Bottomry (nautical loan)
A loan to a shipowner or merchant, repayable with high interest only if the ship or cargo arrived safely, the direct ancestor of marine insurance.
In Antiquity and the Middle Ages, a merchant who wanted to finance a sea voyage could borrow a sum secured on the ship or goods. If the voyage succeeded, he repaid the principal and a very high interest; if the ship was lost, the debt was extinguished and the lender lost everything. The contract thus combined financing with a transfer of sea risk to the lender, the high interest paying for both time and risk. The Church condemned the practice as usury in the thirteenth century, which pushed Italian merchants to separate the two functions: financing on one side, and on the other a promise to pay in case of loss against a premium paid in advance, the form in which we recognize the marine insurance contract that appeared in Genoa and Florence in the fourteenth century. Bottomry survived as a captain's last-resort tool to finance repairs en route, before disappearing with the telegraph.
In classical Athens, speeches attributed to Demosthenes describe maritime loans at rates often cited between 20 and 30% for a single voyage; the Naviganti decretal, collected in 1234 in the Decretals of Pope Gregory IX, condemned these loans as usury.
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