Hannah Farber - Underwriters of the United States: How Insurance Shaped the American Founding

The President and Directors of the Insurance Company, Agreeably to the act of their Incorporation, inform the public [that they are] ready to receive Proposals at their office.

Boston Gazette, Mar. 9, 1801

Applications may be made in the usual form.

New-York Evening Post, Nov. 20, 1801

It is August of 1800. Now is certainly not the safest time for a Boston merchant to be sending a trading vessel down to the Caribbean, but then again, its been worse. Youve been reading the newspapers and corresponding with your business partners overseas, so you know that the French Revolutionary Wars seem to be heading toward a lull in the region. Great Britain, with its armies ravaged by yellow fever and its spirits shaken by French slave emancipations, has given up on conquering Caribbean islands for the moment and is shifting its resources toward the war in Europe. The United States government has put twenty-three naval ships into operation to protect its merchant fleet and is actively negotiating with France to rein in that countrys own predations on Americans. Your government has also given you legal permission to put a few guns on your vessel.

The Eagle, a relatively cheap, two-masted schooner, departed your home port of Boston a few days ago, headed to the British Caribbean island of Antigua with a humdrum cargo of dried fish, barrel staves, and grain. As you and your shipmaster have agreed, the Eagle will sell this cargo, pick up a new cargo of sugar, and return home. If the sugar is too expensive or bad, or if there isnt enough of it, the shipmaster will try a couple of other islands. He has promised to write when he reaches Antigua, but it is too soon to expect word, so you are not worried.

Figure 1. The Continental Schooner Hannah. By John F. Leavitt, n.d. Though fitted out for the use of the Continental navy during the American Revolutionary War, this vessel would have resembled many schooners of the era used for commercial purposes. Watercolor on paper, 27.5 33 inches. Original in Abbot Hall, Marblehead, Mass. Photograph: Accession no. NH 51097KN. Courtesy of Naval History and Heritage Command

Your father-in-law has always advised you to buy insurance in London, where you and he both do a bit of business. Insurance rates are usually lower there. You already have a relationship with a London agent, too, who sells your incoming cargoes, pays your fees, and buys the cargoes your ships take on when they come back home. Why not just get him to buy you insurance policies at the same time? You used to agree that this made the most sense. But this time, you decide to take your chances on one of Bostons new insurance companies, which recently received a corporate charter from the state legislature.