Articles

The Political Economy of Marine Insurance and the Making of the United States

Farber, Hannah

To study political economy is to assert that economic events and ideas belong in political frameworks—or, at least, that they must be understood in relationship to other modes of power. Political economy is thus a particularly helpful concept for approaching questions about the early modern state, its ideas, its modes and degrees of power, and its successes and failures. But “political economy” is itself an analogy, and one with imperfections of its own. With oeconomia signifying something like “household management,” the phrase “political economy” hints that the state manages its own home. Anyone who has listened to a politician talking about a country overspending on its “credit card” knows that this analogy has its limits. In the early modern world, moreover, states were far from the only institutions that organized capital and commerce. As Philip J. Stern and Carl Wennerlind have observed, the early modern state was “rather weak, decentralized, and amorphous, while its competitors—from churches to corporations to corsairs—were extremely vibrant.” Thus it was not only that the early modern state struggled to fully manage its own household but also that competing, overlapping institutions had households of their own, which they managed vigorously and often well.

“Political economy” also implies a world composed of discrete political units, in which any person, institution, or piece of property would belong within either one household or another. In reality, however, political households were messy, overlapping affairs. States were “polycentric” and “composite.” Chartered corporations, which formally received their privileges from the state, could exercise sovereignty both within and outside of it. The complications multiply if we take seriously the political characteristics of institutions such as churches or financial markets, which were organized in a very wide variety of ways. Contemplating the eighteenth-century British Empire with all of these competing institutions in mind, we begin to understand that the empire’s “success” by any metric (for example, territorial expansion, financial development, centralization, or military might) occurred because of its relationships with institutions over which it could exert only partial control.

British marine insurance was one such institution. No contradiction in terms, British marine insurance was genuinely British. By the latter half of the eighteenth century, it was a wealthy and powerful sector of the imperial economy, which extended to the empire’s farthest reaches and held sway in its capital city. But marine insurance must also be understood as its own household—that is, as an institution that organized trade and resources according to its idiosyncratic priorities and rules. This dual character of insurance can be apprehended if we examine the aftermath of the British Empire’s great eighteenth-century rupture: the political, military, and constitutional establishment of the United States of America.

To be sure, recent scholarship has demonstrated that early modern merchant-insurers’ stated grounds for self-governance were historically inaccurate. These self-advocates were incorrect when they argued that their business remained identical across time and space and that, as it was governed solely by lex mercatoria, the so-called laws of merchants, it could never be made subject to the laws of states. The business’s rules and its structure most certainly did vary across space and time. Insurance buyers and sellers lived in particular states and were subjected to those states’ evolving laws. Even co-nationals, who competed for business with one another, did not adhere to a single, unified insurers’ agenda.

Nevertheless, insurance was a genuinely and effectively transnational commercial system from its late medieval origins. The insurance brokers and underwriters of the eighteenth century inherited their core business practices from fourteenth- and fifteenth-century merchants of Genoa and Pisa, who had shaped them to manage the problems of long-distance trade in a politically fragmented world. They pioneered insurance contracts, for example, that prioritized intention and informal agreement over precise form. During the following centuries, though insurance increasingly entered into conversation with the state and attracted an increasing number of statesmen to its cause, it never entered fully into the state’s “household.” It continued to be run by insurance experts, who employed heterogeneous “rules” defying formal legal categorization, and it sustained sizable capital networks that spanned national boundaries. Last but not least, insurance’s self-governance was buttressed by a thoroughgoing self-mythologization that deserves more serious scholarly consideration. The perception of marine insurers as autonomous purveyors of a transnational merchant (self-)governance did concrete political work through this period, and thus we must find some register in which we can understand it as real. In sum, through capital, expertise, statecraft, and mythology, marine insurance maintained a political economy of its own.

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The William and Mary Quarterly
DOI
https://doi.org/10.5309/willmaryquar.77.4.0581

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January 30, 2025