From Coffee-house to " Universal Provider "

A History of Lloyd's. By Charles Wright and C. Ernest Fayle. (Macmillan 25s.) " Now to Lloyd's Coffee-haute ; he never fails To read the letters and attend the sales."

Tins volume provides a complete and authoritative hiStory of Lloyd's. A more astonishing story of how a great instita- tidn was born, developed, and transformed can seldom have been told.

"Lloyd's now justifiably claims to be the " universal pro- vider " of insurance—the almost supernatural agency by which mortals can defy Fate, or, at any rate, can parry her financial thrusts. It is one of the principal institutions of the City of London—one of the thingi which make London the commercial centre of the world. Somehow or other, the London merchants were able to establish institutions like Lloyd's before any of their rivals, and it was this power of co-operation which gave them that start in the race for commercial supremacy which they have never wholly lost.

-What could be- more interesting, then, than an exact his- torical account of how this great institution came into being?

The Committee of Lloyd's took a very wise decision when, on the occasion of the opening of the great new premises in Leadenhall Street, it decided to issue an authoritative history

of the Corporation, and it undoubtedly chose well in its joint authors, Mr. Charles Wright, the present Chairman of Lloyd's Brokers' Association, and Mr. Ernest Fayle, who wrote the official history of our sea-borne trade during the Great War.

Most people know vaguely that- Lloyd was a restaurant- keeper who established himself in the City of London at the very end of the seventeenth century. But few. know the improbable story of how this little coffee-house became the greatest insurance house in the world. The Augustan Age of English literature, and, indeed, of English commerce, the last decade of the seventeenth and- the first two decades of the eighteenth centuries, was a convivial epoch, and a whole . batch of these coffee-houses sprang up in the City of London. There forgathered, for hours on end, the great talkers of this conversational age. And what should be more natural than that the men of particular interests should forgather in particular coffee-houses ? So it came about that the -lawyers in one house, the scholars in another, the poets in a third, the merchants in three or four separate houses of their own, were to be found together. But -this specialization of the coffee-houses took place but slowly ; for several decades after its foundation there was nothing special to connect Lloyd's 'Coffee-house with marine insurance. Such insurances do, -in -fact, seem to have been undertaken at Lloyd's from the first ; but so they were at Garraway's, at John's, and at a

dozen other houses. The only 'early specialization of Lloyd's was that it became essentially a- shippers' and merchants' house, and was early known for its sales of ships, to which the couplet placed at the head of this review refers.

- As the authors point out, shipping was a business which in those days called imperatively for some common centre,

where all the interested merchants could meet. The early eighteenth century had, of course, no equivalent to the modern Press, the modern telegraph, the modern courier, and -we are sometimes apt to foiget what an immense -differenie --this lack of our means of-news distribution must have meant. Literally the only way in which merchants Could obtain intelligence of their enterprises; which even then stretched 43ut to the four corners of the globe, was by hearsay, by the gossip of returned sailors and their friends. It was thus a :vital necessity for' every merchant to go down to Lloyd's as often as he could and so try to discover .what news there -was of his adventukings. The coffee-men, including Edward Lloyd himself, early realized the importance of this side of _their business, and Lloyd: himself capitalized it_by publishing a newspaper sheet to collect the gossip of all his customers.: we are given a facsimile of one sheet. Thus the coffee-houses -became, as it were, organized gossip shops which sold news even more than coffee ; and-no doubt-by the aid-ef this news merchants induced their colleagues to underwrite their risks for then; Development beyond this point was slow. , "At no time, so far as we are- aware, did any group of men say to each other : Go to ; let us make the greatest centre of insurance in the world.' Even association waited for well over a century, and incorporation for nearly two centuries. Certain men took their seats at a coffee-house table, and pledged themselves individually, for a consideration, to take upon themselves the perils of the seas, men-of-war, fire, enemies, pirates, thieves, &c., with all other perils, which might come to the hurt or detriment of the subject-matter of insurance. The coffee-house was frequented by all and sundry, and the merchants of that day found reliable men at some of the tables who would give them good assurance. Amid all the changes of the centuries, with the growth of banks and limited liability companies, the two great principles of individual trading (each for himself and not one for another), and unlimited liability, have been maintained. It is a Striking example of evolution as distinguished from creation. Conditions have been made, rules instituted not in preparation for new factors and developments, but to systematize a practice which had already been adopted to meet the requirements of commerco as they arose."

It was not till well on into the eighteenth century that Lloyd's had any special connexion with marine insurance. Indeed, that business had not, up till then, developed on a regular basis. True, in the South Sea Bubble period fantastic schemes of insurance grew up. There were, it seems, " pro- posals for insurance against death by gin-drinking, for an ' Assurance from Lying,' and an ' Assurance for Female Chastity,' the premiums for which it would be interesting to know." When marine insurance did emerge as a separate and distinguishable business of its own, it was natural that large corporations, or, as we should call them, companies, should be formed for the purpose, and an Act of 1720 estab- lished two marine insurance corporations. The private underwriters, as we can imagine, had protested violently

against this Act and thought that the corporations would put them out of business ; but, as the authors say, " by one of the pleasant ironies of history," the Act had exactly the oppo- site effect. -For it improved the service given by the private underwriters both by restricting them in some ways, and also

by making them concentrate on a definite headquarters of their own. And it was this that finally brought them to Lloyd's Coffee-house. From that date onwards Lloyd's grew steadily.

Up till 1793 and the outbreak of the French wars, the authors tell us, " the growth was one of size rather than of development in organization and function." There the great figures of Angerstein and Brook Watson appeared at the end of the century and developed the special methods which had to be adopted to meet the crises of the French War. It was under the chairmanship of Brook Watson that the first

real - attempt was made to organize Lloyd's as a Society. By the end of the Napoleonic War that attempt had succeeded;

and Lloyd's was far more than a mere meeting-place of individual underwriters. • In subsequent chapters the authors

• trace the development of Lloyd's during the nineteenth century. There was, it seems; a period of stagnation about the middle of the century, which was only broken down by

two energetic innovators, Mr. F. W. Marten and Mr. Cuthbert Heath. Mr. Martin developed large-scale insurance on the marine side of the business, and Mr. Cuthbert Heath developed the non-marine policies at Lloyd's. To-day these policies, including air insurance and every kind of miscellaneous risk, such as typhoons, civil commotion, or " sprinkler leakages," have grown from £366,000 in 1904 to thirteen millions in 1921 :—

" There is every indication," say the authors, " that this develop- ment will be progressive, and it is difficult to set limits to the possi- bilities of the future. Why is it that, no matter what emergency may arise, the apprehensions and alarms of the ordinary trader or private citizen can find a sedative at Lloyd's ? It is because, under carefully devised conditions as to security, there sit in Lloyd's Room a byge number of men, accustomed to take risks, whose freedom is unhampered, save by a few well understood restrictions, who have no superiors to consult, and who can at once turn their minds to any subject brought under their notice."

We would note, in conclusion, that English enterprise is developing aerial insurance on the same lines as it has naval, and that there is good hope that we shall secure a major part of this new world-business.