How Insurers Helped Build America w/ Hannah Farber

[00:00:00] Welcome back to Democracy Nerd. Democracy has been doing so great. We haven't needed to talk to you for a while because it's just going so great. Everything's figured out and we just thought, but there's just been some recent questions that we thought we needed to revisit.

[00:00:25] We do like to look at the hidden histories of American institutions, the underexplored, overlooked connections that help create American way of life.

[00:00:38] And today we're going to look at the hidden history of insurance and the role it played in the founding of America.

[00:00:46] And if you don't think that's already riveting, you haven't been paying attention.

[00:00:51] Insurance is pretty fascinating. Insurance is the only business model where the company makes more money, the less than you want to use it.

[00:01:01] They make money when you get the insurance, but they don't actually want you to use it.

[00:01:07] And how insurance writers helped build the United States into the wealthiest country in the history of the world.

[00:01:12] The hidden history helps to explain why wartime economies result in growth and prosperity in the United States.

[00:01:19] All sorts of things that you might think sound backwards to discuss this hidden history of insurance.

[00:01:25] We're joined by an expert, Hannah Farber. I've got her book right here.

[00:01:29] Professor of Early American History at Columbia University, which is all smooth sailing right now. Just people just hanging out and on the lawn enjoying academia.

[00:01:40] And she is joining us today to talk about her first book, Underwriters of the United States, How Insurance Shaped the American Founding.

[00:01:50] Hannah Farber, hello.

[00:01:52] Hi, thanks for having me.

[00:01:54] All right. Can we talk about Columbia? What's happening?

[00:01:58] We got to at least lay the scene because you explained when we started, before we started, that I don't have my headset.

[00:02:05] I can't access my office. I don't have, I can't even look at the book. Hopefully, I remember what I wrote because you because campus right now is not only people sitting on lawns enjoying academia.

[00:02:16] It's sitting on lawns doing other things. What's happening at your school?

[00:02:19] It's right now for the past, I don't know, week and a half, two weeks, a number of students have been occupying one of the prominent lawns in front of Butler Library on Columbia's main quad.

[00:02:32] This has been controversial. It's been, there have been a lot of discussions about whether they're allowed to be there, whether they're allowed to keep other people out, how much noise they're allowed to make,

[00:02:44] what is an authorized versus an unauthorized protest, but yesterday the students were given a deadline of 2 p.m. to leave and if they did not leave,

[00:02:56] they would be provisionally suspended and some sort of disciplinary process against them would begin. A lot of them chose to leave.

[00:03:05] A fair number of them didn't. The last thing I read was 50 to 70 didn't choose to leave. Don't hold me to that.

[00:03:13] In the evening, they moved to Occupy Hamilton Hall on Columbia's central campus in the spirit of 1968.

[00:03:22] And we are all waiting to find out what happens next because Columbia is setting up for graduation.

[00:03:30] There have already been a lot of delays in the graduation setup and if there's one thing that's important in New York City, it is real estate.

[00:03:39] So the unauthorized occupation of campus real estate at this graduation moment with our new president overseeing her first Columbia commencement,

[00:03:49] everybody is waiting to see what's going to happen.

[00:03:54] It feels different than 1968. The involvement of the United States seems different. The fact that nobody at school is going to be drafted into some conflict feels different.

[00:04:04] The role of social media feels different. The prioritization of what is worthy and most needing of the rise in attention feels different.

[00:04:16] And I am at this point just an old man saying get off my lawn.

[00:04:22] I'll keep my thoughts brief. Talking about you, so you're an academic, you're pre and early American history and culture is an interest. How did you end up looking into insurance companies?

[00:04:35] I thought that was as strange as you do. I went to grad school thinking that I was going to go to college and get a degree in law.

[00:04:47] I was in my 20s. I was excited about people going to exotic destinations. I also love shopping. I love the way people feel about stuff.

[00:04:58] And so I loved reading shipping registers and I loved reading the news. I loved reading the news.

[00:05:06] I loved reading the news about the stuff that was coming into America. What could you buy in Boston in 1767?

[00:05:17] What were Americans selling to be able to afford the stuff from overseas?

[00:05:23] What could you buy in Boston at the time? What were you selling to afford the things?

[00:05:29] Lots of different kinds of fabric, lots of kinds of booze. Those are the things that you would find.

[00:05:35] Calico. That's what I learned from Little House on the Prairie.

[00:05:39] You know what? I think that's a good point.

[00:05:42] It's a literate population, but most people, if they're reading anything, they're reading the Bible or they've got an all-men act or they go to the tavern and share a copy of an English book.

[00:05:52] They're not going to be able to afford the things.

[00:05:54] They're going to be able to afford the things.

[00:05:56] You know, now that you're saying I remember that, but it makes up a huge proportion of most people's budgets.

[00:06:02] It's a literate population, but most people, if they're reading anything, they're reading the Bible or they've got an all-men act or they go to the tavern and share a copy of a newspaper with 20 other people.

[00:06:14] Fabric, certain kinds of manufactured goods that you can't get in the U.S., like a pocket watch, other sort of metal goods, pots and pans, nice imported manufactured stuff you're going to get from overseas.

[00:06:34] Some weaponry.

[00:06:38] But I think if you read those shipping recitaries, you would be particularly struck by how many different kinds of fabric.

[00:06:45] And you say books.

[00:06:46] I'm struck by as someone because I would go walk by there in school is the John Harvard statue.

[00:06:52] John Harvard gave 400 books, right?

[00:06:54] Like 300 titles, 400 books.

[00:06:56] And that was his big bequest and like I think less than a thousand pounds, like not a bunch of money, just like a bunch of books.

[00:07:02] But books were really expensive.

[00:07:04] Some of the things we take for granted now, there wasn't fast fashion then.

[00:07:08] It was very, very slow fashion then.

[00:07:11] So you start looking, you're looking into, you get fascinated about what people are buying, looking at their preoccupation or the attention they're spending on fabric.

[00:07:20] And then you say insurance.

[00:07:23] Right.

[00:07:24] Well, one of the things that you notice when you read the papers of a merchant captain whose job it is to get this stuff from point A to point B.

[00:07:32] You know, it's maybe six or eight or nine weeks across the Atlantic Ocean.

[00:07:37] The captain is a paper pusher.

[00:07:39] He's a middle manager.

[00:07:40] He's got to manage all these rowdy guys on his ship, but he's also legally responsible for the goods on his ship, which means he's responsible for a lot of paperwork.

[00:07:49] And when a voyage goes wrong, one of the things that I noticed was how swiftly insurance became a part of the discussion because they had to sort out what had happened, whose fault it was.

[00:08:02] You know, did they hit a rock and it was no one's fault or did they hit a rock where everyone knew that rock was there and you shouldn't have hit it.

[00:08:09] You know, was there a theft that couldn't have been predicted from some rascal on the crew or did the captain and one of his confederates conspire to steal this stuff?

[00:08:20] Or, and this becomes more the subject of the book, were you captured by French or British privateers who were going to point their guns at you and take what they wanted from your ship.

[00:08:33] In any case, once there is a calamity of that nature, whether it's political or personal or natural, there is this flurry of paperwork and a lot of it is addressed to you or sort of is on display for an insurer.

[00:08:48] And so I thought, my God, there's a lot more insurance in the 1770s, 80s and 90s than I would have possibly expected.

[00:08:57] But there's so much of it. So what are these boring people all doing?

[00:09:01] And then I started to look for them and then I started to count how much money there was in insurance.

[00:09:08] And then I realized, oh my God, this is one of the first big American businesses.

[00:09:16] This is one of the first big American financial operations.

[00:09:21] It's not quite banking, but it's not quite not banking either.

[00:09:26] So one of the visions of this book that this book puts forward is how insurance then as it is now is sort of this shadow cousin to the business of banking, which accumulates these huge pots of money.

[00:09:39] And those pots of money make insurance a politically influential business.

[00:09:44] And they also make they make it a financially consequential business.

[00:09:50] In other words, what they do with that money becomes very, very important for the new United States.

[00:09:55] Yeah, Berkshire Hathaway, Warren Buffett went into insurance and it wasn't because he wanted the premiums.

[00:10:01] He wanted to be able to bundle all that dough and invest it in things.

[00:10:07] And he made more money off the investments than he makes off sort of the profit of the thing.

[00:10:11] It's getting the people in the door and then just try not to spend too much out in payouts.

[00:10:15] Right. That's another big part of the insurance industry at root.

[00:10:20] I mean, as you can't escape the thought that was coming to my mind as you were saying it, which is that going to what was called the new world,

[00:10:30] which wasn't new to everyone, it wasn't new to everybody, but was called the new world by Europeans was a risky venture.

[00:10:36] And therefore maybe not economically surprising.

[00:10:40] I don't mean financially surprising. I mean sort of in economic theory terms, not economically surprising that who bears the risk, who is going to pay for that risk,

[00:10:51] becomes a really important question in the risky venture.

[00:10:54] Are you going to leave Berkshire, England and move to Berkshire, United States or wherever the heck they moved to?

[00:11:00] Absolutely. And so the first colonial project in the Americas, both the Virginia colony is more famously so and less famously so the Massachusetts Bay Colony.

[00:11:14] They all had backers.

[00:11:16] They all had people who thought that in some way they were going to get profit out of America, out of some people doing some sort of labor in America, extracting some sort of value out of the natural landscape.

[00:11:30] They were putting in money, they were taking a risk and they were hoping to get a return. So this settlement of the Americas proceeds for a lot of different reasons for a lot of people in a lot of different places.

[00:11:41] But the hope of return is a pretty widespread hope.

[00:11:46] And that even trickles down to the lowliest settlers who are just hoping to get enough returns to survive.

[00:11:57] I think at the outset of the book you say this could be viewed just as a straightforward business story.

[00:12:02] And as I say it, OK, as a risky venture, people need to do it.

[00:12:05] What are takeaways?

[00:12:07] I actually do want to even explore a little bit the ways that it is just sort of a straightforward business story.

[00:12:12] But what are some of the takeaways beyond that?

[00:12:15] Well, it's like, OK, well there's risk.

[00:12:17] Somebody needs to settle that risk.

[00:12:19] Somebody needs to take it and then there's an exchange of money and then things happen because of that.

[00:12:25] What are, beyond that, what are takeaways?

[00:12:28] Beyond that, one of the points of this book is that the United States itself is a risk.

[00:12:34] It's an investment. It's a venture.

[00:12:37] It is a project that comes together, you know, maybe you want to say during the Revolutionary War,

[00:12:45] maybe even before the war has entirely broken out,

[00:12:49] where there are a lot of people who are thinking not only about the principles of representation and taxation,

[00:12:56] but about what are the possible financial returns to be gained from an independent United States.

[00:13:06] And so, for example, even before there is any U.S. government debt,

[00:13:14] there are people lining up in Britain and thinking about how they can buy that debt once it exists.

[00:13:22] So the United States itself is a risk.

[00:13:24] And one of the ways that I talk about this book is it's a story about some groups of people who invested in the United States,

[00:13:34] who took the risk of the United States in a lot of different ways and a lot of different places in the hopes of a financial return.

[00:13:41] And once they are successful, once there is an independent and financially stable United States,

[00:13:47] it becomes a United States that they're reaping the returns from.

[00:13:52] And the kinds of corporations that they've formed are very financially interwoven with the United States.

[00:13:59] They feel that they deserve to take their cut.

[00:14:04] Another way of telling this story as we go through the revolution is there's a bit of a risk exchange.

[00:14:12] I'm not sure exactly how I want to phrase this, but before independence or during the war for independence,

[00:14:18] there are these groups of merchants who are running insurance companies and in various ways sort of backing the revolutionary cause or backing American commerce.

[00:14:29] And they are shouldering the risk of American independence.

[00:14:33] Once there is a United States, as soon as possible, they want the United States to sort of be their backer of last resort.

[00:14:41] And they engage in this, you know, rhetorical maneuvering that we still see corporations doing today,

[00:14:51] which is that, you know, when they're doing well, these corporations say we are the, we're just really a steward,

[00:15:01] observers of the market. We provide a valuable service. We work exclusively with our clientele.

[00:15:09] You know, leave us alone. You know, we are not, we don't owe anything to the government.

[00:15:16] When things get a little too hot for them, then the rhetoric tends to change and they say, you know, we are American corporations.

[00:15:24] We're made up of, you know, rich and patriotic American citizens who are really invested in this, you know, build some more ships for the Navy, you know, take some of this risk on for us.

[00:15:35] We can't do it alone. And so.

[00:15:38] Or bail us out for a bank or take on financial risk if you're General Motors and make sure the American auto industry doesn't go away, et cetera, et cetera.

[00:15:49] And by the way, I have heard it described. The United States has been described.

[00:15:52] The United States government has been described as an insurance company backed by a standing army.

[00:15:57] And if you look at the bulk of the, even now, the bulk of the federal budget dots, I hadn't connected fully until preparing for this.

[00:16:06] But the Medicare Medicaid, Social Security are the that plus US military and the national debt.

[00:16:14] Those are the five biggest expenditures and comprise nearly three quarters of the federal budget.

[00:16:18] And three of the things I just said are insurance company. The standing arm is the other.

[00:16:22] The other is the debt paying for those other things.

[00:16:25] Right. And the standing army itself is it's an investment against the risk of invasion.

[00:16:31] You know, Columbia, I teach great books and we one of the books that I teach is Hobbs's Leviathan.

[00:16:37] And, you know, in caricature form, Hobbs is sort of known as being the like kind of he's got the tough, mean, dark version of sovereignty and what it means to have a government like your government can do anything, you know, compared to John Locke, who's like, you all have rights.

[00:16:51] You know, the government's for the people. So that's a stereotype. But even Hobbs says like, look, if a foreign army invades your country and your king runs away, you don't have a king anymore.

[00:17:02] It's just it's over. Your king is gone. You know, whatever you, you owe him everything when he's there.

[00:17:07] But if he pieces out like you can start again, it's done because they have abdicated this right of protection.

[00:17:14] So government has been, you know, modern governments and by modern I mean the last 500 years. Sorry, I'm a historian.

[00:17:22] Modern governments have been in this like risk mitigation business for a very, very, very long time. And so one of the projects of this book is to show how private forms of risk mitigation interact with the public forms of risk mitigation that governments do.

[00:17:41] And I love that you brought up, you know, federal health insurance as an example of that because that's a kind of protection from risk that did not exist.

[00:17:53] You know, people did not make that a problem of the state of the government in the age of the American Revolution.

[00:18:00] So what, you know, what risks is the government protecting you from in the 1770s? And American merchants are doing their damnedest to put forward their vision that one of the things that the government should do is protect American commerce from dangers that it faces.

[00:18:23] So insurance companies are in this funny little place, right, where they're run by these merchants. They're sort of collective pools of risk mitigation.

[00:18:32] But they're also, you know, the people running these insurance pools are saying, you know, wait a minute, you know, we're some of the wealthiest, most patriotic, you know, most invested Americans.

[00:18:45] We should have, you know, maybe some extra say in what kind of risk mitigation it's involved in.

[00:18:55] So let's get into that. Let's get into that. And the examples are Legion, right? Not only too big to fail, but also anytime there's a tsunami or major flood, right, there's a limit to how much flood insurance is going to cover.

[00:19:08] Maybe it won't cover anything. The government steps in. So thinking about the government as an insurance company of last resort is not a horrible way to understand the function of a government or at least this government.

[00:19:19] Big names, who are some of the big players and any tethers, any links with those big insurance players at the time of the founding of the country, folks that you looked into, and any economic ties to things that either brands or human beings that people might be aware of now?

[00:19:36] Well, when I started this project, Alexander Hamilton was not nearly as famous as he became soon thereafter. Hamilton's an insurance company lawyer.

[00:19:46] He hangs out in New York, you know, if you watch the Hamilton, the musical, when he comes out with his fancy green velvet jacket in the second act to recommend, you know, symbolizing that he started to make a lot of money.

[00:20:01] A fair amount of that money is serving as an insurance lawyer. Insurance law is, I know it sounds even more boring than insurance, right? Insurance law.

[00:20:12] Insurance law is this incredibly lucrative line of legal work in, you know, very early in the history of the United States because the United States has, you know, one of its principal assets is its incredibly, you know, outsized merchant marine.

[00:20:31] You know, obviously the United States also has a lot of land and everybody knows that's going to be a lot of valuable, you know, that's going to be really valuable someday.

[00:20:39] But you have to, you know, send some poor settler out there to clear the land. You have to ethnic cleanse sovereign native groups off that land if they still think they have a claim.

[00:20:50] But that's going to take some work that's not done yet. But merchants have cash and merchants are coordinated, merchants are savvy, and so they can pay for big insurance policies, they can pay big lawsuits.

[00:21:02] Hamilton is one of the beneficiaries. Hamilton is the protege of Robert Morris, who was probably not, he hasn't had his musical yet.

[00:21:14] He's one of the big, he's the main financier of the American Revolution. And he plays a big part in my book because he came up in Philadelphia in the middle of the 1700s.

[00:21:26] And that's like the insurance capital of the pre-United States of British colony in North America. And so he has sort of an insurer's logic in his mind when he goes about trying to figure out how the rebelling American colonies are going to afford this war.

[00:21:47] The when and where, so a lot of this is happening in port cities. And you said something important that it sounds like from my understanding, and I don't take away everything perfectly, but that a lot of the origins was in fact maritime and shipping that somebody needed to, that the origin, a lot of these insurance arrangements, insurance lawyers, insurance contracts, insurance companies, insurance capital flows were driven to significant parts because somebody had to insure a boat.

[00:22:11] Somebody had to insure a boat and had to insure the calico and the fabric and the books and whatever else. Right? How much is that? Am I over reading, am I over interpreting that connection or is that an important, is that sort of important origin connection?

[00:22:25] Well, it's crucial. So if you ask somebody in 1776 who's a sort of a savvy port city person, they know about three kinds of insurance. Marine insurance, fire insurance and life insurance.

[00:22:39] Life insurance is very, very minimal in the United States until like the mid 19th century until you have sort of urban people with white collar jobs. It's sort of tied up like life insurance is tied up with a certain idea of what a career is for.

[00:22:55] It barely exists yet. Fire insurance exists. There are some fire insurance companies in London. There are some fire insurance associations in the United States where their goal is not profit.

[00:23:09] It's sort of more like a community pot for affording putting out fires. But the big business, the big form of insurance by far in the age of the American Revolution is maritime insurance, the insurance of shipping.

[00:23:25] And that is a very, very old business. The insurance of shipping, you know, in some version you can find it dating back to Roman times because like why wouldn't it exist? Modern insurance, you know, sort of most plausibly pinpointed to sort of the Italian city states of the 1400s like Genoa and Venice.

[00:23:46] And those are the kind of business places where merchants are doing high value long distance trade in a politically splintered landscape. Those are places where it's really important to develop networks among merchants where they sort of trust that they're going to be financially accountable to each other and where things can go very, very wrong.

[00:24:08] So by the age of the American Revolution in the United States, you have this long intricate body of quasi-law. It's not really law but it's sort of merchant practice bordering on law. I'm happy to talk about that more.

[00:24:24] I'm happy to talk about that more. That sort of gives people a general understanding of how the insurance of shipping ought to be done, how it is generally done. And one of the big arguments of the book is that that general understanding of how this insurance ought to be done is a big part of what makes the business so powerful. It's a knowledge business as much as a money business.

[00:24:50] What do you got to know?

[00:24:52] You have to. So the principle of maritime insurance in the 18th century is that the insurer, it is as if he is on the boat, on the ship I should say. Ship people get mad when you say ship.

[00:25:07] Gene Hackman got away with it in Crimson Tide when he said it's the president's navy but it's my boat. But to the listener, you know that he's being a little cheeky when he says that because you're not supposed to call it a boat any more than you're supposed to call a rifle a gun. But anyway, keep going.

[00:25:27] That speaks to, even that very loss, that distinction's loss speaks to the loss of this technical knowledge that most of us don't have today. If you know boat people, they have a lot of technical knowledge and they'll share it with you. But most of us do not. Just like we don't know the names of 25 different types of fabric.

[00:25:48] But the insurance of shipping. I only know Calico. I think that's really the only one. And like madras cotton, I think those are two. Coming back to that one. I've heard a wool. But go on. Just keep running into the ground. It's already run. It's deeply run.

[00:26:05] Go ahead.

[00:26:07] You know, for you have to know how to how a ship should be run responsibly if you're an insurer, because the burden of proof is sort of on you. If you think that, let's say a captain comes to you or a ship owner comes to you really and says there's been a mishap with my voyage.

[00:26:26] I need a payout. Traditionally in this business, the burden is on the insurer to show if there's some reason that the ship captain, the ship owner didn't deserve that payout. So the people who come to run insurance companies are people who have decades usually of mercantile experience themselves.

[00:26:46] And you're supposed to be like people who are on the vessel themselves. They should know navigation, they should know if it's hurricane season. They should know, you know, there's an anecdote that I put in the book where there's a dispute about whether there was a cat on board the ship because everybody knows you have to have a cat because the cat is going to prevent rat damage to your perishable cargo.

[00:27:12] And in the anecdote, there's a lawsuit about damage to perishable cargo and the ship captain brings the ship's cat to court in a bag and dumps it on the, you know, on the judge's desk or something. I forget exactly how it goes.

[00:27:27] Here's the cat, you know, it's not my fault. I did do things properly.

[00:27:32] The other big body of knowledge that an insurer needs to have besides technical knowledge of seafaring and the physical properties of goods and things like that is sort of knowledge of the world of sailing in terms of the humans and the societies and the governments who regulate that sailing.

[00:27:56] So for example, if you are bringing your ship into a port and let's say you bribe a port official and you get caught and there is some sort of loss because of that, then your insurance company might or might not have to pay.

[00:28:15] And it depends on whether everybody knows you're supposed to bribe that port official or not. So you're supposed to know the rules and laws of the places that you're trading with, but you're also supposed to know what people usually do and the insurers will go with what people usually do, whether it is technically legal or not.

[00:28:38] So insurers are very attentive to merchant custom. They're very attentive to politics. And so the big twist in their lives, once the American Revolution starts, the French Revolution starts, the Latin American Revolution starts, all of a sudden you have new groups who are asserting themselves to be governments with the right to make new laws and to institute new customs.

[00:29:04] Is that real or is that not real? Our assumption would be that if it's the new United States that's imposing some law, yeah, the insurers should follow that. That's the new United States. We didn't know that was going to be the new United States. We didn't know that war was going to work out.

[00:29:20] There are all kinds of little groups in the age of revolutions who were sort of trying to found their own states and some of them don't succeed. Then they're just rebels and renegades. So insurance is, this is another big point of the book, that insurance cannot just be a business that is under the law, that is within the law, because it is an international business.

[00:29:47] It's a transnational business. So first of all, whose laws are you going to follow? It's a business that is attentive to customary law and procedure on the high seas. In other words, sometimes everyone bribes the port official and sometimes everyone doesn't.

[00:30:02] Then you have the additional twist that it's the age of revolution. So you don't know who's a real government and who's not. So whose laws are you going to follow? And that is a position, I argue in this book, that makes insurers extremely powerful because they have,

[00:30:16] they are in the information gathering business already. They are news addicts. They know how to read laws. They are used to being in sort of active communication across national boundaries. So they have an immense amount of say in this age of political certainty about what laws or customs they are choosing to follow.

[00:30:40] So you just brought up the Iron Bank from Game of Thrones, right? That was literally for anybody in a Game of Thrones fan, right? The big bank was essentially making an insurance bet. It was essentially saying who are we going to back? Are we going to back multiple players? Are we going to pick a winner? How are we going to make sure that we, the Iron Bank, still wins regardless?

[00:31:01] You brought up, I didn't mean to cut you off. You hadn't finished your point. You brought up international realities, international challenges and how you can't just be of an insurance company, can't just be particularly at a time of uncertainty, at a time of not being sure who the real government is going to be. You can't just be under the one nation certainly at that time.

[00:31:24] And when I asked about any big names, you mentioned Alexander Hamilton and you mentioned Morse. I don't think you mentioned Ben Franklin who's I think made the first U.S., is that true? He made the first U.S. chartered insurance company, the Philadelphia Contribution Ship.

[00:31:41] It's a group. So that's one of his groups. He's not in it for profit. The Contribution Ship is intended to help mitigate losses through fire and insuring people against fire, but he has not, he's not in charge of this leap into joint stock corporations, companies for profit.

[00:32:02] And the success rate of projects like the Contribution Ship is pretty, it's a little uneven because on the one hand, it's very nice to have a non-capitalist approach without shareholders.

[00:32:19] On the other hand, because groups like the Contribution Ship don't keep that much money on hand, they can be a little bit at a loss if there is a big fire. And not only that, but they can be at a little bit of a loss when they come to collect additional premiums from people and people don't want to pay up.

[00:32:39] Yeah, no, it's the argument for government as an insurer, right? That nonprofit insurance company sounds great but has capital challenges. One could imagine a multi-billionaire bequesting enough to have a nonprofit insurance company that worked and it would have a better loss.

[00:32:55] One of the horrifying things I learned when I learned about insurance was, and I already gave it away, I gave away my viewpoint when I said horrifying, but I was in a cab with a delightful couple who owned an insurance company.

[00:33:08] They were going to their very nice place in some darn coastal town. And we started talking, we had a long cab ride and so we had a real time to talk and I curiously asked questions.

[00:33:19] I asked about what they did, they ran an insurance company. And I said, so how much, after many questions, after much discussion, I said, how much do you guys pay out in premiums to share your business?

[00:33:28] And I will never forget this quote. They said, well, the regulators like us to keep about at least a 30% loss ratio and we say pretty close to that.

[00:33:36] And I said, what's a loss ratio? And they said, oh, that's the amount that we pay out in premiums.

[00:33:42] And I said, wait, you call it the loss ratio? Like not the benefit ratio, not the service ratio, not the reason you're in business ratio.

[00:33:49] And then I realized, oh no, it's not the reason they're in business. And so that meant that 30% compare that to Medicare Medicaid, which is fractions, fractions, single points, not tens of points of that.

[00:34:00] So that's the argument against sort of thinking about insurance as primarily a way to drive profit.

[00:34:05] Because again, if I go and get a hamburger, the incentive of the burger maker is that they want me to eat another burger.

[00:34:11] But insurance company just wants me to buy the burger. They never want me to eat the burger.

[00:34:15] And that's the argument for the nonprofit insurance company. You just made the argument against it.

[00:34:20] The argument in favor of the government is, well, the government has capital and the government also make people pay up.

[00:34:24] And it works pretty well. I do want to get, but I want to stick on this international, at least touch on this internationally before we move on.

[00:34:31] But it seems like the early insurers couldn't have all been based in the United States of America because the United States of America didn't exist yet.

[00:34:41] So who are these early insurers that were insuring stuff in the United States and that soon to be United States of America?

[00:34:49] So before independence, some Americans do insure at home and they are not generally allowed to form corporations because the British government frowns for the most part on joint stock corporations being formed in the colonies.

[00:35:07] That's problematic for them in a bunch of ways. But they sometimes-

[00:35:13] Why? Because then they can't run it? Because it's like a Putin kleptocracy?

[00:35:17] Yeah, because they know perfectly well that a corporation is a capital accumulation tool and it could be- it's a power base and it could be put toward all sorts of ends.

[00:35:26] So just in general, they tend to be against them, though they can be individually allowed.

[00:35:31] But Americans insure one another. And again, these are usually the most informed and well-off sort of little groups of coastal merchants who form their own insurance groups.

[00:35:43] And sometimes they even call them companies, though they're not incorporated. It's just sort of this machinist of language in the 1700s.

[00:35:49] And so they're pooling their risk and they are- they're pooling their risk informally, I would say. There's no sort of legal life to their company.

[00:35:58] It's just a group of guys. Sometimes they share some letterhead.

[00:36:02] Sometimes they sort of give their money to a broker who handles all of it for them.

[00:36:06] And they generally insure each other and other people in their towns. And they can either- they can be more or less insular. It just really depends.

[00:36:14] They also can buy insurance from London or from any port city where they do a lot of business.

[00:36:21] And in fact, in Europe, financial services tend to be cheaper, especially London, especially Amsterdam, these financially sophisticated port towns,

[00:36:31] just like you can get a loan cheaper there than you could in colonial North America, right? They're just more active, busier capital markets.

[00:36:38] So Americans can do that and they tend to do it during times of disruption.

[00:36:43] What really prompts Americans to form insurance companies, I argue in this book, is not independence per se.

[00:36:50] With independence, they go back to insuring in London. Lloyd says, no problem, we'll have you back, you know, like no harm, no foul.

[00:36:57] Everybody's happy to go back to doing business. But the formation of US financial markets,

[00:37:04] the marketing of US securities, the creation of the early US stock market, bank corporations,

[00:37:11] all of a sudden it seems like once there are US securities to buy, that really inspires the forming of a lot of corporations.

[00:37:20] And as the corporations can hold US financial securities and then they have this sort of reassurance of income from US government securities

[00:37:30] and they're doing whatever they're doing, like running an insurance business. Like you said, that's risky.

[00:37:35] It's nice to have the buffer of a safe investment. Now, is our US securities a safe investment in 1791?

[00:37:45] Yeah, right. I mean, it's like it's in this transition period. Everybody's excited about them.

[00:37:49] Always been on America.

[00:37:51] Yeah, I mean, there are a lot of things that are riskier investments that are harder to do.

[00:37:58] So there is this big rush to purchase US securities and the first American insurance companies are the biggest institutional owners of US securities.

[00:38:09] And partly because there's hardly any other institutions out there.

[00:38:12] There are banks that start to form banks pretty quickly, but banks are mostly lending their money to merchant customers.

[00:38:18] Insurance companies are the ones that have this big pool of capital. They have to do something with it.

[00:38:24] So they invest in the United States. They buy federal securities.

[00:38:28] They would buy state securities, but it turns out there don't end up being that many of them on offer just from the way the US develops.

[00:38:35] It's not till like 1820s, 1830s that there's a lot of state debt out there to buy.

[00:38:41] So insurance companies form really fast because you have these coordinated organized groups of merchants who are ready to incorporate.

[00:38:49] They get their incorporations. They invest very fast in federal securities.

[00:38:54] They also invest pretty fast in banks and we can talk about insurance and banking if you want.

[00:39:00] But they're sort of up and running very quickly.

[00:39:03] And so there's this great moment in 1810 that's in the book when there is a sort of a parliamentary inquiry in London where they're sort of they're mad about the British insurance sector for various reasons.

[00:39:19] But one of the things that come up is they're like, where did all our American clients go?

[00:39:24] It's, you know, in 1790, even sort of right after the revolution and 1780s, we had a ton of American clientele.

[00:39:32] And now people are estimating that 19 out of 20 American insurance dollars spent are spent at home on American companies.

[00:39:41] And so it's like Britain lost their the vast majority of their American insurance business and they're sort of miffed to find that out.

[00:39:49] But there's like this sort of massive, I guess I don't know if you'd call it repatriation because a lot of the capital is being invented in the early United States.

[00:39:58] But they've invented these companies that are now, you know, it's like they're like planets.

[00:40:03] They've got their own centers of gravity.

[00:40:05] There are financial centers in the U.S. now that have bigger, heavier centers of gravity and they don't need Britain so much.

[00:40:14] I want to get into some definitional stuff.

[00:40:18] Underwriting made the title of your book.

[00:40:22] I want to make sure we have a shared understanding of what we mean by underwriting.

[00:40:27] Did it have the same meaning then as now?

[00:40:29] And either way, give us the meaning.

[00:40:32] Oh yeah, we probably should have done that about 45 minutes ago.

[00:40:35] So underwriting, if I had an insurance policy to show you from this period, you would see that it's very literal.

[00:40:44] That before there were insurance corporations, the insurance that you got, you know, let's say you're a merchant, you own a ship,

[00:40:51] you're sending it somewhere, it's a little dangerous, you're going to buy an insurance policy.

[00:40:54] Your insurance policy has this sort of boilerplate text on it and then let's say you want a thousand dollars of insurance.

[00:41:02] You round that up from different people or really your insurance broker does it for you.

[00:41:08] So one guy will underwrite his name.

[00:41:11] He will write his name under your policy and he'll say, yeah, I'm in for $200 worth of insurance.

[00:41:15] You know, if something goes wrong, I'll pay you back up to 200.

[00:41:18] Somebody else might write down, yeah, I'm in for $300.

[00:41:22] So they split these people split the premium and then if they have to pay out,

[00:41:28] the broker has to go to them and say, you know, you owe the merchant he suffered a loss.

[00:41:32] So they're literally writing their names.

[00:41:34] They're underwriting the policy.

[00:41:36] And so that term broadens and people speak of underwriting a voyage being the person or the corporation

[00:41:43] or the group of people that takes on the shoulders, the risk of the voyage.

[00:41:48] The voyage is on them. If something goes wrong, it's on them.

[00:41:54] So I use the term underwriters in the United States because the term underwriting broadens still further in,

[00:42:03] you know, you can see how that happens in language and people sort of start to use it to say when they're taking on the risk of any kind of venture.

[00:42:11] So, for example, you know, publishing, like you said, it's a risky business now too.

[00:42:17] Publishing is a risky business in the 1700s.

[00:42:20] So a lot of times people will subscribe to a book that they want to be published before it's published.

[00:42:27] And it will be spoken of like they have underwritten the publication of this book, right?

[00:42:32] They're taking on the risk of its non-sale.

[00:42:36] During the American Revolution, Robert Morris, the financier of the American Revolution,

[00:42:45] does what is considered one of the first modern acts of well he makes it happen.

[00:42:51] One of the first modern acts of underwriting the sale of government securities.

[00:42:58] So he's got all this US government debt.

[00:43:01] He takes it to, I'm pretty sure it's Amsterdam, where there's a lot of insurance in Amsterdam.

[00:43:07] There's a lot of risk taking investors.

[00:43:10] He's supposed to try to sell US debt to them.

[00:43:14] So what he tries to do, he tries to get the Dutch government,

[00:43:18] he tries to get rich guys in Amsterdam to underwrite the sale of US bonds.

[00:43:22] In other words, to take on the risk of their non-sale.

[00:43:26] Like Morris doesn't want to be on the hook if these bonds don't sell.

[00:43:30] He doesn't want to go home with them.

[00:43:32] He wants somebody else to take them and or to take the risk of if their value goes down or something like that.

[00:43:39] So underwriting sort of spreads from the insurance business to the sort of idea of backing a risky venture.

[00:43:48] And then into during the revolution, it spreads into this modern practice of taking on the risk of other marketing,

[00:43:57] other forms of financial securities.

[00:44:00] I hope that's not too technical.

[00:44:02] No, it's helpful. It's helpful.

[00:44:04] And so Robert Morris is a founder of the Bank of North America.

[00:44:09] Not to be confused with the Bank of America.

[00:44:11] I think that rolled up and is now after various acquisitions as a piece of Wells Fargo.

[00:44:16] I think that's at least what my cursory research demonstrated.

[00:44:22] It's fascinating to see how some of these corporations continue to live.

[00:44:27] In fact, the the Insurance Company of North America, which is the first joint stock insurance company in the United States,

[00:44:36] it was founded in Philadelphia.

[00:44:38] It's now part of Chubb, I think.

[00:44:42] Oh, wow. OK. All right.

[00:44:44] So it's alive and its books are preserved by Chubb's corporate historian in Philadelphia.

[00:44:49] And you have to talk to their lawyer if you want to go research them.

[00:44:52] So I have some sense of why it mattered then.

[00:44:57] OK, why insurance mattered then?

[00:44:59] You've made that case and the United States wouldn't be able to take all the risk or it's unclear how they would have been able to take a risk.

[00:45:07] But for these insurance folks and whether it was Ben Franklin on the nonprofit side or Robert Morris on the for-profit side,

[00:45:14] and both of them ended up in the Continental Congress.

[00:45:16] And the why does it matter now?

[00:45:21] Why is it particularly important? You wrote the book now.

[00:45:25] How does this help us understand a democracy better or what should we glean from it or what's happening now that has echoes?

[00:45:34] We should be aware of those echoes.

[00:45:37] That's a great question. So I started writing the book after 2008 when a number of historians sort of became interested in finding new ways to write about financial history or economic history, however they want to talk about it.

[00:45:57] There was a feeling that the discipline of history had seeded too much of the conversation about moneyish stuff.

[00:46:06] And I use this as very technical term, moneyish stuff to the discipline of economics, which used a lot of numbers, but was seen in some ways as having not made the world entirely clear enough to explain why the crisis in 2008 had happened.

[00:46:26] Anyway, historians say we're going to take this backward and take a look at all this.

[00:46:29] Belatedly I realized that I was part of that movement to try to say like, you know, let's understand some of these numbers, but let's also understand the cultural power of financial institutions.

[00:46:42] Let's understand the relationship between economics and politics.

[00:46:47] So one of the underpinnings of this book is the idea of political economy, which is, sorry, as well as democracy nerd, I'm just going to say it's a nerdy topic, but now I just looked and I saw this democracy nerd.

[00:47:01] I'm not going to apologize.

[00:47:03] But the way that a lot of historians are now using the term political economy is as the sort of catch all term to insist that the economy is not separate from power parameters.

[00:47:17] And that there, there is no free market because you know on the one hand markets are determined by force by political power.

[00:47:26] They're also shaped by culture by the things that people value, you know economists will talk about scarcity, and that's, that's their toolkit.

[00:47:35] But they're the historians toolkit also includes how people make meaning and what's valuable has to do with what people make meaningful. So one of the sort of biggest, biggest sort of, you know, there are no, there are no free market markets expensive.

[00:47:52] It's expensive everything takes all kinds of stuff to make it happen. I live in New York, you don't have to tell me everything is expensive.

[00:47:58] A lot of things you know if you chase them back there, they're expensive for, for reasons of power for political reasons or if they're suspiciously cheap right like fast fashion everybody talks about it you know why is that so cheap.

[00:48:10] Right, it's not the things are magically made more efficiently and fast fashion right there is sort of different tariff conditions different political conditions that make that possible.

[00:48:20] So it's sort of like this really big movement and sort of exploration project of historians to, to think about the stories that we can tell that show how power how politics and economics are connected.

[00:48:32] And to add more specifically into the insurance around.

[00:48:38] One of the things that I wanted to show is how insurance and politics can never really be separated, and we've covered some of that earlier in our conversation, you know when we're talking about the way that ensures, you know want to act like they're independent

[00:48:55] and they want to do something that's doing well and they want to, you know, make the public take their downside when they can possibly do so, or make the public pay to reduce their risk when they can possibly do so.

[00:49:06] So that is a good example in this story about how insurance is always a political business.

[00:49:14] And that's how it sort of goes in and out of public attention, partly because it does seem so boring. And there's a an episode in this book where some insurers are trying to most merchants are trying to fend off charges that they are price gouging during the

[00:49:32] that they're charging too much for imported goods just because they're greedy. And the way, the way that they fed off these charges that they're price gouging is they, they put the they blame it on their insurance they say our insurance is really expensive, and they

[00:49:47] So they put the calculations in the newspaper. Now, I've been studying this for years. And, you know, it took me many hours to understand these calculations he was putting in the newspaper.

[00:50:00] And I worked through it with an insurance actuary who, who wrote his own article about it. I can send you later if you want.

[00:50:08] But so the idea that anybody reading this newspaper in Philadelphia in 1777 or whatever was really, you know, going to check their calculations and go, ah yes the math is right here.

[00:50:20] And he's using these numbers to intimidate. He was using these like numbers are a sign of expertise. They're saying, you know, we've got this stay away stay out of our business, you know, and then that's the insurers argument all through

[00:50:33] And team owners have been doing that negotiations with players and and doctors do it.

[00:50:39] Do it with medical malpractice and say, oh, the reason the reason that healthcare so expensive is because of we have malpractice insurance or other kinds of insurance. We have to pay the premiums.

[00:50:51] The no no it's a it's a game as old as time I didn't know it was game as old as time you just told me it was.

[00:50:56] Yeah, it's not that they're like it's not that they're telling flat out falsehoods. It's that the world that we live in is a world that's partly of their creating.

[00:51:06] And so, you know, one of the messages of this book is that understanding it is one of the first steps to unraveling it. You know, I, I believe that the world is complicated. I don't think Robert Morris or Alexander Hamilton are good or evil.

[00:51:18] I don't think corporations are good or evil. I think corporations have certain tendencies.

[00:51:24] And if they have certain ways of of acting and within a democracy. And if we, you know, the corporations are going to do their part, which is to accumulate capital and citizens have to do their part, which is this this learning monitoring understanding

[00:51:45] these financial aspects of our society that tend to float along without notice until moments of crisis. And there are so many political issues going on right now in this country that have to do with insurance.

[00:52:01] There's our endless debate over, you know, health insurance.

[00:52:06] There's climate change and the way that insurance markets are collapsing in places like California and Louisiana right now. And the conundrum that this has left for state governments, you know, to you course core corporations to stay do you start your own state funded insurance.

[00:52:23] Do you do the really hard nasty thing and tell the citizens they're out of luck. Well, they're the ones that voted for you so you might not want to do that you could get in trouble.

[00:52:33] The way that who is capturing international trading ships have still sort of snarled up global trade.

[00:52:43] All of these stories that show that you know that our world of cheap globally transported goods you know we learned this during coven and it doesn't take much to learn it again, how quickly it is for that that world to sort of pile up in a traffic jam and a political crisis.

[00:53:01] So these are all insurance related stories that are that are absolutely active today, the one that I never cracked and I also you know I did, I had to finish this book I have to get tenure I have to move on.

[00:53:12] It's a story of category reinsurance, which I wrote in the book is the business that most resembles to me I think the marine insurance of the age of revolution.

[00:53:22] It's transnational it's very quiet. It's about risks rather than, you know, predictable.

[00:53:30] It's about it's about what do we say uncertainties, rather than predictable regularized risks.

[00:53:38] You know it's not actuarial and it's about the, the ultimate unpredictable thing which is human politics and human societies and their unexpected changes. So I see these.

[00:53:53] So a reinsurance company is that the company that ensures the insurance company essentially insurance company. Right so they're, they, they take on the much smaller risks of much bigger catastrophes, and they do not want you to know anything about how they work.

[00:54:10] In fact, they still made the you know my favorite thing that I was learning about reinsurance in this book. I'm like, I have to stop I'm not writing about the 20th century, you know that they're like annual conferences in Bermuda it's like in this really old international trade hub, you know the other place they made his

[00:54:24] Monte Carlo which is like famous for gambling so you know gambling and like international trade. You got to do this follow up you've got to do the reinsurance codicell or the reinsured sequel.

[00:54:35] I don't want to get murdered man like this is like really big business is like Pelican brief stuff man like I'm not.

[00:54:42] I'm just a historian but you got some gum shoes out there send them my way, and we'll talk about reinsurance.

[00:54:48] Was there was there stuff in your look of, because, because you said you said number of important things one of them is that we can't disconnect economy from power.

[00:54:57] And we can't and the and the look at the connection between insurance companies and the practice of insurance and the origin of the United States and the practice and founding United States of America is one of the best examples there is about how inextricably linked money

[00:55:14] and power are that business school and politics school are sort of falsely put into different buildings, and that these things are closely linked.

[00:55:24] And, and even in your in your discussion of marine insurance you even sort of saying well they kind of operate as their own government.

[00:55:32] Right, they have their own sort of rules and they have their own ways of of extracting what they need to extract and enforcing what they need to enforce.

[00:55:41] And because they both maritime, nobody knows that that stuff.

[00:55:45] Our own thing.

[00:55:47] Don't get it.

[00:55:49] It's just maritime.

[00:55:51] And when you started looking to reach it, is there stuff that ever scared you, and I don't mean something like I don't mean Pelican brief somebody calling you on the phone was anything you ever read that said, oh that's interesting.

[00:56:03] That is a manifestation of power that people might not be aware of that as a way that is leveraged when you say how insurance companies impact the United States, how do they leverage that power.

[00:56:14] Is it just, you know, they lobby they put in stories newspaper and they make campaign contributions, or there are other ways they leverage power.

[00:56:21] Well I think we just, we don't know how these sort of highest level managers of the world's risks are allocating and assessing those risks.

[00:56:32] I don't think there's some you know giant sinister conspiracy where they've got their fingers in you know every company around the world or anything like that but there's, there's a lot that we don't know that operates in counterpoint to politics which is supposed to be public

[00:56:45] but the way you know this sort of top level movements of some of these information gathering risk assessing, you know, entities are not really within the scope of, you know, they're not really under a government.

[00:57:03] And that was true in the age of revolution on and that's true now I don't think that makes them evil I don't think there's necessarily some evil conspiracy.

[00:57:12] But if we are operating as a democracy, we need to understand what it is that we control and what it is that we don't control what is within our purview and what is not and if there is something that is not within our purview that might really affect us as citizens then we need to do the work to find out what it is and what what the risks are to us right so so I'm trying to sort of shed light on this whole landscape of the internet interconnected financial world that goes into the

[00:57:38] And that that in a way is one of the big messages of this book that there. There's a financial world operating, we have some effect on it, it has some effect on us, partly national partly not let's learn.

[00:57:48] I just looked up the top 50 global reinsurance groups. I think is 50 is 1000 million as a trillion Is that correct, or is 1000 million a billion billion then we get to a trillion, then we get to billion so so Munich reinsurance companies biggest in the world.

[00:58:04] And so that says it's 51,000. So that means so that means $51 billion that they have in reinsurance premiums written if I'm doing that if I'm reading and doing that arithmetic correctly.

[00:58:17] Hannah Verouk never heard of them Swiss re limited haven't heard of them.

[00:58:21] I don't live in Switzerland either. So, so, as they what I heard you say is that the

[00:58:28] The

[00:58:52] How they leverage power.

[00:58:55] When we think about if you had a takeaway, in addition to the takeaway that money and power linked that that financial realities that the wielding of economic power is the wielding of political power and and impacts it even in more traditional ways of understanding political power other key takeaways we've missed things I should have asked that I failed to

[00:59:17] I think you've done a fabulous job, bringing out some of the core points of this book I think, you know, another sort of maybe more consoling message of this book is that there.

[00:59:30] The history of the United States is often told as this moment in which in the revolution there's this moment of sort of pure potential of democracy and then you know and then, you know, we thought all people were equal and then, oh no it turned out you know we weren't freeing all the slaves

[00:59:45] And, you know, the money guys stepped in and, you know, this sort of reactionary forces took over. I'm saying, look, the forces of the financial world are there all along before during and after the world, the war is end.

[01:00:02] And that doesn't mean that, that they're unchangeable. It's just you know if there's no moment of pure democratic possibility separate for money then just, oh well like any any moment that we live in is a moment when we could potentially make a make major changes.

[01:00:21] And it doesn't make it less important. It doesn't make and it doesn't make it less virtuous to try to see where is that tangle meant helping and where's that tangle meant hurting. Where is that advancing the common interest and where is it manipulating the common interest in a way that is not to the common interest, it doesn't make that question

[01:00:35] less important. In fact, I would argue it makes it more important to understand this stuff and we need to make sure that democracy nerds aren't only humanities nerds right that we actually think about the sort of tug and pull and physics of economics and finance and banking and insurance etc.

[01:00:52] And a lot of the synapses I wouldn't have connected but for talking to you, which I really appreciate. Although my white privilege belied something I didn't ask about slavery. I have to imagine that in terms of assets that were that were considered in terms of risks that were that were considered.

[01:01:09] How did how did slavery it's different than banking. I know that I know that in banking, it was it's it's it's a straight line to evil collateral when we talk about the early days of banking but how did the how did the insurance world touch one of America's biggest business.

[01:01:26] So I read about the 18 there in the early 19th century before the sort of big domestic movement of slaves in the United States into the deep south and the sort of the set that sort of before the rise of the cotton south and the reentrenchment of slavery there.

[01:01:45] During the 18th century, British insurers were very important to the slave trade, because slave trading was a particularly risky form of commerce. The risk of insurrection was always there.

[01:01:58] The sailors who were in the slave trade. I mean it was like a dirty, unsavory world and everyone knew that at the time perfectly well. And so there are a lot of sort of consortiums that in Britain and Liverpool and the slaving towns that that ensured the slave trade.

[01:02:17] There's a project going on at Lloyds of London right now to uncover their historic connections to the slave trade. And it's a bit frustrating because Lloyds itself doesn't have an extensive archive because it's not a corporation, people like brought their papers to Lloyds their individual operators

[01:02:32] Then they go home. But you can look up on their website and see some of the work that they've done so far to uncover that. There are a couple hotspots in the early United States where slave trading is happening like Bristol, Rhode Island, Charleston, South Carolina and places like that.

[01:02:51] And there are insurers who are insuring the slave trade there. Generally speaking, the slave trades on the wane after into the United States after after independence so it is not a huge part of the national story of US insurance in that way.

[01:03:12] Slave importation, but there are, there's a lot of wink nod loopholes that allow people sort of even in Boston, which is a hub of abolitionist sentiment very early. It's not hard to find people who are sort of side betting on underwriting the slave trade privately.

[01:03:33] It tends to take place outside of corporations, it tends to take place quietly. So, so it's it's there but it's not a huge factor in in the American insurance sector.

[01:03:45] So I know you've got a hard stop in a couple minutes and so just one last comment on the impact of war, and even more profiteering on the growth of the insurance. One other thing I failed to ask about was the impact of not only domestic but international conflicts on the

[01:04:02] growth of not only the American but the global insurance industry.

[01:04:07] Yeah.

[01:04:12] They complain about war, loudly and they make profits on the war very quietly. And so you have to be very careful when you read the documentary record that you don't just read about the hand wringing, you look at the people who, you know, they're often people who

[01:04:26] are contracting for, for the government who come out of wars and who are suddenly politically prominent and wealthy people. And there are insurers number among these esteemed Americans insuring during wartime can make you a fortune, it is a form of gambling.

[01:04:51] One, you know I frame this book partly as the about the, the underwriting of the United States, the making of the United States as a whole.

[01:05:00] One of the ways in which the United States is very lucky is the ways in which the French Revolutionary Wars and then the Napoleonic Wars so right French Revolution, then Napoleon we all saw the new Napoleon movie right like war war war war on the oceans.

[01:05:16] The United States is not directly involved in this war until 1812 so it's had the insurance sector has a lot of time to profit from this world of uncertainty when Americans have this fabulous merchant marine and they're sort of navigating these gray areas

[01:05:33] trade in the midst of global war, uncertainty and anxiety is a climate where ensures to really well.

[01:05:41] By the time the War of 1812 is formally declared, and the US has to face the British Navy head on the sectors had a generation to establish itself.

[01:05:53] The United States has had decades to financially establish itself so the United States is not financially devastated by the War of 1812 in the way that its commerce might possibly have been and its insurance sector might might possibly have been.

[01:06:08] So, the United States profits from this climate of global uncertainty maritime war revolution.

[01:06:17] And among those who profited the very most are the maritime insurance.

[01:06:23] Well, one of the takeaway lines from this conversation for me was complain loudly and profit quietly.

[01:06:33] Maybe even express gratitude silently, but I don't want to express credit to you silently, I want to express it loudly. Thank you very much for joining our conversation is Hannah Farber, the book is underwriters of the United States, she is at Columbia

[01:06:49] She can't get in her office, but she did get into your podcast feed rate and review share with a friend by her book. Thank you very much for being a democracy nerd and for talking to us about the business of democracy.

[01:07:01] Democracy nerds recorded in sunny Portland, Oregon produced by Kyle Curtis. Thanks also to technical producer Sig Seliger logo designed by Kat Buckley at K Buckley graphics.com I am Jefferson Smith.

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[01:07:19] Past episodes of the show democracy nerd can be found online at democracy nerd dot us. Go America. Thank you. Thank you democracy.