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The Roots of Northwestern Mutual

Oct. 26, 2010
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If you’ve ever had to provide someone with employment that includes job security, a competitive salary, health insurance and a retirement plan, you have to appreciate that Northwestern Mutual has been providing jobs—really good jobs, with perks that extend way beyond the gourmet lunch in the cafeteria—to members of our community for more than 150 years.

Wisconsin had only been a state for six years when John C. Johnston, a 72-year-old New Yorker from the Catskills, took the small fortune he had earned as an agent for the Mutual Life Insurance Co. of New York and moved with his grandson to the great frontier state in 1854. In a time when the average Wisconsin farm was 114 acres, Johnston bought nearly 3,000 acres—roughly 5 square miles—a few miles northwest of Janesville, and concentrated mostly on raising cattle.

Life insurance, by its nature, is an outgrowth of a mature economy with enough surplus capital for people to protect. The country’s first insurance company was founded in 1732 in Charles Town (now Charleston), S.C., and the first decades of the 19th century saw a number of stock companies appear. Here in the United States, a period of intense economic expansion spurred a life insurance boom in the 1840s.

Wisconsin, circa 1857, was far from having a mature economy. Most of the state was unsettled, and both capital and labor were scarce. Yet, Johnston, at 75 years old, decided to establish a life insurance company. He recruited 36 of the state’s leading bankers, merchants and lawyers, many of who were involved in politics, to sponsor a charter petition before the state Legislature. A bill to incorporate the Mutual Life Insurance Co. of the State of Wisconsin was passed on March 2, 1857. It took Johnston almost two years to collect the required commitments for $200,000 of insurance before his company could issue its first policy. On Nov. 25, 1858, Mutual Life of Wisconsin did just that, issuing its first policy to Johnston, who had, according to The Quiet Company: A Modern History of Northwestern Mutual Life by John Gurda, “solicited more than half of the first insurance.”

Because of its advantageous position on Lake Michigan where three rivers converge, along with the power of some very convincing civic promoters, Milwaukee was the largest city in the state by 1850. Milwaukee was the absolute center of commerce, finance and transportation in the state, and Mutual Life of Wisconsin’s focus shifted from Janesville to the growing metropolis. When 12 trustees voted to move the company’s office from Janesville to Milwaukee in the spring of 1859, all but one, Johnston, voted in favor. A few days later, Johnston agreed to surrender his contract as general agent for a decent payout and new policy. He later moved to Madison, where he died in 1860.

Not even three years after it opened its doors, Mutual Life of Wisconsin’s sound business reputation was earned. A catastrophic train collision near Johnson Creek took the lives of two of the company’s policy owners. Together the claims totaled $3,500, $1,500 more than Mutual Life had. The company president personally borrowed the funds needed and paid the claims immediately. After publishing a leaflet that expounded on the importance of timely life insurance, policy sales increased rapidly, setting Mutual Life of Wisconsin, now Northwestern Mutual, on a course for success.


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