Lloyd’s Coffee House

by | Jan 9, 2013 | Coffee History

This is the best description we have found of the introduction of coffee to London and specifically Lloyd’s Coffee House

It is taken from the book “Against the Gods”; recommended reading for those interested in statistics, finance, the renaissance, etc.

One afternoon in 1637 * a Cretan scholar named Canopius sat down in his chambers at Balliol College, Oxford, and made himself a cup of strong coffee. Canopius’s brew is believed to mark the first time coffee was drunk in England; it proved so popular when it was offered to the public that hundreds of coffee houses were soon in operation all over London.

What does Canopius’s coffee have to do with * the concept of risk? Simply that a coffee house was the birthplace of Lloyd’s of London, which for more than two centuries was the most famous of all insurance company’s. *

The second half of the seventeenth century was also an era of burgeoning trade. The Dutch were the predominant commercial power of the time, and England was their main rival. Ships arrived daily from colonies and suppliers around the globe to unload a profusion of products that had once been scarce or unknown luxuries-sugar and spice, coffee and tea, raw cotton and fine porcelain. * Information from remote areas of the world was now of crucial importance to the domestic economy. With the volume of shipping constantly expanding, there was a lively demand for current information with which to estimate sailing times between destinations, weather patterns, and the risks lurking in unfamiliar seas.

In the absence of mass media, the coffee houses emerged as the primary source of news and rumour. In 1675, Charles II, suspicious as many rulers are of places where the public trades information, shut the coffee houses down, but the uproar was so great that he had to reverse himself sixteen days later. Samuel Pepys frequented a coffee house to get news of the arrival of ships he was interested in; he deemed the news he received there to be more reliable than what he learned at his job at the Admiralty.

The coffee house that Edward Lloyd opened in 1687 near the Thames on Tower Street was a favourite haunt of men from the ships that moored at London’s docks. The house was “spacious, well built and inhabited by able tradesmen” according to a contemporary publication. It grew so popular that in 1691 Lloyd moved it to much larger and more luxurious quarters on Lombard Street. Nat Ward, a publican whom Alexander Pope accused of trading vile rhymes for tobacco, reported that the tables in the new house were “very neat and shined with rubbing.” A staff of five served tea and sherbet as well as coffee.

Lloyd had grown up under Oliver Cromwell and he had lived through plague, fire, the Dutch invasion up the Thames in 1667, and the Glorious Revolution of 1688. He was a lot more than a skilled coffeehouse host. Recognizing the value of his customer base and responding to the insistent demand for information, he launched “Lloyd’s List” in 1696 and filled it with information on the arrivals and departures of ships and intelligence on conditions abroad and at sea. That information was provided by a network of correspondents in major ports on the Continent and in England. Ship auctions took place regularly on the premises, and Lloyd obligingly furnished the paper and ink needed to record the transactions. One corner was reserved for ships’ captains where they could compare notes on the hazards of all the new routes that were opening up – routes that led them farther east, farther south, and farther west than ever before. Lloyd’s establishment was open almost around the clock and was always crowded.

Then as now, anyone who was seeking insurance would go to a broker, who would then hawk the risk to the individual risk-takers who gathered in the coffee houses or in the precincts of the Royal Exchange. When a deal was closed, the risk-taker would confirm his agreement to cover the loss in return for a specified premium by writing his name under the terms of the contract; soon these one-man insurance operators came to be known as “underwriters”. *

Lloyd’s coffee house served from the start as the headquarters for marine underwriters, in large part because of its excellent mercantile and shipping connections. “Lloyd’s List” was eventually enlarged to provide daily news on stock prices, foreign markets, and high-water times at London Bridge, along with the usual notices of ship arrivals and departures and reports of accidents and sinkings. This publication was so well known that its correspondents sent their messages to the post office addressed simply “Lloyd’s.” The government even used “Lloyd’s List” to publish the latest news of battles at sea. *

In 1771, nearly a hundred years after Edward Lloyd opened his coffee house on Tower Street, seventy-nine of the underwriters who did business at Lloyd’s subscribed £100 each and joined together in the Society of Lloyd’s, an unincorporated group of individual entrepreneurs operating under a self-regulated code of behavior. These were the original Members of Lloyd’s; later, members came to be known as “Names.” The Names committed all their worldly possessions and all their financial capital to secure their promise to make good on their customers’ losses. That commitment was one of the principal reasons for the rapid growth of business underwritten at Lloyd’s over the years. And thus did Canopius’s cup of coffee lead to the establishment of the most famous insurance company in history.

* Indicates omissions of text from the original publication.