Dobratsch Mountain climbs 5,700 feet above sea level, a snowy lump imposed on the high meadows of southeast Austria and a soaring boundary at the intersection of Austria, Italy and Slovenia. The village of Arnoldstein sits at the base. Monks looking for solitude built a monastery there in the twelfth century. Apart from a bad year in 1348—the Black Death and an earthquake that buried the village—they got what they were looking for. Trouble came later. In 1478, Turkish adventurers attacked Arnoldstein and killed monks and anyone else they could find. In 1494, the Turks came back and captured ten thousand people in a neighboring province to use as slaves. The monks feared more killing. Then, just a year later, the stillness that once reigned over Dobratsch vanished amid a riot of saws, axes and falling timber. Fugger had come to Arnoldstein. He broke ground on the biggest factory Europe had ever seen.
The commercial potential of the area had always been there. An old Roman road crossed the Drau River in neighboring Villach. Traders worked the territory in the Middle Ages before earthquakes and Turks made them reconsider. Fugger liked the idea of being close to his Italian customers. Using his Tyrolean profits, he bought land near the monastery. The acquisition marked the first step in an eastern expansion that underlined his willingness to bet big, defy conventional wisdom and go anywhere for a deal. It was a sensational move, one that to outsiders looked as crazy as Fugger’s giant loan to Sigmund. It again showed his striking independence of thought.
Called the Common Hungarian Trade on his books, the effort that began in Arnoldstein became his most profitable investment. It took all his political cunning to make it work, but nothing contributed more to his fortune. He remained consumed by the Hungarian Trade on his deathbed decades later.
The story began when Maximilian, just after taking Tyrol, came to Fugger with a plan to reclaim Vienna. Even then, Vienna was a jewel. A university gave it a lively cultural life. St. Stephen’s Cathedral, begun in the massive Romanesque style and completed with airy Gothic flourishes, gave the city a stunning centerpiece. “It cost more than could be got for our whole kingdom,” said a Bosnian ambassador. Corvinus liked Vienna better than his own dreary capital city of Buda and had moved there. After he died, the students of Vienna rose against the Hungarians and begged Maximilian to free them. Fugger was Maximilian’s favorite banker, at least at the moment. He saw advantages of a Habsburg return to Vienna and gave Maximilian what he needed. Approaching Vienna at the head of a large, Fugger-financed army, Maximilian took the city without a fight. Then he marched into Hungary in search of more conquest. Hungary couldn’t battle Maximilian and the Turks at once. It signed a peace treaty that opened Hungary to German merchants. Fugger was the first who came.
At the time, Fugger needed another deal. He was suffering from the high-class problem of having too much money. His silver profits generated more cash than he could invest in Tyrol and he was already loaning Maximilian as much as he reasonably could. The easy option would have been putting more money into textiles. It was a huge industry that could absorb his capital. The drawback was competition. Nothing much had changed since Hans Fugger left his village. Augsburgers and everyone else in southern Germany made or sold cloth. As an asset class, textiles were overbought and margins were thin. Land was another investment possibility. But land suffered from even lower returns than textiles. Fugger wanted an investment as lucrative as his silver deal in Schwaz.
It spoke to his ambition that he turned to the wild East. The opportunity was in copper. A copper belt ran along the Carpathian Mountains from Slovakia to Romania. Hungary controlled it all. Like silver, copper was in high demand. Copper is infinitely useful. A low melting point makes it easier to shape than iron and, when mixed with tin to form bronze, it is unlikely to shatter. This made it ideal for cannons and muskets—the weapons that swung the balance in Renaissance warfare. The Hausmachtpolitik crowd paid dearly for them.
Private operators owned the mines in Hungary. Fugger wanted to buy them and process the copper across the border in Arnoldstein. He could make more money as a mine owner than as a lender, but only after investing scary amounts of money up front. He needed to clear the land, dig the mines and install roof supports. At Arnoldstein, he would have to build a smelter to refine the ore and a factory to turn it into cannons. He needed to build roads to connect the mines with the smelter. These were huge investments. It was risky enough with the Turks at the door. The long payback period on the capital improvements made it even riskier. It would take years before he could turn a profit even under good conditions. If conditions turned on him, he could lose everything. He knew the perils and observed that most who tried mining met their demise. “No business can fall apart more quickly than mining,” he said. “Most of the time, ten perish before one gets rich.” Then there was the political risk. Maximilian’s peace treaty offered protection, but treaties were not guarantees. Official protection could turn to hostility in an instant. The Hungarians had let Germans invest in their country. But they never promised to like them.
To cover himself, Fugger made an inspired decision. He agreed to take on a partner named Johannes Thurzo. Germany’s vaunted reputation for engineering began with men like him. By the time Thurzo met Fugger, he was already famous among German miners for restoring a flooded mine in Saxony. His method seemed simple. Workers in the mines filled sacks with water and a wheel, propelled by a stream, pulled a rope to bring them to the surface. Workers dumped the sacks and sent the empties back down the shaft. The complexity came in getting the system to function.
Thurzo had talents besides pumping. He knew all about metallurgy and was an expert in a new process called liquidation, used to separate copper from silver. Even more important to Fugger was Thurzo’s heritage. Thurzo was Austrian and spoke German, but his ancestors came from Hungary, making him tolerable to the locals. There was one more thing. He was a citizen of Cracow, making him tolerable to Hungary’s King Ladislaus, who took over for Corvinus and was part of the same family, the Jagiellons, who ruled Poland. King Ladislaus controlled the mining rights. He was more likely to grant rights to one of his own than to a German like Fugger.
Thurzo already had a few contracts in Hungary to save flooded mines. But the mine operators were too poor to pay him. Here they were, with rights to exploit some of the richest mines in Europe, but unable to bring them into service. The ore might as well have been at the bottom of the ocean. This was a problem made for Fugger because it could be solved with money. Fugger traveled to Vienna in the summer of 1495 to sign the deal with Thurzo. The terms spoke to Thurzo’s significance. Although Fugger put up all the cash, he agreed to give Thurzo half the profits. The deal pleased both sides. Three years after it began, Fugger and Thurzo solidified the arrangement when Fugger’s niece married Thurzo’s son, George. This was the first of two Fugger-Thurzo marriages. Another came sixteen years later. A Fugger family chronicle makes no mention of romance. The marriages, it says, were “for the furtherance of the Fugger trade.”
With Fugger’s money, Thurzo bought up leases. He struck good deals because he and Fugger were the only ones in Hungary with the capital and know-how to restore them. While Thurzo collected mines, Fugger built the operation in Arnoldstein. He built a fortress as much as he built a factory. Mindful of the Turks and the murderous licking they gave the monks, Fugger built high, crenelated walls into the mountainside. His men could look over the river and roads from the turrets and spot attackers before they got close. They could open fire from on high. Behind the walls, workers installed furnaces, vats and molds to smelt copper and cast cannons. The structure was ugly but functional. The locals called it Fuggerau or the place of Fugger.
Fuggerau loomed over the village. The monks suddenly found themselves in a factory town. Fellers cleared timber for miles around to fire the furnaces and left the hillsides barren and pockmarked. To get water for the production process, Fugger diverted the nearby rivers and dumped the factory’s waste back in. The monks complained about the noise and filth. Fugger took a modern approach to stifling dissent by paying them a modest sum of ten florins a year to shut up.
Here is a good place to mention that Fugger’s far-flung experiences put him in the path of many of the era’s most interesting figures. Even in Arnoldstein, on the fringes of civilized Europe, Fugger may have had such an encounter. The factory complex doubled as a research center. Fugger hired alchemists to find him the next metallurgical breakthrough and hired teachers to train mining engineers. One was a Swiss doctor, William von Hohenheim, whose son Philip attended the Latin school in Villach and later learned chemistry from Fuggerau instructors. Under the name Paracelsus, he became a father of modern medicine. He ridiculed the Greek notions about medicine then in vogue, with all their talk about balancing humors and biles, in favor of observation and scientific analysis. He coined the word “zinc” and inspired the fictional Dr. Frankenstein. Fugger may or may not have met Paracelsus. If he did, he might have lost interest in him once he realized Paracelsus cared more about disease than about mixing chemicals to create gold.
Paracelsus got a lot of things wrong. He believed in astrology and witches, and billed his book Nymphs, Gnomes and Vulcans as a nonfiction field guide. But he was right about mining. It was a brutish occupation, particularly in his time. Using only picks and hammers, Fugger’s miners scraped the walls in low-ceiling tunnels 500 feet beneath the surface. Roofs collapsed. Shafts flooded without warning. Even under the best circumstances, the work was punishing. Ventilation was a few holes punched into the mountain or whatever fresh air made it through the mine entrance. Water dripped from the ceiling and leached through the walls. In the Schwaz mine, the temperature was a constant 54 degrees. Humidity was 99 percent. Lamps fueled by foul-smelling animal fat lit the way. Miners choked on the smoke. The result, as Paracelsus noted in On Miners’ Sickness and Other Miners’ Diseases, the first book on occupational health, was lung disease and stomach ulcers. High pay made up for the health risks. A miner earned a third more than a farmer and, if he was smart and worked hard, he moved up. The peasant Hans Luther began in the pits of Saxony, rose to foreman and eventually owned a mine. He earned enough money to send his son to university and rejoiced when his boy studied law. Then came the thunderbolt that struck young Martin Luther in a field and his promise to become a monk. His law career was finished and so were his father’s dreams.
Miners also had to endure harsh bosses. Duke Sigmund was an exception. When Sigmund controlled Schwaz, he took a conciliatory approach to labor relations. In 1485, the same year that Fugger made his first loan to him, miners marched on Innsbruck to demand better treatment. Horrified by confrontation, Sigmund agreed to radical concessions. He gave them five weeks of paid vacation and an eight-hour day. The concessions, made in a moment of desperation, swept the European mining business, traveled to America a century later and became routine practices across industry. But Maximilian was less accommodating. His Gossensass mine near the Brenner Pass was among those supplying Fugger. Miners barricaded the shaft in 1493 and demanded better treatment. Rather than negotiate, Maximilian sent in troops, arrested the ringleaders and chased their sympathizers from the area. At Fuggerau and in Hungary, Fugger drove his workers as hard as Maximilian, and his operators in Hungary once executed an agitator. Fugger might have looked like a benevolent employer when he petitioned the church to give his miners relief from fasting. But this was self-interest—he wanted his miners strong enough to work a full shift. Miners often accused him of chiseling them on wages. His rough treatment of workers came back to haunt him.
Information is everything on a modern trading desk. The first to get important data has an edge he can exploit for millions. In the name of fair play, the government now mandates that everyone get market-moving information at the same time. But that doesn’t stop traders from cheating. That’s because the slightest head start—whether it’s minutes, seconds or even microseconds—can make all the difference.
It was the same in Fugger’s time only with longer transmission times and no laws to control the flow. Fugger’s competitors knew the advantages of being first as well as Fugger did. But Fugger craved market-sensitive information so much that he created a system to get it first. His creation? A news service, the world’s first. He set up a network of couriers who raced to Augsburg with market information, political updates and the latest gossip—anything that would give him an edge. A postal service had been running between Augsburg and Venice since the fourteenth century. A similar network linked Augsburg with Innsbruck and other imperial cities. But the networks, staffed by city-appointed “post boys,” were too incomplete and slow for Fugger. He wanted a system tailored just for him. In the years ahead, he learned about important deaths and battle outcomes before Maximilian, the electors and his competitors. Historians dubbed the updates the Fugger News Letters. The letters became more sophisticated under Fugger’s heirs. Although content continued to come from Fugger agents, they eventually looked more like newspapers than anything else. Fugger’s letters preceded the Notizie Scritte of Venice, the first newspaper, by half a century and earned Fugger a footnote in the history of journalism. He had staggering courier bills but he happily paid.
His first recorded use of the news service came just after Maximilian took back Vienna. With that out of the way, the emperor was ready for a new war and turned his thoughts to Burgundy, his inheritance from Charles the Bold. The French had stolen it from him after Mary’s death, and he wanted it back. He had no army, and he needed mercenaries and money to fight. He asked Fugger for a loan and offered what he considered the best collateral imaginable: a pledge from Henry VII, the king of England, who hated the French as much as Maximilian. Henry offered Maximilian 200,000 florins. Maximilian asked Fugger to front the money so he could start immediately. He promised to pay him back after he got the money from Henry. Fugger understood that Henry collected a lot of tax money and managed his finances as well as any king in Europe. But he knew better than to trust a promise and dragged his feet.
Fugger was waiting for information. He had spies in England who could tell him if any boats with gold had left English ports. Soon enough, word came back that no boats were coming. Fugger refused to make the loan.
Maximilian was furious with Fugger and refused to believe that Henry had stiffed him. Assuming that the English money was still coming, he threw a small force into Burgundy. The French outnumbered Maximilian, but he had more cannons and defeated the French at Dournon. He came within striking distance of Dijon when he learned that Fugger was right. Henry had dropped him. He later discovered the French had bribed Henry to stay neutral. Fugger played a part in the truce. To keep Maximilian from destroying himself by overreaching, Fugger bribed the French to sign a treaty that let Maximilian lock in his gains.
In the summer of 1495, Maximilian journeyed to the Rhineland city of Worms to participate in one of the grandest ceremonies of the age: The installation of the emperor. After a joust that he won, rituals in place for six centuries took over. He took his place on a throne and the electors came to his side. Maximilian would have stuck out under any circumstance. He stood over six feet tall and had flowing locks that hung over his broad shoulders. For the ceremony, he wore a cloak held together with a jeweled clasp the size of a dinner plate. He held a sword in his lap. One elector, on bended knee, brought him an orb, another brought him a scepter and another his crown. Forty princes and seventy counts pledged their loyalty. Everyone called him Kaiser, the German word for Caesar. He promised to be a just ruler. The people gave him their adulation. Years earlier, when he became Duke of Flanders, one observer could barely contain himself. “I know not which to admire most—the beauty of his youth, the bravery of his manhood or the promise of his future.” Maximilian made a similar impression in Worms. “Not even Alexander the Great heard such praise,” remarked a contemporary. For the thirty-six-year-old Austrian, who only a few years earlier was captive in a Flemish jail, it must have seemed like a dream.
Once the ceremony finished, Maximilian presided over his first imperial diet. These assemblies, known as Reichstags in German, rotated among cities and resembled meetings of Congress or Parliament except they met less frequently and the participants had more fun. Tournaments preceded the diets and the dignitaries hosted dances and banquets. The electors made Maximilian emperor upon the death of Frederick. They assumed Maximilian would be weak like his father, Frederick the Fat, who barely troubled them during his fifty-three years as emperor. But the ceremony went to the new emperor’s head and he believed himself all-powerful. In his first speech to the diet, he all but ordered the electors to hand over enough gold to put him back on the battlefield against the French. The French king Charles VIII was in Italy grabbing territory that Maximilian said belonged to the empire. But what really motivated Maximilian was a desire to get to Rome. Under imperial rules, only a papal coronation could seal his election. He feared that Charles plotted to beat him to Rome and grab the imperial crown for himself. Word got back to him that, only recently, Charles had appeared at a feast dressed in imperial robes and holding his own orb and scepter. His people called him emperor and astrologers told him his own coronation was written in the stars. The reality was Maximilian had nothing to fear from the French. The electors would never have accepted the French king as emperor, especially not when they had already elected a man they assumed was an unthreatening and impoverished weakling.
Maximilian believed the crown was magical, as magical as King Arthur’s sword. If presented to him by the pope, he would possess all the power of Charlemagne and Europe would bow at his feet. With the crown, the people would acknowledge his legitimacy. Without it, they would dismiss him as a phony. Maximilian’s great dream was to mount a crusade, slay the Turks and save Christendom. He believed this was his destiny. But first he needed the crown. He wanted it more than he wanted Burgundy, Hungary or anything else. His obsession with the crown cannot be overstated. It dominated his reign and created one opportunity after another for Fugger. If not for the obsession, Fugger might have remained, like his brothers, a rag dealer.
In the Federalist Papers, James Madison needed a phrase to describe a legislative body’s ability to control policy by supplying or denying funds. He came up with the “power of the purse.” To Maxmilian’s horror and surprise, the electors used that power unabashedly. Maximilian got a reality check when they locked him out of meetings. Then the electors bogged him down in negotiations and hit him with impossible conditions. He became sullen and moody, and complained of being treated like a “small town mayor.”
The emperor only got some money after handing over most of the little power he had to the electors. He hated giving in, but at least he won some cash. To pay for their promises, the electors introduced a tax called the Common Penny. All imperial citizens had to pay. It was the first federal tax in Germany and mirrored schemes in France and England. The Common Penny was trouble for Fugger because it led Maximilian to believe that he no longer needed bankers. He fired Fugger and terminated the silver contracts. There were millions of Germans. Once they paid the tax, he would have all he needed to beat the French and make it to Rome, or so he thought.
Fugger was furious. What about their deal? What about gratitude? Hadn’t he supported Maximilian in the ouster of Sigmund? Hadn’t his brother Ulrich come through for Maximilian’s father, Frederick, when Frederick needed a wardrobe? Did all this count for nothing? Fugger also worried about his survival. He was in a perilous financial state because he had borrowed money to pay for Fuggerau and a second smelter in Hohenkirchen in eastern Germany. He needed the silver profits to stay afloat and would be bankrupt if the money didn’t come through. But not for the last time, he understood the electors better than the man they elected. Fugger’s informants told him what he already suspected, that the German lords would forget their promises. Maximilian may have felt threatened by King Charles and his designs on Italy, but the electors, sitting in grand palaces far away from the Italian border, were indifferent. Sure enough, the Common Penny produced only a fraction of the expected revenue and Maximilian remained destitute. He then did the only thing he could do if he wanted to invade Italy and get to Rome: He limped back to Fugger, pledged more of his silver production and signed for another loan.
With money from Fugger, plus promises of support from Venice and Milan, Maximilian headed over the Alps to Genoa and, from there, hired a ship to take him to Pisa on Italy’s west coast. Fugger’s Genoese branch paid the fare. Maximilian aimed for Florence where the charismatic priest Savonarola had taken control after the death of Lorenzo de Medici. Savonarola promised that God would come to kill the rich. Maximilian cared nothing about that. He only cared that Savonarola supported the French. To make it to Rome and maintain his supply lines, he and his small army needed to take Florence. He got stuck outside the city because Milan and Venice failed to come through with the promised support. Even worse, Maximilian’s son Philip, who ruled Flanders as an archduke and had pledged to distract Charles in France, had fallen under the spell of French advisors and did nothing. Disgusted, Maximilian left Italy and returned to Tyrol. He fought depression by engaging in his favorite pastime: hunting goats in the jagged mountains above Innsbruck.
The disappointment shattered Maximilian’s innocence. Henry VII, the German electors, the duke of Milan, the doge of Venice, his own son—all had let him down. Maybe he had his epiphany while chasing goats but, somewhere, it dawned on him that he could only trust Schwaz and its silver. As long as he had Schwaz, bankers like Fugger would be there for him. After getting off the rocks, a rejuvenated Maximilian ordered all his bankers to Füssen, in the foothills of the Alps, to ask for money.
Fugger went to church on Sunday, endorsed family values and loved his king and country. But make no mistake: He was a radical. He refused to believe that noble birth made someone better than anyone else. For him, intelligence, talent and effort made the man. His view is now mainstream. But it was subversive at the time. Europe operated according to a caste system as rigid as in India. Three groups comprised society: nobles, priests and commoners. Each group had its own pecking order. Among commoners, patricians stood on top followed by rich merchants like Fugger. Then came artisans, peasants and beggars. Each subset had its own dress code. They had different privileges and obligations. Upward flexibility was limited.
Fugger wasn’t buying it. While society as a whole remained glued to the medieval notion of every man in his place, he shared his grandfather’s belief that man made his own luck. Albrecht Dürer and the great Renaissance artists of Italy saw it that way. So did the humanists, the writers and philosophers who broke with tradition and celebrated man instead of God. In 1486, when Fugger was twenty-seven, Giovanni Pico della Mirandola delivered his Oration on the Dignity of Man. The speech became the manifesto of humanism and landed Pico in jail as a heretic. In the speech, he declared that man was unique among God’s creatures because he had free will, and that free will allowed an individual to determine his own course. Fugger was no philosopher and might never have heard of Pico. But he was a product of his times, and the times were changing. By following the dictates of his will, he showed sympathy, unwittingly perhaps, for heretical views.
Fugger’s worldview let him recognize his relationship with the emperor in its true form. It wasn’t one of master and servant. It wasn’t one of lord and serf. It was a relationship of creditor and debtor. In that sort of relationship, he, as the creditor, had the power. Maximilian’s titles meant little to Fugger. Yes, Maximilian was a king. The electors gave him an orb and scepter, and peasants trembled in his presence. Noble ladies hid his boots and spurs to keep him longer at their parties. But Fugger knew that as long as he had cash, Maximilian would need him and would have to accept his terms.
While the other bankers answered Maximilian’s call to the meeting, Fugger stayed away. It was a deliberate snub. He let the other bankers negotiate with Maximilian while he stayed home. He kept the emperor hanging for ten days. Approached by Maximilian’s tailor, of all people, to explain himself, Fugger said he had renounced banking. Still fuming over Maximilian’s earlier decision to fire him after the Common Penny, Fugger wanted out. He wrote to Maximilian to explain his decision. Lending, he said, “achieved nothing but trouble, effort and ingratitude.”
One could hardly blame him. He didn’t want to be at the mercy of a capricious borrower like Maximilian who was above the law and long on questionable promises. Fugger didn’t have to look far to see what could go wrong. Lucas Fugger was the son of Fugger’s uncle and the patriarch of the Fuggers of the Roe, the other branch of the family. He had been the most celebrated businessman in Augsburg. He had trading operations in Frankfurt, Nuremberg, Venice, Milan, Bruges and Antwerp. When not on the road, he served as an Augsburg town councillor as well as a judge and a guild master. More than anything, Lucas loved deal making and rubbing shoulders with his betters. In 1489, he made his own loan to Maximilian. Maximilian pledged the tax revenue of the Flemish city of Leuven to pay it back. The gentlemen of Leuven were as unwilling to pay as gentlemen of Ghent were five years before when they jailed Maximilian and made him watch as they killed his jester. Although the loan was small, the default busted the thinly stretched Lucas. Fugger and his brothers could have bailed him out but sat idly by as Lucas and his family lost everything. In a fit of rage, Lucas’s son attacked him with a knife. Lucas, once the envy of all and holder of many offices, fled to a hut that had once belonged to his grandfather in their ancestral village of Graben. Fugger later gave him a few florins for it.
But fear didn’t keep Fugger away from Fussen. He stayed away for tactical reasons. As his early deals with Sigmund showed, Fugger was a crafty negotiator. He knew Maximilian would want him even more if he played hard to get. The other bankers could loan only a fraction of what Fugger could and Maximilian would need him regardless of what the others did. With that in mind, he may have expected Maximilian to come groveling. But this time he miscalculated. With Maximilian all to themselves, the other bankers schemed to ruin Fugger, whom they considered an upstart. Maximilian didn’t come groveling to Fugger. Instead, he listened to the bankers who plotted to destroy Fugger.
The rivals had names out of a fairy tale—Herwart, Baumgarten and the Brothers Gossembrot. Maximilian had given them some mining concessions, just not as many as he had given to Fugger. The Gossembrots were the most powerful of the group. Sigmund Gossembrot was the mayor of Augsburg and his brother George was Maximilian’s treasury secretary. They came from an old family and hated Fugger for coming into their territory. They wanted his silver contracts and urged Maximilian to confiscate Fuggerau—moves that could have bankrupted Fugger. Maximilian took their advice. He once again issued orders to sever ties to Fugger.
Germans say that to be successful, you need Vitamin B. The B stands for Beziehungen, or connections. Fugger had an abundance of Vitamin B and Fugger called on those reserves to secure his assets. The first to get a call was the bishop of Bamberg. He was the same bishop who had sold him the land that became Fuggerau. He still controlled that part of Austria. Fugger told him about Maximilian’s plan to meddle in his territory and seize Fuggerau. Next, Fugger traveled to Saxony to tell the region’s duke that once Maximilian took Fuggerau, he would surely go to Saxony and take Fugger’s other smelter, Hohenkirchen, in the duke’s territory. Horrified by intrusions on their sovereignty, the bishop and the duke sent ambassadors to Innsbruck and ordered Maximilian to back off.
The decisive blow came when Fugger asked another of the emperor’s lenders, Melchior von Meckau, to call in a loan and put a cash squeeze on the emperor. Meckau served as bishop of Brixen, south of Innsbruck. He had his own silver mines and dabbled as a lender. He often traded favors with Fugger. When Meckau asked Maximilian for his money back, the emperor discovered Fugger was the only banker who could supply the money in a hurry. Fugger made the loan to Maximilian. Maximilian forgot about Fuggerau.
It might have been difficult to recognize at the time, but Fugger was making himself indispensable. Maximilian felt frustrated by Fugger’s methods and demands, but he couldn’t deny that Fugger was the only banker he could count on in a pinch. Indispensability helped drive Fugger’s success and repeatedly won him special treatment. Fugger knew that the emperor couldn’t live without him and made sure it stayed that way.
It goes without saying that monopolists make the biggest fortunes. By controlling supply, they can charge whatever they want and flow the outrageous profits back into other schemes that make even more money. That’s why Vanderbilt wanted to dominate the rails and Rockefeller wanted to dominate oil. And that’s why Fugger wanted to dominate metals. He would never have become the richest person on earth by sharing a market with others. He had to have it all.
He already had it all in Hungary. Hungary was one of few copper-producing regions in Eastern Europe, which made Fugger just about the only supplier to Danzig and the other markets up north. But it was different in Venice where other Germans—those with their own contracts with Maximilian—competed for every sale.
The competitors were the same gentlemen who had conspired in Fussen to bury Fugger. Baumgartner, Herwart and the Gossembrots hated competition as much as Fugger did. To put a stop to it, they invited Fugger into a cartel to fix prices. They explained how they would make a fortune because customers would have nowhere to go but to them.
Fugger was as greedy as the rest of them, if not even greedier. But he wasn’t crazy about partnerships. Unlike the Medici and other Italian banking houses that routinely took in others to spread risk and increase capital, Fugger wanted every penny for himself, and the idea of splitting profits and decision-making repulsed him. His brothers were a special case. Fugger owned 29 percent of Ulrich Fugger & Brothers and he was happy with that as long as Ulrich and George left him alone. As for the partnership with Thurzo, Fugger needed Thurzo for protection in Hungary. But the proposed copper cartel fired his imagination.
Nowadays, such an arrangement would be illegal; authorities long ago prohibited price fixing in the name of consumer protection. But there were no such laws in 1498, only a blanket understanding that businessmen should treat customers in a fair and “Christian” manner. To get around that, the group asked Maximilian for his blessing and explained that they could lend him even more money if he let them make bigger profits. They clinched the deal by bribing him with a loan.
At this point, the story took a surprising turn. It turns out that the cartel had an enemy within in the form of Fugger. Yes, Fugger could sell his copper for high prices if he participated in the cartel. But he wanted more than a quick profit. He saw the cartel agreement as a way to destroy his rivals, run off with their business and create the same kind of monopoly in Austria as he had in Hungary. He had a simple plan: Rather than ship his Hungarian copper to Danzig, he would send it to Venice and flood the market, drive down copper prices and obliterate those too weak to hold on. This sounded great but was a dangerous scheme for Fugger because the other men had the ear of the emperor. The emperor might punish Fugger for attacking them. And there was also no guarantee that Fugger could outlast the others once he slashed the price. Maybe their pockets were deeper than he thought. He could end up bankrupting himself if he wasn’t careful. But he had a stomach for this sort of thing. Without fear, he sprung the trap. He would see the game to its brutal conclusion one way or another.
After the cartel’s first shipments left Austria for Venice, wagons from Hungary followed. Once the copper arrived, Fugger ordered his Venetian agent to dump everything on the market at once regardless of the price. Take whatever was offered. Just get rid of it, he ordered. Venice was instantly oversupplied. It had never seen so much copper. Prices tanked. Stunned by the sudden collapse of the market, the others let their copper pile up in warehouses. They didn’t want to sell into a falling market. But they had bills to pay and could not hold out forever. When Fugger continued to sell and prices kept falling, they ditched everything at a loss.
Bruised and struggling to hang on, the victims accused Fugger of acting in an “unbrotherly and unchristian” way, a characterization that would follow him for the rest of his life. They asked Maximilian to punish Fugger, but the emperor was embroiled in a flare-up in Switzerland and did nothing. Fugger didn’t get his monopoly but he did end up with more mining assets than ever.