Complete Works of Samuel Johnson, page 224
The whole practice of insurance, sir, is, in its present state, I believe, so perplexed with frauds, and of such manifest tendency to the obstruction of commerce, that it absolutely requires some legal regulations.
Sir John BARNARD then spoke to this purpose: — Of frauds in the practice of insurance, with regard to which the honourable gentleman has appealed to me, I can confidently affirm that I am totally ignorant: I know not of any fraudulent practices openly carried on, or established by custom, which I suppose are meant: for with regard to single acts of fraud, committed by particular men, it is not to be supposed but that they have been detected in this, as in all other branches of traffick: nor can I conceive that any argument can be drawn from them against the practice; for if every part of commerce is to be prohibited, which has furnished villains with opportunities of deceit, we shall contract trade into a narrow compass.
With regard, sir, to the instance of the Royal George, though the proceedings of the officers are not wholly to be vindicated, yet part of their conduct is less inexplicable than it has been represented. Their return to Antigua, when they were bound for Britain, and were within a week’s sailing of their port, is easily to be defended, if the wind was contrary to their intended course; for it is not difficult to conceive that they might reach a distant port, with a favourable wind, much sooner than one much nearer, with the wind against them.
I have always observed, sir, that the gentlemen engaged in the trade to the East Indies, assume an air of superiority, to which I know not what claim they can produce, and seem to imagine, that their charter gives them more extensive knowledge, and more acute sagacity, than falls to the lot of men not combined in their association.
But however these gentlemen may disapprove my arguments, and however they may misrepresent them, I shall be satisfied, that they will have, with the disinterested and impartial, their just weight, and that this affair will not be hastily determined upon an imperfect examination.
Sir Robert WALPOLE replied to this effect: — Whether the merchants are satisfied with the present methods of insuring, or what is the opinion of any separate body of men, I think it absolutely unnecessary to inquire. We are constituted for the publick advantage, and are engaged by our senatorial character to consider, not the private interest of particular men, but the general advantage of our country.
In our pursuit, sir, of national interest, we shall be obliged frequently to oppose the schemes which private men or separate fraternities, have formed for their own advantage, and which they may be expected to defend with all their art; both because every man is unwilling to imagine that the publick interest and his own are opposite, and because it is to be feared, that many may consider the publick only in subordination to themselves, and be very little solicitous about the general prosperity of their country, provided none of the calamities which afflict it extend their influence to themselves.
We are in the discussion of this question, sir, to consider that we are engaged in a war against a nation from which insults, depredations, oppressions, and cruelties, have been long complained of, and against which we are, therefore, to act with a resolution proportioned to the injuries which we have suffered, and to our desire of vengeance. We are to practice every method of distressing them, and to promote the success of our arms even at the expense of present gain, and the interest of private men.
It is well known, sir, to all who have either heard or read of the Spaniards, that they live in carelessness and indolence, neglect all the natural advantages of their own country, despise the gain of foreign commerce, and depend wholly on their American settlements, for all the conveniences, and, perhaps, for most of the necessaries of life.
This is the particular circumstance that makes a war with Britain so much to be dreaded by them. A nation superiour to them by sea holds them besieged, like a garrison surrounded by an army, precludes them from supplies, intercepts their succours, and if it cannot force their walls by attack, can, at least, by a blockade, starve them to a capitulation.
Thus, sir, by a naval war with an enemy of superiour strength, they must at length be subdued, and subdued, perhaps, without a battle, and without the possibility of resistance; against such an enemy their courage or their discipline is of no use; they may form armies, indeed, but which can only stand upon the shore, to defend what their enemies have no intention of invading, and see those ships seized in which their pay is treasured, or their provisions are stored.
Such, sir, is our natural superiority over the Spaniards, a species of superiority that must inevitably prevail, if it be not defeated by our own folly; and surely a more effectual method of defeating it, the Spaniards themselves could not have discovered, than that of insuring, their ships among our merchants.
When a ship thus insured is taken, which, notwithstanding all precautions, must sometimes happen, we examine the cargo, find it extremely valuable, and triumph in our success; we not only count the gain to ourselves, but the loss to our enemies, and determine that a small number of such captures will reduce them to offer us peace upon our own terms.
Such are the conclusions which are made, and made with reason, by men unacquainted with the secret practices of our merchants, and who do not suspect us to be stupid enough to secure our enemies against ourselves; but it is often found, upon a more close examination, that our ships of war have only plundered our merchants, and that our privateers may, indeed, have enriched themselves, but impoverished their country. It is discovered that the loss of the Spaniards is to be repaid, and, perhaps, sometimes with interest, by the British insurers.
If it be urged, that we ought not to enact any laws which may obstruct the gain of our fellow-subjects, may it not be asked, why all trade with Spain is prohibited; may not the trade be equally gainful with the insurance, and may not the gain be more generally distributed, and, therefore, be more properly national?
But this trade was prohibited, because it was more necessary to our enemies than to ourselves; it was prohibited, because the laws of war require, that a less evil should be suffered to inflict a greater; it is upon this principle that every battle is fought, and that we fire our own ships to consume the navies of the enemy.
For this reason, sir, it appears to me evident beyond contradiction, that the insurance of Spanish ships ought to be prohibited: we shall, indeed, lose the profit of the insurance, but we shall be reimbursed by the captures, which is an argument that cannot be produced for the prohibition of commerce.
It is urged, sir, that they may insure their ships in other countries; an assertion, of which, whether it be true or not, I am not able to decide; but it is acknowledged, that the necessity of establishing new correspondence will be at least a temporary obstruction of their trade, and an obstruction of even a short continuance may lay them at our mercy.
But let us, sir, reflect upon the weakness of this argument, — they must be allowed to insure here, because they may insure in other places; will it not be equally just to urge, that they must trade with us, because they may trade with other nations? And may it not be answered, that though we cannot wholly suspend their commerce, it is yet our business to obstruct it as far as we are able?
May it-not, sir, be farther affirmed, that by insuring in other nations, they may injure their allies by falling into our hands, but do not the less benefit us? that if they do not grow weaker, we at least are strengthened; but that by insuring among us, whatever steps are taken, the equilibrium of the war is preserved always the same?
It is asserted, and I suppose with truth, that we insure at a lower rate than others, and it will, therefore, follow, that the Spaniards, whenever their ships shall escape us, will suffer more by having-insured amongst foreigners, than if they had contracted with our merchants.
Thus it appears, sir, that there are stronger reasons for prohibiting the insurance of Spanish ships, than for putting a stop to our commerce with them; and that whether their ships are taken by us, or escape us, it is the general interest of the nation, that they shall be insured by foreign merchants.
With respect, sir, to the East India company, I have no regard to their interest, considered as distinct from that of the rest of the nation; nor have received any solicitations from them to promote this bill, or to espouse their interest; but cannot, without concealing my real sentiments, deny, that as they have the grant of an exclusive trade to the East Indies, to insure the ships that are sent thither without their permission, is to invade their rights, and to infringe their charter; and that the practice, if the validity of their charter be admitted, is illegal, and ought to be discountenanced.
The practice, sir, of insuring, interest or no interest, or of assigning to ships an imaginary value, is nothing more than a particular game, a mere solemn species of hazard, and ought, therefore, to be prohibited, for every reason that can be urged against games of chance.
With regard to this bill in general, it is, in my opinion, highly necessary, nor can I discover any important objection that can be made against it. Some law of this kind, and to this purpose, I have long intended to offer to the consideration of this assembly, and since it is now before us, I think we ought to consider it with the attention which may be justly expected from us.
Lord BALTIMORE spoke thus: — Sir, I know not how properly the practice of insuring may be termed a species of hazard, nor do I think any thing more is to be considered, than whether the game be gainful to the nation, or not, for I cannot discover that there is any absurdity in enriching ourselves at the expense of other nations, whether enemies or allies. That we ought to prefer the general good to the advantage of individuals, is undoubted, but I cannot conceive that in this case there can be any opposition between private and publick interest. If our insurers gain by securing the ships of our enemies, the nation is benefited, for all national gain must circulate through the hands of individuals.
No man will assert that we ought to assist our enemies, nor will any man imagine that we assist them by impoverishing them, and if our insurers gain by their practice, the Spaniards must undoubtedly be losers.
Mr. WILLIMOT spoke next, to the following purpose: — Sir, I have conversed on the question to which this bill relates, with men engaged in various kinds of traffick, and who have no common interest but that of their country. I have dispersed among the merchants, most eminent for their acquaintance with the whole extent of commerce, and for their knowledge of the true interest of the nation, copies of this bill, and cannot find any of them so sensible of the grievance of which we have so loud complaints, as to desire that it should be redressed by the measures now proposed.
That frauds are practised on every side, in this, as well as in other trades, the general corruption of our age gives us sufficient reason to suspect; but what is common to every sort of traffick, cannot be produced as an argument for the prohibition of any.
That the practice of insuring an imaginary value may give opportunity for greater frauds than can be practised in common dealings, is likewise evident, but I cannot discover such frauds to require the interposition of the legislature.
If they are practised only by those of our own nation, the publick does not suffer; for property is only transferred from one subject to another: the fraud ought, indeed, to be severely punished in the courts of criminal justice, but the custom which gave the opportunity of practising it, ought not to be restrained, any more than any other profession not criminal in itself, but liable to accidental abuses.
If our insurers are defrauded by foreigners, the nation is then, indeed, more nearly affected, but even in that case, it is to be remembered, that the private interest of the insurers, who must be immediately ruined, is a sufficient security for the publick. For it cannot, sir, be conceived that any man will obstinately carry on a business, by which he becomes every day poorer, or, that when he desists he will be succeeded by another, who cannot but know that he engages in that traffick to his certain ruin.
The true state of this affair is, that frauds are, indeed, often committed, and are for that reason always suspected, and that the insurers, when they insure the ship and cargo against accidents, reckon, among other chances, the probability of being cheated, and proportion their demands, not only to the length and danger of the voyage, but to the character, likewise, of the man with whom they contract.
This, sir, is always the practice of those whom experience has made acquainted with the danger of implicit confidence and unsuspecting credulity, nor do any but the young and unskilful suffer themselves to be so exposed to frauds, as that their fortunes should be injured, or the general gain of their business overbalanced, by a few deceits.
Thus it appears, that notwithstanding the ease and safety with which the present methods of insurance admit fraud to be practised, the insurers, by a proportionate degree of caution, secure themselves from being injured, and, by consequence, the nation.
The insurance of foreign ships is now to be considered, by which great profit arises to the nation. We insure, sir, as it has been observed, at lower rates than other nations, because we have more business of this kind, and the smallness of our profit is compensated by the frequency; the cheapness of insurances, and eagerness of foreigners to insure here, reciprocally contribute to each other; we are often applied to, because we insure at an easy rate, and we can insure at an easy rate, because we are often applied to.
Nor is the cheapness of British insurance the only motive to the preference which it preserves among foreigners, who are induced to apply to this nation, by the reputation which our merchants have deservedly gained for probity and punctuality superiour to that of any other traders. Our merchants, sir, bargain without artifice, pay without subterfuges, and are ready on all occasions to preserve their character at the hazard of their profit.
From these two considerations we may draw unanswerable arguments against any restraints upon the practice of insuring: if foreigners are once disappointed in their applications to us, our business will in a great part cease, and as we shall not then be able to insure at lower rates than other nations, we shall never recover that branch of our trade. And as the character of the British merchants exempts them from any suspicion of practices pernicious to the publick, why should they be restrained? Why, sir, should they appear to be suspected by the legislature of their own country, whom foreigners trust without hesitation.
It has been objected to them with great warmth, and urged with much rhetorical exaggeration, that they assist the enemies of their country, that they prolong the war, and defeat those advantages which our situation and commerce have given us; imputations sufficiently atrocious, if they were founded upon truth.
But let us, sir, examine the arguments by which this accusation has been supported, and inquire whether this triumph of eloquence has been occasioned by any real superiority of evidence or reason; it is urged, that we have already prohibited commerce with the Spaniards, and that, therefore, we ought, likewise, to prohibit the insurance of their ships.
It will not require, sir, an imagination very fertile, or a knowledge very extensive, to supply arguments sufficient to refute the supposed demonstration; in opposition to which it may be urged, that this kind of commerce is of a peculiar nature, that it subsists upon opinion, and is preserved by the reputation of our insurers; a reputation that the insurers of other nations may obtain by the same means, and from whom we shall, therefore, never recover it.
It may be observed, sir, that other commodities are the peculiar product of different countries, and that there is no danger of losing our other trade by suspending it, because it depends upon the excellence of our manufactures; but that insurance may be the commodity of any country, where money and common honesty are to be found.
This argument may, perhaps, be yet more effectually invalidated, or, perhaps, entirely subverted, by denying the expedience of that prohibition which is produced as a precedent for another restraint. Nor, indeed, does it appear why we should preclude ourselves from a gainful trade, because the money is drawn by it out of the hands of our enemies; or why the product of our lands should lie unconsumed, or our manufactures stand unemployed, rather than we should sell to our enemies what they will purchase at another place, or by the intervention of a neutral power.
To sell to an enemy that which may enable him to injure us, that which he must necessarily obtain, and which he could buy from no other, would, indeed, be to the last degree, absurd; but that may surely be sold them without any breach of morality or policy, which they can want with less inconvenience than we can keep. If we were besieging a town, I should not advise our soldiers to sell to the inhabitants ammunition or provisions, but cannot discover the folly of admitting them to purchase ornaments for their houses, or brocades for their ladies.
But, without examining with the utmost accuracy, whether the late prohibition was rational or not, I have, I hope, suggested objections sufficient to make the question doubtful, and to incline us to try the success of one experiment, before we venture upon another more hazardous.
I am never willing, sir, to load trade with restraints; trade is, in its own nature, so fugitive and variable, that no constant course can be prescribed to it; and those regulations which were proper when they were made, may, in a few months, become difficulties and obstructions. We well know, that many of the measures which our ancestors pursued for the encouragement of commerce, have been found of pernicious consequence; and even in this age, which, perhaps, experience, more than wisdom, has enlightened, I have known few attempts of that kind which have not defeated the end for which they were made.
