I’ve made no secret of my admiration for people like Elon Musk and Jeff Bezos. Thanks to Elon’s Starlink, I get to work from home in the farmlands of Northern Italy’s Il Piemonte. And if not for Jeff Bezos, I wouldn’t have Amazon to deliver me my creature comforts I can’t get from Italian stores.

Sure, not all billionaires are created equal. Mark Zuckerberg turns my stomach, Bill Gates is a disaster, and I’m sure Larry Ellison is planning some kind of insurrection.

But the right kinds of capitalists and entrepreneurs make the world a better place. And some of them influence government and policy far beyond anyone’s imagination. This has been evident throughout recorded history.

Today, I’m taking you back to medieval Germany because there’s one man from that era who was richer than today’s billionaires, if you can believe it.

No person had a bigger influence on medieval finance and politics than the man you’re about to read about. But so few Americans have heard of him. Well, sit back, relax, and enjoy the biographical piece.

Who the Fugger Is This?

In the annals of history, few names resonate with the opulence and influence of Jakob Fugger. 

Dubbed “Fugger the Rich,” this medieval magnate's wealth and power dwarf the riches of many modern billionaires. His story is a tapestry woven with threads of ambition, innovation, and strategic mastery, set against the backdrop of a Europe on the cusp of the Renaissance.

Fugger wasn’t just a wealthy merchant but a pivotal figure in his era's economic and political transformation. His life story reads like a grand narrative, intertwining the destinies of empires with the evolution of modern finance.

Early Life and Background

Born in 1459 in the imperial city of Augsburg, then a bustling mercantile center in the Holy Roman Empire, Jakob Fugger was destined for a life beyond the ordinary.

His family, already established in the textile trade, provided a fertile ground for his early introduction to commerce.

Fugger's education, rare for its breadth and depth during that period, was a fusion of practical business training and a broader grasp of the geopolitical landscape. This blend of knowledge and acumen set the stage for his later exploits.

In his early twenties, Fugger traveled extensively, a journey crucial in shaping his global perspective on trade and finance. These formative years were instrumental in developing his understanding of the interconnected nature of European economies and the emerging global trade networks.

Rise to Power and Wealth

Bold financial moves marked Jakob Fugger's ascent to the top of European wealth. His entry into the banking world was almost accidental, born out of necessity and opportunity, but it quickly became the cornerstone of his empire.

The pivotal moment came with his foray into financing the ambitions of the Habsburg dynasty, particularly Emperor Maximilian I. This was more than a mere financial transaction; it was a strategic partnership that would yield immense power and influence.

His business ventures were a mix of innovation and risk-taking. Fugger was a pioneer in the use of financial instruments such as bills of exchange and letters of credit, precursors to modern banking and trade finance tools.

Bills of Exchange

A bill of exchange mandates that one party pay a fixed amount of money to another party at a specified time in the future. Bills of exchange are often used in transactions between buyers and sellers in different countries. They’re used to secure payment for goods or services and can be bought, sold, or traded.

A key feature of a bill of exchange is that it can be endorsed to another party, making it a negotiable instrument (in this case, “negotiable” means “tradable” or “transferable”). This means the legal ownership of the bill and the right to receive the money can be transferred. They’re often used to guarantee payment at a future date, helping manage cash flows and credit risks.

Letters of Credit

A letter of credit guarantees a seller will receive payment up to the amount specified in the letter, provided certain conditions are met. In international trade, this is particularly useful because it reduces the seller's risk.

The seller is assured of payment as long as they deliver the goods in accordance with the agreed terms. The buyer obtains the letter of credit from a bank and provides it to the seller.

The bank will release the funds to the seller once the goods are shipped and the required documents are submitted. Letters of credit are crucial in international trade, where the buyer and seller may not know each other personally and are operating under different legal systems.

They provide transaction security, ensuring the seller is not at risk of non-payment and the buyer receives the goods or services as specified.

Joint-Stock Companies

His establishment of joint-stock companies was revolutionary, predating the famed Dutch East India Company by decades. (The Dutch East India Company was the first publicly traded joint stock company.)

Like today’s publicly traded companies, joint-stock companies have several defining features:

Shared Ownership: Ownership is divided into shares, representing a portion of the company. Individuals or entities can buy and sell these shares, becoming shareholders or stockholders.

Limited Liability: Shareholders are only liable for the company's debts and obligations up to the amount they invested. The shareholders' personal assets are generally protected if the company goes bankrupt or faces legal issues.

Capital Accumulation: By selling shares, a company can raise significant funds from a broad base of investors. This makes it easier to finance large-scale projects and ventures.

Transferability of Shares: Shares can be freely bought and sold (transferred) on stock exchanges or privately. This transferability makes it attractive for investors, who can liquidate their investments if necessary.

Separate Legal Entity: A joint-stock company is a separate legal entity from its owners. This means it can own property, enter into contracts, sue, and be sued in its name.

Governance Structure: Shareholders elect a board of directors to manage the company. The board makes major decisions and oversees the company's overall strategy, while executives appointed by the board manage the day-to-day operations.

Perpetual Succession: Joint-stock companies continue to exist even if the ownership or the board members change. This perpetual succession is independent of the lives of its shareholders or directors, giving the company stability and an indefinite lifespan.

Without these three innovations, we simply don’t have world trade or modern finance.

Mining, Trading, and Commodities

The scope of Fugger's business ventures was vast, covering everything from mining operations in Central Europe to trade expeditions to the Far East and Africa. His investment in the mining industry was a testament to his business acumen and a strategic move to control essential resources. The Thuringian copper mine, for example, gave him a commodity in high demand across Europe, which led to immense wealth.

Fugger’s involvement in the spice trade was another cornerstone of his empire. He understood the value of these commodities in a way that few others did, capitalizing on the burgeoning demand for luxury goods in Europe. His trade routes were not just commercial enterprises; they were geopolitical tools that helped him build a network of influence that extended far beyond Augsburg's borders.

His monopoly over the European copper market was akin to controlling a precious lifeline of the continent's economy. This control afforded him leverage over commercial and political realms, making him indispensable in European power dynamics.

Political Influence and Relationships

Jakob Fugger's wealth and business acumen catapulted him into the upper echelons of European politics. His financial support secured the election of the big-chinned Habsburg, Charles V, as Holy Roman Emperor, reshaping the complex chess game of European politics for decades.

Fugger carefully cultivated his relationships with monarchs and church leaders, allowing him to navigate the tumultuous political landscape of the time. He balanced his business interests with political alliances, often acting as a mediator and advisor to the most powerful figures of his era.

Fugger’s Legacy

Jakob Fugger’s contributions to finance were revolutionary. His pioneering of financial instruments like letters of credit and bills of exchange laid the groundwork for the modern financial system. His practices in banking and finance were ahead of their time, setting the stage for a more interconnected and efficient economic world.

His legacy in finance is comparable to that of modern financial innovators. Fugger was a visionary who recognized the potential of financial markets long before the concept of a globalized economy had taken shape. His impact is felt even today in the principles and practices of banking and trade.

Personal Life and Philanthropy

Despite his immense wealth and influence, a commitment to his community and a deeply ingrained sense of responsibility shaped Fugger’s personal life. His establishment of the Fuggerei, a housing complex for those in need that still operates today, is a testament to his philanthropic vision. He was a devout Catholic, and his faith played a significant role in his charitable endeavors.

This balance between his ambitious business pursuits and a commitment to social welfare defined Fugger’s life. This aspect of his character often contrasts with the typical image of a shrewd and ruthless businessman, showcasing a complexity that defines the man behind the wealth.

Wrap Up

Jakob Fugger's life and achievements represent a pivotal chapter in the history of finance and economics. He was more than just a merchant or a banker; he was a visionary who transformed the economic landscape of his time.

His story is a blend of ambition, innovation, and strategic mastery, underscored by a nuanced understanding of the power of wealth.