Freaks of Fortune: The Emerging World of Capitalism and Risk in America

Freaks of Fortune: The Emerging World of Capitalism and Risk in America

Jonathan Levy

Language: English

Pages: 432

ISBN: 0674736354

Format: PDF / Kindle (mobi) / ePub


Until the early nineteenth century, "risk" was a specialized term: it was the commodity exchanged in a marine insurance contract. Freaks of Fortune tells the story of how the modern concept of risk emerged in the United States. Born on the high seas, risk migrated inland and became essential to the financial management of an inherently uncertain capitalist future.

Focusing on the hopes and anxieties of ordinary people, Jonathan Levy shows how risk developed through the extraordinary growth of new financial institutions-insurance corporations, savings banks, mortgage-backed securities markets, commodities futures markets, and securities markets-while posing inescapable moral questions. For at the heart of risk's rise was a new vision of freedom. To be a free individual, whether an emancipated slave, a plains farmer, or a Wall Street financier, was to take, assume, and manage one's own personal risk. Yet this often meant offloading that same risk onto a series of new financial institutions, which together have only recently acquired the name "financial services industry." Levy traces the fate of a new vision of personal freedom, as it unfolded in the new economic reality created by the American financial system.

Amid the nineteenth-century's waning faith in God's providence, Americans increasingly confronted unanticipated challenges to their independence and security in the boom and bust chance-world of capitalism. Freaks of Fortune is one of the first books to excavate the historical origins of our own financialized times and risk-defined lives.

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McCargo and his house slaves, a free black cook, and the white passengers. The group of nineteen closed on them. A white passenger, John R. Hewell, an owner of slaves onboard, grabbed a musket, opened the cabin door and fired. He drew a knife and plunged forward and the nineteen men seized upon him with their bare hands. Hewell staggered back into the cabin and later bled to death. Every- The Perils of the Seas 25 one in the main cabin now surrendered, except for Merritt who hid under a

commodification concerned “deviation.” A risk only existed when the insured ship or cargo was in motion, along a path agreed to by the underwriter. In 1841, according to his policy with the New Orleans Insurance Company, Thomas McCargo’s slave risks began at Norfolk and continued until “said goods and merchandize shall be safely landed at New Orleans.” The Creole was allowed, only if “obliged by stress of weather or other unavoidable accident,” to deviate The Perils of the Seas 35 from this

labor across the life cycle. The young, disabled, and elderly produced for subsistence—hoeing gardens, fishing streams, tending livestock, performing needlework. Masters ceded slaves customary rights to “Negro plots” through which they supplemented their subsistence (and sometimes even engaged in production for markets). By one estimate, only a third of the average slave’s labor time was spent cultivating cotton. Individual slaves here or there might be carried on the master’s dole. But all in

“the whole universe was created and is governed by a person of immaterial Will, named God.” But the universe was not an unceasing act of God. Thankfully, “science” was now “relegating the human imagination to its proper sphere.” The new “doctrine of chances” supplied “to mankind, in regard to a great many subjects, a sort of substitute” for the “fore-knowledge, or prophetic power” of God. No longer believing in the ways of providence, Wright, the former evangelical abolitionist, died an atheist

the front doors of the new accident insurance corporations that first sprung up in the United States during the 1840s. In 1850 the American Railway Times reported that one “Mr. W. Richardson, a conductor on the Worcester and Norwich Railroad, received Two Hundred Dollars from the Franklin Health Assurance Company for injury received at Fisherville, by the cars falling through the bridge.” He had been “insured at that office against railroad accidents, and paid but fifteen cents for his policy.”12

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