Fugger - Banker Who Made the Habsburgs Hegemon of Europe
The concept of commodity money is one of the most revolutionary inventions in human history, so it should be of no surprise that most political decisions, as well as wars fought, were in one way or another affected by money or revolved around it. Throughout the ages, particularly rich individuals were able to influence nations, states, and even the very progress of humanity. When thinking about the richest individuals in history, the first people that come to mind are industrial magnates such as John D. Rockefeller and Andrew Carnegie, whose impact on the world is well-known. Be that as it may, one man who played a crucial role in European politics and global trade during the Renaissance, is frequently overlooked – Jakob Fugger the Rich. Sponsor of today's video MagellanTV is the favorite documentary platform of Kings and Generals! We have been enjoying our MagellanTV subscription and hope that our viewers love it too.
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As young Jakob was merely the 7th son, his mother had him train to become a priest after his father’s death. This is quite ironic, as the Benedictine Order in the monastery which Jakob joined, strictly adhered to the vow of poverty. At the age of 14, his mother changed her mind and had him sent to Venice for an apprenticeship with a trader. More importantly than trading however, Fugger learned about banking and accounting, two skills which he would hone to perfection.
The double-entry bookkeeping which he learned in Italy complemented his meticulous nature perfectly. Fugger himself believed that he owed much of his wealth to fastidious bookkeeping. In the same year that Jakob left for Venice, his family in Augsburg made their first contact with the Habsburgs, namely with Frederick III.
The Holy Roman Emperor was on his way to Trier to arrange a marriage between his son and Mary of Burgundy, and he needed clothes that would match Burgundian splendor. As most of the merchants in the free city knew that Frederick had no money, they refused to make any contact with him. Jakob’s older brother Ulrich was not one of them. He gave Frederick silk and other materials, and in return his branch of the family received a coat of arms – a lily. More importantly it also established a link between the Habsburgs and the Fuggers, something that would be crucial in the next decades. The fact that simple peddlers denied credit to one of the most powerful men in Europe at the time made Jakob learn a valuable lesson.
Money was an equalizer and a rich commoner could humble anyone, even an Emperor. His brothers, who already proved themselves as capable entrepreneurs, vastly expanded the family’s business. While Jakob was still in Venice, they spread the firm’s branches to a dozen European trading cities and established themselves as collectors of Papal revenue in Scandinavia. The latter achievement may have been at least partially the work of the final living brother, Markus, who was a Papal overseer in Rome. Just as Jakob was finishing his apprenticeship in Venice, in 1478, Markus died of the plague. The family sent 19-year-old Jakob to Rome to settle Markus’ affairs.
The reigning Pope during his visit was the extravagant Sixtus IV and awed by his splendor and riches, Fugger wanted to achieve something similar himself. In 1485, the family sent Jakob to Austria to try to get a stake in the mining business. The Fuggers mostly focused on the textile industry until then, so this was new and unexplored territory for them. Nevertheless, this was the moment when Jakob proved that he was a proficient and shrewd businessman. The Schwaz silver mines in Tyrol were the largest producers of silver in Europe at the time, with over 80% of Europe’s silver output coming from there.
The mines could have brought Archduke Sigismund of Austria immeasurable wealth, had he not been a lavish spender. Due to his extravagant lifestyle, Sigismund frequently sold silver to banks for low prices. Jakob Fugger managed to strike a mining deal with the profligate noble too. He paid 8 florins a pound for the silver and later sold it in Venice for 12.
Sigismund’s incompetence reached new levels when he went to war with the much more powerful Venetians. Though he found initial success, he realized that he bit off more than he could chew and that the Venetians could capture both him and his realm if they wanted to. The peace treaty was very harsh on Sigismund and he was forced to pay 100,000 florins in reparations. None of the bankers which made prior deals with him were willing to loan him anywhere near that amount. None, except for Jakob.
Jakob was no fool. He knew that if he simply loaned the entire amount to Sigismund that it would be the end of him and his family. Therefore, he opted to pay the Archduke in installments and in exchange for that, he would have near complete rights to the Schwaz silver mines. This was his family’s biggest business deal yet and it would grow into Fugger’s safest source of revenue in the years to come. Fugger’s business relationship with the Archduke did not last long. Soon enough, Sigismund found himself in debt once again.
This time it was to his cousin, Maximilian, who took his lands as payment after Sigismund defaulted on the debt. Fugger liked the young and energetic Maximilian, and quickly installed himself in his good graces. He even aided Maximilian financially in recapturing Vienna from the Hungarians. As a reward, in the subsequent peace treaty, Hungary was opened up for German merchants. This was a vital opportunity for Jakob, as he was making more money than he could possibly invest in Tyrol or loan to Maximilian.
German merchants, though given rights in Hungary, were still disliked by the local commoners and nobility. Fugger was able to finesse his way around that as well. He made a business partnership with Johannes Thurzo, a German engineer of Hungarian descent. He loaned Thurzo the money to take over the vast copper mines of the Carpathian Mountains, while he built a metalwork factory complex near Villach, in Styria. Although the profits from the venture were split evenly between Fugger and Thurzo, Fugger still raked in vast amounts of money. Once Maximilian was crowned Holy Roman Emperor and relinquished some of his rights to the Electors, the Common Penny was introduced.
This tax was supposed to make Maximilian rich, so he fired most of his bankers, Fugger included. Once it became evident that the tax did not yield the wealth Maximilian imagined, he called all of his bankers back. Fugger initially refused but accepted later, on his own terms.
He had developed a quick and reliable courier system that would keep him informed on global events and affairs even before the Emperor, so he knew that all the other bankers together could not give Maximilian as much money as he could. The other bankers still had the Emperor’s favor though, and they tried to have Fugger taken down every chance they got. Jakob outmaneuvered them once again - he used the copper from Hungary to flood the Venetian markets, thereby severely reducing its price and nearly bankrupting his competition in Austria. It was a risky move, which could have ended in his own bankruptcy. Fortunately for Fugger, the endeavor paid off and even though he did not achieve a monopoly on copper, he ended up with more mining assets.
Besides mining, Jakob was also highly active on the jewelry market, acquiring some of the late Charles of Burgundy’s most prized possessions. The most valuable one included one of the world’s largest diamonds, surrounded by three rubies, a piece known as the Three Brothers, later worn by Elizabeth I in her most famous portrait. Fugger would frequently lend these jewels to the Habsburgs and other nobles for significant ceremonies and royal weddings, since they did not possess any bijouterie of such high quality.
Jakob Fugger was obviously a man with his feet firmly planted on the ground, however, even he was enticed by Vasco da Gama’s discovery of a sea route to India. In 1505, he invested in a Portuguese spice trading expedition to India. The money invested was not large by his standards yet the gains were larger than he could have ever foreseen. As the Indians were unwilling to trade the spices for anything other than metals, the fact that Fugger sent some copper and silver helped the expedition greatly. After the ships returned to Lisbon, Manuel I of Portugal confiscated Fugger’s spices.
He received the spices after several years, however, that experience convinced him to steer away from the spice trade, as it was a “dirty business”. While Fugger’s youth was spent acquiring vast amounts of money, the latter part of his life was mainly focused on keeping what he had earned. Long gone were the days of high-risk, high-reward endeavors, replaced by a multitude of minor deals and contracts. Fugger’s first great challenge came in the form of the Hanseatic League.
The League posed a great threat to Fugger’s business interests, especially to the copper trade from the port city of Danzig. Shrewd as ever, through careful diplomacy and well-placed bribes, Fugger made some of the Hanseatic cities themselves grant him concessions. In only several years, the once most powerful trade organization in Europe was left virtually powerless. His second great challenge came when several clergymen and humanists from Nurnberg accused him of usury, the process of lending money with interest. Usury has silently been accepted throughout Europe since the rise of trade on the continent, however, Fugger’s riches attracted the envy of many.
In the end, Fugger was not only acquitted of all charges, but he also managed to convince the Pope to lift the ban on usury, though that could very well be because the Medici Pope’s own interest. Throughout the years, Fugger remained Maximilian’s chief banker, financing all of the Emperor’s adventures, barring his campaign to make himself Pope. Fugger never had to directly manipulate the Emperor, at least not until the instability in Hungary prompted him to do so. Uneasy at the prospect of having his funding cut off, Maximilian agreed to make a deal with the Jagiellon kings of Poland and Hungary. The royal marriages and treaties did secure favorable business conditions for Fugger, but on a grander scale they secured the Kingdom of Hungary for the Habsburgs.
Directly or indirectly, it seems that Fugger himself was responsible for the Habsburg policy of “let others wage war, but you, happy Austria, marry”. In the following years, Fugger was accused by several Imperial advisors of fraud and deceiving the Emperor in their business deals. Nevertheless, Maximilian considered Fugger invaluable and needed him more than he needed simple money. The now old and syphilis stricken Maximilian hoped to cement his family at the top of European politics and to that end he needed to secure the election of his grandson Charles as Emperor.
The election of the new Emperor hadn’t been this heated in many generations, yet now both Charles of Spain and Francis I of France were competing for Charlemagne’s crown. The key to winning the favor of the seven electors was, obviously, money, and Fugger could provide it. Maximilian died in 1519, just as everything became secure for the election. His death reduced Charles’ chances of being elected and it only made the Electors’ appetite for money larger.
Fugger personally favored Charles for the position, since he already had experience in dealing with the Habsburgs. Charles did not want to have anything to do with Fugger, however, and completely ignored him. Because of this, Fugger began negotiations with Francis I.
It is unclear whether he truly changed his mind and wanted to place Francis on the throne or simply wished to force Charles to hire him as his banker. Three electors favored Charles and three favored Francis. The key seventh elector was Joachim of Brandenburg. He was known to be greedy and would vote for the candidate who would offer him the most. Francis offered Joachim a French princess in royal marriage, in addition to a large sum of money, making it seem as if Brandenburg would certainly be on the French side.
As the French princess eloped with a French duke, the deal was null and void. Charles would use this opportunity to offer Joachim his own sister and 300,000 florins. Joachim demanded a third of the sum upfront and the only person who could provide the money in such a short period of time was Fugger. Left without a choice, Charles borrowed the sum from Fugger. With Joachim’s vote secured, the rest of the French-leaning electors started favoring Charles too. With the day of the election drawing close, and Henry VIII announcing his candidacy as well, once again, ironically, asked by the Pope, the stakes were higher than ever.
The negotiations inside Frankfurt’s cathedral lasted for a long time. Several electors were in favor of Henry or Francis, however, they would all vote for Fugger’s candidate. Aware that nothing could sway the electors as much as Fugger’s money, Charles relented and hired Fugger as his banker. The money spent on bribing the electors mounted up to 852,000 florins, 544,000 of which were directly from Fugger. This was the largest loan in history until then, though in reality, it was more of a bribe – Fugger would not reclaim any of the money or gain any mining rights.
The electors only promised to vote for Charles. Charles, now heavily indebted to Fugger, was forced to raise heavy taxes in Spain. The Spanish commoners rose up in rebellion and captured many cities, forcing Charles to abolish the tax. This left Fugger out of pocket, as Charles did not put up any collateral when he borrowed the money. What could have been Fugger’s greatest venture and greatest profiteering scheme, came to be his biggest failure.
Once again, Fugger managed to overcome a difficult situation. In 1525, the Holy Roman Empire’s army defeated the French army at the battle of Pavia. In itself a devastating battle for the French, the defeat was made worse by the fact that Francis I was captured and imprisoned. The Italian commander was most deserving for the victory in the battle, but the Imperial army itself would not have been raised, equipped or fed had it not been for Fugger’s loans.
Following the victory, Charles granted Fugger the Maestrazgos mercury mines, the largest mercury mine in the world, for 3 years. In the end, Fugger ended up making an enormous profit once again. The Peasants’ War devastated Germany in 1524 and 1525.
Fugger’s own holdings, businesses and even Augsburg itself came under duress. Through Fugger’s careful allocation of funds, his business came out relatively untouched at the end of the war. At the same time, the financially destitute Hungarian King also captured Fugger’s copper mines in Slovakia.
The Hungarian crown was terrible at managing the enterprise, and the mines which brought great wealth to Fugger worked at a loss for Louis. Furthermore, an enraged Fugger convinced several states within the Holy Roman Empire and even the Kingdom of Poland to place an embargo on Hungarian goods. Louis, realizing that he had bit off more than he could chew, offered to return the mines to Fugger in exchange for 300,000 florins. Fugger declined and asked for the return of the mines and complete restitution of the lost profits. As 1525 dragged on, Fugger found a growth on his abdomen, became bedridden and died near the end of that year. In his 30s, he swore to spend every waking minute of his life trying to make money.
Ultimately, it was a vow that he kept. He was a renaissance man, albeit in a different way than da Vinci, Michelangelo or Erasmus. While they gave new life to philosophy, arts and sciences, Fugger the Rich reintroduced business in the form that it once had in ancient Rome and Greece. Despite being a staunch Catholic, he was also a humanist. This can be shown by his epitaph, which he composed himself –“TO GOD, ALL-POWERFUL AND GOOD! Jakob Fugger, of Augsburg, ornament to his class and to his country, Imperial Councilor under Maximilian I and Charles V, second to none in the acquisition of extraordinary wealth, in liberality, in purity of life, and in the greatness of soul, as he was comparable to none in life, so after death is not to be numbered among the mortal”. Fugger’s records show that at the time of death, he was worth slightly over 2 million florins, a sum which would today amount to over 130 million €. This sum seems meager
in comparison to Crassus’ 17 billion or Mansa Musa’s 330 billion. Jakob Fugger may not have been the richest man in history, but he was most definitely the richest man in the world at the time. He was also one of the most powerful businessmen of all time.
Fugger lived at the unique moment when one man could make a world of a difference. His relationship with the Habsburgs set them at the forefront of European affairs, and they would stay there for centuries to come. To say that his achievements were limited to the Habsburgs and their lands would be a gross misconception.
Fugger’s business sense and innovative capitalism changed the very face of Europe and the entire World. We always have more stories to tell, so make sure you are subscribed and have pressed the bell button. Please, consider liking, commenting, and sharing - it helps immensely.
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