{"text":[[{"start":4.9,"text":"1,000 years ago, so we're talking about almost 1,000 years ago, which is amazing to think about, there was a man in there, wasn't there, called Doge Vitale II Michiel. I got that name right. I've been practicing. "}],[{"start":20.200000000000003,"text":"Excellent, I thought, yes. "}],[{"start":22.750000000000004,"text":"Thank you. And he's very important to our story. What kind of person was he? "}],[{"start":28.750000000000004,"text":"Well, we don't really know, but we can, from his actions, judge that he was a very cautious person. So the Doge was, at that time, elected by the people. That was pretty radical. He was hemmed in. Doge just means basically, leader. "}],[{"start":44.050000000000004,"text":"And we should stress, by the way, it's a different type of Doge from Elon Musk's DOGE that's been smashing up government in Washington. So this is the original Venetian Doge from 1,000 years ago. "}],[{"start":56.75,"text":"It's not even the Dogecoin. "}],[{"start":58.9,"text":"Right. "}],[{"start":59.8,"text":"The tradable cryptocurrency. No, so we see there are some paintings of him. He's got a goatee or a full beard. He's got quite small, pursed lips. Maybe this is me overreading, but he looks very stressed in every painting I've seen of him. "}],[{"start":74.8,"text":"Right. "}],[{"start":75.7,"text":"And controlling Venice and everything that was going on in Venice at the time must have been incredibly stressful, because it was such a unique city at that juncture of history, had so many different competing interests. "}],[{"start":89.60000000000001,"text":"It was ruled by merchants. They kind of controlled him and hemmed in the Doge, even though he was elected directly by the people. But it seems, broadly speaking, he was a wise and very cautious ruler at the time. "}],[{"start":102.2,"text":"So he was running this weird city of hustlers in a swamp 1,000 years ago, called Venice, but it was part of the Byzantine Empire, as well. And as far as I can tell, that was run by someone called Emperor Manuel I Komnenos. Another difficult name. Tell us about that emperor. "}],[{"start":119.85,"text":"Well, Emperor Manny, we can call him, if it makes it easier. "}],[{"start":124.19999999999999,"text":"OK. "}],[{"start":124.94999999999999,"text":"He was not a cautious man. He had grand ambitions. So the Byzantines thought of themselves as the successors of the Roman Empire. Like, they were the real Romans, essentially. They called themselves Romans. "}],[{"start":139.5,"text":"And he wanted to rebuild the Roman Empire. So at one point he tried and wanted to invade southern Italy to take over that part, and Venice, which technically, in theory, he ruled, refused to help him. And he was mightily pissed off by this. "}],[{"start":153.75,"text":"And Venice actually had in the heart of Constantinople, a Venetian quarter, that was kind of like a tax-free trading entrepót in the heart of Constantinople. It was granted a few years earlier in something called the Golden Bull, which was kind of a proclamation. "}],[{"start":170,"text":"And this really annoyed him even more, that in his own capital there was this festering sore of annoying Venetians, uppity merchants that didn't respect the emperor's rule. "}],[{"start":180.95,"text":"So he started granting some of Venice's Italian rivals, like Genoa and Pisa, their own tax-free trading entrepóts, colonies, quarters in Constantinople and started favouring them. And that was when things really started to head towards a rupture. And we don't exactly what happened, but we do know that the Genoese quarter was razed or attacked. "}],[{"start":201.64999999999998,"text":"Wow. "}],[{"start":202.45,"text":"And people were murdered. And Komnenos or Manny, to friends like us, he blamed the Venetians for this. We don't whether the Venetians actually did it. Could be true. It could also be that Emperor Manuel basically attacked it himself and used it as a ruse to do what he wanted to do. "}],[{"start":221.6,"text":"Right. So it all sounds a bit like Game of Thrones or something like that. So you've got the emperor, who's trying to exert his authority over Venice. You've got these very anarchic, freewheeling, independent-minded Venetians. What does the Doge, the cautious, boring man in those portraits, do next? "}],[{"start":240.5,"text":"Well, he sends an emissary to the emperor, saying, oh, we don't know what happened here, but we want to investigate and find out. And Komnenos says, yes, I'm not going to act rashly. It's OK, we're going to investigate. "}],[{"start":253.6,"text":"But he lays a secret plan. And this plan is kind of wild. So I think it's March 12, 1171, he sent out secret orders to all the heads of police across the Byzantine Empire to arrest every single Venetian in the entire empire. "}],[{"start":269.4,"text":"What, all of them? "}],[{"start":271.15,"text":"All of them. Tens of thousands, 20,000. "}],[{"start":275.84999999999997,"text":"In the middle of the swamp? "}],[{"start":277.95,"text":"Yes, but no, not in Venice. But all the ones living in basically modern day Turkey, Constantinople, and some of the lands around there that he controlled directly. Incredibly, I mean, amazing OPSEC, this did not leak out. "}],[{"start":293.95,"text":"And he was able to instigate this incredible raid where they arrested, I think, over 20,000 Venetians: women, children, merchants, ships, shops, everything, put them all in prison. In fact, they didn't have enough places... "}],[{"start":307.84999999999997,"text":"I was going to say, where'd they put them? "}],[{"start":311.49999999999994,"text":"Yeah, I mean, they had to requisition monasteries to fit them... "}],[{"start":316.19999999999993,"text":"Wow. "}],[{"start":316.99999999999994,"text":"...all in. Yeah. There was an overflow. "}],[{"start":323.09999999999997,"text":"Wow. "}],[{"start":323.9,"text":"They have to build internment camps. And this was his big move against Venice. He was no longer going to tolerate, Manny was no longer going to tolerate these uppity merchants. "}],[{"start":335.4,"text":"So how did, you know, you've got half the population in internment camps, or the 12th century equivalent of internment camps, what esdo the Doge do next? And how on earth is this going to be related to bond markets? "}],[{"start":349.7,"text":"Yes, well, we're getting there. Promise. The bond is never far from my mind. "}],[{"start":355.25,"text":"Portfolio discussions are never this exciting. But yes, go on. "}],[{"start":360.5,"text":"No, so, and this is why I said I think Doge Vitale was a cautious man, because again his instinct is to prevaricate. When word gets out, and information travels slowly, when it finally reaches Venice, they just can't believe it. It just sounds so wild, that this can't be true. "}],[{"start":378.35,"text":"So he takes all his senior counsellors, the heads of all the big merchant families. They weren't royals, but generally the richest people in Venice were the royals, to consult. And they decide, OK, caution, this can't be true. Let's send another emissary to Constantinople, find out what's really going on. "}],[{"start":396.70000000000005,"text":"But after they've decided this, a ship of people fleeing, that managed to escape the crackdown in Constantinople, arrives in Venice at the worst possible time, at least for the Doge, spreading these stories of these atrocities. "}],[{"start":410.35,"text":"And suddenly, the Doge is hemmed in. Because it's a republic, people are infuriated. They want to take Constantinople down. Don't forget, Venice is an incredibly rich city at this point, and quite powerful. And they want to take Constantinople down. "}],[{"start":423.75,"text":"So they declare war. "}],[{"start":426.55,"text":"Yes. He has to go to war, essentially, against his own basically... "}],[{"start":431.45,"text":"Rule. "}],[{"start":433.34999999999997,"text":"...judgement, rule, yeah. He does not want to do it, but he does. "}],[{"start":438.7,"text":"So what does that mean in practise? I mean, how do they actually get the means to go to war, and where do they get the money from? "}],[{"start":445.4,"text":"Yes. "}],[{"start":446.7,"text":"This is where bonds are coming in. "}],[{"start":449.2,"text":"This is where the bond finally comes in. So, Venice was very rich as a city, but the city-state itself, the government, was not. It was kind of hemmed in. Even the Doge was not necessarily like a wealthy man. He came from one of the wealthy merchant families. "}],[{"start":464.59999999999997,"text":"So what they periodically did, it was this very low income. They taxed these merchants in the Rialto and a few other things, but for big costs, like a war against Genoa... "}],[{"start":475.24999999999994,"text":"Big CapEx. "}],[{"start":476.94999999999993,"text":"Big CapEx, they had to borrow money. And they used to go down to the bank, the men with their bank in the Rialto and borrow money, typically from some of the big royal families. "}],[{"start":487.94999999999993,"text":"A few decades earlier, they'd hit some of the merchant families up for, I think 20, 30 ounces of silver, for another little minor conflict. But the scale of the money they needed now was so great that they needed to do something else. "}],[{"start":500.6499999999999,"text":"So he divided all of Venice into six provinces. They assessed the wealth of everybody and taxed them proportionately. A one-off war tax. "}],[{"start":507.7999999999999,"text":"But to make it a little bit more palatable to everybody, they said, well, we're just going to borrow the money. "}],[{"start":514.1999999999999,"text":"Right. "}],[{"start":515.0999999999999,"text":"You're going to have to pay it, you have no choice, but we'll pay you 5% a year until we basically kick Constantinople's ass, and we obviously make money back and can pay you back. And to soften the blow, as well, we'll make the receipts tradable. "}],[{"start":530.3999999999999,"text":"And presumably, that only happened because it was a democratic city, a republic, and so they couldn't just order people, they had to persuade them, and tempting them by the idea of it being a loan with some interest payments and things. "}],[{"start":543.0499999999998,"text":"Well, this first loan was involuntary, but it was clearly done with the blessing of the big royal families, who really were... it was a proportional tax. So the poorest citizens were not forced to make this loan. "}],[{"start":555.3999999999999,"text":"Right. "}],[{"start":556.2999999999998,"text":"It was the wealthy ones. And since they acquiesced, it was semi-voluntary, semi-involuntary. But right then, it was basically a forced war tax. "}],[{"start":565.8999999999999,"text":"Right. And the critical point is, and the reason why we're going to start talking about duh, duh, duh, bonds, is because those loans didn't just pay interest, they could also be traded. "}],[{"start":576.4499999999998,"text":"Exactly. So they knew that some people might need to raise cash. And so they made the receipts of the loans tradable. "}],[{"start":583.0499999999998,"text":"There was an office off the Rialto, where if you sold your receipt to somebody else, the new owner could be, that would get the right to that 5% income stream, they could basically be registered as a new owner. And this was incredibly valuable. "}],[{"start":597.5499999999998,"text":"So this prestiti, a loan is plural of prestito. "}],[{"start":602.0999999999998,"text":"Your good Latin or Italian, yes. "}],[{"start":604.8999999999997,"text":"And it became quite a good thing. And we don't how much they raised, but they were able to raise a huge sum, enough to build 120 warships. "}],[{"start":619.8499999999998,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1792222589_4504.mp3"}