A bottomry, or bottomage, is when the master

Master mariner

A Master Mariner or MM is the professional qualification required for someone to serve as the person in charge or person in command of a commercial vessel. In England, the term Master Mariner has been in use at least since the 13th century, reflecting the fact that in guild or livery company terms,...

 of a ship

Ship

Since the end of the age of sail a ship has been any large buoyant marine vessel. Ships are generally distinguished from boats based on size and cargo or passenger capacity. Ships are used on lakes, seas, and rivers for a variety of activities, such as the transport of people or goods, fishing,...

 borrows money upon the bottom or keel

Keel

In boats and ships, keel can refer to either of two parts: a structural element, or a hydrodynamic element. These parts overlap. As the laying down of the keel is the initial step in construction of a ship, in British and American shipbuilding traditions the construction is dated from this event...

 of it, so as to forfeit the ship itself to the creditor, if the money is not paid at the time appointed with interest at the ship's safe return.

This occurs in cases where the ship needs urgent repairs during the course of its voyage or some other emergency arises and it is not possible for the master to contact the owner to arrange funds, allowing him to borrow money on the security of the ship or the cargo by executing a bond

Bond (finance)

In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...

. Where both cargo and ship are hypothecated, the bond is called a bottomry bond. Due to the bond's relatively low priority as against other liens in the event of a libel against the ship, the use of bottomry bonds declined greatly in the 19th century and the subject is today of interest only to legal historians.

The Code of Hammurabi

Code of Hammurabi

The Code of Hammurabi is a well-preserved Babylonian law code, dating to ca. 1780 BC . It is one of the oldest deciphered writings of significant length in the world. The sixth Babylonian king, Hammurabi, enacted the code, and partial copies exist on a human-sized stone stele and various clay...

 describes a form of bottomry that was a type of insurance

Insurance

In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

. A bottomry would be taken, but the repayment would be contingent on the ship successfully completing the voyage.

In his Life of Cato the Elder

Cato the Elder

Marcus Porcius Cato was a Roman statesman, commonly referred to as Censorius , Sapiens , Priscus , or Major, Cato the Elder, or Cato the Censor, to distinguish him from his great-grandson, Cato the Younger.He came of an ancient Plebeian family who all were noted for some...

, Plutarch

Plutarch

Plutarch then named, on his becoming a Roman citizen, Lucius Mestrius Plutarchus , c. 46 – 120 AD, was a Greek historian, biographer, essayist, and Middle Platonist known primarily for his Parallel Lives and Moralia...

describes how he would use the process to make money, but calls it "the most disreputable form of money-lending."

Respondentia

Respondentia is a loan where a ship's cargo is the security, on similar terms to bottomry.