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  • Freaks of Fortune: The Emerging World of Capitalism and Risk in America by Jonathan Levy
  • Sharon Ann Murphy (bio)
Freaks of Fortune: The Emerging World of Capitalism and Risk in America. By Jonathan Levy. (Cambridge, Mass.: Harvard University Press, 2012. Pp. 432. Cloth, $35.00.)

In recent years, scholarly articles and monographs on the history of capitalism, insurance, finance, and risk have abounded, evidence of both a growing interest in the ideological underpinnings of the American economy and the desire to ground economic events solidly within a broader historical context. Jonathan Levy's Freaks of Fortune makes a prominent contribution to this thriving genre by offering a broad history of nineteenth-century risk management techniques, including "insurance policies, savings accounts, government debt markets, mortgage-backed securities markets, bond markets, futures markets, and stock markets" (4). He centers all of these financial tools in the concept of "double commodification," the idea that there is value both in the object itself (slaves, land, one's own labor, etc.) and in the risks associated with that initial object (32). Thus risks themselves can be valued and traded separately from the object that is at risk. At the same time, Levy sees this process of "self-ownership"—recognizing, assuming, and then mitigating personal financial risk—as a part of the larger triumph of liberal individualism in the nineteenth century, even if this "individual freedom required a new form of dependence . . . upon a new corporate financial system" (5-6).

In order to tackle such a wide array of topics in a manageable monograph, Levy structures his chapters as a series of loosely connected vignettes on a particular subset of each theme. The chapter on marine insurance concentrates on the legal issues surrounding the 1841 slave uprising on the Creole, in which he argues that the slaves—who were insured as property for the voyage—voided the policy at the moment they claimed their freedom and thus assumed for themselves the risk of their own lives. Life insurance is viewed through the biographical lens of prominent actuary and abolitionist Elizur Wright, while savings banks are represented by the fascinating story of the interaction between the postbellum Freedman's Bank and the banking house of Jay Cooke. An examination of fraternal beneficiary societies, industrial insurance, and tontines (deferred-dividend policies) follows his discussion of farm mortgages, although Levy's argument that tontines were developed as a response to the competition from fraternal insurance is less than convincing since these products were targeted at entirely different markets. On the other hand, the legal debates between incorporated futures markets and more informal bucket shops provide a very useful entrée into the complicated world of futures trading. Finally, corporate risk management through the creation of trusts is examined by [End Page 114] means of an extended biography of George Perkins, a central player in New York Life, J. P. Morgan & Co., U.S. Steel, and the Progressive Party.

The most rewarding of these chapters is on postbellum farm mortgages. Levy deftly interweaves the plight of the midwestern farmer forced to sacrifice his cherished independence to the faceless mortgage brokers with the life insurance companies, who sold farmers' policies as a hedge against the farmers' dying before the balloon payments came due while simultaneously investing their growing premium reserves back into these same mortgages. The mortgages themselves were then bundled and sold, turning landed wealth into "a dematerialized abstraction in the circulation of a new financial commodity" (152). (The "innovative" financiers of the late twentieth century were thus merely re-creating an old financial instrument, and repeating many of the same mistakes; this first experiment in mortgage-backed securities ended with the Panic of 1893.) Additionally, accident insurance emerged at this time as an unambiguous example of Levy's double commodification. Whereas the valuation of the vast majority of life insurance policies was completely independent of the current or potential value of the insured's human capital (being instead based solely on what the policyholder was willing to pay in premiums, a point Levy either misses or ignores), accident policies were directly related to the "actual money value of the insured's time," indemnifying farmers (or industrial workers...

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