Royal debt system

An increasing monetarisation of society can be observed at the latest from the 14th century. The policies of Ludwig the Bavarian (born 1282/86, ruled 1314-1347) were also hungry for money. Crises and military campaigns had to be overcome, nobles had to be lured with favours and a representation worthy of the emperor had to be financed. The income from his power base and imperial property was not available in sufficient quantities for this purpose. Other sources of income such as spoils of war and gifts could hardly be projected. How on earth could Ludwig retain his power to act? The ruler used an well-known instrument for this purpose: he ran up debts.

Loans, which first established themselves as a financing element in the cities, served as a buffer between unpredictable expenditures and revenues, financed political projects and created planning security. Supporters and court employees of Ludwig IV, such as his chancellor, Bishop Ulrich II of Augsburg (ruled 1331-1337), often acted as creditors. In return, they received privileges or pledges as security or compensation. Valuable objects or rights that bring in taxes were used as such. The pledgee was then entitled to use the same until it was redeemed. By pledging such rights, Ludwig was able to generate money quickly and respond spontaneously to situations. At the same time, he kept open the option of redeeming the rights. Mostly, however, this did not happen, so many sources of income once belonging to the imperial estate were permanently lost to the crown. Nevertheless, the number of loans increased more and more under Ludwig’s successors and reached its peak in the Middle Ages under Emperor Maximilian I (born 1459, ruled 1486-1519). In Ludwig’s case, therefore, a development is already visible that would shape later centuries. Credit became the central instrument of rule.

Anton Serafin Baur