The Insurers’ Wars

When Thomas Jefferson’s administration was trying to decide whether it could declare war against Britain in 1807, it came up against a surprising group of opponents: America’s wealthy and politically savvy marine underwriters.

The French Revolutionary and Napoleonic Wars, which raged around the world between 1793 and 1815, posed an existential threat to the new United States. The wars also made American insurers of commercial shipping extraordinarily powerful.  The wars offered enormous opportunities for traders who were willing to take risks on ventures to blockaded and war-starved ports, and the United States had an outsized merchant fleet that was poised to take advantage of this opportunity. But trade was risky, and the United States’ formal naval defense was minimal. Thus it was a growing sector of American marine insurers, led by coordinated groups of expert American merchants, who helped shippers pool their risks and navigate this high-risk high-reward landscape.

I discuss these dynamics in my new book, Underwriters of the United States: How Insurance Shaped the American Founding. Below is a short summary of the arguments.

By 1810, an American merchant-banker informed a dismayed British Parliamentary committee that Americans had come to purchase about 95% of their marine insurance at home. Even though insurance was a profoundly and comfortably international business, whose intricate customary practices were observed across national boundaries, Lloyd’s of London had managed to lose almost all of its American clientele.

The wars prompted American insurers–a diverse group that ranged from cautious fourth-generation merchants to ebullient speculators and entrepreneurs–to bet on the future of the United States itself. They purchased vast sums of Alexander Hamilton’s new federal securities. They wagered that in spite of the constant and unpredictable international conflict, the American merchant fleet would, on balance, return profits. They provided the fledgling American government with information about the safety of its merchants in the world that was crucial for policy-making, and by supporting American overseas commerce, they allowed the government to collect its most critical stream of revenue, its customs. American underwriters avowed their loyalty to their country, and (setting aside some significant and lucrative gray areas), they followed its laws and demanded that their merchant customers do the same.

Yet as the political conflict escalated, American underwriters’ points of view differed dramatically from those of many of their republic’s politicians. Jefferson and his allies saw the conflict between Britain and the United States in nationalist terms. When the British naval ship HMS Leopard boarded the USS Chesapeake, they believed it had committed a grievous insult to the American flag. For American insurers, however, the conflict was a matter of risk and calculation. And they believed that losses to Britain were more or less manageable. Massachusetts senator Timothy Pickering, who opposed war with Britain, read statistics from insurance companies and brokerages on the floor of the US Senate. Describing these insurers as sources “of unquestionable authority,” Pickering used their records of losses to argue that Britain was far less dangerous to American ocean commerce than Jefferson’s supporters believed.

Insurers were not only vocal opponents of the war. They also posed a financial obstacle to it. When Jefferson asked his treasury secretary Albert Gallatin how much money the United States would be able to borrow from Baltimore’s wealthy banks in case war began, the answer that he received was that it was not nearly as much as the administration hoped, because half of the city’s capital belonged to the insurance companies. If war broke out, the insurers would claim this capital from the banks to compensate merchants for shipping losses. The needs of commerce stood before those of the republic.

Jefferson’s party did not declare war on Britain in 1807. It instead declared a commercial embargo. Even this embargo, however, proved immensely politically damaging and unsustainable. International commerce resumed for several more years, and its very unpredictability fueled insurance company profits further.

Meanwhile, conflict continued to escalate. Britain, France, and other nations continued to capture the United States’ valuable merchant vessels. But as members of Congress voted for limited war preparations in the winter and spring of 1812, the logic of calculation persisted. Calling for more naval spending — on a “little fleet” that could “bring [Britain] to terms” — Massachusetts senator James Lloyd, Jr., one of the first directors of the Boston Marine Insurance Company, presented the history of American foreign encounter as a story of losses and indemnifications. On the whole, he acknowledged, Britain was responsible for capturing a large share of American merchant vessels, but it was also the only foreign party that reliably indemnified Americans for vessels captured in error. Claims made against Britain were “fairly heard, equitably adjudged, and … punctually paid.” Insurers could accept this. All other foreign nations behaved far worse, he argued:

You had the Berlin decree, the Orders in Council, the Rambouillet Decree, the depredations of Spain, the robberies even of the renegado black chief of St. Domingo, and the unprovoked and still continued plunder of Denmark, a nation of pirates from their origin.

This kind of political chaos, Lloyd argued, was far harder for insurers to navigate.

Here it becomes important to assess James Lloyd, Jr., in terms of his political agenda, in addition to the straightforward content of his arguments. Lloyd and his fellow American insurers had never been merely evaluators of global events. They were also political actors. As they assessed the conditions of global markets, they also worked to shape those markets to their advantage by shifting the political and legal landscape in which they operated. Insurers often spoke as if their massive expertise, unequalled by inexpert politicians, made it impossible to act against their advice, let alone to regulate them, without fundamentally damaging the fabric of the United States. Their claims contained some truth. Insurance company leaders were, in fact, the best-networked of American merchants, who possessed unequalled access to commercial (and sometimes political) information. It was this very expertise that allowed them to maintain so much influence.

When, to American insurers’ dismay, the United States did declare war on Britain in 1812, the tightest restrictions imposed on foreign trade would last only four months. At that point the American insurance sector had become well established and highly capitalized, and it had room to maneuver. Some insurers underwrote only relatively safe domestic voyages; others paused their maritime underwriting and increased their investments in various kinds of American debt; others insured illegal voyages in defiance of national law.

Covert Underwriting During the War of 1812. (Policy #1235, Commercial Insurance Office Policy Book. Commercial Insurance Company, Boston, MA, Policy Book, 1812-1813. Baker Library, Harvard Business School) This policy is issued to Messrs. Jonathan Dorr & Co. of Boston as “agents” for an unnamed insured, for a vessel declared to be Swedish. The reverse side of the policy records that the vessel was captured and condemned (by the British) at Antigua, and declares a “total loss” to the insured, paid to Jonathan Dorr & Co.

In the end, American insurers were generously repaid for the risks they took on the United States. The corporate charters they received from the states offered them legal and political security. The developing American legal system came to function in a way that suited their interests. And under a regime of very low taxation, they profited immensely.


  • Professor Hannah Farber specializes in the political economy of colonial North America, the early American republic, and the Atlantic World. Her first book, Underwriters of the United States (Omohundro Institute of Early American History and Culture/UNC Press, 2021) explains how the transnational system of marine insurance, by governing the behavior of American merchants, influenced the establishment and early development of the American republic.

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