Americans know Benjamin Franklin for his civic and diplomatic work spanning the first few years of the country’s history. Old enough to be the grandfather of some of the other American ‘Founding Fathers’, he was a national treasure even before playing his part in the struggle for independence from Britain. In addition to being a politician and diplomat, he was a publisher, writer, inventor, and scientist. He was also a skillful administrator and businessman. True, it’s not a secret that Benjamin Franklin owned a successful newspaper and also organized the first American postal system. However, it is less well known that he applied his commercial acumen to financial endeavors too. Indeed, he was a founder of America’s first insurance company, a firm that still does business today.
An American renaissance man and eldest of the Founding Fathers, Benjamin Franklin, was born in 1706 in Boston, Massachusetts. Though he left school young to apprentice as a printer, a lack of formal education was hardly an insurmountable inhibition to his career. He went on to settle in Philadelphia and at age 22, became the publisher of the Pennsylvania Gazette, a paper he would buy outright with a partner a year later. It became one of the more widely read newspapers in Britain’s North American colonies and made Franklin famous, well-connected, and wealthy.
Yet, he became far more than a newspaperman though. Advancing the literary arts, Franklin published a popular almanac and founded a subscription library in 1731, at the age of 25. Creations of the mind and hands alike didn’t stop there. As an adult, Franklin investigated everything from ocean currents to refrigeration, body temperature to poisons. He experimented with electricity 130 years before Thomas Edison and Nikola Tesla and invented bifocals, the glass harmonica, and the Franklin stove. Besides being a prolific inventor, Franklin was something of a serial entrepreneur, one with a social impact bent.
“Sloth, like rust, consumes faster than labor wears, while the used key is always bright” – Benjamin Franklin, Poor Richard’s Almanack
Having establishing the Library Company of Philadelphia, Franklin would surely be considered a social impact investor today, but his inventive do-gooding continued in 1736, when he founded the Union Fire Company. This fire company, established in Philadelphia, was the first formally organized volunteer fire company to serve an entire city in North America. The mutual fire companies in existence before then only assisted paying members in the event of a conflagration, hardly reassuring when an entire city risked burning.
The Union Fire Company’s creation came a few years after Franklin himself had called for the creation of such a service following a fire in 1730 that destroyed a wharf and several warehouses and homes in the city. He had also been impressed by the precautions taken against fires in London, which he had observed while working in Britain as a typesetter years earlier. His plans came to fruition and his Union Fire Company started with 26 volunteers. That said, it was not a particularly elaborate organization; each member was responsible for providing their own leather water pails as well as cloth bags for rescuing possessions from fire.
Sixteen years after establishing the Union Fire Company, Franklin and his fellow firemen founded yet another company to protect people from fires, this time by offering insurance against them. This new mutual insurance company was founded in 1752 as ‘The Philadelphia Contributionship for the Insurance of Houses from Loss of Fire’. It was modeled after London’s ‘Amicable Contributionship’, a company conducting the same sort of business in London, itself a city plagued by fires. The Deed of Settlement of the Philadelphia Contributionship meticulously laid out how it would provide seven-year fire insurance policies to cover properties within a ten-mile radius of Philadelphia.
Franklin himself was instrumental to the early growth of the Philadelphia Contributionship. He served as one of its early customers, insuring two buildings he owned on Philadelphia’s High Street (today’s Market Street). Franklin was also one of the twelve initial directors and his own newspaper, the Pennsylvania Gazette, provided early advertising for the firm. The company, still in existence today, has moved on from its humble roots, but not far, having collected $150 million in premium and investment revenue in 2018, a small sum for an insurance firm. Its investment capacity was far smaller in the 18th century, but the company was among the few sources of credit available in the almost bank-less colonies.
Regardless, the company got to work writing policies within a couple months of being founded. The first policy was secured by a man named John Smith in June 1752. Policy #1, the very first written by a property insurance company in North America, protected two adjacent dwellings and carried an indemnity of £700. Homes being insured were surveyed at the owners’ expense and pricing was assessed based on the danger posed by fire to the structure. For example, brick structures with at least nine-inch-thick exterior walls were charged seven shillings and six pence per £100 of coverage the year the company was established. Meanwhile, wood structures with thinner walls paid as much as twenty shillings for the same protection.
Depending on the use of the building, some structures could not be insured at all. The company’s governing documents prohibited structures used in hazardous industries, like breweries and bakeries, from coverage altogether. One man sure to make his home compliant and as fire-proof as possible was that fire-conscious polymath himself, Benjamin Franklin. He had his own home on Market Street surveyed in order to secure a policy from the Contributionship. The policy from 1766 describes his home as 34 feet square and three stories tall. Most importantly for fire safety, the walls were thick and made of brick rather than timber. Ever conservative though, Franklin secured £500 of coverage for his home, the maximum the company allowed for any one dwelling.
The American polymath Benjamin Franklin made contributions, however small, to dozens of fields. He had a hand in a surprisingly long list of discoveries, inventions, businesses, and other projects, all a decade or more before his most well-known contributions during the American War of Independence. Few may have known that his industriousness extended to finance. However, above all, Franklin was the embodiment of his own expression that the “used key is always bright”, that enterprise breeds more enterprise. The habits that made the eldest of the Founding Fathers most remarkable in political leadership, namely diligence, intellectual curiosity, and so on, are also surely habits that enabled him to succeed in business.
More from the Tontine Coffee-House
Learn how one of Franklin’s ideological colleagues, himself a polymath, helped influence the public finances of Britain in his era. Also discover how a financial crisis in Europe helped trigger the American Revolution.
1. “About Us – History.” 1752.Com, The Philadelphia Contributionship.
2. Franklin, Benjamin. Deed of Settlement of the Philadelphia Contributionship, Hosted by the National Archives and Records Administration, 25 Mar. 1752.
3. Hutto, Cary. Benjamin Franklin’s “Bucket Brigade:” The Union Fire Company. Historical Society of Pennsylvania, 24 Nov. 2010.
4. “A Legacy of Trust – Celebrating 250 Years of Security and Trust.” The Philadelphia Contributionship Digital Archives, The Philadelphia Contributionship.
5. Union Fire Company. Benjamin Franklin Historical Society, 2014.