Investing in Life

Cover

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Title Page, Copyright, Dedication

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Contents

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pp. vii-viii

Series Editor’s Foreword

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pp. ix-x

Studies in Early American Economy and Society, a collaborative effort between the Johns Hopkins University Press and the Library Company of Philadelphia’s Program in Early American Economy and Society (PEAES), promotes discussions and gatherings of scholars who wish to advance our understanding of the early American economy under the umbrella of numerous disciplines, methodologies, and subjects ...

Acknowledgments

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pp. xi-xii

This project would not have been possible without the financial support of numerous groups including the Library Company of Philadelphia, the Economic History Association, the Harvard Business School, the State Farm Companies Foundation, the University of Illinois Foundation, the University of Virginia Graduate School of Arts and Sciences, and the University of Virginia Office of Research and Public ...

Introduction. New Risks in a Changing World

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pp. 1-10

In December of 1809, a group of prominent businessmen gathered at the Merchants’ Coffee House in Philadelphia and decided to create the first for-profit life insurance company in America.¹ When the Pennsylvania Company for Insurances on Lives and Granting Annuities finally received a charter more than two years later, its incorporation marked the birth of an industry that by the postbellum era would ...

Part I. The Creation of an Industry

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pp. 11-12

Chapter 1. Understanding Mortality in Antebellum America: The Search for a Stable Business Model

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pp. 13-46

In the late 1820s, William Bard of Hyde Park, New York, decided to move his wife and eight surviving children to New York City.¹ A graduate of Columbia College and a lawyer by training, the 50- year- old Bard had spent the majority of his adult life living comfortably on his family’s estate in the Hudson River valley as a country gentleman and man of letters. He was a descendant of prominent French Huguenots ...

Chapter 2. Selecting Risks in an Anonymous World: The Development of the Agency System

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pp. 47-76

In the summer of 1832, Levi A. Ward Jr. of Rochester, New York, wrote to President William Bard of New York Life Insurance and Trust Company in New York City requesting an appointment as local agent for the company.¹ The firm’s two older rivals—Pennsylvania Company and Massachusetts Hospital Life Insurance Company—rarely sold policies outside their respective home bases of Philadelphia ...

Chapter 3. Lying, Cheating, and Stealing versus The Court of Public Opinion: Preventing Moral Hazard and Insurance Fraud

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pp. 77-96

In the summer of 1836, New York Life and Trust received a letter from Gardner Lawrence, one of its new agents in Syracuse, New York, regarding the death of Nathaniel Knowles. Knowles had applied for a life insurance policy with the company earlier that summer before allegedly committing suicide, and Lawrence sought the company’s advice about how to handle the case. President Bard was initially unconcerned ...

Chapter 4. The Public Interest in a Private Industry: Life Insurance and the Regulatory- Promotional State

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pp. 97-122

Following the Panic of 1837, the American economy sank into a deep depression that lasted from 1839 to 1843. Yet even as unemployment rose and countless businesses declared bankruptcy, contemporaries believed New York Life Insurance and Trust “to be above the common ills of our condition,” with its stock “quite above par, and accounted better than old gold.”¹ NYL&T had accumulated substantial ...

Part II. Reaching Out to the Middle Class

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pp. 138-139

Chapter 5 Protecting Women and Children“in the hour of their distress”Targeting the Fears of an Emerging Middle Class

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pp. 125-151

This quintessential piece of advertising copy from the 1858 brochure of New York Life Insurance Company (established 1841 as Nautilus Insurance)² exemplifies the principal marketing technique of all antebellum life insurers: targeting the fears of an emerging urban middle class. The setting is any of the many ballooning “large towns and cities” of the mid- nineteenth...

Chapter 6 Targeting the Aspirations of an Emerging Middle ClassThe Triumph of Mutual Life Insurance Companies

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pp. 152-183

In all branches of business, whether manufacturing, commercial, or agricultural, success depends upon a variety of contingent circumstances. A man may profit by his investment, or he may lose . . . The caprice of fortune rules despotically over all branches of business . . . All other risks are uncertain, even after many years. But the cessation of life is certain; death is sure to come . . . But there are other ...

Chapter 7 Securing Human PropertySlavery, Industrialization, and Urbanizationin the Upper South

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pp. 184-206

In the fall of 1835, John Day of Chuckatuck, Virginia, inquired with the Baltimore Life agent in nearby Norfolk regarding insurance on one of his slaves, “very likely a good Carpenter sober and steady.” For Day, a farmer and the postmaster of that sleepy rural town, ownership of this slave represented an investment in capital from which he could earn a regular income. Although he had been offered $1,200 to sell ...

Chapter 8 Acting “in defiance of Providence”? The Public Perception of Life Insurance

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pp. 222-253

In December 1851, A. B. Johnson published an article in Hunt’s Merchants’ Magazine entitled “The Relative Merits of Life Insurance and Savings Banks.” Attempting to tarnish the image of the American life industry (to the benefit of savings banks), this seven- page diatribe accused life insurers of engaging in gambling contracts and encouraging people to commit heinous crimes. Beginning with a section labeled “Life ...

Part III. Cooperation, Competition, and the Quest for Stability

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pp. 254-255

As heightened competition led to a relaxation in rate structure, selection criteria, and policy restrictions during the 1850s and 1860s, some people began to question the soundness of the life insurance industry as a whole. In this 1861 cartoon, the industry is represented as a horse with potentially crippling tumors on its legs (known as “splints...

Chapter 9 Seeking Stability in an Increasingly Competitive IndustryThe Creation of the American Life Underwriters’ Convention

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pp. 256-276

On May 25 and 26, 1859, at the Astor House on Broadway in New York City, the fi rst meeting of the American Life Underwriters’ Convention (ALUC) was held. In attendance were presidents, vice presidents, secretaries, actuaries, medical examiners, and agents representing nineteen (out of approximately thirty- nine) life insurance companies, including sixteen of the twenty largest.¹ (Three of the remaining ...

Chapter 10 Insuring Soldiers, Insuring CiviliansThe Civil War as a Watershed for the Life Insurance Industry

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pp. 262-283

Less than a month after South Carolina seceded from the Union (but before any other southern states joined her rebellion), agent C. B. Wellford of Fredericksburg, Virginia, was already asking the home office of Baltimore Life for clarifi cation re-garding their military clause. While most policies (including those of Baltimore Life) contained stipulations that voided them in the case of active military service, ...

Chapter 11 The Perils of Success during the Postbellum Years

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pp. 284-296

In the fall of 1863, just as sales of life policies were on the verge of skyrocketing, the North American Review published a remarkable twenty- three- page article on life insurance. Presented as a neutral assessment of the current state of the industry, the piece was actually an extended defense of insurance as sold by the large, well-established mutual companies. It opened with a short (well- crafted but patently ...

Conclusion “Have you provided for your Family an Insurance on your Life?”

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pp. 297-315

In 1856, Harper’s Monthly Magazine published a sixteen-panel cartoon entitled “Life Insurance—A Dream.” The protagonist, Mr. Smythe, is sitting in his easy chair in front of the hearth, gently rocking his baby’s cradle as he reads about life insurance, an activity which inexplicably puts him to sleep. In his dreams, he heads off to the insurance office, where he is greeted enthusiastically by the upscale gentleman who ...

Appendix

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pp. 316-327

Notes

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pp. 328-387

Essay on Sources

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pp. 388-397

Upon entering graduate school, I intended to focus my research on nineteenth- century financial institutions. I was particularly interested in the interaction of commercial and savings banks with both their immediate clientele and with American society at large. As I began exploring this area of inquiry, my advisor (Mark Thomas at the University of Virginia) mentioned my interests to banking historian Eugene White at Rutgers University. It was White who initially ...

Index

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pp. 398-410