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Venice's Bloody Secret: Birth of Global Finance
30 Sep
Summary
- Medieval Venice faced pestilence, defeat, and murder.
- A war loan in 1171 led to the creation of tradable bonds.
- The US Treasury market's roots trace back to this crisis.
Around 1,000 years ago, Doge Vitale II Michiel led Venice during a turbulent period. Emperor Manuel I Komnenos of the Byzantine Empire, seeking to assert authority, grew resentful of Venice's trading privileges. Following an incident in Constantinople, the Emperor ordered the arrest of over 20,000 Venetians in March 1171. This harsh action, which included internment camps, enraged Venice and compelled the Doge to lead a war effort against the Byzantine Empire. To fund this massive undertaking, Venice levied a proportional war tax on its wealthy citizens. Crucially, the receipts for these loans were made tradable, establishing the first 'prestiti,' or tradable bonds. This financial innovation, born out of crisis, became a foundational tool for global capitalism.
