In his circa 1520 portrait by Albrecht Durer, Jacob Fugger’s lined face stares back with determination and confidence. He was about 60 at the time and was already one of the richest men in the world. A copy of this portrait, with its striking blue background, should hang on the office walls of every banker, financier and businessman or woman as a tribute to “the world’s first capitalist.”
When Fugger of Augsburg, then part of the Holy Roman Empire (now Germany), died on Dec. 30, 1525, he was the world’s first millionaire and controlled roughly 2 percent of the entire wealth of Europe, according to Greg Steinmetz’s book The Richest Man Who Ever Lived: The Life and Times of Jacob Fugger. America’s John D. Rockefeller, by comparison of wealth, was no where near Fugger, the author notes.
Fugger (rhymes with cougar) was the grandson of commoners. When he took control of his family’s modest fortune as textile merchants, he would take that company to dizzying heights. Eventually, Fugger would own or control vast tracts of land, castles, mines and would serve as banker to kings, emperors, popes and other princes of the Roman Catholic Church. He had enough political and economic clout to be awarded a royal title, which he never used. He also may have helped finance Magellan’s voyage that circumnavigated the Earth, Steinmetz wrote. According to the author, Fugger could be called “the world’s first capitalist.”
Steinmetz spent 15 years as a journalist at newspapers, including New York Newsday and The Wall Street Journal, where he served as the Berlin bureau chief and later as London bureau chief. He currently works as a securities analyst for a New York money management firm.
Steinmetz’s colorful, fast-paced biography has 23 pages of notes, bibliography and index but offers also a fascinating glimpse into the times and challenges faced by business people in the late 15th and early 16th centuries. Those challenges included bankrupt businessmen finding themselves rotting in debtor’s prison; business cheats getting their hands cut off or a red-hot poker pushed through a cheek; and, bakers when caught adulterating bread, receiving a public dunking or dragging through the streets to face the gauntlet of an angry mob.
According to Steinmetz, however, it was moneylenders who faced the cruelest fate. Lenders, known as usurers, were reviled as confederates of Satan and damned by the church for the sin of charging interest on loans.
But, Fugger got that reversed and accomplished much more. For example, even today, modern businesses still use the double-entry bookkeeping method that Fugger introduced to northern Europe, a practice he learned from the Venetians early in his career.
However, changing the church’s view of charging interest on loans has been most lasting. During his day, the practice of charging interest on loans was considered a mortal sin. That was until Fugger asked Pope Leo X to legalize the practice after making a sizeable loan to a bishop. Giovanni de Medici was the second and smartest son of Lorenzo “the Magnificent,” and upon his elevation to papacy, took the name Leo X. But Leo wasn’t smart enough to see the results of that change.
Leo was “a corrupt pope in corrupt times,” wrote Steinmetz, and he emptied the papal treasury on the most expensive coronation Rome had ever seen and hosted parties where prostitutes looked after cardinals and everyone ate off of gold plates.
To pay off the debt to Fugger, Leo OK’d the restoration of buying “indulgences” that allowed people to pay the church for major sins. That was the final straw for a priest named Martin Luther who kicked off the Protestant Reformation.