Financial History 100th Edition Double Issue (Spring/Summer 2011) | Page 51
Robert E. Wright is the Nef Family Chair
of Political Economy at Augustana College and the director of the Thomas Willing Institute for the Study of Financial
Markets, Institutions, and Regulations.
He is also the author of numerous books,
including most recently Fubarnomics
(2010), and is on the editorial board of
Financial History magazine.
Sources
Kingston, Christopher. “Marine Insurance in
Britain and America, 1720-1844: A Comparative Institutional Analysis,” Journal of
Economic History 67, no. 2 (2007): 379-409.
Murphy, Sharon Ann. Investing in Life: Insurance in Antebellum America (Baltimore,
2010).
Sylla, Richard E. and Robert E. Wright, “U.S.
Corporate Development, 1801-1860,” NSF
Grant No. 0751577.
Wermiel, Sara E. The Fireproof Building: Technology and Public Safety in the NineteenthCentury American City (Baltimore, 2000).
Wright, Robert E. “Insuring America: Market,
Intermediated, and Government Risk Management Since 1790,” in Leonardo Caruana,
ed. Encuentro Internacional Sobre La Historia del Seguro (Madrid, 2010), 239-98.
© Bettmann/CORBIS
© CORBIS
permanent Stockholders.… They play into
each others’ hands — voting on each others’ Risks, reducing the premiums and
taking bad vessels &c.” Other insurers
assumed undue risks in myriad technical
ways, like using unduly optimistic interest
rate, expense or mortality assumptions. In
Pennsylvania in the 1850s several insurers
stole most of the cash of distant stockholders and policyholders and invested the rest
in nearly worthless assets that they listed
on their financial statements at greatly
inflated values.
Large scale managerial expropriation,
however, was the exception rather than
the rule in the early US insurance industry
because policyholders and stockholders
had a number of tools, including prudent
mean voting rules, charter restrictions and
investigatory committees with broad powers that allowed them to monitor directors
and officers and to punish wayward ones.
Stockholders and policyholders generally
knew how to cook their pork thoroughly,
so many antebellum insurers provided
solid services and thrived for years, decades
and even to the present. The K