The empire did not yield enough to get rich on, the securities were insufficient, and Jakob Fugger probably saw that he had to accept a debt cut.
As documented for posterity in a fabulous painting, “the wealthy merchant (Anton Fugger) burned the certificates of debt, because he loved his emperor so much”.
Of course, the only fact that is true about the story is that nothing was paid any more. But at least the rich banker Fugger saved his reputation and made it last throughout the centuries, if not his capital.
Unfortunately, the house Fugger never endowed an economical faculty where the true kowledge of the merchant dynasty might haave been conserved through time. To say it plainly: there is no state that ever deserved a triple-A. There has always been and will always be the risk that a state debtor, by virtue of his power, simply will not pay.
It is interesting to see how the house Fugger at the time was the target of the powerful after the bankers could and would no longer hand out money. “Abolish the monopoly. They must no longer be permitted to lend more than 50,000 guilders. Restrict the number of agencies”, was what the powerful and those who were addicted to liquidity at the time demanded. There was never a word about less spending and the emperor knew that, without the bankers, his bankruptcy would be a foregone conclusion.
For a change, it is easy to see the historical parallels. All you have to do is substitute those who were addicted to solvency at the time with the modern role models.
From the propaganda trick “Euro Rescue ” – for which the majority of journalists fell – to the truth “preservation of the borrowing capacity of the Euro States“. From “no bail out” to “bail out” and now to the long-term federal financing by “leverage”, accompanied by foul-mouthing of bankers done by the creditors… all you have to do is substitute the roles in the texts you will find in the Augsburg history books.
Tonight, October, 23rd, 2011, on TV.
(Translated by EG)