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.
