The Richest Man Who Ever Lived: The Life and Times of Jacob Fugger

by Greg Steinmetz

  Hans registered at City Hall. When he got there, he told the scribe his name. Germans used Latin for official documents and the scribe thought for a moment before coming up with the proper translation for Fugger. He wrote down the letters as they came to him: F-u-c-k-e-r. The registration, now in the city archives, reads Fucker Advenit or Fugger arrives. Fugger historians have enjoyed the laugh ever since.

  Hans prospered and soon had enough money to leave the spinning to others. He became a wholesaler, buying cloth from other weavers and selling it at trade fairs. He began a family tradition of advantageous matches by marrying Clara Widolf, the daughter of the head of the weaver’s guild. The weavers were the most powerful commercial group in town. They showed their teeth in 1478 when they forced the execution of a mayor sympathetic to the poor. After Clara died, Hans married the daughter of another guild boss. This woman, Elizabeth Gfatterman, had an astonishing head for trade. She took over the family business after Hans died and ran it for twenty-eight years. It’s interesting to think how far she might have gone if society had given her a fair chance. Women had no political rights and were considered the legal subjects of their parents or husbands. If they engaged in business without a husband, they had to work through front men. As difficult as it was, Gfatterman still managed to bargain with suppliers, negotiate with customers and invest in real estate while, at the same time, raising her children. She made sure her two boys, Andreas and Jacob the Elder, received the training to take her place. Not wanting to dilute the inheritance, she never remarried. She was one of the largest taxpayers in Augsburg when she died.

  Augsburg minted its own coins and Fugger’s other grandfather, Franz Basinger, ran the mint. He grew rich watching workers pour molten silver into molds and cast coins one at a time. Jacob the Elder married Basinger’s daughter Barbara. Just months after the wedding, authorities caught Basinger diluting the silver coins—a capital offense in some places—and threw him in jail. Jacob helped pay his debts and get him out. It all worked out for Basinger. Sprung from jail, he fled to Austria and, despite his criminal past, became master of the mint in a city outside the Tyrolean capital of Innsbruck.

  Barbara had the same gift for business as her mother-in-law Elizabeth. She and Elizabeth were so remarkable that one can easily argue that they, more than the Fuggers’ male ancestors, gave him his talents. Like Elizabeth, Barbara outlived her husband by nearly thirty years and took the challenging course of remaining a widow. Like Elizabeth, she took the Fugger business to the next level by reinvesting the profits and buying and selling even more cloth than her husband. This would come later. Her immediate job after getting married was to have children.

  The Fuggers lived in a three-story town house at the corner where the old Jewish quarter met the commercial center. It stood across from the hall of the weavers’ guild. A street called Jew Hill sloped down behind the house, ending at a canal. The Romans had dug the canals and lined them with wooden beams. At night, when all was quiet, one could hear water running through.

  Barbara gave birth to Fugger on March 6, 1459. Jacob the Elder had resisted naming any of his other sons after himself. He yielded with number seven. He didn’t spend much time with his namesake; he died when young Jacob was ten. By then, some of the boys—Ulrich, Peter and George—were already working in the business. Another brother, Markus, was a priest climbing the ranks of the Vatican bureaucracy. Two other brothers had died young. As for the girls—Jacob had three sisters—Barbara was preparing them for good matches.

  Fugger looked up to his brothers and envied them and their adventures on the road. His own chance for his adventure came soon enough. After dropping the idea of the church for Fugger, Barbara secured him an apprenticeship in Venice. Venice was the most commercially minded city on earth. It was the way station that linked the Silk Road with the Rhine, where French wine found its way onto boats to Alexandria and Constantinople and where traders swapped pepper, ginger and cotton from the East for horn, fur and metal from the West. Venice was founded on commerce and businessmen ran the place. Money was all anyone talked about. Venetians, wrote the banker and diarist Girolamo Pruili, “have concentrated all their force for trading.” Venice made Augsburg look like a village. Hot, loud and crowded, its population of 200,000 made it one of the largest cities in Europe. Traders shouted at each other from the warehouses that lined the canals. “Who could count the many shops, so well furnished that they look like warehouses,” the priest Pietro Casola wrote in his travel journal. “They stupefy the beholder.” Everyone in Venice prospered. The chronicler Sansovino described how the locals slept on walnut beds behind silk curtains. They ate with silver. Added Casola: “Here wealth flows like water in a fountain.”

  The spice trade made it happen. Europeans loved spices, especially pepper, to liven up bland meals and mask the taste of rotten meat. Arabs bought it in India and hauled it to Levantine ports by camel. Venice monopolized the business. Owing to its fortunate location far up the Adriatic coast, it offered the most economical way to reach the rest of the continent. Venice grew wealthy as a middleman. Fugger had no way of knowing it, but he would one day play a role in the system’s destruction.

  Naturally enough, Venice became the place where young men went to learn about trade. Well-to-do families sent their children there to discover the secrets of commerce and to make contacts. Fugger said good-bye to his family and set off over the Alps, probably through the Brenner Pass. It took him about two weeks to reach Mestre. From there, he boarded a boat and crossed the lagoon to the main island. After the crossing, Fugger headed to the Fondaco dei Tedeschi, a warehouse where Venetians insisted all the Germans conduct their affairs. They wanted them under one roof to more easily hit them for taxes.

  Located smack on the Rialto, the Fondaco was a crowded bazaar with goods piled to the ceilings. “I saw there merchandise of all kind,” wrote the visiting knight Arnold von Hanff. Wrote Casola: “The Fondaco at Venice is so rich in merchandise that it might supply the whole of Italy.” In 1505, well after Fugger’s time in Venice, a fire destroyed the building. When the city rebuilt it, Titian and Giorgione painted murals on the wall facing the Grand Canal and made the Fondaco a destination for art lovers. But in Fugger’s time, the Germans not only worked there but lived there, too. Fugger slept beside his countrymen on a straw-covered floor in the attic. In addition to learning about importing and exporting, he might have made himself useful by packing crates, making deliveries and copying letters. Approaching St. Mark’s from the Ponte della Paglia, Fugger could watch the galleys sailing in from the Bosporus and the Holy Land. He could wonder about the African slaves—the household servants of the rich—in the squares or join other Germans as they hawked pearls and stones at astronomical markups along the Riva degli Schiavoni, the city’s famous promenade. He could hear the trumpets that announced the arrival of every foreign ship.

  We know little of Fugger’s years in Venice other than the marks they left. The marks were few but profound. Some were stylistic. Here Fugger picked up a love for the gold beret that became his signature. And it was in Venice that he began to sign letters in the Latin way. He went to Italy as Jacob, knowing only how to read and write. He came back as Jacobo, an international businessman intent on making a splash.

  More importantly, it was during this time that he learned about banking. Fugger was to become many things in the ensuing years—an industrialist, a trader and at times a speculator—but he was foremost a banker. He learned everything he needed to know about banking in Venice. The Italians invented it, as shown by our borrowing of the words credito, debito and even banca. Venice also exposed him to the advantageous craft of accounting. Most of the merchants back in Germany were still jotting down numbers on paper scraps that were never organized. Italians had moved beyond that. Needing more robust methods to handle large, multinational enterprises, Italians developed double-entry bookkeeping, so named because each entry had a corresponding entry to make the books balance. It let them understand a c
omplex business in a quick glance by summarizing the highlights and condensing the value of an enterprise to a single figure, its net worth. Years after Fugger left Venice, the mathematician friar Luca Pacioli wrote the first accounting textbook. Fugger knew all the tricks before Pacioli’s book went to press. He converted his brothers to the system and brought a new level of sophistication to the family business. He gave the rest of Augsburg no choice but to follow. The fact that Fugger, as a teenager, already understood the importance of bookkeeping and how it gave him an edge says something about his intuitive grasp of business. He knew that those who kept sloppy books and overlooked details left money on the table, something he considered unconscionable.

  A Venetian ambassador, years later, heard that Fugger had learned his craft in Venice. He replied that Fugger had learned more than Venice could teach: “If Augsburg is the daughter of Venice, then the daughter has surpassed her mother.”

  In the same year that Fugger left for Venice, something happened in Augsburg that had monumental consequences for him and his family: The family made its first contact with the Habsburgs, the royal house of Austria. In time, the Habsburgs became Fugger’s biggest customer and Fugger became their counselor and unrivaled financial backer. The relationship was never easy and it almost collapsed several times. But the bond held and became the greatest private-public partnership the world had ever known.

  That spring, just after the snow in the Alpine passes melted, the emperor Frederick III left Innsbruck for an important diplomatic mission to Trier on the French border. Frederick rode to meet Charles the Bold, the fantastically rich archduke of Burgundy, and stopped in Augsburg on the way. In addition to serving as emperor, Frederick was the archduke of Austria and the Habsburg family patriarch. The Habsburgs had their roots in Switzerland where, in the eleventh century, a warlord named Radbot of Klettgau built the Castle of the Hawk—“Habsburg” in German—on the road from Zurich to Basel. Europe had dozens of royal families and the Habsburgs were minor leaguers until 1273, when one of their number, Rudolf, became king of the Germans and the inevitable pick to become Holy Roman emperor. Three years later, the family took Vienna, giving them a more pleasant address than the lonely castle in Switzerland. But even then, the family remained weak compared to the great houses of Europe. Rudolf died before becoming emperor, but, truth be told, “emperor” was a grand title that meant little.

  Napoleon was supposedly the one who said the Holy Roman Empire was none of the three. It was too debauched to be holy, too German to be Roman and too weak to be an empire. But to make sense of Fugger’s life, it helps to understand how he could exploit this odd creation and why the emperor needed a banker. On paper, the empire united Christian Europe along the lines of the Roman Empire with the emperor serving as the secular equivalent and partner of the pope. But only Charlemagne, the first emperor, approached mastery of Europe. After he died, Europe split into kingdoms that further split into principalities, duchies or whatever other entities had enough military power to stay independent.

  By the time Frederick was emperor, the boundaries of the Holy Roman Empire had narrowed to just the eastern part of Charlemagne’s realm and included little more than Germany. It was still big, but the emperor received no funding except from his own estates and thus could only field a small army. This made him easy to ignore, and most everyone did just that. Even in Germany, where the people called him king of the Germans, he was weak because, unlike in the centralized states of France and England, Germany’s provincial lords clung to their independence. The job of emperor was an elected position like the papacy, but the emperor was more of an empty suit than a king. If France or the Turks attacked Germany, the German lords might ask the emperor to lead the defense. But for the most part, they were happy if he did nothing.

  Seven princes and bishops—the most powerful of the scores of territorial leaders—played the role of Vatican cardinals and comprised the electoral college that selected the emperor. When they offered Frederick the job, he took it only after deciding he could turn it into the very force of centralization that the electors feared. The great game of the era was what the Germans called Hausmachtpolitik, the quest to expand the family power base. The winner? Whoever grabbed the most titles and territories. It was a bloody business that the participants found infinitely absorbing but ordinary people found horribly disruptive. The Habsburgs were losing to the likes of the Valois in France and the Tudors in England. Even in German-speaking Europe, they lagged behind such houses as the Wettins of Saxony and the Wittelsbachs of Bavaria. Frederick had the fantastic notion that the imperial crown could make his family the most powerful in Europe. He believed it so much that he stamped the initials AEIOU on his tableware. As revealed only after his death, it stood for Alles Erdisch ist Osterreich Untertan (All Earth Is Under Austria). He dared to consider himself another Frederick Barbarossa—a ruler who, during another low point for the empire, brought order to Germany and restored imperial authority in Italy with little more than charisma and drive. Others agreed with Frederick about the potential. If nothing else, the formidable title gave the job an aura of divine sanction. “His name is great,” said a papal envoy. “In a land of factions he can do much.” But Frederick was nothing more than a dreamer. When the electors refused to cede him power, he failed to exploit factions. He retired to a life of gardening and overeating. Detractors, not without some justification, called him Frederick the Fat.

  Then came the meeting with Charles the Bold and the chance it offered Frederick to shape history. As duke of Burgundy, Charles had the province of Burgundy as well as what is now the Netherlands, Belgium and Luxembourg. These were the richest, most industrialized parts of Europe, and Burgundy itself set the standard for European luxury and sophistication behind its symbol of the Golden Fleece. Although officially accountable to the French king, Charles did as he pleased and, backed by a magnificent army, he dreamed of conquest and becoming the next Alexander. An English official called Charles “oon of the myghtyest Princez that bereth no crown.” More than anything, Charles dreamed of raising Burgundy to a kingdom and formally separating from France. This is why Frederick came to Trier. He could elevate Charles because, as emperor, he had an ancient power that required neither money nor an army to exercise. On a whim, with the stroke of his pen, he could create kingdoms and monarchs. In return for that, Charles offered to wed his only child, fifteen-year-old Mary of Burgundy, to Frederick’s thirteen-year-old son Maximilian. This was a fantastic offer. Maximilian and his children would eventually become kings of Burgundy if all went well. The Habsburgs would be second-tier sovereigns no more.

  Frederick stopped in Augsburg on his way to Trier to buy clothes. Charles was the dandiest prince in Europe. The Habsburgs could not match his gold, diamonds and ostrich plumes but they had to try. The problem was that Frederick, unable to fund an imperial lifestyle on a ducal income, was broke and the Augsburg merchants, stiffed by Frederick in the past, refused him credit. That led Frederick to Ulrich Fugger, the oldest of the Fugger brothers, to help. Ulrich gave Frederick silk and wool for his tailors to stitch into imperial robes.

  Marketing is an ancient craft. Roman promoters hung posters to advertise chariot races and the hookers of Ephesus carved their addresses into marble slabs near the Temple of Artemis. By lending a hand to Frederick, Ulrich saw a chance to sell himself. He wasn’t stupid; he knew the emperor was broke and would never repay. But he received something of intangible yet undeniable value—a coat of arms. The crests weren’t just for knights in battle. Monarchs gave them to anyone they favored including businessmen. Displayed outside a shop, a warehouse or trade fair stall, the arms proclaimed the bearer’s products fit for a king. The royal endorsement was well worth a few bolts of cloth for the Fuggers. Ulrich had a petty motive, too. He wanted the coat of arms to settle a score. Eleven years before, Frederick had given one to the other line of the Fugger family, the descendants of Andreas Fugger, Hans Fugger’s other son. The heirs of Andreas, dubbed the Fug
gers of the Roe for the deer head on their crest, held it over Ulrich as a mark of superiority. Ulrich hated being the lesser Fugger. So did his little brother Jacob. Eager to catch up, Ulrich gave Frederick what he wanted. A letter for Ulrich arrived one day with a picture of three lilies on a piece of parchment. It was from the emperor. A note explained that this was a coat of arms awarded for the family’s “respectability, truthfulness and rationality.” The letter named each of Ulrich’s brothers, including Jacob, as recipients. They were now the Fuggers of the Lily and so were their descendants.

  The spectacle of the emperor begging for help must have startled Jacob. Any belief he may have had in the emperor’s superhuman qualities could not have survived the fact that mere shopkeepers—ordinary people that he saw on the street every day—had denied credit to the supposedly most powerful secular figure in Europe. Whether Fugger actually witnessed the snubs didn’t matter. The lesson was the same: Money was an equalizer. It made no difference that someone was an emperor and another a commoner. If a commoner had money, he could make anyone, even an emperor, grovel.