Financial History Issue 124 (Winter 2018) | Page 32

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