Banking, Credit, and Insurance
Coin is heavy, and a merchant who carried enough of it to buy a cargo would be carrying enough to be worth killing. Almost nothing large is settled in metal. It is settled in paper, in promises, and in other people's money, and the whole of it rests on the Oathbond.
Banking houses
A banking house is a family partnership, not an institution. Its name is a family's name, its capital is that family's money, and its partners answer personally for everything it does. No city stands behind a bank and no bank has ever been rescued. A house holds money for depositors, and the depositor pays for it — two to five Braell on the Goyl a year buys a locked strongroom, an accounting, and someone whose Station depends on the figures being right. Nothing is paid on a deposit, because nothing is earned on it: a house that lent out depositors' money and guessed wrong would ruin every one of them, and with no rescue coming no house has ever found depositors willing to take that risk. A man who wants his money to work buys a share in a venture instead, where he can see the ship.
What a house sells is reach. Letters of credit are the substance of the business: a merchant deposits in Shining Reach, takes a letter, crosses the world, and draws the money from that house's correspondent in Eldershore without carrying a coin, for three to eight Braell on the Goyl. Correspondent relationships are the whole architecture — houses in six cities know one another, honor one another's paper, and settle between themselves once or twice a year. Eldershore is where it all meets: every northern house keeps an office in its Trading Quarter, the only place outside their home cities where all can be found at once. The system holds because a house that failed to honor a letter would be finished.
Bills of exchange
A merchant who sells to a man who cannot pay today takes a bill — a written promise to pay a stated sum on a stated day. The bill then travels; its holder can wait or sell it at a little less than face, and it may change hands four or five times before anyone is paid. Bills discount at less here than anywhere in our own history, because defaulting on one is a failure of the Oathbond, witnessed and remembered.
Lending
Interest is ordinary and openly charged: about a Serath on the Goyl a year secured, about twice that unsecured. What draws judgment is lending to a man everyone can see will not be able to pay — an unpayable debt ends in a magistrate and a collar, and a creditor who lent with that in view has taken a person by arithmetic rather than by strength. It is force with the confession filed in advance. He is not prosecuted for it; he is known for it. So a careful creditor lends against something, and a careful borrower reads the terms.
Voyage lending and shares
A merchant fitting out a voyage borrows against the voyage itself: the lender advances the money and is repaid a fifth to a third more when the ship comes home, and if the ship is lost the debt is cancelled with it. The rate looks monstrous and is not; the lender repaid by nine voyages has paid for the tenth. A Stoenk is a share in a venture, sold before it begins and settled when it ends — a voyage or caravan divided into eighths or sixteenths, the proceeds divided by the shares, and the venture ceases to exist. There is no permanent company, no exchange, and nowhere to sell a share to a stranger. Nobody finds this clever; it is how a whaling crew has always divided a voyage, with money standing in for labor.
Insurance
A merchant pays a premium before the ship sails and collects the value of his cargo if it is lost. Lending and insurance are the same trade from opposite ends. Eldershore leads and sets the rates the world quotes against; Shining Reach writes formal policies signed beneath the terms by each man taking a share; Forgegate's guilds run mutual funds; Eldershore's lineages spread a risk among themselves before anybody writes it down.
The premium is the route. The Ancestor's Channel costs two to three Braell on the Goyl. The Storm and Sunrise Passages five to eight, more in Endwr. The Long Reach the safe way around by Clearhold twelve to twenty. The Long Reach direct one to two Serath on the Goyl, because that water belongs to the Iron Coves. Overland is cheaper and slower to settle: the Guild Road is the cheapest ground in the world to insure, the Brass Road costs more for the mountains, and the Mountain Way is priced by season and not written at all when a pass is shut. A merchant who can prove his ship sailed in convoy pays less, which is the real reason convoys hold together.
When a claim fails
Insurance is written by people, not institutions, and a policy is a page; nothing can be buried in it. In Shining Reach each underwriter signs his own name and carries his own share, so a merchant whose claim is refused knows exactly which man refused it, and refusing to pay what was written is a failure of Station witnessed by everyone whose regard the man needs. Claims still fail, for four ordinary reasons: the terms said so, plainly — a hull insured for the safe route that sailed direct, one that left its convoy, one that put to sea in Endwr against its own policy; the facts are in doubt, and a suspicion holds a payment for a season while somebody goes and asks; the underwriter cannot pay, and the merchant gets a share of his estate and the man is done; or slowness, which ruins a merchant who needed the money this season as thoroughly as a denial. Nobody calls the last dishonest. Everybody remembers it.
When a house fails
Houses do fail, and nobody catches them. No city rescues a bank, because propping up a man who has failed his Station is paying him for the failure. Shining Reach's magistrates wind up the estate and the partners' property goes to the depositors. Forgegate's guild expels them, and surviving houses sometimes cover the smallest depositors from their own pockets, which is charity rather than rescue. Clearhold records the failure exactly and no partner holds licensed standing again. Eldershore's lineage pays, and will ruin itself to make the depositors whole. Stormharbor divides what is left in the open at the Thing.
The Iron Coves
No banking houses and no paper anybody outside would honor. What it has is the Fences' Association, which holds money for captains between voyages, advances against cargo not yet taken, and settles debts between crews — a bank in everything but name and safety. Crews run on articles: shares agreed before sailing, and set compensation for a lost limb or eye, which is insurance written by men who would never use the word. A Coves captain who wants to borrow honestly borrows in Eldershore, through a factor who does not ask where the hull came from and charges him for not asking.