Maritime Loans

Transport by sea was of the greatest importance for the Roman economy because it was the fastest form of transport. Grain and Laconian purple from Alexandria, slaves from Delos, and marble from Greece, would all be transported by ship to Puteoli and from there be carried on smaller ships to Rome?¹ At the same time, maritime trade was a risky business because of perils at sea and pirates.4² The maritime loan not only financed this hazardous enterprise but also functioned as insurance.

This is because a maritime loan only had to be repaid if the financed cargo arrived safely and in good time at its port of destination. As a compensation for this high risk, the interest rates for maritime

³8 FIRA III, no. 145. 39 Section 7.2. 40 See also Scaev. D. 20.4.21.

41 Jones 2006: 24-5. For grain from Alexandria, see TPSulp 51, 52, and 79. For Laconian purple (purpuras laconicas’), see TPSulp 83. According to Jones (2006: 85), although the purple dye was produced in Laconia from shellfish from seas surrounding the island of Cythera, the purple cloth or garments arriving in Puteoli are more likely to have been made in Alexandria. This city was a major centre of textile production and had strong trading links with Puteoli.

42 Chevreau 2008: 37.

loans were much higher than those of ordinary loans. These high rates of interest would increase the credit risk which the lender took on the borrower. For this reason, it was common that the financed cargo would be pledged to the lender and, if the borrower owned the ship, the ship and its gear as well.^[721] ^{^[722] ^[723] ^[724] ^[725] ^[726]} In most cases this pledge must have been either a non-possessory pledge, or at least a pledge with a diluted possessory element. As such, pledges granted in the late Republic and early Principate in order to secure maritime loans can be regarded as ancestors of the Roman non-possessory pledgeTh

Greek origins

The origins of the maritime loan secured by a pledge of the cargo lie in the ancient Greek economy.

Demosthenes's record of a maritime loan agreement (c. 340 bc) in Against Lacritus has elaborate provisions on the pledge of a cargo of wine amphoras, which were to be purchased during the voyage?⁵ After the ship left the harbour, the pledged cargo would be out of the lender's physical control and only the document evidencing the maritime loan would remain in his possession?⁶ In fact, as the traditional Greek possessory rights of pledge could not satisfy the needs of maritime trade, it is a plausible presumption that the development of maritime trade did have a decisive influence on the origin of the ύποθηκη (hypotheke) as a form of non-possessory security?⁷ From the fifth century bc, the non-possessory ύποθηκη was the proper security interest for Greek maritime loans. A good example from a much later period (mid-second century ad), which is representative also for earlier periods, is the so-called Muziris papyrus. This document evidences the financing of a round trip from Muziris in India (Malabar coast).4⁸ The merchant in this transaction did not own the ship, so only the ship's cargo was pledged to the financier.^[727] This Greek pledge shares many characteristics with the Roman hypotheca: it is non-possessory, it concerns future assets (return cargo), it mentions both forfeiture and sale as execution mechanisms, it holds that the debtor shall be liable for any deficit, and it allows the debtor to sell pledged assets free from pledge. These are all characteristics which Greek-Hellenistic pledges already had at an early stage. When from the second century bc the maritime loan was taken over by the Romans, they may have adopted this form of pledge as well.

Reception of the maritime loan in Rome

This Greek commercial and legal institution was adopted by the Romans in the second century bc.^[728] ^{^[729] ^[730] ^[731] The reception of the maritime loan is reflected in Plutarch's account of the maritime loan, which Cato granted to a (large) consortium of shipowners/merchants.}

In describing how Cato turned from agriculture to more profitable investments, Plutarch says: ‘he even practised the most despised form of moneylending, on maritime loans (nautika), and then goes on to give a description of how Cato told fifty merchants and shipowners to form an association/¹ The pledge of the cargoes is not mentioned in Plutarch’s account, although it may very well actually have taken place. Almost all the surviving evidence from both the Greek and Roman world concerns maritime loans coupled with a pledge of the cargo and/or the ship and its gear. Maritime loans are also attested in writings from late republican and early classical jurists, Servius Sulpicius Rufus and LabeoTh Cato financed a partnership of shipowner-merchants and these individual merchants may have been financed by other lenders as well. This is also reflected in jurists’ writings discussing pledges securing maritime loans where multiple lenders or borrowers are involved.5³ Although, in many respects, the structure of commercial finance in Rome was significantly different from that of fourth century bc Greece, the Roman maritime loan was similar to its Greek ancestor.⁵'¹ It is therefore possible that already by the first century ad (if not earlier), pledges securing maritime loans governed by Roman law were either fully evolved non- possessory pledges or at least pledges with a diluted possessory element.

All the direct evidence of Roman maritime loans which were secured by a non-possessory pledge dates from after Julian, when it was generally recognized that pledges could be created nuda conventione.^[732] However, given that (i) a non-possessory pledge of the financed cargo was a common feature of the Greek maritime loan, and that (ii) the Romans exactly copied this type of transaction already in the last two centuries of the Republic, it is plausible that a pledge with non-possessory features would also be granted in the late republican and early classical Roman periods.

Maritime loans in the Sulpicii archive?

According to Chevreau TPSulp 51 and 52 may have represented the final stage of a maritime loan.^[733] We have seen that because of the high degree of risk for the lender, the statutory maximum rate of interest (12 per cent) did not apply to maritime loans.

Chevreau points out that the amount of TPSulp 52 (HS 3,000) represents 30 per cent of the amount originally lent pursuant to TPSulp 51 (HS 10,000), which corresponds with a going rate of 30 per cent for this type of loan. Moreover, in Greek-Hellenistic practice it was common to take a pledge over the cargo, with the value of the pledged assets doubling or tripling the amount of the loan. This also is reflected in TPSulp 51 and 52: the borrowed amount is 10,000 sesterces (13,000 including ‘interest'), while the value of the pledged assets was around 30,000 sesterces. As soon as the cargo reached its port of destination, the risk of the cargo would transfer to the borrower. Physical control, however, would pass to the lender. This also happened in TPSulp 51 and 52, where the lender took possession of the pledged assets through the rental agreement with the warehouse (TPSulp 45). The debtor then had twenty days to sell the cargo and repay the loan with the proceeds. This could explain—according to Chevreau—why TPSulp 51 and 52 did not include a licence to sell: the debtor, rather than the creditor, was authorized to sell. I am not convinced by this interpretation. Why would the parties take the trouble of casting TPSulp 52 in the form of a loan and why would they have done so several weeks after TPSulp 51 was executed? Is it not far more likely that TPSulp 52 actually is what it appears to be on the face of it: an additional loan coupled with the conversion of a non-possesory into a possessory pledge? The original purchase and transport of the wheat from Alexandria to Puteoli could have been financed by a maritime loan, but probably (given the value of the stored grain of 3021,000 sesterces) for a much larger amount than 10,000 sesterces.

Secured maritime loans in the Digest: non-possessory

There is a realistic description of a maritime loan secured by a pledge of the cargo in Scaevola D. 45.1.122.1, which may very well have reflected earlier practices.^[734] It deals with a maritime loan financing a voyage from Beirut to Brindisi and back.

This maritime loan was secured by a pledge not only on the cargo which the debtor had purchased in Beirut and which was to be carried to Brindisi but also on the goods which the debtor would purchase in Brindisi and which were to be transported back to Beirut. This right of pledge has both possessory and non-possessory elements. The non-possessory element is that the pledged goods were present on a ship rented by the debtor. The possessory element is that the creditor's slave was present on board of the ship, in order to supervise the debtor's dealings with the cargo/^[735] However, such a ‘supercargo' was not an essential element of maritime loans/^[736] In the Muziris papyrus, which does contain elaborate provisions on the pledge of the cargo, the lender did not send a slave to travel with the cargo, because he employed agents in Alexandria, Koptos, and (perhaps) the Red Sea port.^[737] At Scaevola's time, the presence of a supercargo as a substitute for traditio would not have been necessary, as the purely contractual pledge had already originated/¹

Secured maritime loans in the Digest: possessory

In maritime loans, the lender's pledge would normally have been a non- possessory one, or at least a possessory pledge with a diluted possessory element (supercargo). There is, however, a late classical legal opinion which— on the face of it—implies that maritime loans were also entered into against pure possessory pledges.

D. 4.9.I.7. Ulpianus libro 14 ad edictum. Item Pomponius libro trigensimo quarto scribit parvi referre, res nostras an alienas intulerimus, si tamen nostra intersit salvas esse: etenim nobis magis, quam quorum sunt, debent solvi. Et ideo si pignori merces accepero ob pecuniam nauticam, mihi magis quam debitori nauta tenebitur, si [ante] < a me> eas suscepit.^[738]

Likewise, Pomponius, in his thirty-fourth book, writes that it is of little importance whether we bring in our own goods or those of another, provided that it is to our interest that they are safe; for they ought to be returned to us rather than to their owners.

Therefore, if I have accepted merchandise as a pledge on account of money lent for a sea voyage, the seaman will be liable to me rather than to the debtor, if he has received the goods from me.

Ulpian says that the shipper (nauta) shall be liable towards the lender for the receipt of merchandise which was pledged in order to secure a maritime loan, if he (the shipper) has received it from the lender. This fact pattern corresponds with a possessory pledge, as the merchandise must have been in the factual possession of the lender when the shipper received the pledged goods from him. This would be an exceptional case, as in maritime loans it is the debtor who takes care of the carriage by sea himself (e.g., Scaev. D. 45.1.122.1). D. 4.9.1.7 is, however, suspected of being interpolated, in the sense that ‘si ante eas suscepit’ is a post-classical addition/³ It has also been suggested that the borrower had assigned his claim against the nauta to the lender/⁴ However, I am not completely convinced by this textual criticism. One cannot exclude the possibility that occasionally, under maritime loans, the lender would have received a possessory pledge and would take care of the transport, in particular where the lender was a merchant financier who was himself also active in maritime trade.

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Source: Verhagen Hendrik L.. Security and Credit in Roman Law: The Historical Evolution of Pignus and Hypotheca. Oxford University Press,2022. — 448 p.. 2022

Maritime Loans

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