Moral Hazard:The "Jew Risks" Affair of 1867 Jeffrey A. Marx (bio) In late October of 1866, Alexander Stoddard, the general agent of the Underwriters' Agency, an umbrella group of four fire insurance companies based in New York, wrote a circular to their agents. Noting the high number of fraudulent claims that had been filed, he stated that it was now necessary for them to scrutinize the character of applicants, especially those who were strangers or recent inhabitants of their towns. He then went on to instruct: Hereafter all applications of Jews for insurance upon stocks of merchandise must be referred to the general agent for instructions before making the same binding. … We will only take under consideration applications of Jews who have resided in your city for a period of not less than five years and sustain a good reputation for fair dealers and integrity.1 That fall, while on a train in the South, Rabbi Isaac Leeser overheard an insurance agent state that Jews were incendiaries, and that insurance risks with them were hazardous, while in December, the American Israelite brought to light that the Hartford Fire Insurance Company had instructed their agents to "avoid Jews, unless the agents should personally know them."2 In early 1867, the Manhattan Fire Insurance Company of New York, apparently unaware that a Sephardic Jew, Harmon Hendricks, had been an early president of the company, instructed its agents: "Do not insure Jews for this Company, nor property exposed to their locality, under any consideration," and Stoddard instructed an agent in Georgia to cancel an existing policy because the names on it seemed to indicate that they were Jews, "a class of customers that we have found exceedingly unprofitable, especially in the Southern States."3 As these discriminatory practices against Jewish merchants came to light, the Jews of America gathered in large cities and small ones through the winter and spring of 1867 to protest and to fight against them. [End Page 255] Although the "Jew Risks" Affair has for the most part received only passing notice in histories of American Jewry, it is worthy of more detailed study.4 First, while previous antisemitic incidents summoned forth public responses from the American Jewish community—the 1840 Damascus Affair; the Swiss Confederation's economic sanctions against Jews between 1853 and 1858; and the Mortara Case in Bologna in 1858–59—these took place in lands outside the United States.5 (A fourth incident, Ulysses S. Grant's "General Orders No. 11," which in 1862 expelled all Jews from the war zone that he commanded, resulted in responses from only a small number of Jewish communities and communal organizations because Abraham Lincoln quickly rescinded the order.6) The "Jew Risks" Affair was the first nationwide Jewish communal protest in reaction to "extra-ordinary" American antisemitism.7 The affair reveals how the Jewish community viewed their Sitz im Leben in America at this time. While there was dismay at the evidence that antisemitism was to still be found in America, and that the organized private discrimination against them had the potential to impact their livelihoods, there was also their growing confidence to speak out publicly and claim their right as American citizens to combat this discrimination. Their successes and failures in doing so shed light on the strengths and limits of Jewish influence during this period. Second, the "Jew Risks" Affair illustrates how some Christians at this time continued to see the Jews of America through mythical lenses. Old, [End Page 256] deep anti-Jewish and antisemitic myths would be combined with current social factors and projected onto the Jew who stood before them. In this affair, the presidents of fire insurance companies, using a centuries-old trope, would see the Jews as scheming, unscrupulous merchants, resulting in their charge that Jewish clothing stores were set on fire in order to collect the insurance money. The "Jew Risks" Affair suggests that, while antisemitic episodes in America were not as severe as in Europe, especially because they were not engendered either by the government or by ecclesiastical authorities, antisemitic charges could nonetheless arise on American soil.8 At the same time, the affair also highlights that not...