Genoa paid its war debt by handing creditors the island they conquered

In 1346 the Republic of Genoa needed to put down internal unrest at home and, separately, wanted control of Chios, an Aegean island that held Europe's only commercial source of mastic — a resin used in medicine, cosmetics and varnish that fetched enormous prices because nowhere else on Earth grew the tree that produced it. Genoa's treasury, though, was empty on both counts: it had no money to hire a fleet for either the domestic crisis or the Chios expedition.

The obvious answer for a cash-strapped state facing a bill it can't pay is to borrow further against future tax revenue or simply delay payment and let the creditor absorb the loss — Genoa had already been doing versions of both for years, and its credit was correspondingly poor. Twenty-nine wealthy Genoese citizens agreed to personally equip and crew a fleet of warships to solve both problems at once, expecting eventual repayment from a government with no realistic way to raise the cash.

Genoa paid its war debt by granting creditors the rights to govern and tax conquered Chios, turning a liability into a profit center they ran for two centuries.

Creditors' repayment became tied to the island's revenue, aligning their incentives with long-term productivity.

Genoa offloaded the cost and administrative burden of running a colony it couldn't fund.

The joint-stock structure with tradable shares allowed the arrangement to persist beyond individual financiers.

The asset (mastic) was uniquely valuable and could generate steady income under private management.

When you can't pay a debt in cash, consider settling it with ownership of a revenue-generating asset you lack the means to exploit.

The Maona ruled Chios profitably for roughly two centuries, building fortifications and irrigation and deliberately capping mastic production to protect prices; annual turnover never fell below 120,000 ducats, and shareholder dividends ran from 2,000 ducats in bad years to ten times that in good ones. Genoa's original debt — the reason the arrangement existed at all — stopped mattering once the company's own commercial success took over as the point of the venture.