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.”

Happy New Year!

To honor the Lunar New Year, we’re proudly displaying this 14th century Ming Dynasty note, one of the oldest objects in our collection. Ming notes such as this one hold special significance because they are among the earliest forms of paper money available to collectors. Paper money is a relatively new phenomenon in the West. Informal paper money was first introduced in the Netherlands in 1574 and the first government issued notes were pioneered by the Massachusetts Bay Colony in 1690. This was almost 800- 900 years after paper money was instituted in China.

ming dynasty note
Ming Dynasty Note

While Ming Dynasty notes predate the first instances of paper money in the West by over a century, paper money has been circulated in China since the reign of Emperor Yung heu of the T’ang Dynasty (c. 650 AD). No examples of this early T’ang Dynasty currency exist today except in the illustrations of early numismatic (the study and collecting of currency) volumes.  In the ninth century, “flying money” or fei-chien was frequently used as an informal currency although it was basically paper IOUs issued by merchants for trade, especially for payment across long distances when copper coins were too cumbersome and dangerous to carry.  By the Song Dynasty around 1000 AD, there were at least 16 private banks in the Sichuan Province alone issuing notes. Soon a special bureau was set up by the government to control the circulation of these notes and eventually it took over the printing bills, which could be exchanged for hard currency.

The Ming note from our collection, featured here, is made of mulberry bark. Mulberry bark paper was often used in early Chinese notes for its distinctive color that was difficult to counterfeit. Many Ming Dynasty notes have survived today because they were often placed under statues of Buddha, much like how coins are placed in foundation stones to commemorate the date of construction here.  Many were discovered during the Boxer Rebellion in the first years of the 20th century when Buddhist statues were overturned. The Ming notes were first issued in 1368 and circulated for more than a century until they were withdrawn due to devaluation.

If you are interested to learn more about early Chinese currency, we recommend the following books.

  • Kranister, W. 1989. The Moneymakers International.  Cambridge: Black Bear Publishing.
  • Kuhlmann, Willhelm. 1983. China’s Foreign Debt 1865-1982. Hannover: Freiberg Druck.
  • Narbeth, Colin, Robin Hendy and Christopher Stocker. 1979. Collecting Paper Money and Bonds. London: Studio Vista.

Thursday Excursions

The Federal Reserve Bank of New York

As Senior Museum Interns, we get the opportunity to participate in out-of-office learning experiences once a week.  We have been given the privilege visiting some of the most important financial institutions located in the New York area.  Thus far, these sites have included the Federal Reserve Bank of New York and the New York Mercantile Exchange.  Visiting the Federal Reserve, located a short walk from the museum, presented a once-in-a-lifetime opportunity.  The Bank takes part in more transactions than any other bank in the United States Federal Reserve System.  At the building, security kept a watchful on us, and they informed us that security officers have their own private shooting range on the premises for target practice.  This might seem extreme, but remember that the bank houses over 300 billion dollars worth of gold.  The museum portion of the building featured many interesting exhibits, including the most valuable US coin in existence.  They even allowed us a chance to visit the gold vault on the tour.  Located several floors underground, the gold vault holds the gold reserves of many foreign nations and multi-national corporations.

Our next visit was to the New York Mercantile Exchange. The tour took us straight to the observation deck located right above the trading floor.  From this vantage point, we saw the entire trading floor, and observed the controlled chaos transpiring below on the exchange.  The guides at the New York Mercantile Exchange took us to the trading floor, and allowed us to walk among the traders as they conducted business.  We saw the “pits” where different commodities, such as gold and silver, trade amongst buyers and sellers.  Each pit contained traders communicating to each other, computer screens, and terminals with telephones.  The guide informed us that the number of people who work on the trading floors has decreased over the last decade.  Automation and digitalization resulted in a decreased demand for human traders on the floor as more and more trades now take place electronically.  The guide continued by saying that he thinks the trading floor would always be a necessity, because of the resources the building offers and the need for face-a-face interaction when making deals.

Our internship thus far

Interning at the Museum of American Finance has been a great experience. While most summer internships for college students consist of tedious letter filing and coffee runs, we learn first-hand what it takes to run a non-profit museum in the financial capital of the world.  In addition to archiving, guiding tours and utilizing social media outlets such as Twitter and Flickr, we take weekly trips to local partner institutions.  The interns here have interests across a range of areas including American history, finance and the visual arts.

One of the better aspects of the internship is that there is a rotational schedule; we spend two weeks on each project, be it visitor services, archiving, social media or educational development. This system allows for collaboration between interns and establishes a sense of community in the office.

Despite the freezing temperatures in the library and the archive room, working in the archiving department provides us with a rare inside look into the collections that have been generously donated over the years to the Museum.  Sifting through old banknotes, bonds, magazines, stock certificates and photographs, interns quickly learn about the nation’s rich financial history. Archiving has also showed us the process of preserving the collections and its importance in helping to maintain objects in their original state.

Everybody looks forward to Thursdays, which is field-trip day. So far, we have been fortunate enough to visit the Federal Reserve Bank, the New York Stock Exchange and the New York Mercantile Exchange. Along with these important financial institutions, we have visited other museums such as the Skyscraper Museum, the National Museum of the American Indian and the New York Public Library. Visiting the museums has given us the chance to see how other institutions maintain and present their collections and exhibits. We found that the NYPL, in particular, had a wide range of collections and a great layout to its exhibits.  It has been both helpful and interesting to compare and contrast the MoAF with other museums.

The upcoming “Race Around Wall Street” scavenger hunt has been a joint project amongst the interns, and is essentially an amalgamation of the different rotations; researching and assembling this event has involved all of the skills and knowledge the interns gained from their various roles at the Museum. We’ve marked key sites around the Financial District, and, using the financial and historical knowledge acquired from walking tours and field trips, generated sets of challenging clues for the competitors.  The skills gained from the interns’ social media rotation have been most beneficial, as we have used Twitter, Facebook and Museum mailing lists to advertise our events.

Our work is made even more enjoyable because of the friendly community atmosphere of the Museum. The staff at the Museum is unbelievably accommodating and open to all of our questions and concerns; rather than regarding interns as lowly grunt men or hassles, the staffers have made a concerted effort to include the interns in staff discussions and traditions such as Free Lunch Friday.  Such a warm community makes the unpaid work bearable!  A small staff ensures that everyone at the Museum gets to know each other, and even employees and interns that leave the Museum come back to visit.

Taking Stock of History: The Bull and Bear Statue

The focus of this video is the Bull and Bear Statue, an object on display at the Museum of American Finance, on loan from LaBranche & Co. The statue previously stood at the entrance of the Stock Exchange Luncheon Club, which was located on the seventh floor of the NYSE. This club was an exclusive place for traders and brokers to discuss the trades of the day and to unwind with fresh seafood and drinks after work.

There are a number of theories for the origin of bull and bear markets – too many to be included in this short video. The term “bull” was used in association with markets as early as 1714. A bull is a person who buys commodities or securities, optimistically anticipating a rise in prices. He may also be someone who tries, by studying stock trends, to contribute to a rise in the market. The longest bull market trend was in 1949, which lasted eight whole years.

The term “bear” dates back to 1709, when it was used as shorthand for the bearskin jobber occupation. The title “bearskin jobber” originates from a proverb highlighting the practice of selling bearskins before catching the bear. In a more modern sense, a bear is someone who expects prices to fall, thus selling stocks in hopes of a future compensation.

In light of its ancient connotations, the bull and bear statue was an emblem of success for Luncheon Club members, as they would superstitiously rub the horn of the bull and hope for their trades of the day to go up. Although the club has closed, the bull and bear symbol remains pertinent to traders and brokers today, as the statue remains an important icon of the history of finance.
To find out more about this historically significant statue, watch the video: “Taking Stock of History: The Bull and Bear Statue.” Additionally, LaBranche & Co. invites the public to view and to touch this statue, here at the Museum of American Finance.

Julia Edwards is a Senior Museum Intern at the Museum of American Finance.

Video by Senior Museum Interns Kelly O’Brien and Julia Edwards.

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