Double Your Money – Part Eighteen
Zenothemis and Hegestratos
The entrepreneur is concerned with risk. After all, to spot and exploit a gap in the market takes chutzpah and a certain amount of money. If you can do it with someone else’s money, so much the better. And a shrewd entrepreneur will try to what we term nowadays de-risk the enterprise. A classic example of this strategy is a couple of likeable rogues who may have perpetrated the world’s first insurance scam.
I’m indebted to the Athenian orator, Demosthenes (384 -322 BCE) for this insight into ancient financial skulduggery but it may be worth sounding a note of caution. Demosthenes was renowned for his oratorical skills and he was known to embellish his story to obtain maximum rhetorical effect. He was prosecuting Zenosthemis and so would have been keen to put the merchant in the worst possible light. We don’t have Zenosthemis’ side of the story and Hegestratos didn’t live to tell the tale. But the case did trouble the Attic courts and so we have to assume that there is a nugget of truth in the orator’s account of the escapade.
Maritime trade was a risky business. The principal risks were that the ship would capsize and the goods sink to the bottom of the sea or that the ship would be boarded by pirates. Often the merchants would take risks themselves, funding the journey and reaping all of the rewards. But increasingly more often during the second half of the 4th century BCE the merchants would seek passive investors who would fund some or all of the venture, receiving as their reward a cut of the profits one the voyage had been completed. The downside of the deal was that if the vessel sank or was hijacked, the investors would lose their money – an early form of what we now know as bottomry.
Our shady duo cooked up a scheme which would rely on the rules of bottomry. They would raise the money necessary for filling their ship up with corn from innocent investors, pocketing the monies which they would send to their home town of Massalia, now modern-day Marseilles. They would then sail away in an empty ship and some way out at sea, they would scuttle it, making their escape by means of a small boat they were towing behind. The crew may have gone down to Davy Jones’ locker but under the terms of the contract Zenothemis and Hegestratos would keep all of the money.
So the empty boat set out with some passengers and when it was some two or three days out at sea, Hegestratos went down to the hold. Zenothemis stayed on the deck with the passengers, pretending to be unaware of what was afoot. Hegestratos prceeded to cut away the bottom of the boat but the noise he made alerted suspicion and members of the crew and some of the passengers went down to the hold and caught the fraudster red-handed. Realising that the game was up, Hegestratos made good his escape, jumping overboard but as it was dark, he missed the rescue boat and drowned for his pains, suffering the fate that he had intended for the innocent passengers and crew. Zenothemis was arrested as details of the fraud were revealed and was left to face the Athenian courts and the rhetorical mastery of Demosthenes.
The prospect of making a few bob by skulduggery has been irresistible since age immemorial, it would seem.