Commercial Risk and Capital Formation in Early America: Virginia Merchants and the Rise of American Marine Insurance, 1750–1815

In the late eighteenth century, northern Virginia's grain-based slave economy prompted a thriving but risky overseas trade. The merchants who conducted this trade sought to manage their risks by purchasing marine insurance, initially from British and northern U.S. sources. After the American Revolution, however, the expense and inconvenience of obtaining insurance abroad prompted merchants to create local institutions modeled on northern practices. Most notably, in 1797 Alexandria merchants established the Alexandria Marine Insurance Company, an incorporated entity that helped manage the risks of overseas trade during the dangerous Napoleonic Wars, enlarged local sources of capital, and, in turn, played a significant role in stimulating regional economic development. The appearance of this marine insurance company (and others like it) reveals the significant role that financial intermediaries played in the development of the southern slave economies in the early republic.