Following its introduction in England, marine insurance spread to the various commercial centers of Europe, its application becoming very general, if judged by the consideration given to the subject in the numerous commercial codes and ordinances of the fifteenth, sixteenth, and seventeenth centuries. Finally, there followed the epoch-making Ordinance de la Marine of 1681, which became the model for practically all the modern codes of commercial law on the continent, including the law of marine insurance. In England, on the contrary, the development of the law concerning sea insurance did not begin to assume such clear and definite form until almost the middle of the eighteenth century. It was then that Lord Mansfield, in his efforts to formulate the commercial law of England, began to draw his legal principles very largely from the commercial ordinances and codes of the continent with a view to applying them to English conditions. His decisions practically constitute the foundation of marine insurance law in England, and, in turn, have become the basis of American decisions. As supplementing this lengthy and continuous legal development, it is important to note that the Lloyd's policy prevailing in England today is very similar to the policy which was in use in the early part of the seventeenth century, and that many features of the English policy have in turn been incorporated in the policies used in America. In other words, we have in marine insurance several centuries of usage and judicial interpretation relating to the signification of a single document.

Development of Marine Insurance.-Turning to the financial development of the business as distinct from the legal, marine insurance has reached its broadest scope and highest efficiency in the United Kingdom. Its history in that country, whose merchant marine for many decades comprised nearly half of the ocean-going tonnage of the world, has been rendered famous by the close identification of the business with the world-renowned corporation of Lloyd's. This gigan

tic institution had its origin in a mere seamen's coffee-house, established by Edward Lloyd near the middle of the seventeenth century. This enterprising and energetic man besides making his coffee-house a convenient place of meeting for merchants and seamen, also created an elaborate system of home and foreign correspondence to supply him with news from all the leading ports of the world concerning the movements and character of vessels for the information of his patrons. In fact, at first the underwriting of marine risks was a subordinate feature of his business. The systematic manner, however, in which maritime information was collected and disseminated soon won for him a large following, and made his coffee-house, among the many other existing in London, the principal meeting place for merchants and professional underwriters who, unhampered by any rules or regulations, assembled there and transacted a general marine business. Thus it came to pass that Lloyd's soon outgrew its early usefulness, was transferred in 1692 from its original location in Tower Street to Lombard Street, and finally, in 1794 to the Royal Exchange of London, and there developed into the chief center of marine insurance in the United Kingdom and in the world.

It is not to be inferred from this account that marine insurance in the United Kingdom is confined to Lloyd's. Prior to the beginning of the eighteenth century the business was conducted almost entirely on the plan of Lloyd's, according to which individuals assumed risks upon the strength of their personal honesty and financial standing. In fact it was the practice of various individuals subscribing their names to the insurance contract for a certain portion of the total risk that gave rise to the familiar term "underwriter." But gradually companies began to participate in the same business that Lloyd's was pursuing. The movement seemed to gain strength rapidly, when, in 1720, the British government in return for a payment of £300,000 to the Exchequer

limited the privilege of insuring marine risks to only two companies besides Lloyd's, namely, the London Assurance Corporation and the Royal Exchange Assurance Corporation. Shortly after, however, this monopoly was removed; and since then, especially during the nineteenth century, numerous corporations in London, Liverpool, and Glasgow, with vast accumulated assets, have risen alongside the unique and unrivaled corporation of Lloyd's, and, like that institution have extended their influence to all parts of the earth. So effective, in fact, has the competition of the powerful insurance companies become that Lloyd's, although still the center of attraction in the marine-insurance business, has gradually lost the dominating influence of former days. It is estimated that Great Britain to-day transacts about three fourths of the sea insurance of the world, a proportion so large that one can look for an explanation only to the preponderating importance of Great Britain as a shipping nation.

Development of Marine Insurance in the United States. -Marine insurance in the United States has had a development radically different from that in England. The business has been conducted almost altogether by corporations, the Lloyd's system of underwriting, though often tried, having never obtained a prominent foothold in this country. While British companies have had a long and prosperous career, the companies of the United States, with few exceptions, have either failed or changed the character of their business. The development of the business in this country may be conveniently divided into four main epochs, each with distinctive characteristics of its own. The dates of these periods may be placed roughly at 1793, as marking the end of the first period; 1793 to 1840, as indicating the limits of the second period; 1840 to 1860, the third; and 1860 to date, the final period.

During the first period, extending to the end of the eighteenth century, the only form of insurance upon goods or

vessels was by personal underwriting. Resort was had at first to the private underwriters of Great Britain, frequent mention being found in earlier colonial correspondence, of indemnity for American shipping. The business transacted by Americans was confined to underwriting by individuals or partnerships only, who generally represented wealthy citizens of the community. It was not until the year 1794 that the General Assembly of Pennsylvania chartered the Insurance Company of North America, the first stock company of its kind upon the continent whose name it bore. Fortunately this pioneer company was launched at a time when Philadelphia was still the commercial metropolis of the country, with its shipowners and merchants trading in all the remote corners of the globe, and, therefore, large purchasers of insurance. It was not long before the brokers, who previously had had the American business to themselves, found that their patrons preferred the stability of corporate underwriting on a large scale to the underwriting of individuals. In the very first year of active business, the company refused to write for private offices, and "realizing its strength made public advertisement of their rules, and invited orders to be addressed directly to the company." 1

This important step toward the establishment of corporate underwriting with all its advantages was soon to serve as a model for similar undertakings in other parts of the country, and before another decade had passed the insurance Company of North America was to have active associates in its own home as well as in New York, Boston, Baltimore, Charleston, and other places. So rapid was the movement of incorporating insurance companies that prior to 1800 thirty-two insurance companies had been established in this country, of which ten were doing a marine business. By 1811 there existed in Philadelphia alone eleven companies,

History of the Insurance Company of North America, '' p. 56.

seven of which were marine companies and one a fire-marine company, while by 1825 there were twelve marine stock companies in New York and at least a dozen in Boston.

Prior to 1830 the history of these companies may be characterized as one of periodical prosperity and depression. If judged by the experience of the largest company (and this is typical of most other companies) business exhibited the greatest fluctuations. Thus during the first decade of its history, ending with December, 1802, the Insurance Company of North America collected premiums of $6,037,456, and paid losses of $5,500,887, leaving a margin of less than 9 per cent for expenses, while the decade ending in 1812 shows premiums of only $1,364,637, or only one fifth the income of the first decade, and losses of $1,583,836.47. These remarkable fluctuations, as also the decrease in the annual premium receipts and the increase of the ratio of loss to income are to be explained, partly by the growing competition arising from the numerous rival institutions which were springing up everywhere; partly because insurance managers had not yet mastered the lesson of accumulating a large surplus, and very imprudently distributed all profits to stockholders without making provision for the heavy losses of the immediate and stormy future; but mainly to the heavy losses connected with the Napoleonic Wars. This series of bitter struggles with its blockades and counter-blockades, affecting practically all of commercial Europe, subjected American commerce to unusual risks and losses. Insurance was consequently in great demand, and came for the first time to be regularly adopted by all shipowners, and at rates which averaged as high as 12 per cent. But while the business of marine insurance received a strong impetus during this period of strife, it was of uncertain tenure, being constantly subject to heavy losses arising from capture, detention, and litigation. A list compiled by Mr. Seybert from a report of the Secretary of State shows that the total captures