Jacob Fugger, a Renaissance-era banker and industrialist from the German city of Augsburg, was “the most influential businessman of all time,” Steinmetz declares early in his new book, which does a decent job of backing the claim. Fugger (rhymes with “cougar”) parlayed his family’s textile business into an astonishing banking and mining fortune, which at the time of his death in 1525 equaled nearly 2 percent of Europe’s total economy. Of course, wealth alone does not equal influence. Fugger also served as Europe’s prime financier, bankrolling emperors, kings and popes; he took sides, decisively, in the major military and political confrontations of the day; he served as a lightning rod for the Protestant Reformation. And in contrast to so many wealthy people who insist it’s not about the money, for Fugger it very much was.
“His objective was neither comfort nor happiness,” Steinmetz explains. “It was to stack up money until the end.”
Steinmetz, a securities analyst and former journalist, tells Fugger’s tale in straightforward, somewhat flat prose that can make it hard to distinguish things that were important from things that merely happened. The pleasure of this book is not in the reading but in the learning. Fortunately, with Fugger, there is plenty to learn. He built his riches on the strength of gambles, flattery, bribes, access to information and an ability to sidestep — or reinvent — the rules of finance. He then safeguarded his fortune with a mix of prudence and ruthlessness from which no one, not even family and close friends, remained safe. His story reflects his era, certainly, but also shows how that era was remade.
To be rich at this time, one normally had to come from many generations of money, Steinmetz explains, but Fugger found shortcuts. Some early and audacious lending transformed him into the top banker to Emperor Maximilian I of the Holy Roman Empire and later to his grandson Charles V of Spain. Over time, this relationship with the Habsburgs became so lopsided that Fugger, born a commoner, was able to cajole the monarchs into granting extraordinary favors. To protect his mining assets in Hungary, for instance, he nudged Maximilian into a marriage alliance, “no matter that it meant redrawing the map of Europe by creating the giant political tinderbox known as the Austro-Hungarian Empire.”
Ever seeking new advantages, Fugger created the world’s first news service, “a network of couriers who raced to Augsburg with market information, political updates, and the latest gossip.” He thus learned about important deaths and key military outcomes before clients and competitors. And at a time when banks were often localized, Fugger established a far-flung network, allowing him to transfer money more efficiently. This ability “endeared him to the Vatican,” because he could move church funds around by debiting an account in one branch and crediting one in another, with coins never changing hands.
Fugger’s “greatest talent was an ability to borrow the money he needed to invest,” Steinmetz writes. “He convinced cardinals, bishops, dukes, and counts to loan him oceans of money. . . . Financial leverage catapulted him to the top.” But in order to charge and offer interest payments, he had to battle the church’s long-standing ban on usury. Here Fugger’s links to Rome, buttressed through bribes for high church officials, became useful. Through artful lobbying and the staging of a high-profile public debate, he helped persuade Pope Leo X to sign a papal bull acknowledging the legitimacy of interest, which became permissible as long as the loan involved labor, cost or risk on behalf of the lender. “And what loan didn’t involve one of the three?” Steinmetz asks. After this victory, “debt financing accelerated,” he writes. “The modern economy was underway.”
It was a system that soon prompted controversies and suffered attacks, whether peasant revolts or even the Protestant Reformation. Clerical offices were for sale then, and Fugger financed the purchase of an influential job — the archbishop of Mainz, one of the seven electors of the Holy Roman Emperor. In order to repay the loan, the new bishop and the pontiff concocted a scheme: the sale of sin-forgiving indulgences to the faithful, ostensibly to refurbish St. Peter’s Basilica but in large part to repay Fugger. A 33-year-old priest and theologian by the name of Martin Luther was outraged at the church cashing in on popular fears of damnation and posted his 95 Theses on the door of All Saints’ Church in Wittenberg. You know what happened next.
Fugger fought back against intellectual and armed uprisings with bribes, mercenaries and — another innovation — lawyers versed in canon law. In an age when personal loyalties and connections meant everything, he also deployed a free-agent mentality that served his business well. When the rulers of Spain and France faced off over who would become Holy Roman Emperor, Fugger played both parties off each other. Even though he was the longtime banker to the family of Spain’s Charles V, he aggressively marketed himself to the French contender. Both kings offered riches to the electors, so both needed Fugger’s financing. When Charles thought he could seek alternative lenders, his aunt Margaret told him to quit fooling around and go with Fugger: “He accomplishes so many favors and services for us that you are duty-bound to acknowledge him.” Finally, the electors themselves told Charles that they would accept promises from no one but Fugger. Charles caved, and Fugger delivered the crown.
Steinmetz worries that his protagonist is too easily taken for granted. All the ways in which Fugger revolutionized capitalism — including his early adoption of double-entry bookkeeping and consolidated balance sheets, at a time when most people recorded transactions on scraps of paper — are now so commonplace as to appear unremarkable.
Yet sometimes his similarities to today’s wealthy are instructive as well. Fugger launched a public-housing facility for the working class, dubbed Fuggerei, that still endures, and his motives echo those of today’s rich foundations and corporate nonprofit arms. “With enemies gunning for him, he sought to project a generous image,” Steinmetz writes. “He wanted people to think, as they walked past the gates and looked into the neatly maintained houses and gardens and saw children playing by the fountain, that he had a heart.” And he bought the adjoining properties around his home, tore them down and constructed an ornate house, as large as Augsburg’s cathedral. Even the Renaissance had McMansions.
Of course, Steinmetz is most interested in how Fugger was unique: “He was a radical. He refused to believe that noble birth made someone better than anyone else. For him, intelligence, talent, and effort made the man.” It may have made the financier more than the man. Fugger’s personal relationships were shallow, subordinate to the demands of the bottom line. He betrayed a longtime, loyal staffer, quickly calling in his family’s debts after the man died. He constantly rewrote his own family’s business agreements, wresting power from his relatives, trusting no one. He died with only a nurse and priest present, having alienated too many.
Many of the world’s wealthiest individuals today offer civic-minded, public-spirited reasons for their pursuit of new riches. It’s about making the world a better place, helping others, creating jobs. Fugger was more narrow-minded, perhaps more honest. Befitting the self-made, self-centered man, he wrote his own epitaph. He listed many personal qualities — “purity of life” and “greatness of soul” — but first was his status as “second to none in the acquisition of extraordinary wealth.”
Yes, Fugger worried about his soul. But he worried more about his wallet.
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