Investing in Life: Insurance in Antebellum America (review)

Investing in Life explores the early development of life insurance in the United States. Life insurance aggregated scarce capital in antebellum America by providing a growing urban population with, as Sharon Murphy puts it, "a market solution for a market dislocation" (131). Despite its significance in the financial sector and its role facilitating and shaping the development of the middle class, life insurance has received comparatively little scholarly attention over the last 30 years. Murphy's new book, along with Timothy Alborn's 2009 Regulated Lives on British life insurance, shows what we miss by not subjecting life insurance to renewed historical investigation.¹ Murphy's study is a long-needed work on early American insurance that makes an important contribution to business and economic history. Perhaps surprisingly, it offers as much reward for the patient social or cultural historian.

Murphy draws on extensive work in the archives of several leading antebellum insurance companies, as well as on substantial collections of corporate publications and a wide range of antebellum news sources, as she presents a young and vibrant industry seeking to build a basis for long-term success. Murphy's narrative begins in 1830 with the founding of the New York Life Insurance and Trust Company. Murphy credits New York Life and Trust, led by William Bard, a country gentleman with a scientific bent, with laying the groundwork for the industry's development. In his definitive work on the American insurance industry, Owen Stalson wrote off New York Life and Trust as a backward precursor to the mutual insurers that dominated the industry after 1843. Murphy's revision finds in Bard's company a crucial, and influential, blend of the aggressive and the conservative.²

On the one hand, Bard sought to make life insurance available to more Americans. His company lowered insurance rates in 1832 and expanded into upstate New York in 1833 on the way toward building a national business. On the other hand, he sought data that could be used to establish sound rates for the long run; he built an agent network of politically influential, respected gentleman charged less with selling policies than with ferreting out poor risks; and he established his company as a quasi-public entity dedicated to meeting its formal obligations to the state while discouraging any unsavory associations. These precedents guided individual company endeavors, as well as a few notable attempts at industry-wide collaboration, until the insurance boom that followed the Civil War. At that point, proliferating insurance companies spurned caution, attracting applicants with liberal policy terms, aggressive sales tactics, and speculative investments. Murphy's re-interpretation of the years 1830-1870 as a single period that saw the establishment of a relatively conservative industry transformed by the Civil War into a more diverse, aggressive, and expansive industry should become the new standard.

Investing in Life will also convince the careful reader that the history of life insurance is crucial to understanding the history of the middle class. Murphy makes this case, to a degree, and she presents the data necessary to back it up. She could have pushed the point even more forcibly.

Murphy's revisionist interpretation allows us to see that early American insurers met and molded the realities and the dreams of the middle class. Insurance companies arose as a solution to a series of problems faced by those whose lives were being made uncertain by city growth and by industrialization. Death could mean dramatic status swings for the dependents of men—especially merchants, clerks, lawyers, doctors, clergy, and other professionals—who now depended solely on their income, as opposed to accumulated land or wealth, to sustain themselves and their families. It could likewise ruin creditors who invested in such men. Insurers promised to sustain family status and protect creditors in exchange for a little bit of every year's income. They also suggested insurance as a tool for accommodating slavery—an institution developed for rural life—to early industrialization in the Upper...