Jakob Fugger Biography: The Richest Man Who Ever Lived

Jakob Fugger: The Richest Man Who Ever Lived

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Short Describtion about Jakob Fugger

Jakob Fugger Born: 6 March 1459

                                      Free Imperial City of Augsburg, Holy                                                 Roman Empire

Jakob Fugger Died: 30 December 1525 (aged 66)

Free Imperial City of Augsburg, Holy Roman Empire

Jakob Fugger Resting place : St. Anna's Church

Jakob Fugger Spouse(s): Sibylla Artzt

Jakob Fugger Parent(s): Jakob Fugger the Elder, Barbara Bäsinger

Jakob Fugger Relatives : Anton Fugger, nephew

Jakob Fugger Biography

For as long as mankind has had currency, a

system of trading, and a market economy, the

world has been split into the "haves" and

the "have-nots," … and for much of that

time, there's been a huge gap between the

two.

The idea of the 1 percent isn't a new concept

by any means, and in order to talk about one

of the richest men in history, we'll have

to go all the way back to the 15th century.

The man who would become known as Jakob Fugger

the Rich was born in 1459, and he had an advantage

that few people get, then or now -- he was

born into a well-to-do family.

But through a series of investments made with

incredible foresight and a willingness to

risk it all, Fugger guided his family to become

one of the richest and most influential in

history.

Here's how he did it.

Just how Rich is Rich?

Jakob Fugger: The Richest Man Who Ever Lived

Since we're going to be talking about Jakob

Fugger in the context of his wealth, it's

worth investigating just how rich he really

was.

Perspective is key, after all, so let's compare

his fortune to that of people who might be

a little more familiar.

Take Bill Gates.

His highest net worth hit a seriously impressive

$144 billion, although he gives so much money

away through his foundation, that's not really

an accurate picture.

Go back in time about 200 years, and we have

John Jacob Astor.

He has the honor of being America's first

multi-millionaire; he controlled much of the

fur trade in the early 19th century, and when

he died, he was worth what would be around

$168 billion in today's money.

Henry Ford tips the scales at around $200

billion in today's money, which puts him right

alongside names like Cornelius Vanderbilt

and Muammar Gaddafi.

Rockfeller and Carnegie come in somewhere

in the middle of the $300-billion range.

Fugger was richer than all of them.

There's a few different ways you can look

at wealth, and given the fast-changing modern

economy, plus factoring in inflation, a simple

numerical comparison doesn't really carry

much weight.

It's estimated that in today's US currency,

Fugger would have a net worth of somewhere

around $400 billion, but there's so much more

to it than that.

Consider Fugger in a grander context.

If you took Europe's entire economic output

at the time, he owned 2.2 percent of that.

If that doesn’t sound like much, remember:

we’re talking about representing more than

two percent of an entire continent.

For reference, examine John D. Rockefeller’s

value -- when he died in 1937, he owned only

1.5 percent of America's gross domestic product.

And that's just one country.

But before you get bogged down by dollar signs,

don’t forget -- we aren’t just talking

about the value of money.

Fugger wielded a great deal of power and influence,

and that can be the most valuable currency

of all.

The benefits of a privileged upbringing

Jakob the Rich may have been the economic

savant who catapulted the family fortune to

newfound heights, but the Fugger fortune wasn't

built on the shoulders of one man.

There are a few others in the family that

deserve an honorable mention.

Jakob's grandfather, Hans, was born into a

peasant family in southern Germany.

By 1367, he had moved to Augsburg and made

a few wise choices in the game of love.

He married twice, and both of his wives were

the daughters of masters in the weaver's guild.

That's not to say he was a master weaver himself,

though; Hans didn't weave at all.

What he did do was act as the middleman, providing

raw materials for those who performed the

manual labor.

Later, he would buy the finished textiles

and sell them at a massive profit.

From there, he moved up in the guild himself,

earning a spot on the committee, and eventually

serving on the Great Council of Augsburg.

Hans died in 1408, but he didn't pass the

business on to his sons; instead, his wife

Elizabeth took the reins, and spent the next

28 years using her own business savvy to continue

growing the family’s wealth.

Hans had two sons of note, Andreas and Jakob

I, and eventually, they made their own fortunes

and contributed to the family's.

Both were goldsmiths, and they worked together

until disagreements led to a split in 1454.

Even though Andreas had more immediate success,

that branch of the family was bankrupt by

1499.

Jakob, on the other hand, increased his wealth

and standing slowly but surely.

He married the daughter of a mint master,

and they raised seven sons — all while he

grew his status as a member of the city's

merchants' guild.

Two of his sons were groomed to take over

the financial side of the business.

The youngest — Jakob II, our future Jakob

the Rich — was, like many youngest sons

were, on his way to being educated for a place

in the clergy.

Jakob — also known as Jakob the Elder — died

in 1469.

For the next 28 years, once again, the business

affairs weren't in the hands of any of those

sons, but were managed by the deceased’s

wife, Barbara Basinger.

She spent nearly three decades buying and

selling, and when it came time to hand control

over to the next generation, the family was

already quite wealthy.

It was Barbara who sent her youngest son off

not just to ecclesiastical studies, but to

learn banking and bookkeeping as well.

Jakob II was just a teenager when he was sent

to Venice to learn the ins and outs of commerce

in a major European city; by the time he came

back, he had learned skills that would serve

him well.

He studied not just the principles of trading

and commerce, but he also learned how to read,

write, and speak multiple languages.

He also mastered more obscure things, like

the formulas for making conversions between

various weights, measures, and currencies.

And then, there was accounting.

The idea is common enough today, but at the

time, German merchants still relied heavily

on a haphazard system of receipts.

Organization was rarely included as a part

of a German merchant's job description, but

things were quite different in Italy.

There, they had developed extensive systems

of bookkeeping, an accounting procedure that

made it possible to stay on top of multinational

companies and trade that spanned the length

of the Silk Road.

Jakob was going to need to know how to do

all of it.

A First Taste of Wealth and Power

It

was several years before Jakob returned to

Germany, and by that time, his older brother

had already set up a firm of their own.

It was called Ulrich Fugger & Bros., and Jakob

started out with a 29 percent ownership stake.

He wasn't working with them for long when

he witnessed a deal that made a lasting impact

on him — and taught him a very important

lesson about the makings of a king.

Ulrich Fugger was approached by the Habsburg

Emperor Frederick III.

He was installed as Holy Roman emperor in

1452, and his reign was both turbulent and

historically significant.

He dealt with a series of revolts and revolutions,

as well as continued unrest on the eastern

border of his kingdom.

He was on the front lines of the long-running

battle between the Ottoman Empire and Christian

Europe, maintaining a firm relationship with

the church, but struggling to consolidate

his territory into a unified power.

One of the most important things he's still

known for isn't necessarily what he did, but

what he laid the groundwork for.

In 1477, he made a deal to join his family

with the Duke of Burgundy's via the marriage

of his son to the daughter of Charles the

Bold.

Before the marriage could be agreed upon,

though, Frederick needed to impress the Burgundians

to prove his family’s worthiness.

With the coffers running dry, he turned to

the Fuggers.

Frederick III found himself in dire need of

fine textiles, and that was precisely what

the Fugger family did best.

Jakob watched as his older brother made the

deal: he would give the Holy Roman Emperor

the fine silks and wool he needed to impress

Charles, but he wanted something in return.

That was a coat of arms, bestowed upon all

the Fugger brothers.

It doesn't sound like much, but for the family,

it was a huge deal that allowed them to rise

from just being well-to-do members of the

merchant class to being a bona fide family

of standing and clout.

It was a win-win — the deal also helped

Frederick to close on the marriage proposal,

which, in turn, consolidated power and made

Austria a force to be reckoned with.

From all of this, Jakob learned that even

kings would bend the knee before money.

Every haggle might come with some natural

give and take, but a careful negotiation could

have a very far-reaching outcome, indeed.

In 1485, Jakob made his first solo deal.

The 26-year old was still working for his

brothers when he headed off to Schwaz, Austria,

with a desire to break into the mining industry.

His brothers had given him full authority

to make any business decisions he deemed appropriate,

which turned out to be one of the better decisions

that the family made.

Jakob met with Sigismund, the Archduke of

Austria and ruler of Tyrol.

Prior to his elevation to these particular

titles, Sigismund was a ward of his cousin,

the aforementioned Emperor Frederick III.

When he was given regency over Tyrol and several

other territories, he was handed incredibly

valuable lands, rich with silver mines.

And while Sigismund may have been instrumental

in promoting and growing his country's mining

industry, he also liked to spend money as

fast as it was mined.

His love of extravagance earned him the epithet

"Rich in Coin," but he wasn't always able

to keep up with his spending.

Enter Jakob Fugger.

He had the extra cash that Sigismund so desperately

needed, so they struck an intriguing deal

-- Jakob agreed to lend the Archduke a sizeable

sum, and in return, the Fuggers would gain

the rights to the area's silver mines.

Money up front in return for the possibility

of money in the future seemed like a brilliant

trade, so Sigismund took it in exchange for

a thousand pounds of silver, delivered over

several installments.

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He did, in fact, deliver the mined silver

as promised, which wasn't always a guarantee

— as an Archduke, could have just leveraged

his own power and standing to decide he wasn't

going to bother with repayment.

Fortunately for the Fuggers, the deliveries

came in right on time, and Jakob was able

to sell that same silver in Venice at a 50

percent markup.

And that's what we call good business.

The Fugger fortune didn't come from that thousand

pounds of silver, but that first deal did

something else — it cemented a relationship

between the Habsburg dynasty and the Fugger

banking empire, because just four years later,

Sigismund found himself in dire need of more

help.

This time, his troubles started with the outbreak

of a border dispute between Innsbruck and

Venice.

Frankly, calling it a "border dispute" is

putting it rather mildly.

After noticing that the Venician military

occupied in a fight with Turkish forces in

Greece, Sigismund launched a modest opportunistic

attack, claiming a small Alpine town and extending

the Austrian borders.

It probably goes without saying that Venice

wasn't terribly happy about this.

They issued their response in no uncertain

terms: Sigismund could either return the town

and pay 100,000 florins in restitution for

his brovado, or he could prepare for Venice

to take back their town by force.

Sigismund appealed to the family's regular

financiers, but no one was willing to lend

him the money.

They refused not because of his military action,

but because he had already managed to run

up massive debts that he hadn't yet repaid.

Desperate, he returned to Jakob Fugger.

Where other bankers saw a risk, Jakob saw

an opportunity.

He agreed to lend Sigismund the money he needed,

but the interest on the deal was going to

be massive.

The contract stated that the loan was going

to be repaid with more silver from Sigismund's

mines — all output was to be sold to the

Fuggers at an almost unthinkable discount,

until the loan was repaid.

The Fuggers could then turn around and sell

that silver, and they stood to make what could

safely be described as boatloads of cash.

The deal wasn't without risks.

Sigismund had already proven he couldn't repay

his regular bankers, and there was the very

real possibility he would simply stop sending

silver to the Fuggers.

But Jakob had banked on the fact that this

was a bridge Sigismund didn't want to burn,

gambling that he would uphold his end of the

deal in order to preserve the possibility

of future partnerships.

It was a little bit about honor, and a lot

about knowing he would need to borrow money

again in the future, and it all came up shiny

for Jakob.

So shiny, in fact, that the Fuggers opened

their first branch office in Tyrol, and it's

important to stress that this was a gamble

on more than just Sigismund's ability or desire

to uphold his end of the bargain.

Metallurgy had been a work in progress for

thousands of years; the evolution of the ages

of man are defined by advancements in the

use of materials like bronze and iron, after

all.

At the time, Jakob was making deals for silver,

but the corresponding smelting technologies

had stalled.

Starting around 1480, though, metallurgical

advancements began happening in leaps and

bounds.

It was becoming much more economical to separate

silver from other metals.

In turn, the demand for not silver, lead,

mercury, and copper exploded.

Portugal, in particular, was buying huge amounts

of copper for their ships and their weapons,

and the Fugger were well-positioned to capitalize

on all of it.

In 1494, Jakob formed the family’s first

public company, a mining consortium.

His goal was a copper monopoly; to get there,

he started investing heavily in copper mining,

buying everything from mines to smelting plants

across present-day Slovakia.

It's impossible to tell just how massive this

portion of their industry was, as they were

incredibly secretive when it came to the technology

they used and the numbers they saw floating

across their accounts.

We do know that it wasn't long before they

had built up a massive trading empire that

stretched from England to India and Africa.

It was an industry that sustained the family

wealth well into the 16th century.

Bankers to the rich, the noble, and the elite

In 1491, Jakob had made another wise decision

— he organized a loan to Maxmilian I, the

son of Frederick III.

When Maximilian became a ruler in his own

right after his father's death in 1493, that

cemented Jakob's continued standing as a banker

to the powerful and not-so-rich men of the

15th and 16th centuries.

That — alongside the aforementioned investments

into a burgeoning mining industry — meant

that the Fugger family coffers were filling

fast.

Still, Jakob was always on the lookout for

the next big deal.

The trades came in faster and faster.

By 1503, they had gotten into the lucrative

spice trade.

Only five years later, they were leasing mints

in Rome, and among the coins they were in

charge of minting were those for the Vatican.

They kept that particular little side business

until 1524, and here's where it's worth mentioning

one endeavor in particular.

In 1514, one of the most powerful positions

in the church and in the political world became

available.

It was for the archbishop of Mainz, a high-ranking

position in Germany second only to the emperor

himself.

The pope at the time was Leo X, and while

that name might not sound particularly familiar,

his birth name will: Giovanni de Medici.

His reign as pope is still known as one of

the most extravagant — he was known as a

patron of the arts, and that's putting it

politely.

Elected to the papacy in 1513 at 37 years

of age, he made it his mission to elevate

the Vatican into something divine.

In order to collect the enormous sum of money

he needed to renovate the holy city, he started

doing some shady things that most devout Catholics

absolutely didn't agree with, like selling

holy positions within the church.

The position of the archbishop of Mainz was

one that was up for sale, and anyone who wanted

to buy their way into the seat was going to

have to pay up.

How much?

Adjusted for inflation, it would cost the

equivalent of about $4.8 million in today's

money.

It was Albrecht of Hohenzollern who was determined

to have it, and he turned to Jakob Fugger

for financing.

Jakob agreed, and he deposited the money right

into the pope's personal bank account.

Hey, you’ve at least got to admire the openness

of it all, right?

Albrecht got the position, but now he had

a hefty loan he needed to repay.

And how on earth was he going to do that?

Like most of Jakob's deals, it was complicated

— and there were a few players in place.

With the support of the pope, Albrecht started

selling indulgences, or get-out-of-jail free

cards for Heaven.

The idea was that anyone who was willing to

make a sizeable “donation" to the church

would have their sins immediately erased,

and their way into Heaven paved… presumably,

with the silver and copper from Jakob's mines.

Perhaps to make the tale even more believable,

the church arranged for the sale of indulgences

while claiming all the money was paying for

some much-needed work on St. Peter's Basilica.

In reality, half of the money went to the

pope, and the rest went to Jakob.

There were some major consequences, though:

the sale of indulgences was so unthinkable

to some Catholics that they decided it was

worth breaking from the church over.

Martin Luther's Ninety-Five Theses were kick-started

by outrage over the selling of indulgences,

eventually leading to the Protestant Reformation.

That sequence of events is pretty much a perfect

example of Jakob Fugger's influence: he may

not be a name that everyone recognizes in

the 21st century, but thanks to his financial

support of powerful Kings and Clergymen across

Europe, he completely rewrote world history.

A Florin Goes a Long Way

Jakob Fugger's wheelings and dealings are

too many to list, so perhaps a better way

to talk about the lasting impact he had on

the world isn't just to talk about how he

made his money, but how he spent it.

Let's take the Fuggerei; in 1517, Jakob oversaw

the groundbreaking of what would be a global

first.

After years spent amassing a fortune larger

than a single person could spend in a lifetime,

Jakob wanted to give back to the community.

To that end, he built a housing complex called

the Fuggerei.

It's located in Augsburg, Germany, and it's

entirely accurate to describe it as a city

within a city.

Opened in 1520, it was designed to provide

housing to low-income tenants; it includes

147 apartments, 67 houses, and a church.

Those who live there had to apply and meet

specific criteria: they had to prove their

devotion to the Roman Catholic faith, have

no outstanding debt, be struggling to make

ends meet, and have lived in Bavaria for two

years.

What are the bonuses?

Rent was just 88 cents a year, and three prayers

a day.

That's impressive, but what's more impressive

is that 500 years later, the Fuggerei still

welcomes tenants who are in need, and the

rent has remained absolutely unchanged.

The effect that Jakob Fugger — and, indeed,

the Fugger family — had on the world is

impossible to trace, and there's some things

that we only have time to mention in tidbit

form.

After Maxmilian's death in 1519, Jakob's support

of Spain's Charles I led to the Habsburg ruler

becoming the Holy Roman Emperor Charles V.

Jakob also loaned a large sum of money to

Ferdinand Magellan, who took that money and

set off on his famous expedition to circumnavigate

the globe.

He even set up a news service, in which he

was sent letters from around the world, updating

him on the economic and political situation

in all his areas of interest — essentially,

it was a newspaper before newspapers were

a thing.

The end of the Fugger family came gradually.

In 1512, Jakob brought four of his nephews

on board; with no children of his own, he

knew he needed someone to pass the business

on to.

It wasn't until 1525 that Jakob the Rich willed

everything to his nephew Anton, with the stipulation

that a brother and a cousin would be kept

on to advise him.

Jakob died that same year, while unrest swept

across Hungary.

Still, the business continued to grow, and

the firm reached its peak in 1546.

They continued to establish charitable organizations

(like a foundation for the treatment of smallpox),

but the very thing that had allowed Jakob

to become one of the richest men in the world

was the same thing that led to the family's

downfall.

They were so closely tied to the Habsburgs

and the fortunes of Hungary that, as trade

worsened, so did the family’s financial

opportunities.

By 1550 — two years after their withdrawal

from the Hungarian trade market — Anton

Fugger told his sons to focus on their education

and find their own fortunes in the courts

of Europe.

Their Spanish branch was bankrupt by 1557,

and after Anton's death in 1560, other branches

that had become unprofitable were sold.

Leases on mines were returned, the family

withdrew from Spain, and in 1658, the firm

was dissolved completely.

It may have been the end of a dynasty, but

the Fugger family influence has lasted much

longer than their fortune.

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