Financial Systems

[Hemdian]

One method I'm considering runs like this:

Interstellar banking is run as an affiliation of system-wide banks. When a merchant travels from system A to system B it requests its bank in system A to transfer its account to system B. This is done electronically via official mail carried by a different ship (xboats or subies).

Frequently, a merchant will arrive before its account has been transferred over. In such cases a 'lean' is placed against the merchant ship (a short term loan with the merchant ship as collateral). This lean covers docking fees and allows the merchant to buy and sell cargo. Eventually the bank transfer will catch up and the merchant can either fund a deficit from its account or add its profit to its account. In either case departure is not permitted until the lean is settled ... if the cargo run was profitable this could be before the bank account has caught up, otherwise the merchant must wait.

It is also possible for an established merchant using a regular circuit to have bank accounts pre-setup along its route ... and then only have to worry about keeping the funds evenly distributed.

Where this method would have problems is when a merchant mis-jumps and then doesn't make a profit at its new destination. It could find itself stranded financially until the 'roving' bank account can be redirected or the crew can do enough odd jobs to cover the short fall.


Regards PLST

 

[jchurchill]

Frequently, a merchant will arrive before its account has been transferred over. In such cases a 'lean' is placed against the merchant ship (a short term loan with the merchant ship as collateral). This lean covers docking fees and allows the merchant to buy and sell cargo. Eventually the bank transfer will catch up and the merchant can either fund a deficit from its account or add its profit to its account. In either case departure is not permitted until the lean is settled ... if the cargo run was profitable this could be before the bank account has caught up, otherwise the merchant must wait.
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Do you mean "lien" for "lean."?

An electronic letter of credit would accomplish the same effect but allowing the character to maintain a relationship with the original bank --ssomething that helps build credit.

Or, one could have an Imperial Bank akin to the Bank of England.

 

[Elliot]

And a charging lien at that! Most lien's in the law of international trade are 'possessory' liens involve the creditor retaining possession of the goods until the debt is paid (for example a carrier of freight may retain possession of the cargo until his carriage fee is paid).

Charging liens in Traveller would (as in the real world) rely on a fairly advanced Imperial law of property - e.g. if the debt is not paid a reciever has a right to take possession by force - which generally implies that there is a judicial structure that will hear and determine such a right to act to prevent abuses of power. Furthermore what of compensation for merchants who have had their rightful goods interfered with by over zealous receivers? No damages for conversion, no remedy - and likely vengeance in violence.

With all this in mind the Imperium would be a fairly unstable and violent place.

This takes us somewhat away from the low law Imperium of m'learned friend Aramis and the 'government of men not laws' idea of the imperium of MW Miller

 

[aramis]

Thanks, Elliot.

One of the things that shaped MTU strongly was the "Government of Men". Which is why the fiefs are the starports and interplanetary buisiness license by sharehold... Since starships are, by extension, registered to a world with a noble, that noble must, of course, have issued liscense to the ship in the name of the emperor. So, any imperially licensed vessel is held as tennant in chief by the "Owner", but with starport authorities being the imperial government, for all reasonable purposes, if the starport needs to, the noble issues the order, and you can appeal up the chain of nobles. Good luck, tho', for such a siezure is usually "For the good of the Imperium", as the object of the imperium is to make trade and commerce happen such that the imperium maintains its power and identity, and provides for the common good.

That being said, ALL governments provide recourse for recovery of debts (even the few small experimental communes have had a system of indebtedness to the commune, to be paid with work). The question set is:
How Effective a collection method is there?
How Fast do they Act?
How much outside interference is there?
Are there Class vs Class distinctions?

We know that the Imperium has a CUSTOM of reposession of skipped starships, even if not law. Likewise, I am certain that, for the sake of commerce, there is custom, Regulation, or edict allowing for siezure of property in fulfilment of extant obligation.

I suspect, however, that Imperial rules on the subject are vague, and leave much power to the individual nobles and/or port administrators.

IMTU, it works thus: the port, if they issue a lien on a vessel for whatever reason, place armed and armored huscarles on the bridge and in engineering, and alter the transponder as well. So, if the ship leaves uncleared, the huscarles shoot the barrater (one who barrats, or commits barratry, the theft of a ship without violence). Hopefully, the next in line won't argue with the two BD troopies on duty.

One of the reasons I have secured deposit notes, rather than transfer of balalnces, is that, in the SDN's, if one forges, it is clearly theft by pretense. Likewise, should one need to leave, one has already covered the debt, unless the instrument is forged. Additionally, unlike currency, they are NOT trusted too far away... (In fact, the limmit is often reduced by the value of the round trip IISS XMail and Wire Service fees.) All debts involving the starport are vetted by the Noble's authorized agent... siezure, if indicated, is executed by the Huscarles, and one has but 2 weeks to file notice of intent to appeal, during which timme the item is held by the noble or his agents. The debt, as listed, is then executed, and the minimum needed to secure is auctioned off; the noble getting 1% of the sale value and the debt less 1% is paid (or siezed value less 1%, if less), and any remainder is paid to the person from whom it is siezed.

Note also, IMTU, a ship under a note can NOT be used for collateral on starport landings... as it leads to potential siezure by two parties. IMTU, it is a case of don't get caught listing your equity in a starship... by imperial edict, none exists until the note is paid in full.

 

[jchurchill]

Aramis,

Interesting points and I have a few questions/comments:

"Since starships are, by extension, registered to a world with a noble, that noble must, of course, have issued liscense to the ship in the name of the emperor. So, any imperially licensed vessel is held as tennant in chief by the "Owner",

....Good luck, tho', for such a siezure is usually "For the good of the Imperium",..."

Doesn't this erode incentive to build merchant starships as there is no private ownership then?

"Note also, IMTU, a ship under a note can NOT be used for collateral on starport landings... as it leads to potential siezure by two parties."

Real life vessels have this occur all the time...but there is a ranking of liens...

 

[Elliot]

Aramis said:

"That being said, ALL governments provide recourse for recovery of debts (even the few small experimental communes have had a system of indebtedness to the commune, to be paid with work)."

Very true - however, I would imagine that the existence of a universal hard currency like the Imperial Credit would presuppose that all debt was to be rated in IC's and thus dealt with by the Imperial starport authority as a legal order (how ever developed).

"Note also, IMTU, a ship under a note can NOT be used for collateral on starport landings... as it leads to potential siezure by two parties."

In fact in the 'real world' the issue of priorities of interests among secured creditors is what makes many lawyers very rich and leads to endless battles in court. In insolvency matters I have know very large litigation to commence over the issue of who holds priority on the basis that the value of the security is enough to pay off one secured creditor only and there is an argument as to who comes first in the ranking of priorities (nb this is only economical because in English law the loser of the case pays the legal costs of the winner).

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The trouble I find in these discussions is the entire Traveller mercantile system is left to presuppositions, many of which are contradictory - the authors of Traveller were not finance lawyers or bankers (and hooray for that

) and thus left the workings of credit and trade as a (semi-) playable system.

On the otherhand, Traveller finance is sufficiently well defined in the rules (i.e. mortgages on moveables like starships) to imply a legal order/system of credit and property beneath and thus beg more questions.

Which is why it is interesting to see how YTU does it...

 

[Captain Zoom]

Aramis:

Note also, IMTU, a ship under a note can NOT be used for collateral on starport landings... as it leads to potential siezure by two parties. IMTU, it is a case of don't get caught listing your equity in a starship... by imperial edict, none exists until the note is paid in full.

You might want to note that real world Maritime Liens work differently from what most people are familiar with. With mortgages, home equity loans, and other commercial financial transactions, the first to perfect their lien gets paid first, then the next, then the next. Liens get paid from oldest to newest.

With "Maritime Liens", you have different "classes" or types of liens, then within each class, payment is reversed, from newest to oldest. Last gets paid first, then next last. Maritime Liens are also superior to all non-maritime liens.

Of course, there is lots of litigation (for the reason mentioned by Elliot) since everything isn't so black and white in the world of maritime law.

Aramis' solution would not work in real terms. For example, one type of maritime lien is the "Salvage Lien". Guess what? You salvage a ship and your lien comes before the "mortgage" of the bank that financed the ship. If it didn't, why would people bother salvaging ships that get into trouble?

"I spent all this time and money to save this freighter, and all I got was this thank you note from the bank!"

Note that modern "salvage" is not, "I recovered a derelict and it's mine." Modern maritime law doesn't work that way. Salvage doesn't get you any "ownership", it's just a lien against the value of the ship, and courts very rarely award 100% (more like 33% or less).

In the case of unpaid port fees, etc., the port can probably have the ship placed under "arrest", and held in rem by the local maritime court. Guess what? The port fees come before the typical bank's mortgage (I'm ignoring the relatively modern statutorily created "preferred marine mortgage").

The real world area of Maritime Law is very interesting and could provide a good basis for Traveller. Alot of the "treaties" between the nations of Earth could be regularized for Traveller (and thus made simpler for refs) by making them "Imperial Law". There would still be some variation since local maritime courts (maybe run by the Starports?) administer the law.

However, that's a task I'll leave to someone who wants to do the in depth research necessary to really understand maritime law. Maybe one of the COTI citizens is a maritime attorney with time to spare?

 

[aramis]

I am well aware of the modern rules on maritime lean priorities... too much of a hassle for MTU.

I handle the salvage issue in admirality courts; time to disposal is 2 weeks plus transit time via XMail between world of court and world of registry. Three Admirals (One IN, one Reserve, and if available, one Local) sit on a board, along with the local noble (or his noble appointee/delegate) and his Merchant Appointee (who must hold a master's ticket). They decide the fate of salvage, and other such issues.

IMTU, securing debts with your uncleared starship is an Imperial Crime... punishable by loss of ticket and forfeiture of ship to Morgage holder.

Salvage usually is handled by a combination of:
1) how long it's been derelict/missing
2) how it was recovered
3) if it was barrated or pirated.

Generally, IMTU, if the ship has been posted as stolen, missing, or skipped, recovery is awarded 10% of FMV to the salvager, or costs as charter for the minimum recovery time, assuming both recovery craft and the recovered craft are chartered. This generally applies for the first 10 years missing.

If it was pirate, hostile, or scrapped-in-place, it's usually 50% of value.

If it has archaeological value, costs as above, doubled.

If the ship was free and clear, but there is an heir or surviving owner, the heir/owner may choose to pay costs as above and recover the vessel.

If the vessel was under multiple lien, the last master is declared barrateur, and the vesel is sold at auction, the proceeds split between claimants proportionately.

The court can, of course, bend to the situation any way which reason allows. Men, not laws, make the decision, based upon the situation at hand.

IMTU, I once wrote up the Imperial Edict Upon Admirality Courts and Salvage.

Basically, I defined derelict, salvage, barratry, piracy, and the composition and authority of Admirality Courts, as agents of the Imperium. They also decide jurisdictional issues on ships, reasonability of actions by crews and/or passengers, who "enemy" and "pirate" vessels are, licensure review and/or revocation, and whether or not the rules of warfare have been violated in space. (Such as: No fire on neutral flagged vessels which do not enter 10 diameters or the declared target worlds during trade wars, or use of NBC weapons aboard or against ships) They also get to award unclaimed cargos.

I've seldom used them in game, but when I have, it's been to good effect. In one case, aplayer made a frivolous complaint against a passenger, who was spaced anyway for hijack later, seeking forfeiture of his paid cargo... Said player's character had his Purser's ticket yanked, since the cargo had been paid forward... Said (ex-)purser picked it up at auction shortly thereafter, as unclaimed delivered-to-dockside... only to find HE couldn't sell it locally, as only a ticked master, Purser or broker was allowed access to the starport's buy-sell net.