The 19th Century was notable for being the last century of chattel slavery, and the transatlantic slave trade sailed its final voyages over these years. Chattel slavery is a unique and important moment in history. It is unlike any other slavery, in that you were owned *forever.* You couldn’t earn your way out of it. If you escaped, you were in fact in violation of the law, and your children, and their children, and their children were fully slaves. It is entirely an invention of European monarchs and early European governments. So don’t get it confused with any other slavery, past or present. It was very different. And truly, truly evil. Even those that fled to free lands, internationally or in the North, were often either kidnapped and returned, or even tried in the court of law as property rightfully owned by their brutal masters.

To that point, a prominent court case regarding the “Creole” tells a piece of this story. The most famous slave revolt in history, and one that Frederick Douglass himself wrote a novella about, ended with the slaves steering the ship to British land, where they were declared free and were able to disembark and continue unharmed. In this case, the debate was whether or not there was a claim to the marine risk, which in fact had been insured. The question about when the ‘risk’ transferred away from the merchant – whether this was an ‘Act of God’ –required an opinion about the morality of slavery itself. Before going further, please refer to my last post for a brief exposition into ‘risk’, which is really important to understand here. An ‘Act of God’ like a hurricane, a strike of lightning, or an unusual current. But was a slave revolt an ‘Act of God’? Further, was slavery itself ordained by God? Indeed, as the laws around insurance and the related financial market evolved, “self-ownership” and “acts of God” served as the main hinge points for assessing claims and paying policies. Pro-slavery theologians had long claimed that chattel slavery was a matter of the “Providence of God”, on the basis of certain readings of the Bible and an ideology with intense vested interest. And thus, it was indeed an Act of God for there to be a slave revolt, and those owners who had been ‘dispossessed of their property’ under those circumstances were entitled to a paid claim.

Around the same time, the life insurance industry was beginning to blossom in London, which was entering an industrial period that saw a widespread reorganization of labor, and a move to city factories. The laborers in these factories, wage-workers, began to take out life insurance policies, as they were responsible for their man-hours, and if an accident were to befall them in the future, the consequences could be devastating for poor, newly urban families.

As you’ll read above, Elizur Wright, the first insurance commissioner in the United States was originally an abolitionist. Wright found so abhorrent the ‘providence of God’ theory which a number of pro-slavery theologians used as justification for slavery and denying fundamental ownership of oneself, that he left the Church itself in the process, and began to investigate the emerging insurance market. He was also disturbed by the emerging commodification of ‘risk’ in private insurance among wage laborers who were buying ‘life insurance’ as a way to hedge against their own future productive capacity.   Buying a hedge against one’s future work-hours sufficed as a way to ensure provision for the family long-term. These ‘hedges’ themselves became ‘risques’ which financiers bought and sold in an open, liquid market. But for those wage workers who were intending the life insurance as a way to protect their personal safety and that of their families, Wright questioned whether this solved the problem, rather than simply transferring aspects of it to more opaque financial markets. If a worker missed a premium payment, according to many of these policies, they were in default, and forfeited their entire policy, which caused Wright concern. 

The political debate for protecting insurers against claimants emerged in view of this reality, and therefore began to fall along political between abolitionists and pro-slavery businessmen in the 19th century. Wright worked to ensure, by law, that those claimants whose life and liberty were at risk regarding a given policy, were prioritized over the property owners. To that end, the business and legal leadership of the Southern states rejected life insurance writ large, because of its abolitionist overtones, and continued to expect their economic security without the support of free financial markets, because of a glaring blind spot — and obsession, frankly — to the power their slave culture has afforded them. This affected how their cities grew, and answers a big part of why New York’s insurance market and Boston’s asset management market (and in their wake the financial powerhouses of these regions) continued expansion the way they had. Very little — in our financial history — that we take to be modern and even American, would have come to pass without the specter of institutional racism hanging over it.

So why does this matter? Well, you already know. Leaving whole demographics outside of the productive workforce takes a massive economic toll, and it is a cultural – and moral – blind spot that we have a rich and deep history in the United States, and in the history of capitalism. And those blind spots hold our society back, and allow us a manner of thinking that doesn’t look to the future. It is not new. And it is bad for business.

But the good news: if we appeal to a collective moral higher ground, it serves to benefit us all.