work done by economic historians in the field that is becoming specialized as business history."—N. S. B. Gras

CHAPTER I—THE ITALIAN INHERITANCE

THE development of the entrepreneurship of Jacob Fugger bears readily recognizable traces of that early European capitalism which arose in Renaissance Italy in contrast to the co-operative ideals of the medieval gilds. This is the starting point for the student who wishes to understand fully the forces that shaped the Augsburg merchant. By the “Italian Inheritance” is implied primarily a frame of mind, that spirit of rationalistic individualism which the Italians had developed earliest and most completely of all the European commercial nations and which also guided Jacob Fugger. It implies also (and this for Fugger as a European business leader was of considerable significance) the whole sum of practical models in business furnished by the Italian merchants ever since the time of the Crusades in the fields of exchange, wholesale trade, industry, colonial administration, and high finance. To what extent Jacob Fugger was in this respect indebted to the Italians can perhaps be most readily seen in the field of finance.

The earliest European bankers who achieved international financial importance were those of medieval Italy. This does not refer to the little, or even the more important, money-changers from Asti, Chieri, and similar Italian cities and towns, who, under the collective name of Lombards or Cahorsines, established their ‘change counters in all the European trading cities of the Middle Ages, who on occasion did a pawn-broker’s business like the Jews’, and who sometimes even made loans to the spiritual and temporal princes. The reference is rather to those few large-scale Italian merchants and trading companies which from their head offices at home and from their branches placed themselves, as international financiers, at the service of the higher European aristocracy in its growing financial needs.

Numerous factors accounted for the early development of such a class of financiers in medieval Italy. One of the most important was the great expansion of Italian economic life, especially from the time of the Crusades. Out of this expansion, based especially on the trade with the Levant, arose two most important prerequisites for the development of Italian haute finance: sufficiently great accumulations of wealth and entrepreneurs competent to conduct international financial transactions.

Among the objective prerequisites, the environmental background which made possible the development of financiers in medieval Italy, the papal financial system must be given first place. The Roman Catholic Church had in the course of the Middle Ages become an international organization with a gigantic administrative system. The Papal See had partly involuntarily and partly on its own initiative risen to problems of important political policy, of the waging of war, and the like. For such a development, a carefully built-up system of papal taxation including all of Christendom early became indispensable. It was founded chiefly under Innocent III, about the beginning of the thirteenth century, on the basis of tithes, Crusade contributions, taxes imposed by the papal bureaucracy, and perquisites of all kinds, levied on all Christendom, but particularly on the clergy.

The Italian merchants, with their trading counters in all the great European centers, furnished ready and satisfactory instruments for the collection and transfer of all these dues. It was inevitable that these merchants should also supply loans to the pope in times of financial stress. Even more often, they performed this function for the upper ranks of clergy, who were not always in a position to pay the various levies demanded by Rome except by means of advances from the bankers. On the other hand, the financiers who were connected with the papacy sometimes accepted deposits from the treasury of the Papal See, when rich yields or an economical and able administration had given rise to a surplus.

Though this connection with the papacy was the chief basis for the early development of a class of financiers in medieval Italy, other factors were also favorable. An especially fruitful and certain field of activity was opened to the financiers when the royal lords began to develop their prerogative. Wherever the overlord had important tariff immunities or other trading privileges to grant, wherever he could grant exemption from export duties on articles in which trade on a large scale was possible, wherever the Crown could distribute more or less monopolistic patents for mining or for the salt industry, or for trade in the products of these enterprises to those who had won its favor, there the ground was prepared for the appearance and activity of the Italian financiers. On their part, loans on a large scale were made in return for economic privileges of the abovementioned or similar character. The practice became most common in Italy itself, which during the course of the Middle Ages became the richest and most active commercial nation. Thus in the Kingdoms of Naples and Sicily it was quite customary, even in the thirteenth century, to finance and repay the large loans of the Florentine and other bankers of central and northern Italy by granting them very profitable exemptions from export duties on grain shipped from Apulia, Calabria, etc., to Rome, Florence, and other points.

The relationship between Italian financiers and the English Crown developed on a similar basis of credit. The exemption from export duties on the fine English wool, which was the chief article of export in the Island and one of the most important articles in medieval international trade, constituted the most popular and satisfactory security by means of which the English kings for centuries obtained large loans from the powerful Italian bankers. The granting of similar privileges in the English tin-mining industry played a comparatively slight rôle. In France, the farming of coinage and taxation formed the chief bases on which the absolute monarchy likewise for centuries built up its great credits with Italian financiers. At times, as early as Philip the Fair, the Italians carried on almost the entire financial administration of the country as the mortgagees of important national revenues.

Most interesting of all, perhaps, are the changes in the rôles played by the different Italian cities in which the financial development took place that was to furnish a model for Jacob Fugger in the fifteenth century. In the twelfth and early thirteenth centuries, it was the inhabitants of various Lombard, Tuscan, and other Italian cities who shared in the carrying of the most important international loans and thus began to lay the foundations of modern banking. From the late thirteenth and early fourteenth centuries, however, the Florentine bankers took over the leadership, in the Kingdom of Naples, in France, with the Papal See, and even in England. Under Edward in, the great Florentine trading companies of the Bardi and Peruzzi (who also played a predominant rôle as royal financiers in the Kingdom of Naples) for a time controlled almost the whole financial administration of England. The finest art of the financier—that of knowing when to give credit and when to refuse it—they seem, however, in the end to have lost. When they failed in 1345 in one of the most sensational bankruptcies in economic history, Edward in owed them enormous sums.

The importance of the Florentine financial world reached its culmination in the fifteenth century under the Medici, that family which may rightly be described by the title, often somewhat lightly accorded by history, of princely merchants. For several generations, from the first to the last quarter of the fifteenth century, the Medici had a determining influence in the finances of England, France, Naples (here especially with the other Florentine family of Strozzi), and in an even greater degree in the finances of the papacy. Only after the death of Lorenzo de’ Medici did other Tuscan bankers supplant this family in its relations with the Papal See. Among these were especially the Florentine Bindo Altoviti (whose immortality was assured even more securely by his self-sacrificing friendship with Raphael, Michelangelo, and Benvenuto Cellini than by his great mercantile achievements), and the Sienese Agostino Chigi, who as the Mæcenas of Italian Renaissance art has associated his name forever with one of the most brilliant epochs in the history of art.

It is shortly after the Medici disappeared from the European arena of financial activity that we first meet the Fuggers in relationships with the Papal See. From the end of the fifteenth century, these relations became much closer, reaching their height under Jacob Fugger in the first decades of the sixteenth century. For more than two decades, the great Augsburg merchant prince was the chief financial aid of the See in northern and eastern Europe.

In a later section of this book, where the various lines of Jacob Fugger’s mercantile activity are traced, his financial operations will be discussed in more detail, especially those with the Papal See. Here it is sufficient to call attention to this branch of his activity by way of indicating the importance for the Augsburger of the Italian influence. It was indeed no merely superficial inheritance from the great Italian financiers which passed to Jacob Fugger when he took over the administration of the papal finances in eastern and northern Europe. The inner structure, the whole technique of the financial system, lay open to him as it had been brought to perfection by the Italians from the thirteenth century onward.

This borrowing from the Italian model was equally feasible with regard to the financial transactions of Jacob Fugger with the greatest temporal princes of his time. He was able to make use of their experiences and their business practices. Indeed, it was in part, as for example in the case of the great financial transactions with the Habsburgs, the same pledges and securities which had formerly served the Italians that Jacob Fugger now utilized. In the Kingdom of the two Sicilies only the dynasties had changed. The Spanish Habsburgs had taken the place of the Anjous; but the same rich revenues from the fruitful land remained, as well as the possibility of using them as security for loans. They were exploited by the new Spanish masters just as by the former Anjous; and the Fuggers came to the aid of the new masters just as the Italian merchants had to the old ones. The greater part of the loans which the German King, Ferdinand I, had to contract in the 1620’s, in order to maintain the Habsburg position in eastern Europe, could no longer be secured by the resources of the Austrian inheritance; and Charles V was forced to secure the loans of his royal brother from Jacob Fugger by the pledge of his revenues from the South Italian possessions. Most of the loans of Ferdinand I which appear in the Fugger inventory of 1527 bear the inscription “referred to Naples”—auf Neapel verwiesen.

Conditions were not very different in Spain. There the incomes of the Grand Masters of the three religious knightly orders of Santiago, Alcántara, and Calatrava (to the latter, for instance, belonged the famous Almada quicksilver mines), represented an important source of revenue for the Spanish Crown after Ferdinand of Aragon had attached the Grand Mastership to the Crown. From the fifteenth century, it was customary to pledge with the merchants the incomes of these orders, as a whole or divided into fractions, as security for considerable advances of money; in the sixteenth century, this practice became much more common. Spanish capitalists competed in the business at first with the best-known Italian financiers of the late medieval and early modern period. Later Jacob Fugger, as in so many other branches of European finance, took the leadership from the Italians.

Italian influence on Jacob Fugger is marked not only in the fields of finance, but in various others of his many-sided interests. Outstanding examples to be cited are those of the wholesale spice trade and the trade in fine Italian silks. But perhaps the strongest of all the Italian influences was the intellectual, which permeated all his business activity. If the Augsburg mercantile genius finally outgrew his early model and became the chief exponent of economic rationalism and business capacity of his time, this was chiefly because of his own great initiative in developing the capitalistic spirit, his chief inheritance from Italy, to a degree hitherto unattained.

The story of the development of the capitalistic spirit in Europe is the story of the rise of the powerful individual, the outstanding personality in the field of material culture and of economic life. It was in Italy that the spirit of individualism developed out of the movement which we call the Renaissance; economic individualism also appeared first in Italy as one of the phenomena which characterized the modern world. In the realm of economic life as well as in religion, politics, and art, single outstanding individuals appeared in Italy, beginning about the eleventh century. They were men who wished to rise above their business contemporaries and who knew how to accomplish their aims, men who were not satisfied with the conventional methods of business procedure, which to be sure produced an income in keeping with their social position, but not much more. These were individuals who boldly conceived new business ideas, who understood how to turn to their own advantage the new opportunities offered by the increasing scale of operations.

What were the motives which led these men on to so feverish an activity? Was it the wish to rise higher in the social scale; was it ambition, lust for gold, desire for fame, the wish to further family interests? All these and other motives undoubtedly played a part, but the primary motive, especially with the most creative among them, was something else. In the background, often indeed in the subconscious, was the drive of strong creative individualism, the unceasing desire for activity which spurred them on in whatever field—which one was indeed more or less incidental—they found themselves. This need for the employment of his energies which constantly drove the individual on cannot be adequately explained, nor can it be resolved into its final elements. It is more than mere joy in achievement and power, more than habit, though all these are included. In the final analysis, it must be accepted as something inherent in all creative natures. It is expressed in classical form in the oft-quoted words of Jacob Fugger, its most important early German exponent. When a relative advised him to abandon an especially speculative part of his business, in order to enjoy in peace during the last years of his life the wealth that had been acquired with so much effort, Fugger replied that “he had no intention of so doing, that he wished to make a profit as long as he could.” The reason is not told us, could not have been told us even by Jacob Fugger. The acquisition of wealth and of more wealth—not to be sure for wealth’s sake alone—is implied in his remark to be an end in itself.

The external circumstances, the economic setting, had been favorable to the development and spread of the capitalistic spirit in Italy since the eleventh century. Better times had followed upon the difficult period of the ninth and tenth centuries, with their Saracen, Norman, and Magyar invasions, as well as other disturbances of economic life. The trade with Byzantium and the Levant, never entirely abandoned, could be taken up again on a larger scale. Then the Crusades brought the Italian merchants directly into the Greek-Arabian world, which they had formerly known only through the Byzantine market, and the mediation of the Byzantine traders. As a result of these events, numerous and inviting opportunities were open to the bolder and more enterprising spirits among the Italian merchants. The advantage was in fact a double one; not only were more profitable sources of supply opened, but buyers of Oriental goods appeared in Italy in increasing numbers from the eleventh century onward. A developing culture in Flanders, Germany, France, and England had widened the market, and the growing demand was naturally satisfied largely through the Italian cities.

Partly as cause and partly as effect of the increasing opportunities for economic enterprise, the spirit of economic individualism had sprung up in Italy since the twelfth century, especially among the more gifted of the merchants in the trading towns. Their property was growing; their credit and the deposits by relatives and by outsiders increased their financial strength. Everywhere there was confidence in these men of initiative; everywhere their credit was good. In addition to the class of powerful merchants which grew up, there was a group of bankers who were soon of international importance. A large part of the industry of the Orient was transplanted to Italy during the course of the Middle Ages. The Italian city states developed a colonial system in the Mediterranean, a system which was a precursor and a prototype for Spain and Portugal in the fifteenth and sixteenth centuries, and even for Holland in the seventeenth.

In the fields of government, of public administration, of diplomacy, and the conduct of war, the spirit of the Italian Renaissance gave rise to carefully reasoned-out systems; in the field of business enterprise, it resulted in economic rationalism. The former process is classically described in Jacob Burckhardt’s Kultur der Renaissance in Italien; the simultaneous appearance of the latter he did not note, or at any rate did not comment upon. Yet the parallelism of the two developments, which sprang from one root, is patent. Renaissance rationalism shows itself in the farseeing, systematically thought-out trading practices, in the credit mechanism, in the organization of trading companies, and most of all, perhaps, in the introduction of double-entry bookkeeping. Parallel to the greatest creation of the Renaissance spirit—the state as a rational evolution—stands the economic system similarly conceived, the modern business undertaking, the capitalistic enterprise built up by individuals left to their own resources.

From Italy, capitalism spread throughout western Europe. This was partly the result of direct imitation, the merchants of these other countries apprenticing themselves, often in the literal sense of the word, to their Italian masters. In part, it was through the gradual development, throughout western Europe, of individualism which spread as a matter of course to the field of economic enterprise and, as the external conditions were favorable, found embodiment in isolated outstanding personalities.

Jacob Fugger’s contact with the field of Italian enterprise came in his youth, when he laid the foundations, during his Venetian apprenticeship, of his later mercantile mastership. In Venice, and later in other Italian cities, the budding merchant saw daily with his own eyes how rapidly and surely the unwearying activities of powerful business men lifted them into the leading ranks of citizenship in the Italian city states, politically as well as socially. The Medici of Florence had begun as merchants the course of family development which was to culminate in princely rank. The history of other great mercantile families was analogous, if not quite so favored by fortune. Such examples must have fired the minds and the imaginations of the young sons of German merchants, while they remained in Italy as apprentices and later as representatives of their fathers’ firms. This may well have given them those high aims in life which urged them on to the full exercise of their business acumen.

It is no accident that Jacob Fugger, long years after his return from Italy (as for example in the partnership agreement of the year 1494) still called himself Jacomo Fugger, that his brothers and business associates still called him by the Italian form of his Christian name. The implicit inference is that he himself and his contemporaries thought of him as the bearer of the Italian inheritance.

To this example of the leading Italian business geniuses was added for Jacob Fugger the example of their intelligent management of business affairs, for which the Italians had perhaps a stronger psychological predilection than the Germans. Jacob Fugger had acquired in Italy precise knowledge of the most advanced mercantile practice, especially in bookkeeping, which enabled him later, on his frequent trips of examination, to test the accounts and balances of the various Fugger branches for himself, and—even more important—to have always at his command a detailed statement of the condition of the whole network of Fugger undertakings.

In this economic rationalism, expressed in an advanced system of keeping accounts, Jacob Fugger showed a strong touch of the modern; indeed, he ultimately reached a height in that essential of modern business...

Table of contents

• Title page
• TABLE OF CONTENTS
• DEDICATION
• EDITOR’S INTRODUCTION
• AUTHOR’S INTRODUCTION
• ILLUSTRATIONS
• CHAPTER I-THE ITALIAN INHERITANCE
• CHAPTER II-THE INFLUENCE OF AUGSBURG
• CHAPTER III-THE FAMILY
• CHAPTER IV-YOUTH AND APPRENTICESHIP; THE RISE TO LEADERSHIP
• CHAPTER V-THE BUILDING UP OF THE FUGGER TRADING COMPANY BY JACOB FUGGER. HIS FAMILY POLICY IN THE INTEREST OF THE ENTERPRISE
• CHAPTER VI-THE RISE OF JACOB TO COMPLETE DOMINATION IN THE FUGGER ENTERPRISE. HIS CARE FOR THE FUTURE
• CHAPTER VII-THE BUSINESS SUCCESS OF THE FUGGER ENTERPRISE UNDER JACOB’S LEADERSHIP. PARTIAL INVESTMENT OF THE EARNINGS IN LANDED PROPERTY
• CHAPTER VIII-THE INTERNATIONAL MERCHANT
• CHAPTER IX-JACOB FUGGER AS CAPTAIN OF INDUSTRY IN THE TYROL AND HUNGARY
• CHAPTER X-THE BANKER, THE EMPEROR, AND THE POPES
• CHAPTER XI-JACOB FUGGER AS HIS CONTEMPORARIES SAW HIM. HIS CHARITABLE ENDOWMENTS
• CHAPTER XII-JACOB FUGGER’S MERCANTILE CHARACTER. THE SECRET OF HIS SUCCESS. HIS DEATH
• LETTERS AND ARTICLES OF ASSOCIATION-1512-1526
• GENEALOGICAL TABLE OF THE OLDEST AUGSBURG FUGGERS
• BIBLIOGRAPHY