Financial History 25th Anniversary Special Edition (104, Fall 2012) - Page 7

Alan Barnett The Origins of the Museum of American Finance When I thought about telling the story of the Museum, a book came to mind that I recently read, called Where Good Ideas Come From, by Steven Johnson. He talks about the slow development of good ideas in encouraging environments, and I want to share the background of the Museum with you in that context. I have been a collector all my life, and there’s no recovering from that; it only gets worse as you get older. I was the CEO of a major Nasdaq market making firm, and also the chairman of R. M. Smythe, a company that provided obsolete securities research since 1880 and later held auctions of antique stock certificates, autographs, bank notes and other items. And I have loved history — especially American history — since childhood. I started my own collection of certificates in 1959, when I left Eastman Dillon to join my father’s trading firm, Herzog & Co., Inc. In the early days, when money was scarce, I wanted to be sure I would be able to sell the objects if I decided to stop collecting. I hit on financial documents from the American Revolutionary period, since many were signed by well-known historical figures and a market for them was well established. This turned out to be a very good idea. My day job in the trading business was slow, but steady, and the firm grew nicely, always expanding our market-making activities. By 1987, we were making markets in thousands of stocks, large and small. On the day of Crash, October 19, I was in our trading room and part of the incredible confusion and pandemonium of that moment. Everyone was yelling, markets were wild and rapidly declining, and there was a sense of sheer exhaustion. The following morning, I woke to the National Public Radio announcer talking about the yen-dollar ratio. My thought was, so what? We had just lost about a quarter of the stock market value in one trading day! I realized then that Americans needed help understanding the capital markets. I knew my collection contained some splendid pieces, and I thought putting them up for all to see would generate interest in the history behind them. I had worked my way through the possibility of failure, realizing it would be easier to start the Museum then and fail than it would be to explain years later why I had not tried it when the opportunity presented itself. At the time I was a director of the Securities Industry Association (SIA), and I wrote to the other members asking for objects to include in the first exhibit, or a check to underwrite it. A few days later, I got a call from Peter Kellogg’s office saying he thought it was a great idea, and he was sending a check. That was terrific news, and I was very pleased. The first exhibit, held in the Custom House at the foot of Broadway, was a retrospective beginning with English pieces from the early 18th century, followed by Colonial bonds and currency, Revolutionary War bonds, and documents illustrating the 19th and early 20th century American experience up to the Liberty Bond drives of World War I. About 1,000 people visited that exhibit, and the reaction was positive. When the exhibit closed, several people encouraged me to continue, and so I did. A suggestion was made to create an exhibit on Alexander Hamilton, to open on the bicentennial of his appointment as first Secretary of the Treasury, in September 1989. It was June, John Herzog speaks at the Museum’s opening ceremony at the US Custom House.  |  Fall 2012  |  FINANCIAL HISTORY  5