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.
www.MoAF.org | Fall 2012 | FINANCIAL HISTORY 5