Book, the underwriters of the United States. And i have a powerpoint to get going and you might answer this during that but we are a group of history nerds here and insurance is probably even a hard sell for us. So, one, thank you for coming. And two, im excited to make insurance fun. Because i read your book and its really interesting. All right, we good to go . This is my first book. My baby that just came out two or three weeks ago. And yet, before you all have the chance to back away. Let me explain myself a little bit. As i talk about insurance. So, this is my book. Theres a couple ways that i would talk about what this book is really about. This is a book about finance in the age of the american founding. Not just the American Revolution but the decades there between the revolution and the war of 1812 especially. Where the United States has declared its independence but were still figuring out what its about. And its about how money fits into that story. Right, now funnily enough, the piece of this thats most famous as a story of money with Alexander Hamilton. Hamilton is involved with insurance but thats not usually the thing people talk about when they talk about hamilton. But this is a big business in the age of the american founding. This book is about how this powerful, Old International business, specifically about marine insurance. The insurance of commercial shipping and a ships. How does business come to terms with a fragile new republic and bets on it. So, insurance is the business of taking risks. The story of my book is how one of the big risks that the Insurance Business takes is the risk of the United States itself. That becomes a story about how economic risk taking and Political Risk are intertwined. So, i want to talk for about half an hour and then take your questions. Im happy to go in any direction you want. Im happy to go with the money people, im happy to go with the politics people. Or the people who are new to thinking about this all together. I was one of those people, i had no idea when i started my dissertation at uc berkeley that i was going to be writing about insurance. The idea would have appalled me, i thought that i was going to tell a story about swashbuckling adventure on the high seas in the age of the young republic. And i kept coming across reference to insurance. When i looked at what these adventures the shippers in this period were actually talking about. First i thought that was just really funny, because i thought theyre all going to be talking about naval battles on the oceans and military risk and Political Risk. Instead, they were like oh god, weve got to write to our insurers about what happened just now. So, this is one of the stories that really compelled me to start writing about this topic, ill tell it to you now. Its from the memoirs of this really unusual fella named mordecai noah, who was a philadelphia born journalist and a playwright. Hes also got lots of big ideas. Hes utopian, he thinks that jews should start a New Jerusalem in upstate new york. But hes also a staunch supporter of james madison. Its the war of 1812, hes a strong supporter of the Republican Party at that time and the war. And madison asks him if he wants to be the United States consulate, the commercial ambassador, in tunis, north africa. Madison asking because hes jewish and hes under the impression that all jews know each other. He asks noah itll go and mordecai, who does not know any of the jews in tunis says, of course ill go. That seems like the right fit to me. But anyway he is traveling during the war in 1812 on an American Ship bound for france, which was the first leg of his journey to tunis and they get captured by a british frigate in the bay of. Mordecai noah he surprised his capture did not involve any violence or humiliation of the kind that the american sailors often experienced at the hands of their british captors. In fact, he found a british admiral in charge of the frigate was quite nice to him. Toured him all over the ship, chatted with, him offered him wine and then the british admirable showed mordecai a list of the american vessels that the british had captured during the past year, this year of the war of 1812. The value of these vessels exceeded 18,000 pounds sterling. So, the british saying americans, weve captured an awful lot of your ships. He explains to mordecai noah, who is drinking away happily, that the american merchants calculate erroneously, that if one of their vessels arrives safe to their trading on the continent out of three there will be no loser. If even this was the case, it would be impossible that the aggregate profits of the one american merchant voyage will cover the loss of the two. But it must be known that, in the aggregate, one vessel out of three does not arrive. In other words, the british admiral is saying that he and his countrymen are capturing more than two out of three of the ships that americans are trying to get to the continent of europe to do their trading. Or to the caribbean to do their trading. However, it continues the british admiral, if your Insurance Companies do not complain, they will never hear any objections on my part. And under such circumstances, i have no objection to the continuance of the war. So, again, at first i just thought this was really funny that this admiral who is engaged in all these daring wartime adventures is actually calculating the progress of the war in terms of insurance. That he is saying how many ships are getting through, how much money are the americans losing. And using that to determine who is winning or losing the war. Then, i thought about this further and i thought, hes actually saying something even deeper. Which is that essentially the american Insurance Companies who are deciding whether the war will continue. They have mistakenly calculated that its worth it to ensure american ventures to france. As long as theyre doing that, theyre the ones who are paying so i have no objections to the continuation of the war. I thought that was very interesting. And it led me toward a story in which insurance is a really highly capitalized transnational business that underpins all of the chaos of the age of revolution, the napoleonic wars. I started to see references to insurance everywhere. You can see insurance in books like, on the left here, this boston directory that lists the names and addresses and institutions of boston. Right here at the beginning here, page six, right after this city directory lists the banks of boston and how much theyre worth it goes on right away to list the incorporated Insurance Companies of boston. And the amount of capital that these Insurance Companies have. It struck me from the beginning, even when i didnt really know they are doing. If you look on the right, youll see a list of premiums and insurance rates that were published in city newspapers. These are the rates that american insurers were charging to american merchants for voyages to places all around the world. So, now that americans are not subject to the British Empire theyre not subject to british restrictions. In theory, in political terms, the whole world lies open to them. At least that they can get to by hook or by crook. But this westerly is is an assessment of the safety of american merchant ships in the world. Because one of the things you learned swiftly when you start to Research Insurance in this period is that most ships dont sink. Most staff gets where its going under normal circumstances. But during the napoleonic wars, the french revolution wars, the wars of the 18th century, most risk is Political Risk. Most of the risk of a merchant voyage has to do with, during wartime, the risk of being captured. And war is a lot of the time. If there isnt war, there is almost war, there is anxiety about war, there is local disturbances. It is local people you have to bribe. Theres a lot of political mess that americans have to navigate when theyre sending ships around the world. So, this list of premiums is telling you something about your own government if youre an american citizen. Its telling you how safe is this country making a merchant fleet in the world. So, what are these insurers doing, really . How did they get to be so many of them . Like i, said this book is a war story. The big growth in the United States in transect, or especially marine insurance, which is most of the insurance in the 17 90s, there starts to be some Fire Insurance. Much, later the source to be some Life Insurance. The big growth in the u. S. Marine insurance sector comes during the french revolutionary and napoleonic wars, which raged around the world between the early 17 90s and 1815. So, france declares war on the rest of europe and vice versa. The United States is not directly involved as a combatant for most of this time. The words pose an existential threat to the United States and its government, which is almost entirely dependent on the taxation of imported goods for the money that it needs to run itself. United States Government needs imports and exports to continue. The wars offer enormous opportunities for American Traders who are willing to take high risk, high reward ventures to ports that have been starved by war, ports that have been blockaded, to ports that warring powers are keeping each other out of or ports that suddenly need a lot of new supplies. Like grain or weapons for the fighting of wars. These are dangerous ventures, as mordecai noahs captain knew all too well. Its all too easy to get captured in that environment. And the states has virtually no formal Naval Defense for this period. But it does, again, have this outsized merchant fleet that is poised to take advantage of this high risk, high reward climate. So, the growing sector of marine insurance, and these are mostly merchants by the, way they have to be, only merchants understand this business. Coordinating a growing sector of ventures led by a group of export margins, they help american merchants pull and organize a risk and guide them through this landscape. Beginning in the 17 90s, american merchants form large numbers of Insurance Companies to pull and manage their risks. Its not just a story of formal incorporations, there are also incorporated trans brokerages, there is informal, private insurance that takes place around this time as well. The really striking development is the growth of the First AmericanInsurance Companies. So, how does insurance actually work . This is sometimes, people have about an hour of questions on this, id be happy to entertain them afterwards. The people in my book really only recognize marine insurance and Fire Insurance. Life insurance has started in london but it doesnt register so much for them. If anything, they see Life Insurance as a subset of marine insurance. Like a Marine Insurance Company would issue an occasional policy on a sailors life as part of what they do. But marine insurance is this old and deeply international business, it is controlled by merchants themselves, it is a fundamentally international business. For this reason, you dont get the whole story when you just look at the nations laws about the practice of insurance. The real way to understand it is through the books that merchants published and circulated to explain merchant practice to each other. So, one thing to understand about insurance is that its a means for some merchants to control one anothers behavior. Because, if youve ever had in a trance policy you understand that, if you didnt behave in a particular way, oftentimes, your Insurance Company will not pay out to you on your policy. So, this is true in the age of revolution as well. The insurer of a merchant voyage can force that merchant to adhere to the terms of the policy. But the specific terms of his policy and the broader rules and customs by which insurance is set to operate. These are known as the laws of merchants. They are not, formerly speaking, laws. They dont belong to any particular country. If you look at these books, they contain a lot of things that are not, laws they tell you about different ports and different ways of dealing with money. But they tell you what merchants are generally expected to do. Insurers are sort of these managers of the laws of merchants. At the same time, the insurer is also at the mercy, a bit, of his merchant customers. Because insurers are traditionally, from medieval times, sort of expected to behave as if they themselves are part of the ship, part of the voyage. In other words, theyre also expected to know generally how this incredibly complicated business works. One of the dicta of the laws of merchants is that the merchant is not obligated to tell the insurer anything that the insurer is supposed to already know. Now what does this mean . Well, youve got to look in the book to find out. Theres a long conversation about it. But fundamentally, this is a deeply customary practice that is meant manage the uncertainties of doing business across long distances, political boundaries, where merchant cargo is maybe operating in very different political landscapes. That is a grain of truth to this idea that insurance works the same way in lots of different places and times. So, what happens when this was one of the quotes about how the Insurance Business works. One of these english merchants insists that the law of merchants has always been the same everywhere, constant and permanent, concurring with the law of nations in all countries. Like yeah, yeah, yeah, he just doesnt want people to interfere with the merchants selling each other insurance. But it becomes a self availing prophesy. The more the insurers say that their business is complicated and imperfect in the same at all places and, times the more it comes to be true. What happens when this business meets the United States . Im skipping the American Revolution for now, but im happy to go back to it if there are questions. There have been american Insurance Brokerages since the mid 18th century in philadelphia especially, and boston. They tend to surge in number during wartime, when merchants are interested in aquiring assurance locally, which they find to be more convenient for various reasons. The formation of corporations is mostly barred to american colonists. Thats different after the revolution. Now, first corporations are sort of taboo, they remind people of monopolies, the east india company. But this taboo starts to break down during the french revolutionary wars. There is suddenly a surge in demand for insurance among american merchants at home. They form their own Insurance Companies, they also form their own brokerages. So, merchants are suddenly drawing on this old body of mercantile customary knowledge. And theyre dropping these new businesses and in the United States within the form of the corporation. And they grow rapidly. There is a picture of an insurance policy, happy to come back to it. This is some of the work i did for this, book i tried to find out how much capital is held by american Insurance Companies exactly. I compare that amount of capital to the amount held by american banks. Banking being the other really big, really early financialized business in the United States. Insurrance is never as big a business as banking. This is marine and fire together. But it, respectively, keeps pace with american banking. This is the number of Insurance Companies and banks. The parallels are even more striking and how parallel these numbers are. But Insurance Companies have never attracted the same amount of public political attention that banks have. I can talk about that later, if youre interested. This new cohort of american insurers, who are in constant conversation with their overseas counterparts, have this mindset that they are genuinely, staggeringly complex and lucrative business belongs to themselves and could not really be managed or regulated by the United States. There is some sense to this. The Insurance Business is a very, very complicated one. Enters insurrers simply know things about how the business operates, about how merchants work, but how Global Commerce is going. They are news addicts, they are deeply and carefully listening to their International News networks about whats going on overseas. They know things that the First American politicians just dont know. They know things that american juries dont know. During the American Revolution, there is this populist movement that says that regular juries should try to adjudicate Insurance Law cases and law suits of insurance. And they just cant, they cant do it. They try to get a regular jury to understand what a merchant is doing about why this Insurance Company shou