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

by Greg Steinmetz

  The emperor only got some money after handing over most of the little power he had to the electors. He hated giving in, but at least he won some cash. To pay for their promises, the electors introduced a tax called the Common Penny. All imperial citizens had to pay. It was the first federal tax in Germany and mirrored schemes in France and England. The Common Penny was trouble for Fugger because it led Maximilian to believe that he no longer needed bankers. He fired Fugger and terminated the silver contracts. There were millions of Germans. Once they paid the tax, he would have all he needed to beat the French and make it to Rome, or so he thought.

  Fugger was furious. What about their deal? What about gratitude? Hadn’t he supported Maximilian in the ouster of Sigmund? Hadn’t his brother Ulrich come through for Maximilian’s father, Frederick, when Frederick needed a wardrobe? Did all this count for nothing? Fugger also worried about his survival. He was in a perilous financial state because he had borrowed money to pay for Fuggerau and a second smelter in Hohenkirchen in eastern Germany. He needed the silver profits to stay afloat and would be bankrupt if the money didn’t come through. But not for the last time, he understood the electors better than the man they elected. Fugger’s informants told him what he already suspected, that the German lords would forget their promises. Maximilian may have felt threatened by King Charles and his designs on Italy, but the electors, sitting in grand palaces far away from the Italian border, were indifferent. Sure enough, the Common Penny produced only a fraction of the expected revenue and Maximilian remained destitute. He then did the only thing he could do if he wanted to invade Italy and get to Rome: He limped back to Fugger, pledged more of his silver production and signed for another loan.

  With money from Fugger, plus promises of support from Venice and Milan, Maximilian headed over the Alps to Genoa and, from there, hired a ship to take him to Pisa on Italy’s west coast. Fugger’s Genoese branch paid the fare. Maximilian aimed for Florence where the charismatic priest Savonarola had taken control after the death of Lorenzo de Medici. Savonarola promised that God would come to kill the rich. Maximilian cared nothing about that. He only cared that Savonarola supported the French. To make it to Rome and maintain his supply lines, he and his small army needed to take Florence. He got stuck outside the city because Milan and Venice failed to come through with the promised support. Even worse, Maximilian’s son Philip, who ruled Flanders as an archduke and had pledged to distract Charles in France, had fallen under the spell of French advisors and did nothing. Disgusted, Maximilian left Italy and returned to Tyrol. He fought depression by engaging in his favorite pastime: hunting goats in the jagged mountains above Innsbruck.

  The disappointment shattered Maximilian’s innocence. Henry VII, the German electors, the duke of Milan, the doge of Venice, his own son—all had let him down. Maybe he had his epiphany while chasing goats but, somewhere, it dawned on him that he could only trust Schwaz and its silver. As long as he had Schwaz, bankers like Fugger would be there for him. After getting off the rocks, a rejuvenated Maximilian ordered all his bankers to Füssen, in the foothills of the Alps, to ask for money.

  Fugger went to church on Sunday, endorsed family values and loved his king and country. But make no mistake: He was a radical. He refused to believe that noble birth made someone better than anyone else. For him, intelligence, talent and effort made the man. His view is now mainstream. But it was subversive at the time. Europe operated according to a caste system as rigid as in India. Three groups comprised society: nobles, priests and commoners. Each group had its own pecking order. Among commoners, patricians stood on top followed by rich merchants like Fugger. Then came artisans, peasants and beggars. Each subset had its own dress code. They had different privileges and obligations. Upward flexibility was limited.

  Fugger wasn’t buying it. While society as a whole remained glued to the medieval notion of every man in his place, he shared his grandfather’s belief that man made his own luck. Albrecht Dürer and the great Renaissance artists of Italy saw it that way. So did the humanists, the writers and philosophers who broke with tradition and celebrated man instead of God. In 1486, when Fugger was twenty-seven, Giovanni Pico della Mirandola delivered his Oration on the Dignity of Man. The speech became the manifesto of humanism and landed Pico in jail as a heretic. In the speech, he declared that man was unique among God’s creatures because he had free will, and that free will allowed an individual to determine his own course. Fugger was no philosopher and might never have heard of Pico. But he was a product of his times, and the times were changing. By following the dictates of his will, he showed sympathy, unwittingly perhaps, for heretical views.

  Fugger’s worldview let him recognize his relationship with the emperor in its true form. It wasn’t one of master and servant. It wasn’t one of lord and serf. It was a relationship of creditor and debtor. In that sort of relationship, he, as the creditor, had the power. Maximilian’s titles meant little to Fugger. Yes, Maximilian was a king. The electors gave him an orb and scepter, and peasants trembled in his presence. Noble ladies hid his boots and spurs to keep him longer at their parties. But Fugger knew that as long as he had cash, Maximilian would need him and would have to accept his terms.

  While the other bankers answered Maximilian’s call to the meeting, Fugger stayed away. It was a deliberate snub. He let the other bankers negotiate with Maximilian while he stayed home. He kept the emperor hanging for ten days. Approached by Maximilian’s tailor, of all people, to explain himself, Fugger said he had renounced banking. Still fuming over Maximilian’s earlier decision to fire him after the Common Penny, Fugger wanted out. He wrote to Maximilian to explain his decision. Lending, he said, “achieved nothing but trouble, effort and ingratitude.”

  One could hardly blame him. He didn’t want to be at the mercy of a capricious borrower like Maximilian who was above the law and long on questionable promises. Fugger didn’t have to look far to see what could go wrong. Lucas Fugger was the son of Fugger’s uncle and the patriarch of the Fuggers of the Roe, the other branch of the family. He had been the most celebrated businessman in Augsburg. He had trading operations in Frankfurt, Nuremberg, Venice, Milan, Bruges and Antwerp. When not on the road, he served as an Augsburg town councillor as well as a judge and a guild master. More than anything, Lucas loved deal making and rubbing shoulders with his betters. In 1489, he made his own loan to Maximilian. Maximilian pledged the tax revenue of the Flemish city of Leuven to pay it back. The gentlemen of Leuven were as unwilling to pay as gentlemen of Ghent were five years before when they jailed Maximilian and made him watch as they killed his jester. Although the loan was small, the default busted the thinly stretched Lucas. Fugger and his brothers could have bailed him out but sat idly by as Lucas and his family lost everything. In a fit of rage, Lucas’s son attacked him with a knife. Lucas, once the envy of all and holder of many offices, fled to a hut that had once belonged to his grandfather in their ancestral village of Graben. Fugger later gave him a few florins for it.

  But fear didn’t keep Fugger away from Fussen. He stayed away for tactical reasons. As his early deals with Sigmund showed, Fugger was a crafty negotiator. He knew Maximilian would want him even more if he played hard to get. The other bankers could loan only a fraction of what Fugger could and Maximilian would need him regardless of what the others did. With that in mind, he may have expected Maximilian to come groveling. But this time he miscalculated. With Maximilian all to themselves, the other bankers schemed to ruin Fugger, whom they considered an upstart. Maximilian didn’t come groveling to Fugger. Instead, he listened to the bankers who plotted to destroy Fugger.

  The rivals had names out of a fairy tale—Herwart, Baumgarten and the Brothers Gossembrot. Maximilian had given them some mining concessions, just not as many as he had given to Fugger. The Gossembrots were the most powerful of the group. Sigmund Gossembrot was the mayor of Augsburg and his brother George was Maximilian’s treasury secretary. They came from an old family and hated Fugger for coming int
o their territory. They wanted his silver contracts and urged Maximilian to confiscate Fuggerau—moves that could have bankrupted Fugger. Maximilian took their advice. He once again issued orders to sever ties to Fugger.

  Germans say that to be successful, you need Vitamin B. The B stands for Beziehungen, or connections. Fugger had an abundance of Vitamin B and Fugger called on those reserves to secure his assets. The first to get a call was the bishop of Bamberg. He was the same bishop who had sold him the land that became Fuggerau. He still controlled that part of Austria. Fugger told him about Maximilian’s plan to meddle in his territory and seize Fuggerau. Next, Fugger traveled to Saxony to tell the region’s duke that once Maximilian took Fuggerau, he would surely go to Saxony and take Fugger’s other smelter, Hohenkirchen, in the duke’s territory. Horrified by intrusions on their sovereignty, the bishop and the duke sent ambassadors to Innsbruck and ordered Maximilian to back off.

  The decisive blow came when Fugger asked another of the emperor’s lenders, Melchior von Meckau, to call in a loan and put a cash squeeze on the emperor. Meckau served as bishop of Brixen, south of Innsbruck. He had his own silver mines and dabbled as a lender. He often traded favors with Fugger. When Meckau asked Maximilian for his money back, the emperor discovered Fugger was the only banker who could supply the money in a hurry. Fugger made the loan to Maximilian. Maximilian forgot about Fuggerau.

  It might have been difficult to recognize at the time, but Fugger was making himself indispensable. Maximilian felt frustrated by Fugger’s methods and demands, but he couldn’t deny that Fugger was the only banker he could count on in a pinch. Indispensability helped drive Fugger’s success and repeatedly won him special treatment. Fugger knew that the emperor couldn’t live without him and made sure it stayed that way.

  It goes without saying that monopolists make the biggest fortunes. By controlling supply, they can charge whatever they want and flow the outrageous profits back into other schemes that make even more money. That’s why Vanderbilt wanted to dominate the rails and Rockefeller wanted to dominate oil. And that’s why Fugger wanted to dominate metals. He would never have become the richest person on earth by sharing a market with others. He had to have it all.

  He already had it all in Hungary. Hungary was one of few copper-producing regions in Eastern Europe, which made Fugger just about the only supplier to Danzig and the other markets up north. But it was different in Venice where other Germans—those with their own contracts with Maximilian—competed for every sale.

  The competitors were the same gentlemen who had conspired in Fussen to bury Fugger. Baumgartner, Herwart and the Gossembrots hated competition as much as Fugger did. To put a stop to it, they invited Fugger into a cartel to fix prices. They explained how they would make a fortune because customers would have nowhere to go but to them.

  Fugger was as greedy as the rest of them, if not even greedier. But he wasn’t crazy about partnerships. Unlike the Medici and other Italian banking houses that routinely took in others to spread risk and increase capital, Fugger wanted every penny for himself, and the idea of splitting profits and decision-making repulsed him. His brothers were a special case. Fugger owned 29 percent of Ulrich Fugger & Brothers and he was happy with that as long as Ulrich and George left him alone. As for the partnership with Thurzo, Fugger needed Thurzo for protection in Hungary. But the proposed copper cartel fired his imagination.

  Nowadays, such an arrangement would be illegal; authorities long ago prohibited price fixing in the name of consumer protection. But there were no such laws in 1498, only a blanket understanding that businessmen should treat customers in a fair and “Christian” manner. To get around that, the group asked Maximilian for his blessing and explained that they could lend him even more money if he let them make bigger profits. They clinched the deal by bribing him with a loan.

  At this point, the story took a surprising turn. It turns out that the cartel had an enemy within in the form of Fugger. Yes, Fugger could sell his copper for high prices if he participated in the cartel. But he wanted more than a quick profit. He saw the cartel agreement as a way to destroy his rivals, run off with their business and create the same kind of monopoly in Austria as he had in Hungary. He had a simple plan: Rather than ship his Hungarian copper to Danzig, he would send it to Venice and flood the market, drive down copper prices and obliterate those too weak to hold on. This sounded great but was a dangerous scheme for Fugger because the other men had the ear of the emperor. The emperor might punish Fugger for attacking them. And there was also no guarantee that Fugger could outlast the others once he slashed the price. Maybe their pockets were deeper than he thought. He could end up bankrupting himself if he wasn’t careful. But he had a stomach for this sort of thing. Without fear, he sprung the trap. He would see the game to its brutal conclusion one way or another.

  After the cartel’s first shipments left Austria for Venice, wagons from Hungary followed. Once the copper arrived, Fugger ordered his Venetian agent to dump everything on the market at once regardless of the price. Take whatever was offered. Just get rid of it, he ordered. Venice was instantly oversupplied. It had never seen so much copper. Prices tanked. Stunned by the sudden collapse of the market, the others let their copper pile up in warehouses. They didn’t want to sell into a falling market. But they had bills to pay and could not hold out forever. When Fugger continued to sell and prices kept falling, they ditched everything at a loss.

  Bruised and struggling to hang on, the victims accused Fugger of acting in an “unbrotherly and unchristian” way, a characterization that would follow him for the rest of his life. They asked Maximilian to punish Fugger, but the emperor was embroiled in a flare-up in Switzerland and did nothing. Fugger didn’t get his monopoly but he did end up with more mining assets than ever.

  3

  THE THREE BROTHERS

  On a January morning in the middle of the copper battle, Fugger shaved, put on his best suit and went to church. He was still living in the house where he was born—a house he shared with his mother until her death the previous year at the impressive age of seventy-eight. His brothers lived down the street. They were raising their families in a big house across from the church of St. Anne. But Fugger was still single. Most men in Renaissance Germany married in their early twenties. His brothers had held on longer. Ulrich made it to thirty-eight and George to thirty-six. Fugger had them beat. He was now thirty-nine. But his status was about to change. He took a spot before the altar and waited for his bride.

  The Renaissance marked a turning point for marriage. Couples began marrying for love. Arranged marriages were still the norm in the countryside, where families tied up land by advantageous matches. But fortunes could turn quickly in cities and marriages needed stronger glue than certificates. Love provided the bond. In that context, one might imagine love led Fugger to Sybille Artzt, a vivacious blonde of eighteen. Pictures show her at a dance and riding around town in a sled. But love wasn’t what Fugger had in mind. Fugger was old school. He saw a chance for social and commercial gain.

  Sybille came from one of the most powerful families in the city. Her parents were among Augsburg’s biggest landlords. Her uncle was once the mayor. While the old families in Augsburg looked down on the Fuggers as nouveau riche, Sybille’s mother, who arranged the match, overcame snobbery and concentrated on Fugger’s money. Fugger concentrated on prestige. The Artzt family brought him power, influence and another badge of success. All were good for business. As for political influence, the Artzt family had two seats on the town council. Fugger could work through them as an in-law and influence local affairs from behind the scenes.

  A young Augsburg artist named Hans Burgkmair painted the wedding portrait. Burgkmair had just opened his own shop. Considering Augsburg was also home to Hans Holbein the Elder, Germany’s best artist before Dürer, Burgkmair was an odd choice. But Burgkmair’s painting is luminescent and detailed, unquestionably the work of a master. It shows the couple arm in arm with a kitschy inscrip
tion that reads, “In the year 1498 on January nine, we truly came together so fine.” Neither is smiling. Fugger, wearing his gold cap, looks eager to get on with it. Sybille looks lost. She wears a laurel wreath on her head to signal her virginity. Her dress is high-waisted to show off the belly and hint at fertility.

  There is no record of the festivities. But the January wedding date is telling. The upper class regularly married in winter because the cool air allowed for exotic delicacies like oysters and lobster. Wedding feasts took in hundreds of guests and lasted several days. Princes and bishops came on one day and friends and family came on another. If a dignitary sent a representative, the family treated him with the same reverence as the man himself and put him in the front row. The Augsburg town council limited the number of wedding guests in an effort to contain luxury and maintain the appearance of social equality. Fugger likely ignored the rules and paid the fines. For him, anything less than a grand wedding would have been shameful. Wilhelm Rem, who worked for Fugger, later attended the ceremony for Fugger’s niece Ursula. He found it scandalous that Ursula dressed not with the veil of a commoner but was bareheaded like a noble woman. Rem condemned the family’s “overweening pride” and fretted about whether other families would follow the Fuggers’ lead.

  Fugger and Sybille moved in with Sybille’s mother. The couple probably spent their first night together at her house. By law, they had to consummate the marriage to make it legal. Fugger’s brothers and their friends may have been outside egging them on, as was the custom. Fugger wanted children if for no other reason than succession. Fugger’s brothers each had several, including a number of sons, and Thurzo, his partner in Hungary, had so many sons that he gave three to the church. Each of the Thurzo priests, thanks to the influence of Fugger and Thurzo, became a bishop. Fugger began to think about succession early in his career, but his match with Sybille produced no heirs.