Freaks of Fortune: The Emerging World of Capitalism and Risk in America
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Until the early nineteenth century, "risk" was a specialized term: it was the commodity exchanged in a marine insurance contract. Freaks of Fortune tells the story of how the modern concept of risk emerged in the United States. Born on the high seas, risk migrated inland and became essential to the financial management of an inherently uncertain capitalist future.
Focusing on the hopes and anxieties of ordinary people, Jonathan Levy shows how risk developed through the extraordinary growth of new financial institutions-insurance corporations, savings banks, mortgage-backed securities markets, commodities futures markets, and securities markets-while posing inescapable moral questions. For at the heart of risk's rise was a new vision of freedom. To be a free individual, whether an emancipated slave, a plains farmer, or a Wall Street financier, was to take, assume, and manage one's own personal risk. Yet this often meant offloading that same risk onto a series of new financial institutions, which together have only recently acquired the name "financial services industry." Levy traces the fate of a new vision of personal freedom, as it unfolded in the new economic reality created by the American financial system.
Amid the nineteenth-century's waning faith in God's providence, Americans increasingly confronted unanticipated challenges to their independence and security in the boom and bust chance-world of capitalism. Freaks of Fortune is one of the first books to excavate the historical origins of our own financialized times and risk-defined lives.
century, the crazy quilt of mutualist obligations that was early modern landed property was all but gone. An old set of hedges that had allocated some land to individual households and some to broader collectivities was replaced by a new set demarcating absolute, and therefore alienable, individual property rights.5 In the seventeenth century, when English colonists arrived on American shores, one of the first things they did was to begin to enclose the land, and to claim it as their own. Some
them to slaves was a fundamental category mistake.87 Very few antebellum Americans cherished the status of wage laborer. Wage laborers were a minority of the antebellum working population—and many of them were already dependent women and children—but they were a growing minority, and evidently a class of permanent industrial hirelings who would never join the cherished ranks of independent proprietors was forming. In this context, Wright began to wonder, “whether the system of work to the lowest
of premature death, sickness, accident, or unemployment. But, much to Wright’s lament, they did not insure their own contingent productive labor.90 In this context, Wright decided the “forfeiture clause” was thievery. But the theft was only visible actuarially for the key was the nature of “level premium” life insurance. “Leveled” premiums meant that each year the premium was the same amount. But the cost of insurance each year was not the same, as it increased with age. So, in the early years of
climbing too fast; weren’t no use in climbing slow, neither, if they was going to take everything you worked for when you got too high. There was always the peril of getting “cleared out” of everything one had by the white ruling class. Cobb’s father managed that risk by never running it.80 Against these odds, freedmen made their deposits and saved and strove for land. After 1868, letters arrived at the bank’s Washington headquarters from all over the South requesting the opening of branches in
different meaning. The subsequent losses—grasshoppers assaulted western farmers in the late 1870s, followed by cinch bugs and hessian flies—were not the same on a mortgaged farm, as the world market connected the Argentine drought with the Kansas beetle. “All the uncertainties of the weather, crops and prices had been borne with heavier weight,” John Ise recalled of the family mortgage. Carleton’s “Tramp’s Story” began: “Worm or Beetle—drought or tempest—on a farmer’s land may fall; But for