One of the darker periods in financial innovation was the securitization of loans using human collateral. While lending against slaves, serfs, and unfree labor doubtlessly occurred wherever unfree labor was institutionalized throughout history, the late 1700s and early 1800s brought new, complex structures as global finance exploded.

The use of American slaves was so prevalent that in at least one county one in four slaves was serving not just as labor in the fields, but as collateral pledged to a loan. Loans were generally either purchase-money mortgages (to acquire a slave) or equity mortgages (using an owned slave as collateral for a loan, often connected with trade finance).
In the colonial period, slaves were a major source of collateral in both the Deep South and in the tobacco-producing regions further north. Over time, the fertile land and booming cotton prices seem to have had an effect, and in the national era, the share of money raised by human mortgages was cut in half in Virginia, while a sample of Louisiana’s recorded loans have slave mortgages raising a staggering ~85% share of money raised.
In general, the value of slaves became tightly correlated with the value of cotton, as labor was drawn into cotton production, which both benefited from economies of scale that tobacco did not and as England and France’s textile mills screamed for more cotton supply.
As these loans proliferated and became standardized, American banks did what they would later do with land mortgages in the early 2000s - they bundled hundreds of both land and slave mortgages together, and pledged the income from those mortgages to back bonds.
Unlike modern mortgage-backed securities, these bonds didn’t give an ownership interest in the underlying loan, but were backed by the revenues from the loans. But the effect was mostly the same (while the loan portfolio was performing).
Particularly for European investors in London, Amsterdam, and Paris, these bonds and their 5% interest were very attractive. Given that Bank of England bonds paid a bit more than 3% during this era, European capital flowed across the Atlantic.
Europe’s economy had always needed “safe” long-term investment options that weren’t tied to the value of local land. Not since the end of annuities sold by the Habsburg kings in Castile (called juros, which paid 7% annually) had there been a financial instrument yielding both above-market rates and viewed as safe. So the bonds backed by a pool of land + slave collateral packages were snapped up.
Unfortunately for everyone involved, these bonds were highly exposed to cotton prices, since the value of both the land and the slaves collateralizing the loans at the bottom of the financial stack were both tied to their cotton output. As cotton-based income collapsed in the late 1830s and early 1840s, borrowers were less able to service the mortgages, and sometimes collateral was seized and sold at low prices.
So the bondholders in Europe often ended up with delayed or suspended payments, forced restructuring of the bonds, or even outright default (even in the case of some backed by the state of Louisiana). Ironically, 180 years later, a similar dynamic would play out with residential mortgage-backed securities in the Great Financial Crisis.