Illustration: Vladimir Kush. Eye of the Needle
ATTENTION — QUESTION!
In 1762, the Englishman James Dodson have been studied church books and rural cemeteries for a long time.
What kind of new business did he create as a result of this work?
The answer is a little later.
ROLE OF TRADE
If an animal sees someone else’s piece of meat that seems great to it, and it has the ability to take it away, he takes it away. Sometimes even turning the unfortunate robbed victim into another piece of meat. No ceremonies and moral restrictions — where did animals get them at all? They don’t need it…
However, there are exceptions. The spider-boy carries his own paw-caught insect, securely wrapped in a cocoon of cobwebs, to the spider-girl. The vervet-monkey-guy gives a banana to the vervet-monkey-girl without violence and voluntarily. However, hoping for sex …
Well, this is beautiful and symbolic — love brings you closer to civilized relationships. A person who lives not in a herd, but in a community will not necessarily take away the stone knife or hand chopper he likes from another person by force — he will offer something in return.
In any case, it leads to an agreement — he is ready to receive exactly as many arrowheads or clay cups as he was offered, no more and no less. This is already a sign of civilized life. If there is trade, there is also an treaty on what can and cannot be done.
As soon as trade appeared, it immediately became clear that some are better at it, while others are worse. Someone sets the most reasonable price, praises their product, so that people are willing to buy it, and can easily live on the difference between the selling and buying prices. This is how the merchants appeared.
However, as soon as they appeared, the representatives of this profession found out that they could rightfully say about themselves, “Our service is both dangerous and difficult.” A lot of risks has proven to be hidden in the profession (you yourself understand that in our time there are even more of them), and every threatened that at least devastation can happen.
If you are a merchant, you must have a lot of goods so that everyone will have enough. Where do you keep it? In some rooms, in the warehouse? And what if bad people get there and take everything completely free of charge? Or is it just that this room will catch fire, and only coals will remain from the goods?
And when trade gets stronger a little and the most enterprising people will go to distant lands for the attractive goods — this is even more risky! What if the ship that is full of commodities sinks? And if it is captured by the inhabitants of these most distant countries, which have their own laws? And it happens like that …
Who would like a profession, where one sunken ship or a looted caravan can mean poverty and hunger? You can, of course, advise stop putting all your eggs in one basket, splitting up assets, not to risk with everything — but this dramatically slows down the business. So what can you do about it?
It is unlikely that anyone will be greatly surprised if they see a link to the Hammurabi Code here, which I have already mentioned several times — after all, it is first more or less detailed set of laws in the world. It was already written there that when a caravan was robbed, other caravan drivers must also compensate some of the damage.
The same purpose was served by the custom adopted in Babylon, not to demand debts from the owner of a robbed caravan, but in the event of his successful arrival, to add a certain amount to the debt as a cost of risk. It was a type of insurance already — you risk less, but you pay for it.
A peculiar form of risk distribution also existed among the builders of the Egyptian pyramids. They formed a semblance of mutual aid funds, in which they dropped off little by little, but in case of great trouble, a crippled worker or already his heirs received a decent amount of money.
But it seems that the Talmud is the oldest source that tells about the actions taken in such cases. There they tell the donkey driver, whose breadwinner was dying, a new donkey at the expense of his colleagues — it was emphasized that only a donkey, no money!
The Phoenicians borrowed these progressive ideas from the Sumerians and Babylonians, and from them the ancient Greeks, who received from the Phoenicians not only the alphabet. The local seafarers began to unite in fiases — voluntary organizations that, in the event of any losses, compensated the victims for losses, and the funds for this were taken from small regular contributions.
This idea also helped the Romans. During the conquest of Spain, supply caravans along the way were often plundered, and the Roman army risked being left without food and weapons. But the Senate decided to compensate the losses to the owners of the robbed caravans, and the supply improved — many caravans were robbed, but this did not affect the number of people wishing to participate in a profitable business.
In addition, the idea of funeral brotherhoods — societies, in which each member contributed a small amount of money and in case of death received an allowance for a decent funeral — gained tremendous success among the poor Romans. In addition, members of these fraternities regularly gathered together, ate and drunk, more dangerous, talked about politics — there was almost no place to do it somewhere else.
The charter of one of these burial brotherhoods has survived to these days and turned out to be very interesting. According to this statute, money for the funeral was given only to the heir under the will. If there was no will, the brotherhood itself buried the the person who passed away. It was forbidden to spend this money to pay off the debts of the deceased. Only the non-payers and people who committed suicide didn’t have such privileges .
In the Middle Ages, the insurance system of sea shipping was very important — both because of the high percentage of such traffic, and because of the considerable risks from inevitable accidents and piracy at sea. But then the popes intervened into the established business and almost finished the trade off.
The fight against usury began — the collection of interest on the borrowed amount, in addition to the debt itself. There is no direct prohibition of usury in the Bible, but phrases that can be interpreted in this way, can be found. But if the payment for the cargo of the lost ships was not taken, then, in addition to the payment, they also took a certain percentage from those that came down — so that there was something to pay from.
The easiest way, of course, is to ban everything suspicious, and the popes did it, and those who violate the ban were punished, as they used to, without shedding blood, that is, by burning them at the stake. Right away, something that is more important for the life of the state than any ideology — a normal economy — began to crack and collapse.
If something breaks, and it’s scary to fix, they put cribbing. The church did the same, allowing interest on loans, but with “reasonable rates.” Since the rates that the participants agree to pay are already reasonable for this cause, the economy continued its course.
As a result, a real market of commercial insurance emerged — the policyholders pledged to compensate the possible loss of the ship and cargo if they were paid a certain amount of money. In 1347, the owners of the ship Santa Clara insured their cargo on route to Mallorca, and it is now the earliest insurance policy, already reminiscent of modern documents.
Ships risked only while sailing, the homes of the townsfolk — all the time. In 1666, London was rocked by the Great Fire, which destroyed 13,500 residential buildings. A year later, Nicholas Barbon founded The Fire Office (later The Phoenix) in London, which insures houses from fire.
Soon thereafter, shipowners, merchants, and the people who insured ships and their cargo began to gather in a London coffee house owned by a certain Edward Lloyd. Later, a famous company arose there, which is still flourishing.
Around the same time, in 1653, the Italian physician Lorenzo Tonti suggested to Cardinal Mazarin an idea similar to gambling — it was called “tontina”. Participants made a contribution, and then divided the interest from it. Those who were dying left the share, increasing the income of the living ones.
The idea worked for a very long time: the last part of the “tontine” died more than 70 years after the start of this venture, and by that time her annual income had reached 73,500 livres — such a mind-blowing wealth! Just remember — the musketeer bought himself and his servant a horse, weapons and everything needed for the service only for 2,000 livres, so you can imagine what a crazy amount of money it was!
Generally speaking, tontine is already very much similar to the life insurance business, although it is not yet — it is still rather a gamble. People bet on the fact that they will live longer than their companions, and the one who turns out to be right, gets a certain prize.
Any developed business, in order to finally take shape, needs an introduction to science. In particular, this is where the appeal to demography suggests itself. What life expectancy should you expect from a person? This would help calculate the correct contribution.
The first life tables, estimating the probability of survival for each age, were developed by John Graunt, who became one of the first demographers in the world. His data was clarified by John Halley, the discoverer of the comet of the same name, in order to determine the contributions for the life annuity.
And the final result was, perhaps, summed up by James Dodson, a student of Abraham de Moivre himself, one of the founders of the theory of probability. Studying mortality statistics, he used church books, in which it was possible to find the dates of birth and death of parishioners.
He checked some information additionally — simply by studying the gravestones in rural cemeteries, which indicated the years of birth and death of the person who was burried there. Based on the data obtained, he could already accurately predict the likelihood of a human’s death.
ATTENTION — CORRECT ANSWER!
Now we can already say why he needs all this data — in order to know what contribution to demand and what compensation to offer to those who wish to insure their lives!
Now it is possible to calculate a payment, the amount of which will not ruin the insurance company and provide it with some profit, and so that it would be affordable for the one who insures his life.
DEVELOPMENT AND RISE
On the basis of Dodson’s calculations, the Society of Fair Life and Survival was created in 1762, which it the practice of calculating insurance premiums based on age was introduced for the first time. This organisation laid the foundation for a scientific practice and the development of life insurance in general.
Business without insurance soon became almost nonsense. Henry Ford, for example, wrote, that there would be no New York without insurance — workers would not agree to earn money at heights, risking to leave their families without a breadwinner, no one would make investments in huge buildings that could be ruined by one flaming cigarette, and who would drive without insurance, risking to hit a pedestrian?
The world’s first dollar billionaire John D. Rockefeller saved on his own clothes and his children’s entertainment, but he advised never to skimp on advertisement, security and insurance. At the age of 80, he paid $ 50,000 and got insured to get $ 10,000,000 if he lived to be 100. When he was 95, he was offered $ 1,000,000 to terminate the contract. He agreed and guessed correctly again — he died at the age of 98!
And here is what Winston Churchill said about insurance, “If I had my will, I would write the word “ insure” over the door of every house and in the notebook of every person. I am convinced that at the cost of small sacrifices, families can protect themselves from disasters that would otherwise “crush” them forever. It is our duty to stop the terrible devastation … of the health and strength of the nation”.
The successes of the insurance business have spawned some of the most amazing insurance policies. Recently, the British company GRIP sold almost insurance against the virgin birth to four thousand girls for $ 150 for the insurance premium of $ 1,500,000. So far, not a single one has received the money, but they say that it happened!
It’s approximately equally likely to get abducted by aliens — but there were those who wanted to have an insurance from it! To get it, you need a signature of aliens on the document, but those who want to take the risk are still there — they are all literate there …
There’s bigger possibility of what the American climbers insured themselves against before climbing Everest, is the Bigfoot attack. True, even here the insuring event did not occur, and the insurers simply earned little money, and the climbers themselves — a funny advertising.
It is possible to insure partly. Jennifer Lopez, for example, insured her breasts for $ 200,000 and for exactly the same amount, sorry, her buttocks. However, compared to Britney Spears, who insured her breasts for $ 5,000,000, this is some kind of stinginess!
However, not everything and not everyone can be insured. They did not want to insure the American astronauts, that is why they had to sign a bunch of souvenir cards — in case of failure, they would sell them to collectors and provide the families of spacemen… Fortunately, it was not necessary, and the insurers lost their income.
However, people don’t think of something to insure against. The Japanese insurer Sataka insured itself against almost everything in the world to advertise his company. But the family did not receive a penny — a suicide who jumped out of the window fell on his head, and this case was not in the policy!
WELL AND HERE …
To strive to do everything completely without risk is unrealistic, to pay too much attention to risk is dangerous. The best way is to try to minimize the risk.
Many supposedly new business ideas have actually been around for millennia. You just have to take a closer look — and find an analogue that is many thousands years old. People were practically the same …
Business has always tried to be outside of politics. But when a politics is not wanted, it still finds itself a way to sneak in. The Roman funerary brotherhoods, when they arose, did not even think that they would turn into clubs, where, despite all the prohibitions and punishments, they could talk about government like that …
Beliefs at the time of their creation are usually quite logical. But time passes, and the teaching is sacred — it cannot be changed. Banning health-threatening pork before invention of refrigerators made sense. Charging interest is practically the same thing.
When science comes into business, it is a sign that business is about to grow. And it clearly applies not only to the insurance business.
Some of the extensions of already common businesses are starting to seem too out of the ordinary and surprising. So what happens if it doesn’t bother anyone? Just a testament of popularity. What to do with them? To be envy, probably …
All illustrations from open sources