 The reason the story is not better known is because underwriters for the most part do not want it to be known. It is not in their best interest to become politicized actors, insurers do not want to be seen as members of one political party or another. So American underwriters trying to avoid political attention tend toward one of two tactics, sometimes in the same conversation. Sometimes American insurers underwriters say we're really just people who are in the business of supporting merchants. We have very little to do with political affairs. We have very little to do with the American public. We should just be allowed to go out about our business undisturbed. We are accurate, objective assessors of the markets. And that's how you need to think of us. So stay out of our way. My name is Hannah Farber. I'm an assistant professor of history at Columbia University. Yeah well you've stumbled right away into one of the most important things about the history of insurance, which is that there's a whole lot of terminology that you need to understand in order to understand what insurers are doing. And insurers like it that way. So marine insurance is the only big money insurance in the 18th century. There's some fire insurance, a little bit of life insurance, but marine insurance is the insurance of commercial vessels and their cargoes, which are valuable and which merchants send from place to place. And if something befalls their vessels or their cargoes, the insurer indemnifies the merchant for his losses. At least that's how it's supposed to work. Underwriting then is the process of insuring, of being the person who stakes the money and says, you know, pay me this premium now. And if you have a loss, then I will indemnify you for everything that you've lost, provided you've followed certain stipulations of the insurance contract. My book, Under Rhetorics of the United States, is about this moment when a very old, wealthy international business comes crashing into a brand new state that's just trying to establish itself. It's just getting set up. It doesn't have a legal system. It doesn't have a set of rules by which money is integrated into the country. And coming into this system is a very old, powerful, coordinated international business that specializes in political unrest, in conflict. The insurance business specializes in dealing with unusual political situations and extracting money from those situations. However, it's able to do so. And so my book is really a story of accommodation about how the insurance business and the United States came to understand that they were good for one another. The insurance business and the United States managed one another's risks. My book starts a little bit in the 18th century before the American Revolution. It goes through and past the end of the Napoleonic War, so through after about 1815. What this book is really about is how what happened to the United States in this period really depended on two very unique circumstances. One is that the United States desperately needed income from its commercial fleets. It needed to export goods. It needed to import things. It needed to tax those imports in order to run the government. So it was really important in the New United States that the commercial system continued to function. At the same time, the French Revolutionary Wars are breaking out in the 1790s. France is declaring war on the world. The world is declaring war on France. Existing commercial networks are disrupted. And so there's a really enormous opportunity for American shippers to make a great deal of money stepping in to old networks that have been disrupted. British shipping, French shipping, shipping in the Mediterranean. And the United States has the merchant fleet to be able to do this. But they have to manage this insane amount of political risk that is coming their way from all of the privateering and warring that's taking place among these European powers. So this book is about a period of high risk, high reward commerce for the United States. Who are the people who are ready to step in to manage high risk, high reward commerce? That is the underwriters of the United States. We might think that the most important risks today for commercial shipping are risks of the oceans, risks of hitting rocks. In fact, the most expensive risks to insure against during much of the 18th and 19th centuries were political risks, the risks of being captured by a rival power, maybe even by an over-eager naval vessel of one's own country, which would get a cut if they found somebody out, even their own countrymen, doing some illegal commerce. One of the things that this book is about is about how the risk that insurers manage in this period is fundamentally political, which makes insurance a fundamentally political business. You cannot talk about the insurance business of commercial shipping in the early republic in terms of actuarial accounting, long-term gains, long-term losses. Everybody was trying to stay alive from minute to minute, from hour to hour, from three-month period to three-month period. So they're engaging in behaviors that are not formally rational according to what we would consider to be economic theory today. They're acting in a highly political landscape, and that means the things that they do, these insurers, the things that they do to try to manage their own risks are political actions. They try to lobby the government to get support for their own shipping when it gets too dangerous. They're trying to get the government to stay out of their way when they think they can get more money by having government stay out of their way. They're coordinating and dictating the behavior of their merchant customers along political lines. Where do they think shipping is most dangerous? Where do they think it's less dangerous? So insurance is this fundamentally political project in this period, and that's why when I entered the realm of economics with my study, I think you cannot tell the story without understanding that the risk is political. So the United States comes into being in debt. The United States has to form itself as a political entity that people recognize as real, but along with that it comes into existence as a financial entity. It has to borrow money from foreigners, most famously the French and the Dutch, in order to fight its revolutionary war. So the country is born into debt, and it's born into a world that already has active credit markets, lending markets. American politicians know this. They know the financial world is watching them, and so they know if they're going to have to have a solvent country in any way, they need to at least demonstrate to foreign financial authorities that they are solvent. So politicians know the stakes of establishing, again, not even necessarily making sure the money is coming in right away, but to establish that trust that the United States is going to be able to pay its debts so that it can borrow more money in the future when it needs it. So foreign financiers are closely watching the United States. Marina insurers are part of these hubs of commercial and financial activity in London and in Amsterdam. They are powerful information brokers. They have cash and money and credit to move things around the world. So the new United States has this sort of vulnerability to financial actors who control its fate. So American underwriters, when they start assuming some of this governance role really over American merchants shaping their behavior, coordinating their activities, interfacing with governments on their behalf, American underwriters become incredibly powerful actors. The reason the story is not better known is because underwriters, for the most part, do not want it to be known. It is not in their best interest to become politicized actors. Insurers do not want to be seen as members of one political party or another. So American underwriters trying to avoid political attention tend toward one of two tactics, sometimes in the same conversation. Sometimes American insurers, underwriters, say we're really just people who are in the business of supporting merchants. We have very little to do with political affairs. We have very little to do with the American public. We should just be allowed to go out about our business undisturbed. We are accurate, objective assessors of the markets and that's how you need to think of us. So stay out of our way. On the other hand, when the Napoleonic Wars get too hot for American underwriters who are themselves merchants, experienced merchants, they tend to come running to the government and say we're American citizens. Our property is American property. Any loss to us is a loss to the country. Support us. Take on our risk. So this is how underwriters balance their risk. When things are good, they try to extricate themselves from political affairs and from any possible governance. When things go poorly, when they're facing increased risk, they look to government as they're backed up. So it's this movement back and forth that I thought was so fascinating about insurance in the founding era of the United States. This is really a contrasting experience to the story of early American banks. Early American banks are much better known institutions than early American insurance companies. There's a long history of Anglo-American public debate about banks because banks face the public to a much greater degree than insurance companies do. What I found in my research is that early American banks and early American insurance companies are founded by some of the same people around some of the same times. They track with one another in their incorporations in very similar numbers. Banks and insurance companies are often run by some of the exact same people, but the banks get dragged into public conversation. There's political pressure to regulate banks, to restrict banks, and insurance companies are much more effective at staying out of this conversation. Again, because they're much better at portraying themselves either as institutions that are wholly in support of merchants or because they can portray themselves as institutions that support American commerce. The farmer has to grow his goods and send them to market, so he has to put them on the merchant vessel. So they are generally able to portray themselves until about the mid-19th century as this sort of benign business that has very little to do with public life. I don't think we have a lot to gain by thinking of early American insurers as bad people. I am not interested in a story that's about social class or about class relations, which is one long-standing and powerful way of analyzing a society. What I'm interested in is how things work, and what I found in studying early American insurance is that the question of how things work is really powerful because a complex system is complex in its own time as well as in the present day. I had to teach myself how to understand a merchant or an insurer's balance sheet the same way that somebody would have learned in the 18th century. I picked up a handbook. I talked it through. I doodled numbers to myself. Early American insurers are navigating this complex world, and they're the bearers of this financial technology that really works. In a way, one of the great stories of the late 18th century Atlantic is the invention of these powerful financial institutions, apparatuses like national banks, like insurance companies. These institutions make states immensely more powerful. The Bank of England is famously part of the toolkit that allows the British government to wage ever greater and more expensive wars over the course of the 18th century. Insurers are also the bearers of this enormous financial power in a sort of a different subtler way. Strangely enough, there is some talk during the American Revolution of establishing some like nationalized insurance companies, and it doesn't happen for a variety of reasons. Some of them, the same reasons that many American Grand National projects never take hold. But ultimately, what I think is really important for contemporary political figures to do, when they pick up a history book, is not to look at the history book to tell them, what should I do today? That's impossible. I have no good advice for what political actors should do today, except in the most extreme circumstances. I really don't. But I want folks today to see how Americans have always lived in a world in which financial institutions have managed certain kinds of risks. And it has always been the case that the way that financial institutions manage risk affects all of our lives, affects all of our risks, even directly. And what I really want is just for people to redevelop the instincts to notice what's happening.