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podcast transcript
When you think of the wealthiest people in history, you typically imagine kings, emperors, or modern-day tech billionaires.
But 500 years ago, one merchant banker from Augsburg may have been wealthier than them all.
He financed the emperor, influenced papal politics, controlled important mines, and helped shape the future of Europe.
Despite his wealth and power, few people today know his name.
Learn more about Jakob Fugger, one of the most powerful businessmen of all time, in this episode of Everything Everywhere Daily.
It is very difficult to compare wealth and money over a long period of time. Most people would rather live an average or even below-average life in modern society than they would have been rich hundreds of years ago. There was no money back then to provide modern conveniences. Because it simply didn’t exist.
Another problem is comparing a monarch, who had absolute control over his domain, to a business owner. Previous episodes have featured some of the wealthiest people in history. Some of them, like Mansa Musa of the Empire of Mali or Augustus of the Roman Empire, were able to personally claim a significant portion of the country’s wealth as their personal property.
In this episode, I want to focus on a man who was neither a monarch nor a modern tech billionaire who got his net worth from modern public stock markets.
He was a merchant who, through a series of incredibly astute decisions, built a net worth that represented a significant portion of the entire European economy.
He was born Jakob Fugger von der Lilie on March 6, 1459 in the Free Imperial City of Augsburg. The city answered directly to the Holy Roman Emperor rather than to a local prince, giving it unusual political autonomy and making it one of the wealthiest trading, banking and manufacturing centers in Europe.
When Fugger was born, his family was already one of the most prominent in Augsburg, the main city of Bavaria before its fall by Munich.
Jakob’s father died in 1469 when Fugger was only ten years old. His mother took over the business until her three surviving sons came of age. Initially, Jakob and his brother Markus targeted the clergy.
However, the death of one of the brothers in 1473 changed plans. At the age of fourteen, Jakob was told to abandon his religious aspirations and instead join the family business.
Jakob began his education at the age of 14 in Venice, where he studied modern bookkeeping from 1478.
Fugger’s time in Italy was a turning point in his life. There he was fully immersed in the most advanced business environment of his time.
For ten years he worked as an apprentice in the Venetian warehouse of the Fugger family, mastering the merchant trade and then becoming a partner in the business.
After forming a partnership, Jakob began changing the mission and scope of the family business. He stopped the company from reselling goods such as spices, silk, and other textiles, and instead began looking for profitable investments, especially mines, loans, and bills of exchange.
Jakob, who took charge of the Fugger business in Innsbruck in 1485, showed sound business acumen by making the company a partner in the mines of Tyrol, which had rich silver and copper deposits.
His first major financial breakthrough came in 1487. His first transaction, establishing connections with those in power, was a loan of 23,627 florins to Sigismund, Archduke of Tyrol. Crucially, the loan was secured by a mortgage on the Archduke’s valuable silver mines in the Schwaz region.
This deal gave Jakob control of the mines in Tyrol in return for funding the duke’s lavish lifestyle. The industrial activities of the Fugger family brought people to Schwaz, and by the first half of the 16th century, Schwaz had become the world’s largest mining center.
Through his position, he was able to force mine operators to sell silver directly to the Fugger family, bypassing middlemen and establishing vertical integration between mines and trade.
From 1495, many mines in the Banská Štiavnica region and the current Banská Bystrica region in Slovakia were owned by the Fugger family.
As a result of their mining activities, they had a virtual monopoly on the European copper trade in the 16th century. Copper, an extremely valuable resource, was essential for the production of cannons and bayonets as well as coins.
Fugger also entered global trade early on. After Vasco da Gama discovered the sea route to India and established Portugal’s spice monopoly, Jakob Fugger entered the spice trade and opened a factory in Lisbon in 1503.
This was fundamentally different from the trade his family had previously engaged in, in that he was investing in the procurement of spices rather than reselling them to other merchants.
He, along with other merchants from Germany and Italy, contributed to the fleet of 22 Portuguese ships under Francisco de Almeida, which sailed to India in 1505 and returned in 1506.
His financial operations were as important as his mining operations. Medieval money lending was often fragmented and local. Fugger helped pioneer large-scale international finance.
He lent money to kings, princes, bishops, and popes. He moved funds across borders through a network of agents and branches. He managed exchange rates, collateral and political risks. He did not invent banking, but he represented a new scale of private finance that had never existed before.
Although mining brought him great wealth, Fugger’s banking gave him political power. European monarchs always needed money for wars and building projects.
The cornerstone of Fugger’s political power was his financial ties with the Habsburg dynasty, especially Emperor Maximilian I. Maximilian’s combination of military and political ambitions earned him a reputation as “the worst manager of all the Habsburgs” and he was particularly profitable.
In 1510 the other two Fugger brothers in the partnership died. Fugger then brought his four nephews, Hieronymus, Ulrich, Raimund and Anton, to the company, and the company’s name was changed to “Jakob Fugger and Nephews”.
At this point Fugger was inextricably involved in the finances of the Holy Roman Empire. In return, Fugger was granted land titles and noble titles in 1511, and the additional rights of count in 1514.
This relationship with the Habsburgs culminated in the Imperial Elections of 1519. When Maximilian I died he owed Jakob Fugger about 350,000 guilders. At the time this episode was recorded, its gold equivalent was approximately $186 million.
To avoid losing this investment, Fugger had to help Maximilian’s grandson Charles V ascend to the throne. It took a huge bribe totaling 851,585 guilders to get Charles unanimously elected by the Electoral College. Jakob Fugger contributed 543,385 guilders, about two-thirds of the total, with the remainder coming from the Welser banking family and three Italian companies.
Fugger was so convinced of his indispensability that he later reminded Charles V of this fact in a famous letter. In 1523, he wrote directly to Charles V, then the most powerful man in Europe and on earth, demanding repayment. In the book, Fugger candidly stated that without his money, Charles would never have won the imperial crown.
Charles V repaid some of his debts to Jakob Fugger and the Fugger company, but not fully or on an ongoing basis. Like many rulers of his time, Charles relied heavily on rolling loans, delayed payments, renewals of credit, and grants of privileges rather than direct repayment.
Although the Fuggers were partly compensated through interest, tax revenues, mining rights, monopolies, and access to lucrative state contracts, much of the royal debt was often restructured or carried forward over the years.
The Habsburgs were not the only power center over which Fugger could influence. He also had connections with the Pope. The Fugger family was the first German trading company to establish direct business links with the Vatican.
In 1500, Jakob Fugger lent the Vatican money to build a new St. Peter’s Basilica, the Sistine Chapel, and other buildings within the Vatican. For the new Pope Julius II, Fugger financed the recruitment of the Swiss Guard in 1505-1506, which still exists today.
The links between Fugger and the Reformation are deep. Archbishop Albert of Brandenburg borrowed a large sum of money at interest from the Fugger family to purchase a church office. To raise the income to pay off this debt, Albert paid an additional 10,000 ducats to secure the right to administer the “Jubilee Indulgence” from Pope Leo X, designed to pay for the construction of St. Peter’s Basilica.
A deal was made for Fugger Bank, which has branches across the continent, to pool these profits for a profitable stake. Agent Fugger, accompanied by indulgence preacher Johann Tetzel, held the key to indulgence. When the books were full, a company executive opened them and transferred the money to Fugger’s office in Leipzig. Jakob Fugger received a 3% cut for each shipment to the South.
Jubilee indulgences became a symbol of perceived corruption and the selling of spiritual interests, sparking criticism from Martin Luther in 1517 and sparking the Protestant Reformation.
Fugger also played a key role in reorganizing church doctrine on issues of concern. He influenced the church’s stance on usury, helping to legalize the charging of interest on loans.
Fugger also used his wealth for extensive philanthropy. In 1521, he founded the Fuggerei, which provided affordable housing for the city’s poorest citizens at a cost of one florin per year, with the obligation to say three prayers for the Fugger family.
Fuggerei still exists today, 500 years after it was founded. These terms have not changed in 500 years and have never been adjusted for inflation. Provides housing for 150 citizens of Augsburg. The annual cost of living there is now less than 1 euro, and the requirement to pray three times daily still remains.
Fugger was also a patron of art, architecture, and culture. Like the Italian merchant princes, he used buildings, chapels, tombs, and commissions to secure his memory.
His family chapel in Augsburg became one of the major Renaissance monuments north of the Alps. This reflects another change in the times. Wealthy merchants were increasingly outperforming hereditary nobles in financing public projects.
Jakob Fugger died childless in Augsburg in 1525 at the age of 66. He left behind a huge business empire.
His nephew, Anton Fugger, took over leadership of the company and continued to run it for several decades. However, over time, changing markets, sovereign defaults, wars, and changing trade routes weakened the family’s control.
The question that haunts Jakob Fugger is just how rich he is. As mentioned at the beginning of the episode, comparing wealth over the long term is very difficult. But that doesn’t mean people haven’t tried.
American journalist Greg Steinmetz estimated Fugger’s total wealth to be about 2% of Europe’s GDP at the time, equivalent to about $400 billion in 2015 and about $512 billion today.
For better or worse, Jakob Fugger’s historical significance is enormous. He helped transform Europe from a medieval commercial world of local merchants to a modern system of credit, international finance, and politically connected capital.
Fugger is an often overlooked figure in history. He was not a general, a king, or a pope. Rather, he was the man behind the powers that be who financed and promoted many important people and events in the early 16th century.
