The birth of the bond market started with a ruthless multinational raid that sent shock waves through the Mediterranean. On the morning of March 12, 1171, the Byzantine emperor’s soldiers suddenly rounded up every Venetian man, woman, and child they could find throughout their lands, seized their shops, wares, and ships, and threw the owners in jail. Over 10,000 people in Constantinople alone were rounded up, and more than 20,000 overall — so many that monasteries were requisitioned to handle the overflow.
By the 12th century, Venice was the beating heart of Mediterranean trade. Partnership contracts between investors and merchants known as colleganza allowed even poorer citizens to pool their money, invest in long-distance trade, and share in both the risks and the spoils. These were an early precursor to joint-stock companies that sprang up in northern Europe centuries later.
When news arrived of Emperor Manuel I Komnenos’s sweeping raids, the shocked doge Vitale II Michiel summoned his counselors. A convoy of Venetian ships that had managed to flee the Byzantine crackdown sailed into town, carrying distressing tales of injustices that infuriated the Venetian citizenry. Faced by an outpouring of popular anger, Doge Vitale II reluctantly decided to lead a fleet of warships to exact revenge on Constantinople.
Venice’s famous Arsenale shipyard was able to churn out the war galleys needed. However, the armada they planned to launch would cost dearly, and the city itself had little money, despite the wealth of its citizens. This led to the creation of the first bond market.
Source: Hacker News · Summarized by HeadlinesBriefing