The Bubble Act and the First Corporate Economy

The alleged failings of contemporary marine insurance were cited in the opening article of the Bubble Act of 1720 as the reason why its passage was necessary. The act declared that, by granting exclusive charters to two new London corporations to underwrite ships and their cargoes on a joint-stock basis, this would provide a prophylactic against the ruin of overseas merchants and investors by the bankruptcy of their insurers. Consequently, insurance found itself at the epicentre of the rumblings about organisational choice and state controls over the promotion of stock companies that dogged the corporate economy of Britain through the eighteenth and early nineteenth centuries. This chapter examines, first, the role of the two groups of insurance investors in the passage of the Bubble Act, and, second, the act’s subsequent impact on company formation in insurance through to its repeal in 1825. It is argued that the nature of the business facilitated its organisational flexibility and that this enabled the insurance industry to become a pioneer of Britain’s nascent corporate economy.