I'm the owner of a large bank in Europe, with vast resources at my disposal. I would like to increase my wealth by lending it out at interest.

The ruler of the country I'm based in has his own wishes: he wants to conquer the neighboring country, paying off some lords over there to join his side. The problem is, being a bit of a spendthrift, he needs a loan.

I would gladly lend the money, except I know that rulers like to dissolve wealthy organizations and "redistribute" their assets, especially if they owe money to them. For example, one of the reasons that people of Hebrew descent were disliked throughout Europe (besides widespread anti-Semitism) is because they were known for lending money. The Knights Templar amassed a large amount of wealth as well, which later led to their downfall.

What measures can I take to ensure that the King will not just decide that he owes too much money to me and confiscate it all? I would prefer:

  1. No eventual execution on false charges, banishment, or impoverishment.
  2. Eventually regaining my lent money plus interest, or something else of equivalent great value
  3. (Optional) A maintenance of (at least outward) neutrality so that I can also lend to my king's enemies

I would prefer a technology level/political system of that around the High Middle Ages, but that's not concrete, if sometime else works better.

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    $\begingroup$ Not familiar with the "fate of the Knights Templar" - I suggest editing a short summary of what you're trying to avoid instead of referencing to a story that could be taken down. $\endgroup$
    – Aify
    Commented Feb 25, 2018 at 19:00
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    $\begingroup$ Here is one big example in European history: en.wikipedia.org/wiki/Rothschild_family $\endgroup$
    – user535733
    Commented Feb 25, 2018 at 21:44
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    $\begingroup$ Since you mention Judaism, Yeshua ben Sira wrote more than two thousand years ago: “Do not lend to one more powerful than yourself; or if you lend, count it as lost.” $\endgroup$
    – Davislor
    Commented Feb 26, 2018 at 2:16
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    $\begingroup$ @Aify: What happened to the Knights Templar is not a story, it is attested historical fact. (Of course, that doesn't mean that a website containing that history can't be taken down.) $\endgroup$ Commented Feb 26, 2018 at 11:10
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    $\begingroup$ Christians were forbidden by scripture to lend money at interest to other Christians, which gave Jews a near-monopoly on the money-lending business, so some Jewish creditors got very rich. And of course everyone hates a money-lender, especially a rich one, especially one of a different religion. I've heard that king Edward I's seizure of all Jewish property (including debts) and subsequent expulsion of Jews from England came after he himself had borrowed a huge sum from them to build a string of castles. So yes, it can be risky to lend to sovereigns, or even get rich in their dominion. $\endgroup$
    – Beta
    Commented Feb 28, 2018 at 0:19

16 Answers 16


So nice to have interesting questions to which real history provides a ready made and exemplary answer which is also a great tale to be told.

Consider the Fuggers

  1. The beginnings:

    It all begins with Johann "Hans" Fugger, who

    "came from Graben to the free city of Augsburg as a Landweber in 1367. Through hard work and two marriages to good women, Hans left his family a large fortune on his death in 1408. His widow Elisabeth Fugger-Gattermann led the weaving and the textile-trading side of the business until her own death in 1436. She was helped in these areas by Hans and Elisabeth's sons Andreas and Jakob, who also learned gold-working as apprentices. Together the three of them built the family business into a thriving but still low-level business and in the first three decades of the 15th century made a considerable fortune." (Wikipedia)

  2. Early rise:

    It then continues with his son Jakob Fugger "the Elder" (1398–1469), who took over the firm when his mother died. He worked hard and he traded harder, diversified into banking, and by 1460 he became one of the twelve richest citizens of Augsburg.

  3. The highest point:

    His son, Jakob Fugger "the Rich", was born in 1459 and died in 1525. I know, this is more early Renaissance than High Middle Ages, but then he was a German, and in Germany the Renaissance started later than in Italy and didn't really do much to the social relationships anyway.

    Jakob was involved in the family business from an early age; by the time he was 14 he was already representing the firm's interest in Venice, where he will base his operations throughout his life. He married very well, taking for wife Sibylle Artzt, the daughter and heiress of a Grand Burgher of Augsburg, thus giving Jakob the opportunity to become a Grand Burgher himself.

    The firm was now fabulously rich, giving loans to the pope, and to emperors and kings and grand princes left and right; this made Herr Fugger consider the very question, how can a banker successfully and safely lend money to an autocrat? His answer was to get valuable collateral, in the form of commercial and mineral rights:

    "As collateral for loans that he had given to the Habsburgs and the King of Hungary, he demanded mine revenues of Tyrol and the transfer of mining rights in Upper Hungary to him. Through this method he eventually established a dominant and almost monopolistic hold on the copper trade in Central Europe." (Wikipedia)

    The firm started a lucrative business exporting European copper to India, from where they imported spices; arguably, this was the first large scale long-distance bidirectional trade network since the fall of the classical civilization one thousand years earlier.

    In 1519 Jakob Fugger entered into an agreement to fund king Carlos I of Spain in his attempt to be elected Emperor of the Holy Roman Empire; this was eventually successful, and King Carlos I became Emperor Charles V, in the process accumulating a debt of about 600,000 guilders to the Fugger Bank. (That's about 2.1 metric tons of gold, or about 0.7% of the annual GDP of Europe at that time.)

    The point is that the newly minted emperor obviously could not pay back the debt, and Herr Fugger never had any misplaced hope that he would; instead, the firm of Jakob Fugger und Gebrüder Söhne (Jakob Fugger and Brothers' Sons) got even more mineral rights and "all discussions of trade restrictions and limits to monopolies" (Wikipedia) were quietly dropped.

  4. Gentle decline and gentrification:

    Jakob Fugger II left the firm to his nephew Anton Fugger (1493–1560), who expanded the firm into a worldwide trading house, from the Americas to the East Indies. Realising that a mercantile genius of the scale of Jakob II would never happen again in the same dynasty, and that times were changing, he set to trade the firm's riches for social positions, and he arranged marriages into nobility for his sons and daughters.

    Anton left the firm to his nephew Johann Jakob (1516–1575), who led a splendid life as a patron of the arts and sciences; under him, the firm suffered a great setback when Spain went bankrupt under the reign of King Philip II. Johann Jakob had to save the firm with his own personal wealth; he then transferred control to his cousin Markus. However, the firm had successfully diversified and Markus Fugger (1529–1597) proved that a solid financial and mercantile firm can overcome a sovereign default by a major world power.

  5. A princely family:

    "Anselm Maria Fugger von Babenhausen (1766–1821) was created Prince of the Holy Roman Empire in 1803. The present head of this branch is Prince Hubertus Fugger von Babenhausen who owns Jakob the Rich's former business seat, the Fuggerhäuser in Augsburg, as well as nearby Wellenburg Castle and the castle at Babenhausen, Bavaria (purchased by Anton Fugger in 1539 and today housing a museum on the family history); he is also co-owner of a small private bank, the Fürst Fugger Privatbank, in Augsburg." (Wikipedia)

Jakob Fugger the Elder Jakob Fugger the Rich Anton Fugger Markus Fugger

(Jakob Fugger the Elder, anonymous portait. Jakob Fugger the Rich, portrait by Albrecht Dürer. Anton Fugger, portrait by Hans Maler zu Schwaz. Johann Jakob Fugger by Christoph Amberger. Markus Fugger, anonymous portrait. All pictures in the public domain and available on Wikimedia.)


  • The key to giving loans safely to sovereign princes is to extract as collateral papers giving you some sort of lucrative rights. Mineral rights, land rights, trade rights, it does not matter; the important thing is to remember that you are dealing with powerful aristocrats, who are poor in terms of actual capital, have no understanding of trade and finance, but can easily sign their names on sheets of parchment giving you the exclusive right to open metal mines in Upper Hungary, for example. Moreover, the powerful but insolvent prince will feel that he made a good deal -- after all, he took your money, never paid it back, and all he gave you was his gracious consent to allow you to work!

  • It is wise to diversify, and to maintain a ready amount of capital to be able to overcome sovereign defaults. Before late modern times, sovereign defaults simply wiped out all debt; consider the fate of all the investors on the St. Petersburg stock exchange in 1918...

The question mentions the difficulties faced by Jewish bankers. Jewish bankers are a special case, in that their religious affiliation made them subject to restrictive laws which prohibited them from owning real estate; how to make a medieval, renaissance or early modern state give up its anti-Jewish discrimination is a much more complicated problem, which I won't touch.

Further reading:

Excursus: What on Earth is a Landweber?

"Jakob's father was Hans Fugger, who came from Graben to the free city of Augsburg as a Landweber in 1367", says Wikipedia, in the article on Jakob Fugger the Elder. What on Earth is a Landweber? The literal translation would be "country weaver", which is not immediately helpful. The Wiktionary does not know the word, and neither does the online version of the Duden.

Dagmar Klose and Marco Ladewig's Freiheit im Mittelalter am Beispiel der Stadt (Freedom in the Middle Ages Exemplified by the Cities) (Potsdam University, Potsdam, 2009, ISBN 9783940793959) contains this illuminating passage in section II.3.4 "Der Aufstieg der Familie Fugger" (The rise of the Fugger family), subsection (c) "Stadtluft macht Frei" (The air of the city sets you free):

Die Vorfahren von Jakob dem Reichen (1459-1525) waren keine unternehmerischen Genies, aber sie waren allesamt reichlich zäh. Hans Fugger hatte erkannt, dass er als Landweber auf dem Dorf keine allzu großen Zukunftschancen besaß. Die Landweber waren vollkommen abhängig von den Kaufleuten der Stadt, welche ihnen di e Rohwaren brachten und die fertigen Stoffe wieder mitnahmen. Landweber wurden schlecht entlohnt — pro Tag verdienten sie etwa zehn Kreuzer. Das machte einen Gulden in der Woche und fünfzig Gulden im Jahr — vorausgesetzt, es war genug Arbeit da. Die Weber in der Stadt verdienten mehr, und das war einer der Gründe, weshalb die Augsburger Verlagsherren, wie man die entsprechenden Kaufleute nannte, lieber die bescheidenen Dörfler beschäftigten. Gewoben wurde auf einfachen Webstühlen, das Produkt war vornehmlich der Barchent, ein fester, auf einer Seite aufgerauhter Stoff aus Baumwolle und Flachs. Er wurde zu den groben Kleidern der Bauern und Bürger verarbeitet, wohlhabende Kaufleute und der Adel dagegen bevorzugten Seidenstoffe und Damast.

which means

The ancestors of Jakob the Rich (1459-1525) were not entrepreneurial geniuses, but they were all pretty tough. Hans Fugger had realized that as a country weaver ["Landweber"] in the village he had no great future prospects. The country weavers were completely dependent on the merchants of the city, who brought them the raw materials and took back the finished fabrics. Country weavers were poorly paid—they earned about ten kreutzers a day. That made a guilder a week and fifty guilders a year—assuming there was enough work. The weavers in the city earned more, and that was one of the reasons why the Augsburg distributors ["Verlagsherren", literally master shifters], as those [specialized] merchants were called, preferred to employ the humble villagers. Woven on simple looms, the product was primarily fustian, a solid fabric made of cotton and flax, piled on one side. It was made into the coarse robes of peasants and citizens, while wealthy merchants and the nobility favored silk and damask. (Translation based on Google Translate, corrected and improved by hand.)

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    $\begingroup$ This is the best possible answer for this question. $\endgroup$
    – Dan Clarke
    Commented Feb 26, 2018 at 0:15
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    $\begingroup$ In short you don't loan the money, you instead purchase and rights from the king, but disguise it as a Reverse Mortgage with zero interest and an unlimited tenor. Sounds like what a modern ibank would do. $\endgroup$
    – Aron
    Commented Feb 26, 2018 at 10:53
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    $\begingroup$ In short, when lending money to someone who you cannot harm, make sure you are ok with the money being paid back or not. Your service is to take their solid capital (and the right to mine somewhere is capital) and make it liquid for them (so they can use it to win a war, for example). As a bonus, by continuing to do this you continue to have utility for them. When you demand large amounts of liquid wealth (cash) back from them do you become bothersome (and hence in extra danger). Then coopt the existing system (over generations) so you are no longer an outsider. $\endgroup$
    – Yakk
    Commented Feb 26, 2018 at 16:35
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    $\begingroup$ Also, a dismaying number of the top search results for the edict expelling all Jews from England are from antisemites pretending that it is still somehow valid and that this is a good thing. $\endgroup$
    – Davislor
    Commented Feb 27, 2018 at 3:25
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    $\begingroup$ @user121330, kings usually avoided welching out on deals or loans unless they were in dire straits. When it did happen, the king or noble in question had trouble getting new loans in the future. It didn't help the lender who just lost his money, but it made things easier over the long run. That's why we don't see even more historical situations of lenders being expelled or thrown in prison. $\endgroup$
    – Dan Clarke
    Commented Feb 27, 2018 at 17:12

Demand a hostage ward as collateral

A good collateral is a family member of the monarch. Someone young and closely-related to the king, yet not important enough that they want them at their court. Like the 2nd daughter, the 5th son, a niece or nephew. Not as a hostage, of course. They would be entrusted to you as a ward. You would provide them with an education in the arts of business, economy and negotiation to prepare them for their future challenges as a noble. You would also provide them with a standard of living which suits their position. They will just become a hostage if the king stops fulfilling his side of the bargain.

This was actually a very common practice between nobles in the middle ages. When you wanted to form a trust relationship with another noble, you would send them a close family member as a ward. Officially this was to provide the family member with a wider education and to give them the opportunity to form connections with other powerful people. But inofficially it was often to provide the educating party with an insurance against getting double-crossed.

A step further is to arrange a marriage between your families. Forming marriage ties implied a permanent alliance between the heads of the families. But when your family does not have a noble heritage, the king would be very reluctant to let you marry into the royal family.

  • 4
    $\begingroup$ Yes, between nobles. But bankers were definitely not nobles, and it would be insulting to have someone of noble birth raised by moneylenders. $\endgroup$
    – RonJohn
    Commented Mar 2, 2018 at 0:45
  • $\begingroup$ @RonJohn Even if the banker is rich and powerful enough to deal directly with the king? $\endgroup$
    – anon
    Commented Mar 2, 2018 at 3:23
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    $\begingroup$ @RonJohn During the middle-ages, being wealthy and being noble where synonyms. During the early middle ages, the economic capital number one was farmland. Being rich meant owning lots of farmland. When you owned so much land that you could no longer manage it yourself and needed to sub-lend it to peasants, you would call yourself a noble. In the later middle-ages, other forms of wealth were also accepted. Jakob Fugger, the rich guy from the top answer, was officially recognized as a noble in 1511. $\endgroup$
    – Philipp
    Commented Mar 2, 2018 at 13:55
  • $\begingroup$ "During the middle-ages, being wealthy and being noble where synonyms." Which can mean nothing other than the wealthy Jewish moneylenders were part of the nobility. That's laughably wrong. $\endgroup$
    – RonJohn
    Commented Mar 2, 2018 at 15:06
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    $\begingroup$ @NicHartley Jews were "rich and powerful enough to deal directly with the king" but they sure weren't part of the nobility. $\endgroup$
    – RonJohn
    Commented Mar 2, 2018 at 15:07

Don't supply gold, supply troops.

One option, apart from AlexP's excellent answer, is to avoid supplying any gold directly to the autocrat. In your case, the autocrat wants to spend the gold, borrowed from you, convincing a number of lords to join his quest. So perhaps you could buy those lords directly instead? "My Lord, it would be highly lucrative for you to supply troops to the King in the coming war. If you so wish, I can lend you the gold to set up an army." (Or hire mercenaries) If all goes well, the King won't be in debt to you directly, but to several lords/vassals. Ignoring them might be more dangerous than going after you. And if one of those lords refuse to pay... well hopefully you have the autocrat on your side there.

In short, spread your risk by supplying troops through intermediarys instead of lending directly to the autocrat.

  • $\begingroup$ That's not exactly staying neutral, though. $\endgroup$
    – Bergi
    Commented Feb 26, 2018 at 11:30
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    $\begingroup$ Well, neutrality is in the eyes of the beheader. ;) Jokes aside, nothing forbids you to do business with other lesser lords, just don't come out as openly against the autocrat. $\endgroup$
    – Guran
    Commented Feb 26, 2018 at 11:54

1. Religious Loans

Your bank should be part of a religious institution that the King and most of his subjects also worship. Historically, the Catholic Church was one of the largest loan and debt-collecting organisations, using excommunication as a potent tool for forcing repayments. It would be a foolish or desperate King that would risk religious unrest to avoid paying their dues.

Of course, there were no end of foolish and desperate monarchs in history, so this is still no guarantee.

2. Military Force

As a bank, you can make loans to mercenary troops, keeping a large military force in reserve. Mercenaries in medieval times were usually veteran and experienced troops, especially Swiss and Italian companies. Compared to royal and noble levies, you would have a superior local force. Wait until the King is embroiled in his foreign war, then demand repayment from seized foreign assets and loot.

You have the local superiority then, and the King will risk military turmoil if they don't meet your demands. You could seize local assets if your demands are still refused.

3. Political Influence

Having loaned foreign royalty and nobility money at reasonable rates, you have built up political capital and goodwill with other nations. You can use this to subtly pressure the King. Will you throw your political weight around to create an alliance against this kingdom if he fails to repay? Once he's involved in a foreign war, this is a real, credible threat.

This is the riskiest option because it requires you to have faced similar issues with other monarchs previously, but once you have that influence, future loans become far easier to recoup.

  • $\begingroup$ Point two can be generalized, and is a basic premise of game theory: If it is (much) more expensive for the authority to kill you than to pay you back, they will likely pay you back. (Note that this only works if you will make them hurt on principle if they don't pay back, regardless of whether it is attractive for you.) $\endgroup$ Commented Mar 1, 2018 at 12:06

You can't - it's simply impossible to guarantee. Who are the people going to believe, the word of their king or the word of their banker?

The king has no reason to ask you for a loan either, he could just straight up confiscate your assets for personal use the moment he finds out about you.

Being an Autocrat, the king could also simply produce more currency, thus causing inflation, and your assets to be worth less. He can steal from you, and everyone else in his country, without actually stealing from you.

Unless you have a king that you 100% trust, there's no reason for you to even try this. Mark my words - It will end badly.

Here are your possible solutions:


Go to the Kings shop and find something you can "invest" in. Eg: Buy up jewelry and gems, in the hopes that the king will eventually buy them back from you. Basically create a stock market type transaction where you buy units of XYZ and give the king fiat (which he needs), then when he's done with it, you'll be able to sell the units of XYZ hopefully at a profit. If you picked gemstones and the like, the value of those aren't likely to go down by too much, or are likely to go up depending on the land and the story.


If you have enough resources to lend to the king for the king to dominate the neighboring countries, stage a coup. Go to the king of the neighboring country, tell him you'll pay him to help you take over your country. You'd get the help of more than a few lords, as there are many benefits to having a friendly country beside you. Expose your kings plan to them, make sure they know that you can coexist and don't have to go to war, propose favorable trade agreements for when you're the king. There are a multitude of things you can do that can help you secure your own kingship, and once you have your own kingship, you can easily increase your own wealth. In fact, when you're the king, you can actually lend out money to increase your wealth since you'll have knights to help you dish out punishment against those who don't pay up.

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    $\begingroup$ "Who are the people going to believe" - belief is entirely unnecessary if one of the 2 parties can send you to a Gulag while the other cannot. $\endgroup$
    – Peter
    Commented Feb 25, 2018 at 22:34
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    $\begingroup$ Hm. Contrary to this answer, this has happened repeatedly in the past, and is happening as we speak (it’s also happening extensively in other fiction, see the Iron Bank in Game of thrones). $\endgroup$ Commented Feb 26, 2018 at 17:09
  • $\begingroup$ @KonradRudolph The difference in this answer and reality is that I assume that the king slightly smarter than depicted - smart enough to eat your loan alive. Anyone with the power of a king should never be put into a situation this stupid to begin with (situation being short of money) - the mere prospect that they are in this situation means they are stupid, in which case you should probably take over anyways. $\endgroup$
    – Aify
    Commented Feb 26, 2018 at 18:36
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    $\begingroup$ @Aify - For hundreds and maybe thousands of years governments have been in dept to thousands of bond holders or to a few large banks, or both. I don't think that any European national governments have been without national debts since 1500, except for the nations that formed after 1500. Almost all great and powerful monarchs in history have had money problems, and thus were in debt - if there were lenders available - no matter how smart they were. $\endgroup$ Commented Feb 27, 2018 at 19:05
  • 2
    $\begingroup$ @Aify - In modern times all governments raise money by a combination of means, taxes, bonds, loans, and printing money, in a combination that they hope will be best for them and the country. Printing too much money can cause disastrous hyperinflation. Some reviewers of J.R.R. Tolkien's fantasy story for children Farmer Giles of Ham thought that the King must be incompetent because of his chronic shortage of funds - but in real history almost all medieval monarchs, even the richest or smartest, were hampered by chronic shortages of funds. Thus the king's money problem was simply realistic. $\endgroup$ Commented Feb 27, 2018 at 19:16

Why not do what banks and big business actually do?

Buy politicians on their way up, own them forever. Back them and their rivals, produce a scandal when needed, or destabilize a corporation, let one of the alternates take over.

The autocrat may have "absolute power" but there will be rebels and a 5th column for the bank to fund, or the bank can - clandestinely - back the other side in a war, and failing that there are always tragic accidents and assassinations.

For non-real world examples of this you have Iron Bank of Braavos (SoIaF) and Valint & Balk (The first law)

NB: The important thing to note, is the bank doesn't wait to act, the bank is constantly in operation with plans B to Z ready to go in case plan A goes awry.


Invest in the enterprise.

If you issue a loan, you are not an ally - you are a businessman and could be considered an adversary.

An investor, however, wins or loses with the endeavor in question. An unsuccessful endeavor means the money is lost. A successful endeavor however means you will be there for him next time too. Make clear to the king you support his military endeavor, and in the (in your opinion, likely! Say it loud!) event of victory, your interest in return is in presiding over lands x and y - and paying taxes from this income to your king as you always have, of course.

You have skin in the game now and your fortune rides on the fortune of the king. Which is already the case as you point out - you are based in his country and are at his mercy. Moneyed persons with options might have opted at some previous time to move their resources and base of operations to a more predictable locale than the one you are in - for example Russian oligarchs parking money in Cyprus or the recently leaked Panama papers, or the Iron Bank of Braavos in Game of Thrones.

But you did not do that. No, you are right there with this aggressive monarch and your fortunes are tied to his anyway. You might as well back his endeavor. And while he is busy, hedge your bet with a quiet move of at least some of your resources to some friendly nearby locale.


Let's start with a simple economic fact : No loan is risk free.

What measures can I take to insure that the King will not just decide that he owes too much money to me and confiscate it all ?

Sell the business to someone else. Not joking - that's the only strategy that is 100% safe from this risk.

I would prefer:

If you're King, prefer matters. You're not. :-)

No eventual execution on false charges, banishment, or impoverishment.

Flexible interest rates, favorable terms. Lots of "as your majesty wishes".

Eventually regaining my lent money plus interest, or something else of equivalent great value

Being able to borrow has to have greater appeal that stealing your money. This is simply a matter of common sense for most rulers, as if he screws over the loyal (you are loyal, right ?) help of a subject, who will help voluntarily, volunteers will start to become hard to find. More importantly people will move their money and themselves out of his control. Having to force everyone to help you sound fun, except that eventually that's how monarchs end up as deposed monarchs and the sensible ones don't risk this.

But to lend to monarchs you do have to accept that they will pay you back on their terms. You might get leverage from this, favorable terms on some other deal you want to do, but you won't get to guarantee anything.

Interest from your own King to finance this patriotic endeavor is entirely optional from your point of view, just as applying thumbscrews to parts of your body other than your thumbs is entirely optional for your King.

The expression we're looking for here is "happy to help, your Highness, interest free goes without saying.".

If you're very, very lucky, you might get a title other than "victim" out of it.

(Optional) A maintenance of (at least outward) neutrality so that I can also lend to my king's enemies

Did I mention being a loyal subject ?

Let's remember this :

The ruler of the country I'm based in has his own wishes: he wants to conquer the neighboring country, paying off some lords over there to join his side.

You do not get to be neutral if you want to be loyal and being loyal is not an optional extra.

Lending money to your own King's enemies is called being a traitor. If you're lucky you'd get a reasonably quick death, although that's not my idea of being a vengeful autocratic monarch.

So unless you're not only suicidal but also masochistic, I'd suggest lending to the King's enemies is not a plan any responsible CEO would endorse.


I am currently reading the book Why Nations Fail. There the author makes a point that economic development is closely linked with politics. You came to the same conclusion, as you (the banker) do not trust the (absolute) monarch. To loosely quote from the book, this is a common theme in all extractive political systems (a minority has much or all the political power). Such political systems are very likely to also have extractive economic systems (a minority controls the economy and reaps its profits).

In your case, to secure points 1 and 2, become allied to the king. Thus, join the elite of the extractive economy. The elite will always look after itself. That covers 1 and 2.

If you want to have all 3 points, then you need some sort of inclusive economy (people are free to start businesses, there are low entry barriers, and there are secure property rights) in an extractive political system, which is deemed by the author as stable only in rare cases. In essence, a scenario of modern day China would allow your banker to cover point 1-3. You have an absolute ruler, who interferes relatively little with the economy, as well a largely inclusive economy that does not threaten the ruling political elite.

Sorry for butchering the book's theories, however, I strongly suggest it if you are into politics, and are interested to explore why the world is, as it is now.


Money is power

Both countries and armies run on money. No money, no army. No army, no country.

Several answers have stated that you should give up on the idea of loaning money to several competing monarchs. I would like to go the other way and say that the key to success is having several monarchs and other powerful people in your debt.

Make sure that your holdings are spread out in many countries so that no single monarch can confiscate more than a fraction of it. Have a big family and have it spread out too, so that an attack against one family member can be avenged by the others.

Make sure your debtors know that the debt doesn't disappear with your death, but will be collected by the family. Any confiscated property will also be added to the debt.

Scare merchants away from the bad debtor by saying that any merchant who trades with them becomes responsible for their debt too. Without trade the country/monarch is really bad off.

You may lose a few family members and have to make an example of a few monarchs before the rest gets the point.


At this point it would depend entirelly on the Autocrat, if he feels like paying you then he will, otherwise... I'm sure future historians will have a fun time readying about your death.

If you have enough money you could hide something away and put it as a bounty against the King in case he ever betray you, but even them it assumes there is some bigger fish that could deal with this King in the first place.


Make sure that you never lend them all of your money. All but the most foolish of autocrats will have plans beyond just this one, upcoming war. Make it quite clear that if they prove a trustworthy debtor and make regular payments, then you have an incentive to protect your "investment", likely by lending them additional money in the future. If they default on their loans however, then you'll have absolutely no reason not to lend money to their enemies as a way to recoup your losses.

Play it right and you can have most of the major powers practically competing for who can borrow the most money from you, because they know you'll want to protect your largest investment the most. Cheerfully let them pay just the interest on their debts and you can rack up massive amounts of money over the subsequent generations. Use this money to covertly diversify into the arms trade and make sure to sell weapons to both sides of every conflict. Your goal is to get them both to rack up as much debt as possible and end in a stalemate so that you get to keep both accounts. This won't always work of course, but it really doesn't need to. You can always foment an uprising in the name of the old government if necessary.

Within a few generations your bank should be the secret power behind the throne of most major players in whatever portion of the world you choose to make your domain. Kingdoms can rise and fall all they want, but as long as you stay out of the public eye and content yourself with simply being filthy rich but not particularly famous there won't be any concerted effort to take you out. Except maybe by other banks...

Fun fact: Britain is still paying interest on its debts from the French and Indian War in the early 1700s.


How about collateral? Does the Autocrat have anything he holds as dear as his desire for conquest? If yes, demand to hold it on your terms until he squares his loan.

Think about what you will accept and your terms carefully: You have to be able to possess, physically, whatever it is he does not want to lose, and you must be able to possess it in such a way that any "accident" you meet would result in him losing it forever.


Divide a fund into several subsidiaries and command them to lend a total amount to the king. The king will target the subsidiaries to delete unpaid debts, and only a subset of them.

Another obvious option is to allow the king to mint more money. The interest paid would be new money, but you would raise rates to drain the new supply. (which is precisely what the new Fed chairman is doing this year, for all you mortgage payers out there)

The other answer about the Fuggers basically says 'use your wealth to establish political influence'. An option.

I would probably go for an economic attack on the foreign country: Create trade imbalances by selling cheaply to the foreign country. This can be achieved through domestic economic manipulation. Trade deficit settlement is carried out by gold shipments. This eventually leads to raised interest rates and contracting cash supplies in the target economy. Bribe the target officials and lords by paying in their weak foreign currency, which is also earning higher rates. No lending to king necessary, only in nominal terms.


Might i offer another solution that may guarantee a return on your loan but only if said sovereign has unwed children of age. i would suggest to marry into the family and then your loan becomes an investment in your own future especially if your spouse is next in line for the throne and is loved by their father. a further guarantee would be to supply the sovereign with a grandchild to keep the blood line going.

  1. Diversify the assets backing the loan Get the King to agree to a mix of (A) fixed assets (i.e. land inside the Kingdom (B) Foreign assets - land/gold jewels already held in foreign locations or moved there as guarantee for at least partial payback. (And keep the deeds etc outside the country.) (C) A share of the spoils if he wins.

  2. Diversify the risk. Even if you can afford to lend him the entire amount he wants say you can't and put together a pool of bankers so that your competitors also have to bear a portion of the debt. If he loses the battle this also 'diversifies' his anger at having to pay back his loans.

  3. Lend at generously low rates in exchange for access to certain guaranteed income streams like liens over a % of certain royal tax revenues for a fixed period of time - so that at least part of the loan is covered. The King is less likely to miss what he doesn't get in the first place and can always raise taxes to adjust.

  4. Be invaluable in other ways - provide financial services for the King and his chief ministers/ agents. Efficiently transfer funds on their behalf, provide advice on investments. Let them in on good deals you are investing in but don't let them invest too much in any one deal in case that deal goes south - or pay them back if it does and wear the loss, at least for 'smaller' debts. In short get in good as you can with at least some of the King's closest advisers so they can, at times cover you back. (If they owe you, they owe you)

  5. Pass on the odd bit of useful intelligence you get through your banking and trading networks. (But not so much and so regulatory that they begin to regards you as 'their spy'.

  6. Have a lot if not most of your personal assets spread around other countries not just the one you live in. And own a fast horse in case things go wrong.


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