"
"
THE EMERGENCE OF TRADITIONAL LEGAL PRINCIPLES
ACCORDING TO MENGER, HAYEK, AND LEONI
The traditional, universal legal principles we dealt with in
the last section in relation to the irregular deposit contract
have not emerged in a vacuum, nor are they the result of a pri-
ori knowledge. The concept of law as a series of rules and
institutions to which people constantly, perpetually and cus-
tomarily adapt their behavior has been developed and refined
20
Money, Bank Credit, and Economic Cycles
21At this point it is important to draw attention to the “time deposit”
contract, which possesses the economic and legal characteristics of a
true loan, not those of a deposit. We must emphasize that this use of ter-
minology is misleading and conceals a true loan contract, in which pres-
ent goods are exchanged for future goods, the availability of money is
transferred for the duration of a fixed term and the client has the right to
receive the corresponding interest. This confusing terminology makes it
even more complicated and difficult for citizens to distinguish between
a true (demand) deposit and a loan contract (involving a term). Certain
economic agents have repeatedly and selfishly employed these terms to
take advantage of the existent confusion. The situation degenerates fur-
ther when, as quite often occurs, banks offer time “deposits” (which
should be true loans) that become de facto “demand” deposits, as the
banks provide the possibility of withdrawing the funds at any time
without penalty.
through a repetitive, evolutionary process. Perhaps one of Carl
Menger’s most important contributions was the development
of a complete economic theory of social institutions. According
to his theory, social institutions arise as the result of an evolu-
tionary process in which innumerable human beings interact,
each one equipped with his own small personal heritage of sub-
jective knowledge, practical experiences, desires, concerns,
goals, doubts, feelings, etc. By means of this spontaneous evo-
lutionary process, a series of behavior patterns or institutions
emerges in the realms of economics and language, as well as
law, and these behaviors make life in society possible. Menger
discovered that institutions appear through a social process
composed of a multiplicity of human actions, which is always
led by a relatively small group of individuals who, in their par-
ticular historical and geographical circumstances, are the first
ones to discover that certain patterns of behavior help them
attain their goals more efficiently. This discovery initiates a
decentralized trial and error process encompassing many gen-
erations, in which the most effective behavior patterns gradu-
ally become more widespread as they successfully counter
social maladjustments. Thus there is an unconscious social
process of learning by imitation which explains how the pio-
neering behavior of these most successful and creative individ-
uals catches on and eventually extends to the rest of society.
Also, due to this evolutionary process, those societies which
first adopt successful principles and institutions tend to spread
and prevail over other social groups. Although Menger devel-
oped his theory in relation to the origin and evolution of money,
he also mentions that the same essential theoretical framework
can be easily applied to the study of the origins and develop-
ment of language, as well as to our present topic, juridical insti-
tutions. Hence the paradoxical fact that the moral, juridical, eco-
nomic and linguistic institutions which are most important and
essential to man’s life in society are not of his own creation,
because he lacks the necessary intellectual might to assimilate
the vast body of random information that these institutions
generate. On the contrary, these institutions inevitably and
spontaneously emanate from the social processes of human
The Legal Nature of the Monetary Irregular-Deposit Contract 21
interaction which Menger believes should be the main subject
of research in economics.22
Menger’s ideas were later developed by F.A. Hayek in
various works on the fundamentals of law and juridical insti-
tutions,23and especially by the Italian professor of political
science, Bruno Leoni, who was the first to incorporate the fol-
lowing in a synoptic theory on the philosophy of law: the eco-
nomic theory of social processes developed by Menger and
the Austrian School, the most time-honored Roman legal tra-
dition, and the Anglo-Saxon tradition of rule of law. Indeed,
Bruno Leoni’s great contribution is having shown that the
Austrian theory on the emergence and evolution of social
institutions is perfectly illustrated by the phenomenon of com-
mon law and that it was already known and had been formu-
lated by the Roman classical school of law.24Leoni, citing
22
Money, Bank Credit, and Economic Cycles
22Carl Menger, Untersuchungen über die Methode der Socialwissenschaften
und der Politischen Ökonomie insbesondere (Leipzig: Duncker and Hum-
blot, 1883), esp. p. 182. (Investigations into the Method of the Social Sciences
with Special Reference to Economics [New York: New York University
Press, 1985]). Menger himself eloquently formulates this new question
which his proposed scientific research program for economics is
designed to answer:
How is it possible that the institutions which are most signif-
icant to and best serve the common good have emerged with-
out the intervention of a deliberate common will to create
them? (pp. 163–65)
The best and perhaps the most brilliant synopsis of Menger’s theory on
the evolutionary origin of money appears in his article, “On the Origin
of Money,” Economic Journal (June 1892): 239–55. This article has been
reprinted by Israel M. Kirzner in his Classics in Austrian Economics: A
Sampling in the History of a Tradition (London: William Pickering, 1994),
vol. 1, pp. 91–106.
23F.A. Hayek, The Constitution of Liberty (London: Routledge, 1st edition
[1960] 1990); Law, Legislation and Liberty (Chicago: University of Chicago
Press, 1978); and The Fatal Conceit: The Errors of Socialism (Chicago: Uni-
versity of Chicago Press, 1989).
24See Jesús Huerta de Soto, Estudios de economía política (Madrid: Unión
Editorial, 1994), chap. 10, pp. 121–28, and Bruno Leoni, Freedom and the
Law (Princeton, N.J.: D. Van Nostrand Company, 1961), essential reading
for all jurists and economists.
Cicero’s rendering of Cato’s words, specifically points out that
Roman jurists knew Roman law was not the personal inven-
tion of one man, but rather the creation of many over genera-
tions and centuries, given that
there never was in the world a man so clever as to foresee
everything and that even if we could concentrate all brains
into the head of one man, it would be impossible for him to
provide for everything at one time without having the experi-
ence that comes from practice through a long period of his-
tory.25
In short, it was Leoni’s opinion that law emerges as the
result of a continuous trial-and-error process, in which each
25
Nostra autem res publica non unius esset ingenio, sed multo-
rum, nec una hominis vita, sed aliquod constitutum saeculis
et aetatibus, nam neque ullum ingenium tantum extitisse
dicebat, ut, quem res nulla fugeret, quisquam aliquando fuis-
set, neque cuncta ingenia conlata in unum tantum posse uno
tempore providere, ut omnia complecterentur sine rerum usu
ac vetustate. (Marcus Tullius Cicero, De re publica, 2, 1–2
[Cambridge, Mass.: The Loeb Classical Library, 1961], pp.
111–12. See Leoni, Freedom and the Law, p. 89)
Leoni’s book is by all accounts exceptional. Not only does he reveal the
parallelism between the market and common law on the one hand, and
socialism and legislation on the other, but he is also the first jurist to rec-
ognize Ludwig von Mises’s argument on the impossibility of socialist
economic calculation as an illustration of
a more general realization that no legislator would be able to
establish by himself, without some kind of continuous collab-
oration on the part of all the people concerned, the rules gov-
erning the actual behavior of everybody in the endless rela-
tionships that each has with everybody else. (pp. 18–19)
For information on the work of Bruno Leoni, founder of the prestigious
journal Il Politico in 1950, see Omaggio a Bruno Leoni, Pasquale
Scaramozzino, ed. (Milan: Ed. A. Guiffrè, 1969), and the article “Bruno
Leoni in Retrospect” by Peter H. Aranson, Harvard Journal of Law and
Public Policy (Summer, 1988). Leoni was multifaceted and extremely
active in the fields of university teaching, law, business, architecture,
music, and linguistics. He was tragically murdered by one of his tenants
while trying to collect the rent on the night of November 21, 1967. He
was fifty-four years old.
The Legal Nature of the Monetary Irregular-Deposit Contract 23
individual takes into account his own circumstances and the
behavior of others and the law is perfected through a selective
evolutionary process.26
ROMAN JURISPRUDENCE
The greatness of classical Roman jurisprudence stems pre-
cisely from the realization of this important truth on the part
of legal experts and the continual efforts they dedicated to
study, interpretation of legal customs, exegesis, logical analy-
sis, the tightening of loopholes and the correction of flaws; all
of which they carried out with the necessary standards of
prudence and equanimity.27The occupation of classical jurist
was a true art, of which the constant aim was to identify and
define the essence of the juridical institutions that have devel-
oped throughout society’s evolutionary process. Furthermore,
classical jurists never entertained pretensions of being “origi-
nal” or “clever,” but rather were “the servants of certain fun-
damental principles, and as Savigny pointed out, herein lies
their greatness.”28Their fundamental objective was to dis-
cover the universal principles of law, which are unchanging
and inherent in the logic of human relationships. It is true,
however, that social evolution itself often necessitates the
24
Money, Bank Credit, and Economic Cycles
26In the words of Bruno Leoni, law is shaped by
una continua serie de tentativi, che gli individui compiono
quando pretendono un comportamento altrui, e si affidano al
propio potere di determinare quel comportamento, qualora
esso non si determini in modo spontaneo. (Bruno Leoni,
“Diritto e politica,” in his book Scritti di scienza politica e teoria
del diritto [Milan: A. Giuffrè, 1980], p. 240)
27In fact, the interpreter of the ius was the prudens, that is, the legal
expert or iuris prudens. It was his job to reveal the law. Jurists provided
advice and assistance to individuals and instructed them in business
practices and types of contracts, offered answers to their questions and
informed judges and magistrates. See Juan Iglesias, Derecho romano:
Instituciones de derecho privado, 6th rev. ed. (Barcelona: Ediciones Ariel,
1972), pp. 54–55.
28Iglesias, Derecho romano: Instituciones de derecho privado, p. 56. And esp.
Rudolf von Ihering, El espíritu del derecho romano, Clásicos del Pensamiento
Jurídico (Madrid: Marcial Pons, 1997), esp. pp. 196–202 and 251–53.
application of these unchanging universal principles to new
situations and problems arising continually from this evolu-
tionary process.29In addition, Roman jurists worked inde-
pendently and were not civil servants. Despite multiple
attempts by official legal experts in Roman times, they were
never able to do away with the free practice of jurisprudence,
nor did the latter lose its enormous prestige and independence.
Jurisprudence, or the science of law, became an independ-
ent profession in the third century B.C. The most important
jurists prior to our era were Marcus Porcius Cato and his son
Cato Licianus, the consul Mucius Scaevola, and the jurists
Quintus Mucius Scaevola, Servius Surpicius Rufus, and
Alfenus Varus. Later, in the second century A.D., the classical
era began and the most important jurists during that time
were Gaius, Pomponius, Africanus, and Marcellus. In the
third century their example was followed by Papinian, Paul,
Ulpian, and Modestinus, among other jurists. From this time
onward, the solutions offered by these independent jurists
received such great prestige that the force of law was attached
to them; and to prevent the possibility of difficulties arising
from differences of opinion in the jurists’ legal writings, the
force of law was given to the works of Papinian, Paul, Ulpian,
Gaius, and Modestinus, and to the doctrines of jurists cited by
them, as long as these references could be confirmed upon
comparison with original writings. If these authors were in
disagreement, the judge was compelled to follow the doctrine
defended by the majority; and in the case of a tie, the opinion
of Papinian was to prevail. If he had not communicated his
opinion on an issue, the judge was free to decide.30
29
The occupation of interpretatio was intimately related to the
role of advisor to individuals, magistrates, and judges, and
consisted of applying time-honored principles to new needs;
this meant an expansion of the ius civile, even when no new
institutions were formally created. (Francisco Hernández-
Tejero Jorge, Lecciones de derecho romano [Madrid: Ediciones
Darro, 1972], p. 30)
30This force of law was first acquired in a constitution from the year 426,
known as the Citation Law of Theodosius and Valentinianus III. See
Hernández-Tejero Jorge, Lecciones de derecho romano, p. 3.
The Legal Nature of the Monetary Irregular-Deposit Contract 25
Roman classical jurists deserve the credit for first discov-
ering, interpreting, and perfecting the most important juridi-
cal institutions that make life in society possible, and as we
will see, they had already recognized the irregular deposit
contract, understood the essential principles governing it, and
outlined its content and essence as explained earlier in this
chapter. The irregular deposit contract is not an intellectual,
abstract creation. It is a logical outcome of human nature as
expressed in multiple acts of social interaction and coopera-
tion, and it manifests itself in a set of principles which cannot
be violated without grave consequences to the network of
human relationships. The great importance of law in this evo-
lutionary sense, distilled and rid of its logical flaws through
the science of legal experts, lies in the guidance it provides
people in their daily lives; though in most cases, due to its
abstract nature, people may not be able to identify or under-
stand the complete specific function of each juridical institu-
tion. Only recently in the historical evolution of human
thought has it been possible to understand the laws of social
processes and gain a meager grasp on the role of the differ-
ent juridical institutions in society, and the contributions of
economics have been mostly responsible for these realiza-
tions. One of our most important objectives is to carry out an
economic analysis of social consequences resulting from the
violation of the universal legal principles regulating the mon-
etary irregular-deposit contract. In chapter 4 we will begin this
theoretical economic analysis of a juridical institution (the
monetary bank-deposit contract).
The knowledge we have today of universal legal princi-
ples as they were discovered by Roman jurists comes to us
through the work of the emperor Justinian, who in the years
528–533 A.D. made an enormous effort to compile the main
contributions of classical Roman jurists and recorded them in
three books (the Institutiones, the Digest, and the Codex Consti-
tutionum, later completed by a fourth book, the Novellae),
which, since the edition of Dionysius Gottfried,31are known
as the Corpus Juris Civilis. The Institutiones is an essential work
26
Money, Bank Credit, and Economic Cycles
31Corpus Juris Civilis (Geneva: Dionysius Gottfried, 1583).
directed at students and based on Gaius’s Institutiones. The
Digest or Pandecta is a compilation of classical legal texts which
includes over nine thousand excerpts from the works of differ-
ent prestigious jurists. Passages taken from the works of
Ulpian, which comprise a third of the Digest, together with
excerpts from Paul, Papinian, and Julianus, fill more of the book
than the writings of all of the rest of the jurists as a group. In all,
contributions appear from thirty-nine specialists in Roman clas-
sical law. The Codex Constitutionum consists of a chronologi-
cally-ordered collection of imperial laws and constitutions (the
equivalent of the present-day concept of legislation), and Novel-
lae, the last work in the Corpus, contains the last imperial con-
stitutions subsequent to the Codex Constitutionum.32
Now let us follow up this brief introduction by turning to
the Roman classical jurists and their treatment of the institu-
tion of monetary irregular deposit. It is clear they understood
it, considered it a special type of deposit possessing the essen-
tial deposit characteristics and differentiated it from other
contracts of a radically different nature and essence, such as
the mutuum contract or loan.
THE IRREGULAR DEPOSIT CONTRACT UNDER ROMAN LAW
The deposit contract in general is covered in section 3 of
book 16 of the Digest, entitled “On Depositing and Withdraw-
ing” (Depositi vel contra). Ulpian begins with the following def-
inition:
Adeposit is something given another for safekeeping. It is so
called because a good is posited [or placed]. The preposition de
32Justinian stipulated that the necessary changes be made in the com-
piled materials so that the law would be appropriate to the historical
circumstances and as close to perfect as possible. These modifications,
corrections and omissions are called interpolations and also emblemata
Triboniani, after Tribonian, who was in charge of the compilation. There
is an entire discipline dedicated to the study of these interpolations, to
determining their content through comparison, logical analysis, the
study of anachronisms in language, etc., since it has been discovered
that a substantial number of them were made after the Justinian era. See
Hernández-Tejero Jorge, Lecciones de derecho romano, pp. 50–51.
The Legal Nature of the Monetary Irregular-Deposit Contract 27
intensifies the meaning, which reflects that all obligations cor-
responding to the custody of the good belong to that person.33
A deposit can be either regular, in the case of a specific
good; or irregular, in the case of a fungible good.34In fact, in
number 31, title 2, book 19 of the Digest, Paul explains the dif-
ference between the loan contract or mutuum and the deposit
contract of a fungible good, arriving at the conclusion that
if a person deposits a certain amount of loose money, which
he counts and does not hand over sealed or enclosed in
something, then the only duty of the person receiving it is to
return the same amount.35
28
Money, Bank Credit, and Economic Cycles
33Ulpian, a native of Tyre (Phoenicia), was advisor to another great
jurist, Papinian, and together with Paul, he was an advising member of
the concilium principis and praefectus praetorio under Alexander Severus.
He was murdered in the year 228 by the Praetorians. He was a very pro-
lific writer who was better known for his knowledge of juridical litera-
ture than for his creative work. He wrote clearly and was a good com-
piler and his writings are regarded with special favor in Justinian’s
Digest, where they comprise the main part. On this topic see Iglesias,
Derecho romano: Instituciones de derecho privado, p. 58. The passage cited
in the text is as follows in Latin:
Depositum est, quod custodiendum alicui datum est, dictum
ex eo, quod ponitur, praepositio enim de auget depositum, ut
ostendat totum fidei eius commissum, quod ad custodiam rei
pertinet. (See Ildefonso L. García del Corral, ed., Cuerpo de
derecho civil romano, 6 vols. [Valladolid: Editorial Lex Nova,
1988], vol. 1, p. 831)
34However, as Pasquale Coppa-Zuccari astutely points out, the expres-
sion depositum irregolare did not appear until it was first used by Jason
de Maino, a fifteenth century annotator of earlier works, whose writ-
ings were published in Venice in the year 1513. See Coppa-Zuccari, Il
deposito irregolare, p. 41. Also, the entire first chapter of this important
work deals with the treatment under Roman law of the irregular
deposit, pp. 2–32. For an excellent, current treatment in Spanish of bib-
liographic sources on the irregular deposit in Rome, see Mercedes
López-Amor y García’s article, “Observaciones sobre el depósito irreg-
ular romano,” in the Revista de la Facultad de Derecho de la Universidad
Complutense 74 (1988–1989): 341–59; and also Alicia Valmaña Ochaita, El
depósito irregular en la jurisprudencia romana (Madrid: Edisofer, 1996).
35This is actually a summary by Paul of Alfenus Varus’s Digest. Alfenus
Varus was consul in the year 39 A.D. and the author of forty books of the
Digest. Paul, in turn, was a disciple of Scaevola and an advisor to Papinian
In other words, Paul clearly indicates that in the monetary
irregular deposit the depositary’s only obligation is to return
the tantundem: the equivalent in quantity and quality of the
original deposit. Moreover, whenever anyone made an irreg-
ular deposit of money, he received a written certificate or
deposit slip. We know this because Papinian, in paragraph 24,
title 3, book 16 of the Digest, says in reference to a monetary
irregular deposit,
I write this letter by hand to inform you, so that you will know,
that the one hundred coins you have entrusted to me today
through Sticho, the slave and administrator, are in my pos-
session and I will return them to you immediately, when-
ever and wherever you wish.
This passage reveals the immediate availability of the
money to the depositor and the custom of giving him a
deposit slip or receipt certifying a monetary irregular deposit,
which not only established ownership, but also had to be pre-
sented upon withdrawal.36
during the time Papinian was a member of the imperial council under
Severus and Caracalla. He was a very ingenious, learned figure and the
author of numerous writings. The passage cited in the text is as follows
in Latin:
Idem iuris esse in deposito; nam si quis pecuniam numeratam
ita deposuisset ut neque clausam, neque obsignatam traderet,
sed adnumeraret, nihil aliud eum debere, apud quem
deposita esset, nisi tantundem pecuniae solvere. (See Ildefonso
L. García del Corral, ed., Cuerpo de derecho civil romano, 6 vols.
[Valladolid: Editorial Lex Nova, 1988], vol. 1, p. 963)
36Papinian, a native of Syria, was Praefectus Praetorio beginning in the
year 203 A.D. and was sentenced to death by the emperor Caracalla in
the year 212 for refusing to justify the murder of his brother, Geta. He
shared with Julianus the reputation for being the most notable of Roman
jurists, and according to Juan Iglesias, “His writings are remarkable for
their astuteness and pragmatism, as well as for their sober style” (Dere-
cho romano: Instituciones de derecho privado, p. 58). The passage cited in the
text is as follows in Latin:
centum numos, quos hac die commendasti mihi annumerante
servo Sticho actore, esse apud me, ut notum haberes, hac epi-
tistola manu mea scripta tibi notum facio; quae quando volis,
et ubi voles, confestim tibi numerabo. (García del Corral, ed.,
Cuerpo de derecho civil romano, vol. 1, p. 840)
The Legal Nature of the Monetary Irregular-Deposit Contract 29
The essential obligation of depositaries is to maintain the
tantundem constantly available to depositors. If for some reason
the depositary goes bankrupt, the depositors have absolute
privilege over any other claimants, as Ulpian skillfully explains
(paragraph 2, number 7, title 3, book 16 of the Digest):
Whenever bankers are declared bankrupt, usually
addressed first are the concerns of the depositors; that is,
those with money on deposit, not those earning interest on
money left with the bankers. So, once the goods have been
sold, the depositors have priority over those with privileges,
and those who received interest are not taken into account—
it is as if they had relinquished the deposit.37
Here Ulpian indicates as well that interest was considered
incompatible with the monetary irregular deposit and that
when bankers paid interest, it was in connection with a totally
different contract (in this case, a mutuum contract or loan to a
banker, which is better known today as a time “deposit” con-
tract).
As for the depositary’s obligations, it is expressly stated in
the Digest (book 47, title 2, number 78) that he who receives a
good on deposit and uses it for a purpose other than that for
which it was received is guilty of theft. Celsus also tells us in
the same title (book 47, title 2, number 67) that taking a
deposit with an intent to deceive constitutes theft. Paul
defines theft as “the fraudulent appropriation of a good to
gain a profit, either from the good itself or from its use or
possession; this is forbidden by natural law.”38As we see, what
30
Money, Bank Credit, and Economic Cycles
37
Quoties foro cedunt numularii, solet primo loco ratio haberi
depositariorum, hoc est eorum, qui depositas pecunias
habuerunt, non quas foenore apud numularios, vel cum
numulariis, vel per ipsos exercebant; et ante privilegia igitur,
si bona venierint, depositariorum ratio habetur, dummodo
eorum, qui vel postea usuras acceperunt, ratio non habeatur,
quasi renuntiaverint deposito. (García del Corral, ed., Cuerpo
de derecho civil romano, vol. 1, p. 837)
38
Furtum est contrectatio rei fraudulosa, lucri faciendi gratia,
vel ipsius rei, vel etiam usus eius possessionisve; quod lege
naturali prohibitum est admittere. (Ibid., vol. 3, p. 645)
is today called the crime of misappropriation was included
under the definition of theft in Roman law. Ulpian, in reference
to Julianus, also concluded:
if someone receives money from me to pay a creditor of
mine, and, himself owing the same amount to the creditor,
pays him in his own name, he commits theft. (Digest, book
47, title 2, number 52, paragraph 16)39
In number 3, title 34 (on “the act of deposit”), book 4 of the
Codex Constitutionum of the Corpus Juris Civilis, which includes
the constitution established under the consulship of Gor-
dianus and Aviola in the year 239, the obligation to maintain
the total availability of the tantundem is even clearer, as is the
commission of theft when the tantundem is not kept avail-
able. In this constitution, the emperor Gordianus indicates to
Austerus,
if you make a deposit, you will with reason ask to be paid
interest, since the depositary should thank you for not holding
him responsible for theft, because he who knowingly and will-
ingly uses a deposited good for his own benefit, against the will
of the owner, also commits the crime of theft.40
Section 8 of the same source deals expressly with deposi-
taries who loan money received on deposit, thus using it for
their own benefit. It is emphasized that such an action violates
the principle of safekeeping, obligates depositaries to pay
interest, and makes them guilty of theft, as we have just seen
in the constitution of Gordianus. In this section we read:
If a person who has received money from you on deposit
loans it in his own name, or in the name of any other person,
39Ibid., p. 663.
40
Si depositi experiaris, non immerito etiam usuras tibi restitui
flagitabis, quum tibi debeat gratulari, quod furti eum actione
non facias obnoxium, siquidem qui rem depositam invito
domino sciens prudensque in usus suus converterit, etiam furti
delicto succedit. (Ibid., vol. 4, p. 490)
The Legal Nature of the Monetary Irregular-Deposit Contract 31
he and his successors are most certainly obliged to carry out
the task accepted and to fulfill the trust placed in them.41
It is recognized, in short, that those who receive money on
deposit are often tempted to use it for themselves. This is
explicitly acknowledged elsewhere in the Corpus Juris Civilis
(Novellae, Constitution LXXXVIII, at the end of chapter 1),
along with the importance of properly penalizing these
actions, not only by charging the depositary with theft, but
also by holding him responsible for payment of interest on
arrears “so that, in fear of these penalties, men will cease to
make evil, foolish and perverse use of deposits.”42
Roman jurists established that when a depositary failed to
comply with the obligation to immediately return the tantun-
dem upon request, not only was he clearly guilty of the prior
crime of theft, but he was also liable for payment of interest on
arrears. Accordingly, Papinian states:
He who receives the deposit of an unsealed package of
money and agrees to return the same amount, yet uses this
money for his own profit, must pay interest for the delay in
returning the deposit.43
This perfectly just principle is behind the so-called deposi-
tum confessatum, which we will consider in greater detail in the
next chapter and refers to the evasion of the canonical prohibi-
tion on interest by disguising actual loan or mutuum contracts
32
Money, Bank Credit, and Economic Cycles
41
Si is, qui depositam a te pecuniam accepit, eam suo nomine
vel cuiuslibet alterius mutuo dedit, tam ipsum de implenda
suscepta fide, quan eius successores teneri tibi, certissimum.
est. (Ibid., p. 491)
42“Ut hoc timore stultorum simul et perversorum maligne versandi cur-
sum in depositionibus homines cessent.” As is clear and we will later
expand upon, it had already been demonstrated that depositaries made
perverse use of money entrusted to them by their depositors. See ibid.,
vol. 6, pp. 310–11.
43
Qui pecuniam apud se non obsignatam, ut tantundem red-
deret, depositam ad usus propios convertit, post moram in
usuras quoque iudicio depositi condemnandus est. (Ibid., vol.
1, p. 841)
as irregular deposits and then deliberately delaying repay-
ment, thus authorizing the charging of interest. If these con-
tracts had from the beginning been openly regarded as loan or
mutuum contracts they would not have been permitted by
canon law.
Finally, we find evidence in the following extracts (among
others) that Roman jurists understood the essential difference
between the loan or mutuum contract and the monetary irreg-
ular-deposit contract: number 26, title 3, book 16 (passage by
Paul); number 9, point 9, title 1, book 12 of the Digest (excerpts
by Ulpian); and number 10 of the same title and book. How-
ever, the clearest and most specific statements to this effect
were made by Ulpian in section 2, number 24, title 5, book 42
of the Digest, in which he expressly concludes that “To loan is
one thing and to deposit is another,” and establishes
that once a banker’s goods have been sold and the concerns
of the privileged attended to, preference should be given
people who, according to attested documents, deposited
money in the bank. Nevertheless, those who have received
interest from the bankers on money deposited will not be
dealt with separately from the rest of the creditors; and with
good reason, since to loan is one thing and to deposit is
another.44
44
In bonis mensularii vendundis post privilegia potiorem
eorum causam esse placuit, qui pecunias apud mensam
fidem publicam secuti deposuerunt. Set enim qui depositis
numis usuras a mensulariis accepurunt, a ceteris creditoribus
non seperantur; et merito, aliud est enim credere, aliud
deponere. (Ibid., vol. 3, p. 386)
Papinian, for his part, states that if a depositary fails to comply with his
responsibilities, money to return deposits can be taken not only from
deposited funds found among the banker’s assets, but from all the
defrauder’s assets. The depositors’
privilege extends not only to deposited funds still among the
banker’s assets, but to all of the defrauder’s assets; and this is
for the public good, given that banking services are necessary.
However, necessary expenses always come first, since the cal-
culation of assets usually takes place after discounting them.
(The principle reflected here of bankers’ unlimited liability
appears in point 8, title 3, book 16 of the Digest.)
The Legal Nature of the Monetary Irregular-Deposit Contract 33
34
Money, Bank Credit, and Economic Cycles
It is therefore clear from Ulpian’s writings in this section
that bankers carried out two different types of operations. On
one hand, they accepted deposits, which involved no right to
interest and obliged the depositary to maintain the full, con-
tinuous availability of the tantundem in favor of the deposi-
tors, who had absolute privilege in the case of bankruptcy.
And, on the other hand, they received loans (mutuum con-
tracts), which did obligate the banker to pay interest to the
lenders, who lacked all privileges in the case of bankrupcy.
Ulpian could show no greater clarity in his distinction
between the two contracts nor greater fairness in his solutions.
Roman classical jurists discovered and analyzed the uni-
versal legal principles governing the monetary irregular-
deposit contract, and this analysis coincided naturally with
the development of a significant business and trade economy,
in which bankers had come to play a very important role. In
addition, these principles later appeared in the medieval legal
codes of various European countries, including Spain, despite
the serious economic and business recession resulting from
the fall of the Roman Empire and the advent of the Middle
Ages. In Las Partidas (law 2, title 3, item 5) it is established that
a person who agrees to hold the commodities of another takes
part in an irregular deposit in which control over the goods is
transferred to him. Nevertheless, he is obliged, depending
upon agreements in the corresponding document, to return
the goods or the value indicated in the contract for each good
removed from the deposit, either because it is sold with the
authorization of the original owner, or is removed for other,
unexpected reasons.45Moreover, in 1255 the Fuero Real (law 5,
45In Las Partidas (c. 1312) deposits are called condesijos [hidden deposits],
and in law 2 of this work we read that
Control over the possession of goods given another for safe-
keeping is not transferred to the receiver of the goods, except
when the deposit can be counted, weighed or measured when
handed over; and if it is given the receiver in terms of quan-
tity, weight or measure, then control is transferred to him.
However, he must return the good or the same amount of
another equal to that given him for safekeeping.
The Legal Nature of the Monetary Irregular-Deposit Contract 35
title 15, book 3) the distinction is made between the deposit
“of some counted money or raw silver or gold,” received from
“another, by weight,” in which case “the goods may be used
and goods of the same quantity and quality as those received
may be returned;” and the deposit “which is sealed and not
counted or measured by weight,” in which case “it is not to be
used, but if it is used, it must be paid back double.”46These
medieval codes contain a clear distinction between the regular
deposit of a specific good and the irregular deposit of money,
and they indicate that in the latter case ownership is trans-
ferred. However, the codes do not include the important clar-
ifications made in the Corpus Juris Civilis to the effect that,
though ownership is “transferred,” the safekeeping obliga-
tion remains, along with the responsibility to keep continu-
ally available to the depositor the equivalent in quantity and
quality (tantundem) of the original deposit. Perhaps the reason
for this omission lies in the increasing prevalence of the deposi-
tum confessatum.
In conclusion, Roman legal tradition correctly defined the
institution of monetary irregular deposit and the principles
governing it, along with the essential differences between this
contract and other legal institutions or contracts, such as the
loan or mutuum. In chapter 2 we will consider ways in which
the essential principles regulating human interactions in the
monetary irregular deposit (and more specifically, the rights
of availability and ownership implied by the contract) were
gradually corrupted over the centuries as a result of the com-
bined actions of bankers and politicians. We will analyze the
circumstances which made these events possible, as well as the
reasons behind them. In chapter 3 we will study the different
attempts made by the legal profession to justify contracts
This topic is covered with the utmost eloquence and clarity in Las Par-
tidas. See Las Siete Partidas, annotated by the university graduate Grego-
rio López; facsimile edition published by the Boletín Oficial del Estado
[official gazette] (Madrid, 1985), vol. 3, 5th Partida, title 3, law 2, pp. 7–8.
46See the reference made by Juan Roca Juan to the Fuero Real in his arti-
cle on “El depósito de dinero,” in Comentarios al Código Civil y Compila-
ciones Forales, vol. 1, tome 22, p. 249.
36
Money, Bank Credit, and Economic Cycles
which, against traditional legal principles, gradually gained
acceptance. Then in chapter 4 we will begin to consider the
economic consequences of these events.
ACCORDING TO MENGER, HAYEK, AND LEONI
The traditional, universal legal principles we dealt with in
the last section in relation to the irregular deposit contract
have not emerged in a vacuum, nor are they the result of a pri-
ori knowledge. The concept of law as a series of rules and
institutions to which people constantly, perpetually and cus-
tomarily adapt their behavior has been developed and refined
20
Money, Bank Credit, and Economic Cycles
21At this point it is important to draw attention to the “time deposit”
contract, which possesses the economic and legal characteristics of a
true loan, not those of a deposit. We must emphasize that this use of ter-
minology is misleading and conceals a true loan contract, in which pres-
ent goods are exchanged for future goods, the availability of money is
transferred for the duration of a fixed term and the client has the right to
receive the corresponding interest. This confusing terminology makes it
even more complicated and difficult for citizens to distinguish between
a true (demand) deposit and a loan contract (involving a term). Certain
economic agents have repeatedly and selfishly employed these terms to
take advantage of the existent confusion. The situation degenerates fur-
ther when, as quite often occurs, banks offer time “deposits” (which
should be true loans) that become de facto “demand” deposits, as the
banks provide the possibility of withdrawing the funds at any time
without penalty.
through a repetitive, evolutionary process. Perhaps one of Carl
Menger’s most important contributions was the development
of a complete economic theory of social institutions. According
to his theory, social institutions arise as the result of an evolu-
tionary process in which innumerable human beings interact,
each one equipped with his own small personal heritage of sub-
jective knowledge, practical experiences, desires, concerns,
goals, doubts, feelings, etc. By means of this spontaneous evo-
lutionary process, a series of behavior patterns or institutions
emerges in the realms of economics and language, as well as
law, and these behaviors make life in society possible. Menger
discovered that institutions appear through a social process
composed of a multiplicity of human actions, which is always
led by a relatively small group of individuals who, in their par-
ticular historical and geographical circumstances, are the first
ones to discover that certain patterns of behavior help them
attain their goals more efficiently. This discovery initiates a
decentralized trial and error process encompassing many gen-
erations, in which the most effective behavior patterns gradu-
ally become more widespread as they successfully counter
social maladjustments. Thus there is an unconscious social
process of learning by imitation which explains how the pio-
neering behavior of these most successful and creative individ-
uals catches on and eventually extends to the rest of society.
Also, due to this evolutionary process, those societies which
first adopt successful principles and institutions tend to spread
and prevail over other social groups. Although Menger devel-
oped his theory in relation to the origin and evolution of money,
he also mentions that the same essential theoretical framework
can be easily applied to the study of the origins and develop-
ment of language, as well as to our present topic, juridical insti-
tutions. Hence the paradoxical fact that the moral, juridical, eco-
nomic and linguistic institutions which are most important and
essential to man’s life in society are not of his own creation,
because he lacks the necessary intellectual might to assimilate
the vast body of random information that these institutions
generate. On the contrary, these institutions inevitably and
spontaneously emanate from the social processes of human
The Legal Nature of the Monetary Irregular-Deposit Contract 21
interaction which Menger believes should be the main subject
of research in economics.22
Menger’s ideas were later developed by F.A. Hayek in
various works on the fundamentals of law and juridical insti-
tutions,23and especially by the Italian professor of political
science, Bruno Leoni, who was the first to incorporate the fol-
lowing in a synoptic theory on the philosophy of law: the eco-
nomic theory of social processes developed by Menger and
the Austrian School, the most time-honored Roman legal tra-
dition, and the Anglo-Saxon tradition of rule of law. Indeed,
Bruno Leoni’s great contribution is having shown that the
Austrian theory on the emergence and evolution of social
institutions is perfectly illustrated by the phenomenon of com-
mon law and that it was already known and had been formu-
lated by the Roman classical school of law.24Leoni, citing
22
Money, Bank Credit, and Economic Cycles
22Carl Menger, Untersuchungen über die Methode der Socialwissenschaften
und der Politischen Ökonomie insbesondere (Leipzig: Duncker and Hum-
blot, 1883), esp. p. 182. (Investigations into the Method of the Social Sciences
with Special Reference to Economics [New York: New York University
Press, 1985]). Menger himself eloquently formulates this new question
which his proposed scientific research program for economics is
designed to answer:
How is it possible that the institutions which are most signif-
icant to and best serve the common good have emerged with-
out the intervention of a deliberate common will to create
them? (pp. 163–65)
The best and perhaps the most brilliant synopsis of Menger’s theory on
the evolutionary origin of money appears in his article, “On the Origin
of Money,” Economic Journal (June 1892): 239–55. This article has been
reprinted by Israel M. Kirzner in his Classics in Austrian Economics: A
Sampling in the History of a Tradition (London: William Pickering, 1994),
vol. 1, pp. 91–106.
23F.A. Hayek, The Constitution of Liberty (London: Routledge, 1st edition
[1960] 1990); Law, Legislation and Liberty (Chicago: University of Chicago
Press, 1978); and The Fatal Conceit: The Errors of Socialism (Chicago: Uni-
versity of Chicago Press, 1989).
24See Jesús Huerta de Soto, Estudios de economía política (Madrid: Unión
Editorial, 1994), chap. 10, pp. 121–28, and Bruno Leoni, Freedom and the
Law (Princeton, N.J.: D. Van Nostrand Company, 1961), essential reading
for all jurists and economists.
Cicero’s rendering of Cato’s words, specifically points out that
Roman jurists knew Roman law was not the personal inven-
tion of one man, but rather the creation of many over genera-
tions and centuries, given that
there never was in the world a man so clever as to foresee
everything and that even if we could concentrate all brains
into the head of one man, it would be impossible for him to
provide for everything at one time without having the experi-
ence that comes from practice through a long period of his-
tory.25
In short, it was Leoni’s opinion that law emerges as the
result of a continuous trial-and-error process, in which each
25
Nostra autem res publica non unius esset ingenio, sed multo-
rum, nec una hominis vita, sed aliquod constitutum saeculis
et aetatibus, nam neque ullum ingenium tantum extitisse
dicebat, ut, quem res nulla fugeret, quisquam aliquando fuis-
set, neque cuncta ingenia conlata in unum tantum posse uno
tempore providere, ut omnia complecterentur sine rerum usu
ac vetustate. (Marcus Tullius Cicero, De re publica, 2, 1–2
[Cambridge, Mass.: The Loeb Classical Library, 1961], pp.
111–12. See Leoni, Freedom and the Law, p. 89)
Leoni’s book is by all accounts exceptional. Not only does he reveal the
parallelism between the market and common law on the one hand, and
socialism and legislation on the other, but he is also the first jurist to rec-
ognize Ludwig von Mises’s argument on the impossibility of socialist
economic calculation as an illustration of
a more general realization that no legislator would be able to
establish by himself, without some kind of continuous collab-
oration on the part of all the people concerned, the rules gov-
erning the actual behavior of everybody in the endless rela-
tionships that each has with everybody else. (pp. 18–19)
For information on the work of Bruno Leoni, founder of the prestigious
journal Il Politico in 1950, see Omaggio a Bruno Leoni, Pasquale
Scaramozzino, ed. (Milan: Ed. A. Guiffrè, 1969), and the article “Bruno
Leoni in Retrospect” by Peter H. Aranson, Harvard Journal of Law and
Public Policy (Summer, 1988). Leoni was multifaceted and extremely
active in the fields of university teaching, law, business, architecture,
music, and linguistics. He was tragically murdered by one of his tenants
while trying to collect the rent on the night of November 21, 1967. He
was fifty-four years old.
The Legal Nature of the Monetary Irregular-Deposit Contract 23
individual takes into account his own circumstances and the
behavior of others and the law is perfected through a selective
evolutionary process.26
ROMAN JURISPRUDENCE
The greatness of classical Roman jurisprudence stems pre-
cisely from the realization of this important truth on the part
of legal experts and the continual efforts they dedicated to
study, interpretation of legal customs, exegesis, logical analy-
sis, the tightening of loopholes and the correction of flaws; all
of which they carried out with the necessary standards of
prudence and equanimity.27The occupation of classical jurist
was a true art, of which the constant aim was to identify and
define the essence of the juridical institutions that have devel-
oped throughout society’s evolutionary process. Furthermore,
classical jurists never entertained pretensions of being “origi-
nal” or “clever,” but rather were “the servants of certain fun-
damental principles, and as Savigny pointed out, herein lies
their greatness.”28Their fundamental objective was to dis-
cover the universal principles of law, which are unchanging
and inherent in the logic of human relationships. It is true,
however, that social evolution itself often necessitates the
24
Money, Bank Credit, and Economic Cycles
26In the words of Bruno Leoni, law is shaped by
una continua serie de tentativi, che gli individui compiono
quando pretendono un comportamento altrui, e si affidano al
propio potere di determinare quel comportamento, qualora
esso non si determini in modo spontaneo. (Bruno Leoni,
“Diritto e politica,” in his book Scritti di scienza politica e teoria
del diritto [Milan: A. Giuffrè, 1980], p. 240)
27In fact, the interpreter of the ius was the prudens, that is, the legal
expert or iuris prudens. It was his job to reveal the law. Jurists provided
advice and assistance to individuals and instructed them in business
practices and types of contracts, offered answers to their questions and
informed judges and magistrates. See Juan Iglesias, Derecho romano:
Instituciones de derecho privado, 6th rev. ed. (Barcelona: Ediciones Ariel,
1972), pp. 54–55.
28Iglesias, Derecho romano: Instituciones de derecho privado, p. 56. And esp.
Rudolf von Ihering, El espíritu del derecho romano, Clásicos del Pensamiento
Jurídico (Madrid: Marcial Pons, 1997), esp. pp. 196–202 and 251–53.
application of these unchanging universal principles to new
situations and problems arising continually from this evolu-
tionary process.29In addition, Roman jurists worked inde-
pendently and were not civil servants. Despite multiple
attempts by official legal experts in Roman times, they were
never able to do away with the free practice of jurisprudence,
nor did the latter lose its enormous prestige and independence.
Jurisprudence, or the science of law, became an independ-
ent profession in the third century B.C. The most important
jurists prior to our era were Marcus Porcius Cato and his son
Cato Licianus, the consul Mucius Scaevola, and the jurists
Quintus Mucius Scaevola, Servius Surpicius Rufus, and
Alfenus Varus. Later, in the second century A.D., the classical
era began and the most important jurists during that time
were Gaius, Pomponius, Africanus, and Marcellus. In the
third century their example was followed by Papinian, Paul,
Ulpian, and Modestinus, among other jurists. From this time
onward, the solutions offered by these independent jurists
received such great prestige that the force of law was attached
to them; and to prevent the possibility of difficulties arising
from differences of opinion in the jurists’ legal writings, the
force of law was given to the works of Papinian, Paul, Ulpian,
Gaius, and Modestinus, and to the doctrines of jurists cited by
them, as long as these references could be confirmed upon
comparison with original writings. If these authors were in
disagreement, the judge was compelled to follow the doctrine
defended by the majority; and in the case of a tie, the opinion
of Papinian was to prevail. If he had not communicated his
opinion on an issue, the judge was free to decide.30
29
The occupation of interpretatio was intimately related to the
role of advisor to individuals, magistrates, and judges, and
consisted of applying time-honored principles to new needs;
this meant an expansion of the ius civile, even when no new
institutions were formally created. (Francisco Hernández-
Tejero Jorge, Lecciones de derecho romano [Madrid: Ediciones
Darro, 1972], p. 30)
30This force of law was first acquired in a constitution from the year 426,
known as the Citation Law of Theodosius and Valentinianus III. See
Hernández-Tejero Jorge, Lecciones de derecho romano, p. 3.
The Legal Nature of the Monetary Irregular-Deposit Contract 25
Roman classical jurists deserve the credit for first discov-
ering, interpreting, and perfecting the most important juridi-
cal institutions that make life in society possible, and as we
will see, they had already recognized the irregular deposit
contract, understood the essential principles governing it, and
outlined its content and essence as explained earlier in this
chapter. The irregular deposit contract is not an intellectual,
abstract creation. It is a logical outcome of human nature as
expressed in multiple acts of social interaction and coopera-
tion, and it manifests itself in a set of principles which cannot
be violated without grave consequences to the network of
human relationships. The great importance of law in this evo-
lutionary sense, distilled and rid of its logical flaws through
the science of legal experts, lies in the guidance it provides
people in their daily lives; though in most cases, due to its
abstract nature, people may not be able to identify or under-
stand the complete specific function of each juridical institu-
tion. Only recently in the historical evolution of human
thought has it been possible to understand the laws of social
processes and gain a meager grasp on the role of the differ-
ent juridical institutions in society, and the contributions of
economics have been mostly responsible for these realiza-
tions. One of our most important objectives is to carry out an
economic analysis of social consequences resulting from the
violation of the universal legal principles regulating the mon-
etary irregular-deposit contract. In chapter 4 we will begin this
theoretical economic analysis of a juridical institution (the
monetary bank-deposit contract).
The knowledge we have today of universal legal princi-
ples as they were discovered by Roman jurists comes to us
through the work of the emperor Justinian, who in the years
528–533 A.D. made an enormous effort to compile the main
contributions of classical Roman jurists and recorded them in
three books (the Institutiones, the Digest, and the Codex Consti-
tutionum, later completed by a fourth book, the Novellae),
which, since the edition of Dionysius Gottfried,31are known
as the Corpus Juris Civilis. The Institutiones is an essential work
26
Money, Bank Credit, and Economic Cycles
31Corpus Juris Civilis (Geneva: Dionysius Gottfried, 1583).
directed at students and based on Gaius’s Institutiones. The
Digest or Pandecta is a compilation of classical legal texts which
includes over nine thousand excerpts from the works of differ-
ent prestigious jurists. Passages taken from the works of
Ulpian, which comprise a third of the Digest, together with
excerpts from Paul, Papinian, and Julianus, fill more of the book
than the writings of all of the rest of the jurists as a group. In all,
contributions appear from thirty-nine specialists in Roman clas-
sical law. The Codex Constitutionum consists of a chronologi-
cally-ordered collection of imperial laws and constitutions (the
equivalent of the present-day concept of legislation), and Novel-
lae, the last work in the Corpus, contains the last imperial con-
stitutions subsequent to the Codex Constitutionum.32
Now let us follow up this brief introduction by turning to
the Roman classical jurists and their treatment of the institu-
tion of monetary irregular deposit. It is clear they understood
it, considered it a special type of deposit possessing the essen-
tial deposit characteristics and differentiated it from other
contracts of a radically different nature and essence, such as
the mutuum contract or loan.
THE IRREGULAR DEPOSIT CONTRACT UNDER ROMAN LAW
The deposit contract in general is covered in section 3 of
book 16 of the Digest, entitled “On Depositing and Withdraw-
ing” (Depositi vel contra). Ulpian begins with the following def-
inition:
Adeposit is something given another for safekeeping. It is so
called because a good is posited [or placed]. The preposition de
32Justinian stipulated that the necessary changes be made in the com-
piled materials so that the law would be appropriate to the historical
circumstances and as close to perfect as possible. These modifications,
corrections and omissions are called interpolations and also emblemata
Triboniani, after Tribonian, who was in charge of the compilation. There
is an entire discipline dedicated to the study of these interpolations, to
determining their content through comparison, logical analysis, the
study of anachronisms in language, etc., since it has been discovered
that a substantial number of them were made after the Justinian era. See
Hernández-Tejero Jorge, Lecciones de derecho romano, pp. 50–51.
The Legal Nature of the Monetary Irregular-Deposit Contract 27
intensifies the meaning, which reflects that all obligations cor-
responding to the custody of the good belong to that person.33
A deposit can be either regular, in the case of a specific
good; or irregular, in the case of a fungible good.34In fact, in
number 31, title 2, book 19 of the Digest, Paul explains the dif-
ference between the loan contract or mutuum and the deposit
contract of a fungible good, arriving at the conclusion that
if a person deposits a certain amount of loose money, which
he counts and does not hand over sealed or enclosed in
something, then the only duty of the person receiving it is to
return the same amount.35
28
Money, Bank Credit, and Economic Cycles
33Ulpian, a native of Tyre (Phoenicia), was advisor to another great
jurist, Papinian, and together with Paul, he was an advising member of
the concilium principis and praefectus praetorio under Alexander Severus.
He was murdered in the year 228 by the Praetorians. He was a very pro-
lific writer who was better known for his knowledge of juridical litera-
ture than for his creative work. He wrote clearly and was a good com-
piler and his writings are regarded with special favor in Justinian’s
Digest, where they comprise the main part. On this topic see Iglesias,
Derecho romano: Instituciones de derecho privado, p. 58. The passage cited
in the text is as follows in Latin:
Depositum est, quod custodiendum alicui datum est, dictum
ex eo, quod ponitur, praepositio enim de auget depositum, ut
ostendat totum fidei eius commissum, quod ad custodiam rei
pertinet. (See Ildefonso L. García del Corral, ed., Cuerpo de
derecho civil romano, 6 vols. [Valladolid: Editorial Lex Nova,
1988], vol. 1, p. 831)
34However, as Pasquale Coppa-Zuccari astutely points out, the expres-
sion depositum irregolare did not appear until it was first used by Jason
de Maino, a fifteenth century annotator of earlier works, whose writ-
ings were published in Venice in the year 1513. See Coppa-Zuccari, Il
deposito irregolare, p. 41. Also, the entire first chapter of this important
work deals with the treatment under Roman law of the irregular
deposit, pp. 2–32. For an excellent, current treatment in Spanish of bib-
liographic sources on the irregular deposit in Rome, see Mercedes
López-Amor y García’s article, “Observaciones sobre el depósito irreg-
ular romano,” in the Revista de la Facultad de Derecho de la Universidad
Complutense 74 (1988–1989): 341–59; and also Alicia Valmaña Ochaita, El
depósito irregular en la jurisprudencia romana (Madrid: Edisofer, 1996).
35This is actually a summary by Paul of Alfenus Varus’s Digest. Alfenus
Varus was consul in the year 39 A.D. and the author of forty books of the
Digest. Paul, in turn, was a disciple of Scaevola and an advisor to Papinian
In other words, Paul clearly indicates that in the monetary
irregular deposit the depositary’s only obligation is to return
the tantundem: the equivalent in quantity and quality of the
original deposit. Moreover, whenever anyone made an irreg-
ular deposit of money, he received a written certificate or
deposit slip. We know this because Papinian, in paragraph 24,
title 3, book 16 of the Digest, says in reference to a monetary
irregular deposit,
I write this letter by hand to inform you, so that you will know,
that the one hundred coins you have entrusted to me today
through Sticho, the slave and administrator, are in my pos-
session and I will return them to you immediately, when-
ever and wherever you wish.
This passage reveals the immediate availability of the
money to the depositor and the custom of giving him a
deposit slip or receipt certifying a monetary irregular deposit,
which not only established ownership, but also had to be pre-
sented upon withdrawal.36
during the time Papinian was a member of the imperial council under
Severus and Caracalla. He was a very ingenious, learned figure and the
author of numerous writings. The passage cited in the text is as follows
in Latin:
Idem iuris esse in deposito; nam si quis pecuniam numeratam
ita deposuisset ut neque clausam, neque obsignatam traderet,
sed adnumeraret, nihil aliud eum debere, apud quem
deposita esset, nisi tantundem pecuniae solvere. (See Ildefonso
L. García del Corral, ed., Cuerpo de derecho civil romano, 6 vols.
[Valladolid: Editorial Lex Nova, 1988], vol. 1, p. 963)
36Papinian, a native of Syria, was Praefectus Praetorio beginning in the
year 203 A.D. and was sentenced to death by the emperor Caracalla in
the year 212 for refusing to justify the murder of his brother, Geta. He
shared with Julianus the reputation for being the most notable of Roman
jurists, and according to Juan Iglesias, “His writings are remarkable for
their astuteness and pragmatism, as well as for their sober style” (Dere-
cho romano: Instituciones de derecho privado, p. 58). The passage cited in the
text is as follows in Latin:
centum numos, quos hac die commendasti mihi annumerante
servo Sticho actore, esse apud me, ut notum haberes, hac epi-
tistola manu mea scripta tibi notum facio; quae quando volis,
et ubi voles, confestim tibi numerabo. (García del Corral, ed.,
Cuerpo de derecho civil romano, vol. 1, p. 840)
The Legal Nature of the Monetary Irregular-Deposit Contract 29
The essential obligation of depositaries is to maintain the
tantundem constantly available to depositors. If for some reason
the depositary goes bankrupt, the depositors have absolute
privilege over any other claimants, as Ulpian skillfully explains
(paragraph 2, number 7, title 3, book 16 of the Digest):
Whenever bankers are declared bankrupt, usually
addressed first are the concerns of the depositors; that is,
those with money on deposit, not those earning interest on
money left with the bankers. So, once the goods have been
sold, the depositors have priority over those with privileges,
and those who received interest are not taken into account—
it is as if they had relinquished the deposit.37
Here Ulpian indicates as well that interest was considered
incompatible with the monetary irregular deposit and that
when bankers paid interest, it was in connection with a totally
different contract (in this case, a mutuum contract or loan to a
banker, which is better known today as a time “deposit” con-
tract).
As for the depositary’s obligations, it is expressly stated in
the Digest (book 47, title 2, number 78) that he who receives a
good on deposit and uses it for a purpose other than that for
which it was received is guilty of theft. Celsus also tells us in
the same title (book 47, title 2, number 67) that taking a
deposit with an intent to deceive constitutes theft. Paul
defines theft as “the fraudulent appropriation of a good to
gain a profit, either from the good itself or from its use or
possession; this is forbidden by natural law.”38As we see, what
30
Money, Bank Credit, and Economic Cycles
37
Quoties foro cedunt numularii, solet primo loco ratio haberi
depositariorum, hoc est eorum, qui depositas pecunias
habuerunt, non quas foenore apud numularios, vel cum
numulariis, vel per ipsos exercebant; et ante privilegia igitur,
si bona venierint, depositariorum ratio habetur, dummodo
eorum, qui vel postea usuras acceperunt, ratio non habeatur,
quasi renuntiaverint deposito. (García del Corral, ed., Cuerpo
de derecho civil romano, vol. 1, p. 837)
38
Furtum est contrectatio rei fraudulosa, lucri faciendi gratia,
vel ipsius rei, vel etiam usus eius possessionisve; quod lege
naturali prohibitum est admittere. (Ibid., vol. 3, p. 645)
is today called the crime of misappropriation was included
under the definition of theft in Roman law. Ulpian, in reference
to Julianus, also concluded:
if someone receives money from me to pay a creditor of
mine, and, himself owing the same amount to the creditor,
pays him in his own name, he commits theft. (Digest, book
47, title 2, number 52, paragraph 16)39
In number 3, title 34 (on “the act of deposit”), book 4 of the
Codex Constitutionum of the Corpus Juris Civilis, which includes
the constitution established under the consulship of Gor-
dianus and Aviola in the year 239, the obligation to maintain
the total availability of the tantundem is even clearer, as is the
commission of theft when the tantundem is not kept avail-
able. In this constitution, the emperor Gordianus indicates to
Austerus,
if you make a deposit, you will with reason ask to be paid
interest, since the depositary should thank you for not holding
him responsible for theft, because he who knowingly and will-
ingly uses a deposited good for his own benefit, against the will
of the owner, also commits the crime of theft.40
Section 8 of the same source deals expressly with deposi-
taries who loan money received on deposit, thus using it for
their own benefit. It is emphasized that such an action violates
the principle of safekeeping, obligates depositaries to pay
interest, and makes them guilty of theft, as we have just seen
in the constitution of Gordianus. In this section we read:
If a person who has received money from you on deposit
loans it in his own name, or in the name of any other person,
39Ibid., p. 663.
40
Si depositi experiaris, non immerito etiam usuras tibi restitui
flagitabis, quum tibi debeat gratulari, quod furti eum actione
non facias obnoxium, siquidem qui rem depositam invito
domino sciens prudensque in usus suus converterit, etiam furti
delicto succedit. (Ibid., vol. 4, p. 490)
The Legal Nature of the Monetary Irregular-Deposit Contract 31
he and his successors are most certainly obliged to carry out
the task accepted and to fulfill the trust placed in them.41
It is recognized, in short, that those who receive money on
deposit are often tempted to use it for themselves. This is
explicitly acknowledged elsewhere in the Corpus Juris Civilis
(Novellae, Constitution LXXXVIII, at the end of chapter 1),
along with the importance of properly penalizing these
actions, not only by charging the depositary with theft, but
also by holding him responsible for payment of interest on
arrears “so that, in fear of these penalties, men will cease to
make evil, foolish and perverse use of deposits.”42
Roman jurists established that when a depositary failed to
comply with the obligation to immediately return the tantun-
dem upon request, not only was he clearly guilty of the prior
crime of theft, but he was also liable for payment of interest on
arrears. Accordingly, Papinian states:
He who receives the deposit of an unsealed package of
money and agrees to return the same amount, yet uses this
money for his own profit, must pay interest for the delay in
returning the deposit.43
This perfectly just principle is behind the so-called deposi-
tum confessatum, which we will consider in greater detail in the
next chapter and refers to the evasion of the canonical prohibi-
tion on interest by disguising actual loan or mutuum contracts
32
Money, Bank Credit, and Economic Cycles
41
Si is, qui depositam a te pecuniam accepit, eam suo nomine
vel cuiuslibet alterius mutuo dedit, tam ipsum de implenda
suscepta fide, quan eius successores teneri tibi, certissimum.
est. (Ibid., p. 491)
42“Ut hoc timore stultorum simul et perversorum maligne versandi cur-
sum in depositionibus homines cessent.” As is clear and we will later
expand upon, it had already been demonstrated that depositaries made
perverse use of money entrusted to them by their depositors. See ibid.,
vol. 6, pp. 310–11.
43
Qui pecuniam apud se non obsignatam, ut tantundem red-
deret, depositam ad usus propios convertit, post moram in
usuras quoque iudicio depositi condemnandus est. (Ibid., vol.
1, p. 841)
as irregular deposits and then deliberately delaying repay-
ment, thus authorizing the charging of interest. If these con-
tracts had from the beginning been openly regarded as loan or
mutuum contracts they would not have been permitted by
canon law.
Finally, we find evidence in the following extracts (among
others) that Roman jurists understood the essential difference
between the loan or mutuum contract and the monetary irreg-
ular-deposit contract: number 26, title 3, book 16 (passage by
Paul); number 9, point 9, title 1, book 12 of the Digest (excerpts
by Ulpian); and number 10 of the same title and book. How-
ever, the clearest and most specific statements to this effect
were made by Ulpian in section 2, number 24, title 5, book 42
of the Digest, in which he expressly concludes that “To loan is
one thing and to deposit is another,” and establishes
that once a banker’s goods have been sold and the concerns
of the privileged attended to, preference should be given
people who, according to attested documents, deposited
money in the bank. Nevertheless, those who have received
interest from the bankers on money deposited will not be
dealt with separately from the rest of the creditors; and with
good reason, since to loan is one thing and to deposit is
another.44
44
In bonis mensularii vendundis post privilegia potiorem
eorum causam esse placuit, qui pecunias apud mensam
fidem publicam secuti deposuerunt. Set enim qui depositis
numis usuras a mensulariis accepurunt, a ceteris creditoribus
non seperantur; et merito, aliud est enim credere, aliud
deponere. (Ibid., vol. 3, p. 386)
Papinian, for his part, states that if a depositary fails to comply with his
responsibilities, money to return deposits can be taken not only from
deposited funds found among the banker’s assets, but from all the
defrauder’s assets. The depositors’
privilege extends not only to deposited funds still among the
banker’s assets, but to all of the defrauder’s assets; and this is
for the public good, given that banking services are necessary.
However, necessary expenses always come first, since the cal-
culation of assets usually takes place after discounting them.
(The principle reflected here of bankers’ unlimited liability
appears in point 8, title 3, book 16 of the Digest.)
The Legal Nature of the Monetary Irregular-Deposit Contract 33
34
Money, Bank Credit, and Economic Cycles
It is therefore clear from Ulpian’s writings in this section
that bankers carried out two different types of operations. On
one hand, they accepted deposits, which involved no right to
interest and obliged the depositary to maintain the full, con-
tinuous availability of the tantundem in favor of the deposi-
tors, who had absolute privilege in the case of bankruptcy.
And, on the other hand, they received loans (mutuum con-
tracts), which did obligate the banker to pay interest to the
lenders, who lacked all privileges in the case of bankrupcy.
Ulpian could show no greater clarity in his distinction
between the two contracts nor greater fairness in his solutions.
Roman classical jurists discovered and analyzed the uni-
versal legal principles governing the monetary irregular-
deposit contract, and this analysis coincided naturally with
the development of a significant business and trade economy,
in which bankers had come to play a very important role. In
addition, these principles later appeared in the medieval legal
codes of various European countries, including Spain, despite
the serious economic and business recession resulting from
the fall of the Roman Empire and the advent of the Middle
Ages. In Las Partidas (law 2, title 3, item 5) it is established that
a person who agrees to hold the commodities of another takes
part in an irregular deposit in which control over the goods is
transferred to him. Nevertheless, he is obliged, depending
upon agreements in the corresponding document, to return
the goods or the value indicated in the contract for each good
removed from the deposit, either because it is sold with the
authorization of the original owner, or is removed for other,
unexpected reasons.45Moreover, in 1255 the Fuero Real (law 5,
45In Las Partidas (c. 1312) deposits are called condesijos [hidden deposits],
and in law 2 of this work we read that
Control over the possession of goods given another for safe-
keeping is not transferred to the receiver of the goods, except
when the deposit can be counted, weighed or measured when
handed over; and if it is given the receiver in terms of quan-
tity, weight or measure, then control is transferred to him.
However, he must return the good or the same amount of
another equal to that given him for safekeeping.
The Legal Nature of the Monetary Irregular-Deposit Contract 35
title 15, book 3) the distinction is made between the deposit
“of some counted money or raw silver or gold,” received from
“another, by weight,” in which case “the goods may be used
and goods of the same quantity and quality as those received
may be returned;” and the deposit “which is sealed and not
counted or measured by weight,” in which case “it is not to be
used, but if it is used, it must be paid back double.”46These
medieval codes contain a clear distinction between the regular
deposit of a specific good and the irregular deposit of money,
and they indicate that in the latter case ownership is trans-
ferred. However, the codes do not include the important clar-
ifications made in the Corpus Juris Civilis to the effect that,
though ownership is “transferred,” the safekeeping obliga-
tion remains, along with the responsibility to keep continu-
ally available to the depositor the equivalent in quantity and
quality (tantundem) of the original deposit. Perhaps the reason
for this omission lies in the increasing prevalence of the deposi-
tum confessatum.
In conclusion, Roman legal tradition correctly defined the
institution of monetary irregular deposit and the principles
governing it, along with the essential differences between this
contract and other legal institutions or contracts, such as the
loan or mutuum. In chapter 2 we will consider ways in which
the essential principles regulating human interactions in the
monetary irregular deposit (and more specifically, the rights
of availability and ownership implied by the contract) were
gradually corrupted over the centuries as a result of the com-
bined actions of bankers and politicians. We will analyze the
circumstances which made these events possible, as well as the
reasons behind them. In chapter 3 we will study the different
attempts made by the legal profession to justify contracts
This topic is covered with the utmost eloquence and clarity in Las Par-
tidas. See Las Siete Partidas, annotated by the university graduate Grego-
rio López; facsimile edition published by the Boletín Oficial del Estado
[official gazette] (Madrid, 1985), vol. 3, 5th Partida, title 3, law 2, pp. 7–8.
46See the reference made by Juan Roca Juan to the Fuero Real in his arti-
cle on “El depósito de dinero,” in Comentarios al Código Civil y Compila-
ciones Forales, vol. 1, tome 22, p. 249.
36
Money, Bank Credit, and Economic Cycles
which, against traditional legal principles, gradually gained
acceptance. Then in chapter 4 we will begin to consider the
economic consequences of these events.
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