Financial History 25th Anniversary Special Edition (104, Fall 2012) - Page 48

A Museum of Finance continued from page 27 had both, and even now they are lacking in many countries. The Role of Finance Museums The power of finance is clear to those of us who study it, both historically and in today’s world. Yet many people are unaware of it or don’t fully understand it. This provides the rationale for a museum of finance. Through artifacts brought to life with written and oral explanations, a museum can use visual stimulation to arouse curiosity and teach important historical lessons. Some examples may illustrate the point. In 2009, the Museum had an exhibit featuring the world’s oldest extant share of stock of a publicly-traded company, the Dutch East India Company. It was lent by its Dutch owners. The company was founded in 1602, and the share dated to that decade. The company sponsored Henry Hudson’s “discovery” of New York harbor and the river subsequently named after him. For New Yorkers and others, it was a great way to relate the city’s history to financial developments in Europe long ago. The Museum’s permanent exhibits feature two early US government bonds. One dates to 1792 and is registered in the name of George Washington, whose signature appears on it. It was “assumed debt,” meaning that Washington had turned in some Virginia state debt he owned for US government debt as a part of Alexander Hamilton’s plan for the assumption of state debts by the federal government in 1791. This is an entry for teaching about Hamilton’s financial innovations at the beginning of US history, which spurred both economic growth and our two-party system when Thomas Jefferson and James Madison organized a political party to resist Hamilton’s innovations. The other early bond is a Louisiana 6% of 1803. Almost every American knows of the Louisiana Purchase of that year. But how was the Purchase actually made? The US government issued $11.25 million of bonds maturing some 15 years later, of which the one on display is an example. The bonds were taken to Europe by Barings, London investment bankers, and sold by them and other banking houses to European investors. The proceeds were paid to France so that the French emperor, Napoleon Bonaparte, had more money to wage his wars in Europe. The transaction, the largest such international financial transaction in history to that time, doubled the geographical size of the US. Our country had been a bankrupt nation in 1788, but by 1803, thanks to Hamilton, it had one of the best credit ratings in the world. That is why France was to be paid in US bonds. The bonds were easily marketable to European investors, illustrating the power of finance. Perhaps you have heard the phrase, “Not worth a Continental.” It refers to the paper money issued to such an extent by Congress during the War of Independence that it lost almost all of its value. You can see one and learn the story in the Museum’s permanent “Money: A History” exhibit. Have you heard of the greenbacks that were similarly issued by Abraham Lincoln’s Union government during the Civil War, and similarly lost value? You can see greenbacks and learn their story at the Museum. Did you ever see a check for $642,600,000? Investment bankers wrote such a check to the Ford Foundation in 1956, after they had sold a large block of the Foundation’s stock in the Ford Motor Company to the public. Henry Ford ran a private company, and when he died in 1947, he left most of his stock to the Ford Foundation. By selling the block of stock in 1956, the Foundation diversified its assets and increased its philanthropic activities, while the Ford Motor Company became a public company in which anyone could invest. You can see that check at the Museum. A number of stories about the power of finance can be conveyed on the basis of it. But one shouldn’t have to come to New York to view these artifacts of financial history and learn the stories that they tell. Modern information technologies can allow us to put these and other treasures, and their stories, online. Then anyone in the world with access to the Internet can see and learn from them. It means more, of 46    FINANCIAL HISTORY  |  Fall 2012  | course, to see the real thing up close. When I was young, I saw many images of the Mona Lisa and the Venus de Milo, but they meant much more when I later viewed the actual masterpieces at the Louvre in Paris. So our online plans when realized will not be a substitute for a visit to 48 Wall Street, as much as an invitation to make that visit. Using artifacts from financial history and exhibits based on them to increase the public’s understanding of the power of finance is just one aspect of the Museum’s mission. Financial education broadly construed is just as important. The Museum does that for adults with its evening lecture series featuring prominent speakers from the financial and academic worlds. Its “Lunch and Learn” midday events give authors of recent books on finance and financial history an opportunity to explain their work. The Museum Finance Academy uses the Museum’s own and Wall Street’s resources to educate high school students about the power of finance and to increase their personal financial literacy. In 1987, in the wake of the stock market crash of October 19 that year, Wall Street and the US financial system were under a cloud. Some feared it was 1929 all over again and expected a depression to follow. In those dark days, stockbroker John Herzog, knowing of the power of finance, decided to dedicate his fine coll