The Tontine: The Last Survivor Bet That Built Early Wall Street

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The last survivor pact from old mystery novels and sitcoms is a real financial instrument with a long record. In a tontine, investors pay a lump sum into a trust that pays annual interest to the group. When a member dies, that share is divided among the living, so payouts climb for each survivor until the last one dies and the trust dissolves. The idea takes its name from Lorenzo de Tonti, a Neapolitan banker who pitched it to the French government in 1653 and was turned down. The first working tontine opened in the Dutch city of Kampen in 1670.

This episode follows the scheme from Louis XIV's war chest to toll bridges, the first home of the New York Stock Exchange, and an American insurance scandal that made the word toxic for a century. It also explains why the concept is returning under new names, as longer lives strain retirement savings and regulators in Europe and the United States open the door to longevity risk sharing pools.

• Charlotte Barbier put 300 livres into Louis XIV's 1689 tontine and outlived her cohort, collecting 73,000 livres in her final year before dying in 1726 at age 96.
• Investors learned to name five year old girls as nominees, since a child who had survived early disease was the best statistical bet for a long life.
• Richmond Bridge over the Thames was financed by a tontine in 1777, and its tolls ended when the last surviving investor died.
• Henry Baldwin Hyde's Equitable Life began selling tontine policies in 1868, and the industry sold roughly nine million of them, with forfeiture clauses that wiped out savers who missed a single payment until the 1905 Armstrong investigation.
• In Francophone Africa and parts of Asia, the word now describes rotating community savings pools in which members take turns receiving the kitty and no one profits from a death.