Category Archives: Collections

May Day Deregulation Shakes Brokerage Industry

Jas. H. Oliphant & Co. Inc. was a securities broker and a member firm of the New York Stock Exchange specializing in providing research and execution services to institutional clients.  The firm went public in 1972 after acquiring the business of Jas. H. Oliphant & Co., a New York limited partnership founded in 1898.  The board made its decision to dissolve the 77-year-old firm in December 1975.

Oliphant Article

The reason: May Day—May 1, 1975.  Fixed commissions had been the norm for the past 183 years, since the signing of the Buttonwood Agreement on May 17, 1792.  But on May Day, the US Securities & Exchange Commission mandated the deregulation of the brokerage industry.  The securities industry lobby had battled very hard to keep Congress from passing HR 5050, mandating the end of the fixed commission system.  They had argued that Congress should allow the industry to fix the problem, and also argued that without Congressional approval, the SEC should not act administratively on this issue.  However, Congress did adopt the legislation ending fixed commissions.  The New York Stock Exchange announced within days that it would accept the SEC ruling.

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The Bonds That Sparked New York’s Transportation History

Sonia Huang

A few days ago, New York’s Metropolitan Transportation Authority (MTA) announced it is selling a “catastrophe” bond worth $125 million, in order to cover the damage from future natural disasters.

The New York City transportation system has a 109-year-old history, but it has “never faced a disaster as devastating” as Hurricane Sandy, the chairman of the MTA, Joseph J. Lhota, said in a statement. After Sandy smashed the city in October 2012, the “Metro-North Railroad lost power from 59th Street to Croton-Harmon on the Hudson Line and to New Haven on the New Haven Line. The Long Island Rail Road evacuated its West Side Yards and suffered flooding in one East River tunnel. The Hugh L. Carey Tunnel is flooded from end to end, and the Queens Midtown Tunnel also took on water and was closed.”

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The Anthropology of the Banker: MoAF’s Warren Miller “New Yorker” Cartoon

Published in the “New Yorker” on 8/3/92
2012.01.094

The Museum of American Finance has humble beginnings. In 1988, founder John Herzog set up an experimental, freestanding exhibit in the historic New York City Customs House (now the Museum of the American Indian). He was inspired to teach economic and financial history after experiencing firsthand the chaos and confusion of the 1987 stock market crash. The trial museum was a success; over 6,000 visitors visited the display of historic financial documents.

It was only after 1989 that MoAF became a tax-exempt organization. In 1992, the Museum moved into its first home at 24 Broadway. The city noticed the new kid on the block and famous New Yorker cartoonist W. Miller honored MoAF with a cartoon on August 3, 1992. The picture is drawn in the signature style of Miller, who was a famous New Yorker mainstay and published his first piece in the magazine in 1961. In the cartoon, a humorless butler announces to his financier boss, “A field anthropologist from the new Museum of American Financial History, sir.”

The Museum has the original cartoon by Miller in its collection. The picture shown above is a direct scan of the cartoon’s print, signed by Miller. The Museum has grown by leaps and bounds since 1992 and financial history is proving to be just as important as ever. It’s only a matter of time until another cartoonist has a go at portraying our beloved MoAF.

Lily Goodspeed is a summer museum intern at the Museum of American Finance and a History major at Brown University. Her twitter handle is @lilygoodspeed. Julia Yeung is also a summer museum intern and attends Pace University studying Business Economics. Her twitter handle is @YeungJulia.

Fractional Currency: Spencer Clark “Five Cents”

Original scan of “Five Cents” fractional currency note featuring Spencer Clark. On loan from the collection of Mark D. Tomasko.

Fractional currency notes were issued by the US federal government from 1862 to 1876 in denominations of 3, 5, 10, 15, 25 and 50 cents to combat the shortage and hoarding of coins, which contained metals more valuable than the money the coins represented during the Civil War. The currency notes were originally called “postage currency,” but they officially became  “fractional currency” after the passing of the Congressional Act of March 3, 1863.

Several fractional currency notes are on display in the Museum’s “Money: A History” exhibit. One particularly fascinating currency note is the “five cents” issue, lent to the Museum by collector and honorary curator of engraving Mark D. Tomasko. This particular “five cents” issue is the third version of the fractional currency note, and the first issue to contain signatures in order to prevent counterfeiting that had occurred with the previous issues. The currency note features the face of little-known Spencer Morton Clark, who served as the first Superintendent of the National Currency Bureau, which is now the Bureau of Engraving and Printing (BEP). The BEP was in charge of the production of these notes, and a large sensation erupted when Clark’s face appeared on the new print of “five cents” notes.

It is said that Congress initially intended the currency to honor William Clark of the Lewis and Clark expedition, but they failed to specify which “Clark.” Spencer M. Clark took the opportunity to instead make himself the model of the portrait on the bill. A much less famous Clark, Spencer Clark was already under investigation for embezzlement, fraud and sexual harassment. By the time the government began to take action, Clark had already printed the notes in significant quantities.

Nineteen days after the new bills went into circulation, an outraged Congress passed a law forbidding the portrait of anyone living to be used on US currency, stamps or coins. Interestingly, Francis E. Spinner, the US Treasurer at the time, didn’t make much of a fuss when Clark placed him on the 50 cent note without his consent. Although he had the authority to select portraits on new notes, Spinner was pleasantly surprised by the choice.

Clark was able to keep his job only because of the interference of Treasury Secretary Salmon P. Chase. These notes still remain in legal tender today, as the law did not null notes with living portraits if the bills had already been printed before the passing of the law.

Julia Yeung is a summer museum intern at the Museum of American Finance and attends Pace University studying Business Economics. Her twitter handle is @YeungJulia.

Lily Goodspeed is a summer museum intern at the Museum of American Finance and a History major at Brown University. Her twitter handle is @lilygoodspeed.

 

Uncovering the Paternity of the Hedge Fund Industry in the Museum’s Collection

Graham and Newman, 1959
Benjamin Graham (right) and Jerry Newman, 1959.

 

For the past few months I have been a guest contributor to Bloomberg’s Echoes blog, which is edited by historian Stephen Mihm and focuses on the history of business and finance.  While most of my columns have tied in with significant anniversaries or events in financial history, for this week’s post I was invited to instead write an article on one of the Museum’s collections.

I have several favorite collection items, but I chose to focus on the Graham-Newman Collection.  It’s a fascinating archive of business documents, personal correspondence, rare first edition books and personal effects belonging to Warren Buffett’s mentor and the father of value investing, Benjamin Graham, and his business partner, Jerry Newman.

And, as I assert in my article, within this collection may lie the answer to the on-going debate over the origins of the hedge fund industry.

To learn more, read “What Was the Very First Hedge Fund? Ask Warren Buffett.”