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The Fugger Banking Dynasty

By Edited Nov 13, 2013 0 0

The Fuggers were a family of German bankers and venture capitalists who replaced the de'Medici family as the most powerful and influential European banking dynasty. The family was founded by Hans Fugger, a weaver who became a citizen of Ausburg in the mid-1300s. Hans married twice, both times to daughters of a master of the Weaver's Guild, in which he became a high-ranking member. His sons Andreas and Jakob I continued his business enterprises and also became goldsmiths. Andreas was the more ambitious of the two, and became known as "the rich Fugger" due to his merchant activities and land purchased. Emperor Frederick III granted Andreas' son Lucas Fugger a coat of arms featuring a golden deer on a blue background, for which he was called "the Fugger of the Deer." Both Andreas and his sons overextended themselves in business and went bankrupt, but the family continued to spread throughout Europe. 

Jakob I founded a second branch of the family and ran his enterprises more conservatively than his brother. Jakob was a master weaver and a merchant involved in city politics, and married the daughter of a goldsmith. By the 1460s he had become one of the richest men in Augsburg, and his branch of the family became known as the "Fuggers of the Lily" after their coat of arms. Jakob's I's eldest son Ulrich Fugger continued the family businesses. After providing the Habsburgs with suits of clothes for the wedding of Maximilian I and the daughter of Charles the Bold of Burgundy, the Fuggers became bankers for the Habsburgs, a highly valuable relationship that would bring the family fortunes. Ulrich and several of his brothers in Rome also established business with the papal court by handling payments sent to the Church for the sale of indulgences (cancellations of punishments for various sins) and the acquiring of Church offices. The Fuggers became wealthy enough to begin making large loans to Maximilian I, who granted them large landholdings and valuable special privileges. 

Ulrich and Georg Fugger established a branch of the family business in the German merchants' building in Venice where their younger brother Jakob II studied bookkeeping. Jakob was very shrewd and eventually took charge of an agency of the family business, rather than pursue a career in the Church. In exchange for a loan made to Archduke Sigismund, Jakob acquired an interest in Tirolean silver and copper mines, the first of a large number of interests the Fuggers would acquire in mining and precious metals. 

Jakob, who was known for his motto "I want to gain while I can," established the family's first public firm in 1494. They doubled their initial capital several years after Jakob persuaded the Prince Bishop of Brixen to invest in the firm as a silent partner. Jakob opened a number of foundries and expanded the Fuggers' sale organization, intending to build a monopoly in copper mining. They used the large profits from their operations to buy an interest in Silesian mines, where Jakob partnered with a mining expert to lease copper mines in Neusohl, which eventually became the largest mining centre of the period. Jakob was also instrumental in raising funds for the election of Maximilian's successor Charles V, raising over 500,000 guilders — more than half of the total election funds. He financed this huge sum with streams of revenue from his business interests, including mercury and silver mines. 

Not surprisingly, Jakob — later known as "Jakob the Rich" — met with sharp criticism for a number of his practices. Government authorities in Nuremberg brought legal action against him for monopolistic business practices, and his mining interests were compromised by Hungarian nobles attempting to nationalize the mines, which were also the site of major social unrest. The Fuggers were also one of a number of merchant families attempting to persuade the Pope to repeal prohibitions on interest charges for the sale of indulgences, and Jakob was denounced for this by Martin Luther, whose indignation over the sale of indulgences was a major factor contributing to his radical actions in the Reformation.

Jakob persevered through all these obstacles using his shrewd negotiating skills and tenacity, and became one of the richest men in the world. In addition to his business empire, Jakob built the castle of Fuggerau in Tirol, a number of monuments, and the Fuggerei, a housing development with over 100 dwellings rented at low rates to the poor. He was also featured in a portrait by the great German painter Albrecht Dürer. 

Jakob died in 1525, and was succeeded by his nephew Anton Fugger. The company's assets totalled more than 2 million guilders at the time of Anton's succession. Having strong ties to the papacy, the Fuggers were ardent opponents of the Reformation and provided funds to support the war against the Protestants. Although Anton managed the dynasty's enterprises very skillfully, the yields from their largest mining interests diminished until Anton was obliged to dissolve them. He was also forced by Spanish nationalists to renounce interests in Spain. Anton engaged in various international trading ventures in an attempt to make up for the losses. While the Fuggers' commercial empire was in decline, Anton nevertheless managed to amass over 5 million guilders.  

As Anton Fugger aged, he had difficulty in selecting a successor, as none of his sons or nephews showed any serious interest in business. Meanwhile Anton was obliged to continue borrowing to finance the firm's activities. Although he amassed nearly as many liabilities as assets by the time of his death, he had safeguarded much of the family fortune by purchasing various landed estates. Most of Jakob and Anton's descendants spent their lives pursuing aristocratic activities and enjoying their estates. However, Anton's oldest son Markus Fugger was eventually chosen to take charge of the family business. Markus carried on the business successfully, eventually earning huge sums of money from the company's complex of mercury mines at Almaden. The Fugger company remained in operation until the Thirty Years War of the 17th century, when the firm was finally dissolved.


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