Friday, September 30, 2011

[Marginal Revolution Style] Markets in Everything: Nobleman-Backed Securities

We have all recently learned about the complexity of mortgage-backed securities, but what about securities whose value depended on the ransoms collected by kidnapping a nobleman in the fourteenth century?

   It was not only wages that attracted, in any case: it was plunder.  Every foot soldier stood a good chance of finding loot in the rich provinces of France; as for a knight, he would hope to capture a nobleman.
   "There's your path to fortune," Gilbert reminded his son.  "We must have a knight to ransom.  That'll save the estate.
   The ransoms were huge.  A French knight could often be sold back to his family for over a thousand pounds.  Indeed, so valuable were captured nobles that a thriving commodity market in them had developed.  Captives were sold between knights, or even to syndicates of merchants for cash against an anticipated ransom, so that a French nobleman might after a little time find that he was owned by a confusing collection of men spread all over the country, each of whom had a percentage interest in his life.
--Edward Rutherfurd in Sarum: A Novel of England.  In the chapter titled Death.  This may be a novel, but it is a historical novel, and I have yet to catch Rutherfurd tell anything but the historical truth.

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