Sunday, December 30, 2007

Underwriter Warfare

I've been reading The Barbary Wars: American Independence in the Atlantic World by Frank Lambert and came across this example of economic warfare by the British. Everything old is new again.

In late 1784 and early 1785, while deploying a naval squadron to patrol the Mediterranean and thereby protect His Majesty's shipping, the British circulated reports that the Algerines had captured an American ship and planned to seize others. Though the reports proved groundless, the damage to American shipping was real and immediate. One Henry Martin explained to Jefferson, "In consequence of these reports, the underwriters at Lloyd's will not insure an American Ship to Cadiz or Lisbon for less than 25 percent whereas the customary insurance for English vessels is no more that 1 1/4 or 1 1/2 percent and therefore no American Ship has any chance of getting freight either to Spain or Portugal." America and the Barbary States confronted each other in the shadows of the Union Jack.

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