watches and encouraged anyone with information to contact Lloyd at his shop“ in the City.” To this day,“ The City of London” is the one-square-mile business center, equivalent to the Financial District in Manhattan.
Lloyd’ s coffee house specialized in information about shipping. At this time, there were more than 80 coffee houses within the City of London’ s walls, and each claimed its own specialization. By the 1730s, Lloyd’ s was emerging as the spot for marine underwriting by individuals.
The American Revolution, followed by the Napoleonic Wars, did not see the dire effects on shipping business as had been seen in earlier naval conflict. That helped to substantiate the viability of contingent risk. Just as important, marine insurance proved to be profitable, attracting more legitimate involvement, business expertise and capital.
At least one reference dates the first publication of Lloyd’ s Ships Arrived in 1692 as a news sheet that became Lloyd’ s List. The company itself cites 1734 as the initial publication of Lloyd’ s List.
“ The first edition of Lloyd’ s List, one of the world’ s oldest continuously running journals, was first published by Thomas Jemson,” according to the official company history.“ He used Lloyd’ s name and not his own because by this time, the establishment had instant recognition in the shipping community and a dedicated audience who would pay for subscriptions. More than 300 years on, the paper still provides weekly shipping news to London and beyond.”
Returning to the question of natural versus human causes for loss, an important trial took place in 1764. It was over a ship built in France and insured by Lloyd’ s. At the trial after its loss, the vessel was described in a“ weak, leaky and distressed condition.” The long case determined that a ship must be seaworthy before leaving shore, and that a loss would not have to be paid on an insured vessel“ which suffered from a latent defect unknown to both parties to the contract.”
Favorable rulings and profitability led to a lowering of standards.“ Underwriters at Lloyd’ s coffee house had enjoyed higher profits in the early 1760s, in part due to the Seven Years’ War, but as it came to an end,
The ubiquitous intermodal box container was developed by Malcolm McLean in 1956. Opposed by longshoremen, railroads and ship lines, its simplicity and efficiency prevailed, reducing unit costs for retail consumer goods to essentially nothing. But there is a hitch: the efficiency of a pre-packed container means contents are rarely inspected. Flammable or hazardous materials are supposed to be declared, but often are not. As a result, containership fires are not uncommon. The newest massive vessels can carry close to 10,000 40-foot containers, raising new questions about concentration of risk.
marine premiums returned to a lower level,” according to the company history.“ This drove certain underwriters to more speculative lines— putting their names to other kinds of risks, including highway robbery and death by gin drinking— and Lloyd’ s coffee house soon became notorious as a gambling den. An extract from the London Chronicle of the time stated:‘ The amazing progress of illicit gambling at Lloyd’ s coffeehouse is a powerful and very melancholy proof of the degeneracy of the times.’”
A“ new Lloyd’ s” was formed by reformminded members, supported by legislation and regulation.
In 1799 the economy in the German city of Hamburg was in dire straights, and City of London merchants raised a large amount of capital, mostly in specie, to keep its sister port city solvent. The consignment was loaded onto the Royal Navy frigate HMS Lutine and insured by Lloyd‘ s underwriters.
The Lutine was driven ashore in the Netherlands by a storm with the loss of all crew and cargo. In 1858 the Lutine’ s bell was salvaged and hung from the rostrum of Lloyd’ s underwriting room. Eventually, the bell would be struck when news of an overdue ship arrived— once for its loss and twice for its safe return.
Just two years earlier in England, the North of England Steam Ship Insurance Association( NESSIA) was founded in Newcastle upon Tyne in January 1856, according to the sesquicentennial history of the successor organization, the North of England Protecting & Indemnity Club. NESSIA appears to have been among the earliest clubs founded to insure steamships. Although they had been in use for almost half a century, steamships were still a minority of the British merchant fleet, which then accounted for half of all the world’ s tonnage.
Some shipowners, especially those in the north of England, bridled at the limited market for insurance, one of the two recognized commercial underwriters— The Royal Exchange and London Assurance— as well as the individuals and clubs in Lloyd’ s. By 1824 the legal sanction for that triumvirate was ended, and mutual clubs began to grow.
The North of England Iron Steam Ship Protecting Association, its name reflecting the growing development of the steamship, emerged out of NESSIA in 1860.
30 FINANCIAL HISTORY | Winter 2018 | www. MoAF. org