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

by Greg Steinmetz

  If someone asked Fugger to name his greatest achievement, he might cite the imperial election or the Fuggerei. Or he could cite the balance sheet of the firm Jacob Fugger & Nephews. It is a summary of a career that, although reduced to numbers, tells a story about kings and queens; popes and loved ones; overseas adventures and shifting fortunes; resource plays and enough real estate to merit the attention of mapmakers. It is the story of his life.

  The balance sheet of 1525, Fugger’s final year, has been lost like most of Fugger’s papers. The 1527 balance sheet offers a fair approximation. On the left side of the page are the assets or the things Fugger owned. The biggest items were loans. Ferdinand owed him 651,000 florins on loans backed by the mines of Tyrol. Charles and the Kingdom of Spain owed him 500,000, backed by the mercury mines of the Maestrazgos. The king of Portugal owed him 18,000. The viceroy of Naples, which was under Ferdinand’s control, owed him 15,000. Kasimir of Brandenburg owed him 2,000.

  The next largest item, 380,000 florins, was inventory. This was the copper and textiles in the Fugger warehouses. Then came real estate at 150,000 florins. Breaking it down, it valued Weissenhorn and the other Fugger estates at 70,000, the Augsburg properties at 57,000, the Antwerp office at 15,000 and the Rome office at 6,000. It valued Fugger’s mines at 270,000, presumably based on the price Fugger paid rather than the value of the ore in the ground. Other assets—cash plus various loans and investments—came to another million.

  There was nothing like the Securities & Exchange Commission to keep him honest. Nor were there fixed rules for how to do things like value assets and recognize revenue. Fugger could prepare the books any way he pleased. He took a path of prudence. He wrote off worthless assets and classified others as doubtful. Among those in the doubtful category were 260,000 florins’ worth of loans to Hungary, a 113,200-florin loan to Alexi Thurzo and a 20,958-florin loan to Pope Leo X, the pope who sanctioned moneylending. Leo had died but Fugger held a ring as collateral, so there was still a chance of collection if Leo’s family wanted the ring back.

  On the other side of the page were the liabilities. These were what Fuggers owed to others. The Fuggers owed 340,000 florins to creditors in Spain, 186,000 to other creditors and 290,000 to depositors. These amounts were manageable and indicate that the most striking aspect of the 1527 balance sheet was neither the assets nor the liabilities but the difference between the two. The difference was the equity or what the business was worth. It can be equated with the value of Fugger’s personal fortune at the time of his death. His nephews had shares in the business, but he controlled the business completely and had full authority to direct how the money was spent. When he talks in his epitaph about being “second to none in the acquisition of extraordinary wealth,” he is referring to the equity. It came to 2.02 million florins. Maybe another businessman before Fugger was worth more than a million in a standard European currency but, if so, none ever put it on paper. If one believes the accounting statements of the Medici, the Medici family, or at least its bank, was never worth more than 56,000 florins. Fugger can claim to be the first millionaire for this reason.

  Comparisons between the 1527 balance sheet and earlier ones indicate his investment return. In 1494, when Jacob became a partner, the firm had equity of 54,385 florins. By 1511, it had grown to 196,791 for a return of 8 percent a year. By 1427, it reached 2.02 million for an annual return between 1511 to 1527 of 16 percent. It’s tempting to think that the returns increased in the latter period because Fugger had full control while, in the first term, returns were diluted because he had to share decision making with his brothers. Once liberated from interference, he was free to invest as only he could. But the improved returns are more of a case of Fugger reaping profits from earlier investments. Fugger’s total return over the entire thirty-three years was 12 percent. He might have made even more if had taken more risk but, as the balance sheets indicate, he became cautious in the latter phase of his career. With his equity and the cash coming in from his mines, he could have, in modern terms, put his balance sheet to work by borrowing more money and investing it. But what would he have done with the money? Lucrative investment ideas were in short supply, particularly for someone who had to find big opportunities in order to make a difference in his fortune. Besides, he valued wealth preservation above wealth accumulation as he grew older. He wanted the firm to remain standing for generations even if the Habsburgs defaulted. The wisdom of this became clear after his death when Anton made a bad bet on tin, trying but failing to corner the market by monopolizing production in Bohemia and Saxony. The mistake cost nearly 500,000 florins, but the firm survived. No other business in Europe could have withstood a blow like that.

  Fugger was dead but his business kept going. In a development that might have surprised him, it reached its greatest height after his death. Its balance sheet grew bigger, it opened offices in more cities, it became more international and more sophisticated, and retained its influence in world affairs. The Fugger company lasted another hundred years and wrapped up its affairs only because Fugger family members lost interest and preferred to live as country squires rather than businessmen. Some became art patrons and built libraries. Two went bankrupt and took day jobs. Another built a castle larger than the Fugger Palace.

  Because his business lived on, a summary of the two generations after Fugger is needed to complete his story. The longevity of the business reflects the strong foundation Fugger created as well as the rarity of his skills and character. Some of his successors had talent but none in the same degree. Nor did they have his conviction, his steely temperament and his ambition. How could they? Great men like Fugger are statistical flukes. But even lesser men can shape history and, in the generations that followed, subsequent Fuggers influenced the major events of the day.

  For a time, his nephew Anton Fugger did everything right. The tin fiasco excluded, he was careful and avoided becoming more entangled with the Habsburgs. In his first significant act, he settled with King Louis of Hungary and got the mines back. Louis blinked because, just like Fugger predicted, he needed cash to fight the sultan. After receiving encouragement from France, Süleyman and the Janissaries were now racing across the plains to Buda. Anton loaned Louis 50,000 florins. A Fugger agent later noted that a figure four times as high would have made no difference; the Turks were simply too formidable. Louis took the field himself and the Turks killed him at the Battle of Mohacs. His death made Ferdinand lord of Hungary or at least the areas the Turks failed to control. The Habsburg parts included Neusohl and the other Fugger mines. The relationship between the Fuggers and the Thurzos had soured with the Hungarian uprising in 1525. The Thurzos owed so much money to the Fuggers that Anton went to court to get it back. He settled after the Thurzos surrendered the 50 percent stake in the Fugger-Thurzo partnership to him. Anton retained Alexi as an agent. The Turkish threat eventually became more than Anton could tolerate. He surrendered his Hungarian leases to another Augsburger, Matthias Manlich, who later went bankrupt.

  At first, Anton steered a cautious course and let other bankers finance Emperor Charles. Charles had confined his prisoner, King Francis, to a palace in Madrid. Francis promised to give Charles the duchy of Burgundy if he let him go free. After Francis surrendered two of his sons as a security pledge, Charles let him go. Francis renounced the agreement as soon as he crossed the Pyrenees and, with the pope and Henry VIII as allies, declared war on the Habsburgs to chase them out of Italy. Anton refused to fund Charles and Charles managed on money he found elsewhere. This had calamitous consequences. The Habsburg mercenaries went unpaid and, determined to find compensation, they sacked Rome, stole its treasures and killed thousands of defenders. Had the mercenaries been Catholics, they might have spared Rome the worst of the abuses. But many were Lutheran and they let loose their rage in Vatican City. The pope escaped from his palace through a secret passage. Charles was not a party to the sacking, but the episode, more than any other, shaped his reputation in history.

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p; Anton reengaged in 1530 after Charles tried to lessen his own workload by transferring his duties as king of Germany to Ferdinand. Anton financed the handover by bribing the electors with 275,000 florins. This was good business for Anton because he received a claim to the prodigious Neapolitan tax revenues, additional contracts in Schwaz and another chunk of Habsburg real estate.

  The election paved the way for what could have potentially been the most exciting chapter in the family’s already remarkable history. After Fugger underwrote Ferdinand’s election, Charles returned the favor by making Anton a tempting offer—the chance to colonize Peru and Chile. Pizarro had defeated the Incas in 1532 and Charles needed someone to exploit the potential of the Andes. The plan would have made the Fuggers lords over much of South America. Anton agreed but changed his mind before doing anything about it. Meanwhile, the Welsers accepted a similar deal for Venezuela. It generated only losses. The Welser episode is best remembered for a slave voyage in 1528 that brought 4,000 Africans to the colony. Two years later, Charles visited Augsburg and stayed with Anton in the Fugger Palace where he ennobled Anton, Raymund and Hieronymus. They, like their uncle Jacob, could now call themselves counts. And like Jacob, they never did. During the same visit, Anton supposedly burned some imperial documents that obliged Charles to pay off a debt. A Carl Becker painting from 1866 shows Charles seated in a throne as Anton tosses the notes into a fireplace. The piece hangs in the National Gallery in Berlin and the story has become an accepted part of Fugger lore. The story is based on facts. Anton voided some obligations in 1546. Unknown is the value of the burned notes or why Anton did it. It may have been to avoid having to loan Charles even more money.

  Anton continued to earn large profits on Schwaz and in Spain. In 1538, he put down 224,000 ducats for a five-year lease for Maestrazgos and earned a profit on the deal of 152,000 ducats. He added offices in London, Madrid, Lisbon and Florence, taking the branch count up to seventy. He trafficked in gold from the Americas and India. The balance sheet of 1546 shows a business that had never been stronger. With assets of 7 billion florins and liabilities of only 2 billion, the capital came to 5 billion, indicating a 7 percent annual return over the nineteen years since Jacob’s death. This was a solid but unspectacular return. But in Anton’s defense, he battled the law of large numbers. It’s easier to grow off a small base than a big one. Jacob had already created the biggest business on earth. Anton had put even more distance between the Fuggers and the others. That alone was remarkable.

  Germans, including several electors, rushed to become Protestant in these years. The Fuggers and the Habsburgs stayed true to the old faith, convinced that Luther had it wrong. Raymund Fugger was unsparing when it came to Luther. “He shit on the Gospels,” he said. Anton’s life became more complicated as tension between the Catholics and Protestants escalated. In 1546, the Lutheran princes joined to fight the Habsburgs and claim all of Germany for the new faith. Charles, backed by Anton, defeated the Protestants in one of the great conflicts of the Reformation, the Schmalkaldic War. Charles pressed his luck in the aftermath and tried to force his opponents to return to Catholicism. The Protestants, led by the elector duke Maurice of Saxony, fought back and threatened to bring the hostilities to Augsburg unless Anton loaned as generously to them as he loaned to the Habsburgs. Anton lied and said he had nothing to give.

  The strain of being Europe’s most powerful banker wore on Anton in a way that it never did on his robust uncle. He had never asked to lead the business. Fugger turned it over to Anton only because the death of his older cousin Ulrich created a vacancy. He complained of exhaustion and ill heath, and considered liquidating the company’s assets, paying off the debts and distributing the wealth among family members. His own sons were too young to take over and his nephews eschewed the responsibility. In his will of 1550, Anton wrote that he would “end and retire” the enterprise.

  He might have liquidated immediately if not for the war with the Protestants and the danger to himself and Augsburg. Charles had spent all he had and then some on the war. Anton and other bankers turned him down when he asked for more money. “It seems as if the merchants were agreed together to serve me no longer,” Charles said. “I find neither in Augsburg nor elsewhere any man who will lend to me, howsoever large a profit offered him.” But the war trudged on and Maurice, backed now with French gold, took over one Habsburg stronghold after another. He chased Charles to Innsbruck where, high in the mountains, Charles was safe but had neither money nor troops. Feeling utterly trapped, the emperor wrote a personal note to Anton, asking him to come to the Tyrolean capital to discuss financing: “This is what I now most greatly desire.”

  Loyalty and the chance to win generous terms compelled Anton to make the trip. As the negotiations slogged forward, Maurice closed in on Innsbruck. The emperor and his court fled to Villach, hard on the Italian border, joined by Anton. Villach was a pleasant walk to the Fuggerau factory, but Anton had no time for strolls because Charles had already opened surrender negotiations with Maurice.

  What follows is a key moment in the story. Mercenaries stood by awaiting Anton’s decision. If Anton opened his purse and paid them, Charles could put enough men on the field to chase Maurice back to Saxony and save at least a part of Germany for Catholicism. If Anton refused, the Protestants would take all of Germany. Anton, sixty-one and exhausted by business, was facing a choice as momentous as the one his uncle Jacob faced when deciding who to support in the 1519 imperial election. Like his uncle, Anton stayed true to the Habsburgs and made an enormous loan of 400,000 florins. Charles and his mercenaries routed Maurice and forced him back to his castle. Northern Germany stayed Protestant and southern Germany Catholic, and so it remains to the present.

  Anton managed to sell some assets and dole out the proceeds to his family. By 1553, he had distributed 2 million florins. This was as much as the firm’s entire value when Jacob Fugger died and 40 percent of its capital at its peak under Anton seven years earlier. Jacob would never have undertaken such a liquidation, partial or otherwise. He could not bear to shrink the business. But it was the right decision for Anton because it sheltered the family’s fortune from the possibility of a Habsburg bankruptcy. Anton continued to discuss a total liquidation but, when a boom gripped Europe in the 1550s, he couldn’t resist and he made more loans. The volume of American gold flowing into Europe reached 330 tons a year in the 1540s and tripled over the next ten years. Confident that the supply was limitless and the boom would last, he and other financiers lent freely and borrowed money to make even more loans. Trouble came in 1554 when Spain delayed an interest payment. Anton needed the money to pay a loan. In a panic, he ordered his agent in Antwerp, Matthaus Oertel, to pay whatever interest rate it took to raise money and avoid default “for my credit stands thereon.” The Fugger name was strong and a single missed payment could destroy it. Anton knew this: “I think as much on men’s mockery as on the money itself.”

  Despite the warning shot, Anton remained ebullient as New World gold continued to land on European shores. He gave Oertel free rein to lend money in his name and, after Charles’s son Philip replaced Charles on the Spanish throne, Oertel loaned Philip 1.5 million florins in anticipation of quick repayment. An installment of 800,000 florins worth of American gold was on its way to Antwerp to repay Anton when Philip ordered the convoy to turn around. He needed the money for a war he was fighting with France. He apologized to Anton but said he had no choice. Anton, in a fury, fired Oertel: “The devil thank you for this agency.” But he only had himself and his greed to blame. Anton again faced default. “The creditors are many,” he wrote. “A man might shudder to think of them.” He paid his bills by going deeper into debt. His greatest fear came in 1557 when Spain defaulted. The crash pushed a number of Augsburg financiers into bankruptcy. By all rights, Anton should have joined them. But he was too big to fail. Philip thought he might need Anton again, so he suspended the claims against him. Other bankers, under court order, held fire sales to rais
e money and satisfy creditors. Anton continued as if nothing had happened.

  Approaching seventy, Anton was ill and needed someone to take over. His eldest nephew, Hans Jacob, refused. Another nephew, George, told Anton “he could not do the work and would rather live in peace.” With nowhere else to turn, he went back to Hans Jacob and forced him to step up against his wishes and run the business “until everything be recovered and until trading runs out and comes to an end.” Anton died in 1560 and, when personal debts forced Hans Jacob into bankruptcy in 1563, Anton’s eldest son, only thirty-four, took over.

  The balance sheet from that year shows capital of 663,229 florins. This was still considerable but only an eighth of the peak level. The Genoese and the traders of the Antwerp Boerse had by now surpassed the Fuggers as Europe’s leading financiers. The family seemed headed for oblivion. Then a strange thing happened. Markus Fugger, who studied ancient languages and wrote a book on horse breeding, had an aptitude for business that would have impressed his granduncle. He closed unprofitable operations, struck favorable deals on the Spanish mercury mines and used new methods to boost ore production. His efforts combined with inflation to push the firm’s capital back to prior levels. Markus distributed most of it to family members.

  The Fuggers numbered several dozen when Markus died in 1595. The money Anton and Markus gave them ensured that none of them—nor their children nor their children’s children—would ever have to work. Some of the Fuggers worked anyway and used their money to build successful businesses of their own. Others retired and enjoyed quiet lives as members of the landed gentry, living on the estates Jacob Fugger had bought from Maximilian in more adventurous times. In 1620, the Fuggers began using the noble titles Charles had conferred on their forefathers. Jacob and Anton had never used titles because they feared rebuke. The new generation of Fuggers, who were old money by now, didn’t care. The Spanish business of the Fuggers, the rump of the enterprise Jacob created, fell into bankruptcy in 1637 but it no longer mattered. The Fugger counts and countesses already had their money. They moved on. Thus the firm of Jacob Fugger & Nephews didn’t die as much as fade away.