Stakes&Fangs28

16th Century AD, part 1. (The Fuggers)

21st Century AD, part 1. (The War of the Worlds)

2nd Century AD, part 1. (Hadrian and Marcus Aurelius)

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The Guilds

The guilds first emerged in Germany towards the middle of the 15th century, e.g., in Frankfurt, “that of shoemakers and the journeymen tailors in 1453; that of canopy-makers in 1454, of the weaver helpers in 1460, of the cross-bow makers in 1471, of the barbers and the gardeners in 1482, of the stone masons in 1518.”

The guild was autonomous, i.e., it controlled itself, and it was free as far as internal affairs were concerned. The guild insured collaboration and solidarity rather than the instrumentalization of strife, which characterized Anglo-capitalism.

Members of a guild “were supposed to share with one another “all brotherly love and loyalty,” and as a true and proper community to demonstrate brotherly love and loyalty according to what each one has for a lifetime,” “to live peacefully and harmoniously with one another,” and “to keep oneself honorable and friendly in keeping with Christian order and brotherly love,” and all of this is not only in their personal relationships, but also in the high offices and the cities and wherever else it is called for.”

Paper Money

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Serfdom

Money did not play a significant role in the fortified estates of the feudal economy. The serf owed his lord a certain amount of work, and that work was never transformed into a specific amount of money.

The serfs who were fortunate enough to work in Church estates were assigned a plot of land on which they had to work three days a week for their lord. This meant that they could develop that land for the other three days in their own interests.

Being bound to the land was the essence of serfdom, but being bound to work it for the lord for only three days out of six conferred on the serf a right to use that was tantamount to ownership. This arrangement became the basis of the Germanic-Christian concept of property and property ownership.

Ownership in the Germanic-Christian sense was not absolute; it was based on use. The peasant had a right to 50 percent of what he could produce, but he did not have the right to turn the land into an object of speculation nor could he mortgage it to the detriment of either his lord or his descendants.”

Guild members had to be born legitimately because “the sanctity of marriage is one of the strongest pillars of the social structure.” The guild also operated as a credit association and as a loan fund, for its entire movable and immovable wealth belonged to the corporate body, and it served for the use and purpose of the individuals. The guild regulated competition and insured quality control. The guild prescribed not only its way of working, but also the raw material that was to be used and how it was to be handled, the kind and form and size of the product.

“Any buyer who thought that he was cheated could turn to the head of the guild…in Danzig…the goldsmiths had to come up with four pounds of wax as punishment for poor work.”

In Berlin, incompetent wool weavers and tailors lost the right to carry on their craft; furthermore, their wares were burned. Also, precise prices were set for the merchandise of the crafts, and the sale was regulated with the area, kind and time of the sale determined. ‘Hawking’ and any improper solicitation of the customers of others was forbidden. The individual master could have only one place for selling.

Competition in the ruinous modern sense of the term was prohibited because the guilds controlled the economic terms of engagement. This did not mean the imposition of socialist equality, but it precluded the “race to the bottom” that brought about ruinous price-cutting.

The member of the guild was a free man who could travel, and “every guild lodge had to take him in” because “travel constituted a main component of the journeyman’s life.” He could also bear arms. The journeyman “carries a dagger and weapons like any master.”

As a free man he could negotiate both wages and prices. The guild was responsible for acquiring raw materials setting wages and granting credit. As a result wages were higher in the Middle Ages than after the Reformation.

“In Klosterneuburg (Lower Austria),” for example, “the daily wage of the mason and carpenter journeyman was set at 20 denar for the summer and 16 for the winter, at a time when a pound of beef usually cost 2 denar.” For six days wages, a journeyman mason or carpenter in Miessen could buy himself 3 sheep and one pair of shoes. In pre-Reformation England, a worker earned enough in 3 days so that he and his family could live comfortably for one week.”

In addition, the guild provided social welfare benefits: “With the money in the treasury, not only were the poor and sick inside and outside the guild supported, but advances were also made to the poorer guild members—without payment of interest within the then closed economic order, in accordance with canonical requirements.” As a result, the isolation which is the main characteristic of modern life was unknown in the Middle Ages.

The guild avoided the pitfalls of both socialism and cut-throat capitalism and “brought about a happy balance among conflicting interests,” as was certainly only possible so long as the community stood above egotism, and the regard for honor was above the quest for profit.

The guild was the crowning achievement of the Germanic-Christian economic system. It introduced “free labor” into history. The guild arose from the development of social life in the cities; and the distinction of German handicraft is “the great fact of world history, with its infinite plenitude of blessing.””

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>>>>>>>16th Century AD, part 1. (The Guilds and The Reformation)

“Usury and the just wage are the alternatives which, once chosen, will determine whether an economy is going to be a success or failure.”

“Virtually every instance of capital accumulation in the modern capitalist era, beginning with the city-states of northern Italy, was theft of labor, carried out through usury and a combination of low wages and debasement of the silver currency or theft of property, as in the case of the Reformation. It’s difficult to find an instance of capital accumulation that was put to social use, unless of course, we turn to the system which preceded capitalism, which is to say the economic system of the Holy Roman Empire, the Christian successor to the Roman Empire, and the predecessor to the system which rules us with an iron rod today.

“The crucial test of any economy is, therefore, whether it values labor over usury or usury over labor.”

The “Reformation” robbed the poor of their patrimony.” The looting of the monasteries changed England from “this land of roast beef…all of a sudden, into a land of dry bread and oatmeal porridge.” This poverty came about because the people could no longer earn revenues from the land which the monks had preserved and developed for their use.

William Cobbett is one of the few writers who understood that the monastic system in England was capital accumulation put to social use. The monasteries, he writes, “Flourished in England for 900 years; they were beloved by the people; they were destroyed by violence, by the plunderer’s grasp and the murderer’s knife.”

Capitalism, which was begotten in the looting of Church property during the Reformation, begat in turn ‘Liberalism’ as the philosophical justification of theft. Liberalism than gave birth to ‘Pauperism’, and class conflict, etc.

Unlike the capitalist state which invariably leads to conflict by dividing society into creditor and debtor, and invariably favoring the interests of the former to the detriment of the latter, the feudal system upheld the organic character of society.

Property ownership as a result “operated in…[a] unifying manner” because it protected the land from the “egotistical, unscrupulous exploitation in the interest of whoever happened to own it at the time; and it effectively preserved its destiny as the common source of sustenance of the people.””

Although it would take centuries before the principle was finally articulated, the Germanic-Christian economic system was based on “the unassailable principle that the temporal well-being of a nation lies not so much in the absolute level of the ‘national wealth,’ as in “the broadest possible distribution of its wealth to the whole nation.” It thereby eliminated the chronic state of capitalism, in which “enormous sums accumulate in the hands of a few,” while “hundreds of thousands of citizens elsewhere are left to wallow in the depths of mass poverty.””

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16th Century AD, part 2. (Jakob Fugger, and Mines and Banking, in Germany)

The Fuggers had found the right man for the job when it came to mining technology. There is no record of how the two titans of the mining industry met.

Thurzo brought his technical know-how into the partnership, while the Fuggers took over the financing. Thurzo was an ingenious inventor who understood the mining industry from top to bottom, and Jakob Fugger possessed the same magnitude of genius in the complementary area of capital and finance, and this marriage of effort took place when silver was more valuable than it had been and more valuable than it would be for centuries to come.

Thurzo, according to Streider, “Understood how…to restore to use mines flooded by water;” he also “understood how to make use of the art of separation of metals” via the Saiger process, which used lead to effect the separation of copper and silver.

The Fuggers agreed to a joint venture with the Thurzos in operating the mines for the next 16 years as well as building a smelter.

In addition to their financial skills, the Fuggers brought their inevitable political connections to the table any time a deal was in the offing.

The Thurzos allowed the Fuggers access to Hungarian soil when foreigners were barred from commerce there.

The Hapsburgs allowed the metal extracted from the mines in Neusohl access to the markets their family controlled throughout Europe.

When difficulties arose, the Hapsburgs had the political clout to make them go away—in exchange, of course, for more loans. Jakob Fugger was content to operate behind the scenes, as long as the operations he financed went smoothly.”

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Jakob and Thurzo, continued?

When Thurzo demanded a greater share in the profits, however, Fugger had no compunction about forcing him out, and because he controlled the financing of the operation, Fugger had the power to enforce his views. Thurzo was inexorably, if politely, pushed aside.

In 1508 AD a certain Hieronymous Tischler, who was in debt to the Thurzo family, attempted to foment a rebellion, but he was sentenced to death as a revolutionary. The Fuggers then used their new-found wealth to drive their competitors to the wall.

Thanks to the expansion of the Slovakian mining operations under the Swabian direction and the outstanding profits which accrued, Fugger could now contemplate the gradual centralization of the copper market. Success in the Tyrol alone was insufficient.

On March 12th, 1498 AD, Jakob Fugger signed a contract which brought the first copper cartel in German history into existence.

He then lost no time putting his new-found financial clout to work. By the fall of 1499, Jakob was able to destroy the Augsburg copper syndicate by using Thurzo’s name to sell Hungarian copper at dumping prices. Once the competition had been eliminated, the Fuggers had a monopoly and now could raise prices with impunity to “recoup the losses they had voluntarily incurred on tactical grounds.”

According to von Poelnitz, “The ruthlessness of these tactics was unusual for those times.” The resentment of his competitors manifested themselves as “anti-Fugger” politics, which Georg Grossembrot prosecuted at the court of Innsbruck.

The destruction of the Augsburg syndicate in 1498 was a low point in German business ethics, marking the beginning of alien thought in conventional trade practice. Jakob’s plan to lower copper prices, combined with a corresponding increase in production and inventory, in order to get better returns, remained incomprehensible to non-merchants, and seemed dubious to them.

The more production improved in the Neusohl mines, the more the Fuggers took over leadership of the Hungarian trade by predatory financial dealings. They understood that the value of the natural resources came not so much in mining but rather in smelting and marketing.

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>>>>>>16th Century AD, part 2. cont. or part 3. (Jakob)

The behavior of the Fugger family (and of Jakob in particular) is characteristic of the paradoxical nature of the age. The Fuggers were the quintessential transitional link between the piety of the high Middle Ages and the rapacity of the capitalist spirit which was the driving force of the modern era. They were at once pious Catholics, who were lavish in their dealings with workers and the poor, but ruthless in their treatment of fellow merchants, not hesitating to sell at dumping prices to drive the competition to the wall.

The Fuggers represented an unlikely combination of rapacious Italian usury at its worst, combined with a Germanic Catholic piety according to which they treated their employees fairly, something which can be seen as the legacy of the Germanic-Christian tradition and the high value it put on human labor.

Each employee of the Fugger firm received a lavish salary plus expenses. As a result, these employees signed contracts that ran years into the future, even though they knew that the utmost was expected of them.

Jakob was on the road for large portions of the year in order to fine-tune his understanding of every aspect of his operation both in terms of materials and men. In one instance, this meant living for weeks in the forests of Thuringia, where he was “shut off like a charcoal burner from all civilization,” to supervise the building of smelter.

While there he took time from the technical aspects of the metal industry to have the local church renovated. He also concerned himself with the needs of his workers in the Slovakian and middle German mining operations. In Neusohl, he paid for the renovation of a hospital and encouraged others to follow his example. While at Hochenkirchen he petitioned Pope Alexander VI for a mitigation of the fasting rules. It was impossible, in his opinion, for men working in the mines or the smelters to follow the Church’s rules on fasting. He was able to work out a deal with the pope which relaxed the specific rules. The time had not yet arrived for social measures or welfare on anything on a local scale, but he did his best to ameliorate the working conditions under his control.

The whole enterprise was surrounded by a sense of solidarity between the lord and his followers and was underpinned by a serious consciousness of the religious responsibility which the employer bore. This conjunction of differing attitudes towards business practicality on the one hand and religious devotion on the other was typical of Jakob.

Nonetheless, it was not clear how these contradictory parts, which we have designated “Italian” and “German,” fit together.

The Fuggers may have succeeded the Medici as Christendom’s premier banking family, but they never lost sight of the sober facts in the literary intoxication which flowed from the beauty of antique texts or the rediscovery of their glories. Jakob Fugger was not so easily moved. He wanted to be and to remain what he was by nature, which is to say, a merchant with every fiber of his being, even to the point of perfection. As such he loved columns of figures in the same way and with the same fervor that others loved the classics, and he knew how to construct his own political-economic world better than the best classical architects of his day knew how to construct buildings.

His system was attacked from without because his individualistic notions about the use of capital, as well as his cartel building, and his international connections, contradicted the conventional wisdom and the bourgeois way of doing business.

The Fuggers were hated. Nonetheless, the merchant was fiercely loved by his own people, who saw him as an inimitable example of the commercial talent that was the basis of their prosperity.

Rather than rein Jakob in, Maximilian decides to exploit Jakob’s industry (or his ruthlessness) for his own purposes.

The Hapsburgs were at a disadvantage ‘vis à vis’ the king of England and France because of the decentralized nature of the Holy Roman Empire and the disordered fiscal situation which flowed from that fact. The French crown seemed to have access to inexhaustible resources thanks to an orderly tax system and the legal possibility of forced loans. The same thing could be said of the fortunes of the King of England, who was a big time financier in his own right. Things were different for Maximilian. The emperor was unable to raise the money he needed by taxation, but with his astounding power Jakob satisfied their every need with the magic formula of the New Age: credit. The Fuggers loans were also to bring about an unfolding of the mining industry and thereby increase the further monetization of the country.

As a result, a quid pro quo evolved between the Fuggers and the Hapsburgs.

The charge of “usurious monopoly” was often brought against Jakob Fugger and his undertakings, but the emperor invariably brushed these charges aside in light of the advantages he gained by his relationship with the Fuggers. In an age when the sanctity of contracts was unknown and the sanctity of usurious contracts an oxymoron, Jakob and Maximilian worked out a financial ‘modus vivendi’ that would last for generations and paved the way for the development of the capitalist finance of government debt. Following Maximilian I’s example, the German kings and Emperors secretly pledged themselves unconditionally to honor the monopolistic ore contracts to protect the merchants, in case they were attacked on behalf of the Empire as monopolists. In exchange for loans from the Fuggers, the Hapsburgs granted them monopoly status in exploiting the Empire’s natural resources. In the final analysis, it seemed quite natural for the king to allow a monopoly, instead of dealing with a dozen different interests as he had in the past. This was the simplest solution to how to keep the extremely expensive court of the last knight including his war machine and his political operation flush with money.

The great bullion dearth took place when the economy of the Holy Roman Empire was still based on labor. The serf owed his lord three days a week of labor. When every prince was rich in labor but chronically short on cash, the Fuggers helped the Habsburg monetize their assets: “The ever needy Hapsburgs looked upon the mineral resources of their territories…as the best security for financial advances. In this way, the big Augsburg trading companies were led into the metal trade simultaneously with the lending business, and often earned as large sums in one as in the other. The individual merchant often rose from metal trading on a small-scale to large-scale operations by means of loans to “ore-wealthy” princes. From wholesale trade in metals it was only a step to the acquisition of mines, mining stocks, smelting works, and thus to entrance into the mining industry.”

As one might expect of economic activity in the early stages of capitalism, the Fuggers were involved in a number of different enterprises, some of which were morally licit and some of which were not. The Fuggers were pulled in two opposite directions at once: toward the labor economy of legitimate investment and toward the usury economy which was on the verge of once again gaining the ascendancy.

For centuries the Church has been complaining that usury meant no shared risk. Usury, according to St. Bernardine of Siena, killed both charity, when it came to the poor, and business, by discouraging investment, when it came to the wealthy. Tainted by their involvement in usury, the Augsburg bankers were largely unwilling to invest in mining operations in the Tyrol, which meant that they were unwilling to share risks, which meant that the Fuggers, who were willing to share risk, had an open field for investment. As a result of Jakob Fugger’s vision and his readiness to act, the Fugger firm got in on the ground floor when the European economy was starved for the precious metals which constituted money.

Both the technology of mining and the financing of that technology were ‘terra incognita’ and therefore full of risk, which the conventional bankers chose to avoid. Instead of the evil they didn’t know, risk in a new venture, they chose the evil they did know, lending to princes, and as a result missed the opportunity that the Fuggers seized in the production of precious metals in Europe…

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Jakob and Thurzo

On March 12th, 1498 AD, Jakob Fugger signed a contract which brought the first copper cartel in German history into existence.

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>>>>>>16th Century

Jakob

Nonetheless, it was not clear how these contradictory parts, which we have designated “Italian” and “German,” fit together.

The Fuggers were hated. Nonetheless, the merchant was fiercely loved by his own people, who saw him as an inimitable example of the commercial talent that was the basis of their prosperity.

Rather than rein Jakob in, Maximilian decides to exploit Jakob’s industry (or his ruthlessness) for his own purposes.

As a result, a quid pro quo evolved between the Fuggers and the Hapsburgs.

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‘The Rise of the Fuggers’

In 1367 a young weaver with the unfortunate name (in both English and Latin) of Fucker moved from his place of birth in the township of Graben on Lechfeld into the Imperial city of Augsburg.

Jakob Fugger’s career marked the end of the medieval age and the beginning of the modern; he also brought about a synthesis of the Germanic and the Italian economic systems.

The capitalistic enterprise begun in the city states of Northern Italy achieved a its next phase of development during the 15th and early 16th centuries: “…under the leadership of South German entrepreneurs… There spread rapidly through a fairly large and economically active class in Germany the capitalistic spirit—a consistent, unchecked, never-satisfied search after gain. This spirit found it’s most complete expression in the Augsburg of the 16th century. In this city, enormous capital accumulations…growing out of commerce and industry were being concentrated in the hands of a few large merchants.”

Jakob Fugger was the paradigmatic German capitalist of his age. “The rise of this new, powerful, and important social class is directly related to Fugger’s activity. It is due to him that former efforts at creating a German entrepreneurship on a grand scale were crowned with success.”

By combining the experience of the German guild with the financial techniques of the Italian city-states, Fugger brought about “the culmination of early European capitalism, which had been developing in Italy since the beginning of the Renaissance.” By studying at the Fondaco dei Tedeschi in Venice, Jakob gained access to “the whole technique of the financial system…as it had been brought to perfection by the Italians from the 13th century onwards.”

The notion that Jakob synthesized the best aspects of Italian and German finance does not preclude the conflict inherent in the meeting of those two systems, something that Streider adverts to: “The developments of the entrepreneurship of Jakob Fugger bears readily recognizable traces of that early European capitalism which arose in Renaissance Italy in contrast to the cooperative ideals of the medieval guilds.”

It is impossible to synthesize the Germanic and the Italian economic traditions because they are based on contradictory first principles. The German system is based on the valuation of labor; the Italian system was based on manufacturing, but it quickly lost sight of its origins and became involved in finance and ultimately usury.

The Christian-Germanic tradition, which saw as its culmination the creation of the guild system in the 15th century, was based on the Christian understanding of the dignity of human labor as taught by the Benedictine monks, in the thousand year long tutorial they held for the benefit of the Germanic tribes which had destroyed the Roman Empire. The Italian system was based on the Renaissance’s repudiation of that heritage…based on the classical world’s contempt of labor.