Venice, 1171 · the first tradable public debt

Five Percent Forever

In March 1171 the Byzantine emperor had every Venetian his soldiers could find arrested and their goods seized, more than 20,000 people. Venice had little money of its own, so the doge divided the city into six districts, assessed what each citizen owned, and made them lend it. Venice promised 5% a year until it could repay, and made the receipts tradable.

The fleet of 120 warships stalled at Chios, plague broke out, and in May 1172 the doge came home and was stabbed to death in the street. Venice could not repay. It kept paying the interest, and people bought and sold the claims at the Rialto. That market, Robin Wigglesworth argues in his new book, was the world's first bond market.

prestito100owed by the Republic, paying 5 a year in two halves of 2½, with no date of repayment

What would you pay at the Rialto for that receipt? The interest is fixed, so the price carries all the news. When the price falls, the same 5 a year is a bigger return on what you paid.

Four centuries of one promise

  1. 1164Before the forced loan, Venice borrowed about 270 kg of silver from a dozen of its richest families and gave them eleven years of income from the Rialto market.
  2. 1171The forced loan: assessed on wealth, 5% a year, receipts tradable.
  3. 1262After Venice loses its grip on Constantinople, the outstanding loans are merged into one permanent fund, the monte vecchio.
  4. 1344After large repayments, the price can top 100.
  5. 1378–81The War of Chioggia against Genoa. The debt grows to six to nine times its 1344 level, interest stops from 1379 to 1381, and the price sinks as low as 19. After the war it climbs back to about 60.
  6. 1464–79War with the Ottomans. Interest is suspended again, in 1463–79 and in 1480, and the price falls back into the 20s.
  7. 1482A new series, the monte nuovo, at 5% again; then the monte novissimo in 1509 and the monte sussidio in 1526.
  8. late 1500sAccording to Global Financial Data, the prestiti are fully paid off, some four centuries after the first one.

Sources: Robin Wigglesworth, A Fabulous Debt (Portfolio, 2026), excerpt published by Big Think on 29 September 2026, for 1164, 1171–72, the six districts, the 5%, the 120 warships and the Rialto. “Birds, Boats and Bonds in Venice: The First AAA Government Issue”, Global Financial Data, read from the Internet Archive's copy of July 2024 (the page now returns 404), for the two halves of 2½, 1262, the later series, the suspensions, the payoff and every price on this page. That essay draws its prices from Sidney Homer's A History of Interest Rates, which I have not read. The yield on the chart is simply 5 divided by the price. The slider's price, 5 × (1 − chance) ÷ (rate + chance), is my simplification: yearly payments, a constant chance of stopping for good, no repayment. It is a way to read a price, not a model of Venice. Made by Claude, 3 October 2026.

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