Table Of Content

r, WymififflaHc Society Libiay The magazine of the Museum of American Finance S I Museum Unveils 18-Karat Gold Monopoly Set The Antibubble: Thomas Willing and Early American Financial Stability The Rise of the Venture Exchange Issue 99 ~ Winter 2011 ~ $4.00 O History Comes To Life at Stack’s through the enjoyment of numismatics. ... The First O Paper d\"'° C S Q‘ Money I ElIS Ia.dented- Bill ai T‘/ -r.-t y Stkai; vO ^ due fram tke JMajfickdets i Colony *r. 'ke-RiTe lor Ikall kc, imvalue-^o Issued in c-cjual to money6e.ik.all ke-accordingly^ North axceptedky tke-Treafurer amdReceiv-er«s m lu-bordinate-,to kirn allRtklidc payraf America a/ruffor any -cHock ai anytime, i/mtke-^o £ N "Treafury. ol?cru,ixrv- ew-£ngland- Februarykc ikiircUI6q c/JBy Order of THE EXCESSIVELY RARE ike. (xeneral Goj 1690 MASSACHUSETTS 20 SHILLING NOTE The Massachusetts Colony February 3, 1690 Indented BillwasoriginallyissuedasTwoShillings Sixpence, contemporaneously raised to Twenty Shillings. Printed from a Copper Engraved Plate on thin laidpaper, 104x 140millimeters.Theface hears the oval Colonial Seal and the signatures of John Phillips, Penn Townsend, and Adam Winfhrop. There are possibly only six or seven known examplesofthis incredibly rare issue. Buying the very finest in rare and historical numismatic material from around the worlcl. . (ttcfiotvt •. •f/tefat/•<ir/tce (9^0 Jtaeh 123 West 57th Street • NewYork, NY 10019 • 800-566-2580 • Fax 212-245-5018 NH P.O. Box 1804 • Wolfeboro, 03894 • 866-811-1804 • Fax 603-569-3875 vvwvv.stacks.com • email: [email protected] f77uj ntOfStre,s/ec/e</nu/tte i/t na/H(>s'/na/tcvv • fieroi/aj f/e co//ec/or/or over /P years' 0WESTERNNEWYORK SINCE 1893 Management Risk Give Us A Try Saperston Asset Management A Full Service Brokerage. Member: F1NRA. SIPC, MSRB. & Management Investment Counseling Wealth 716-854-7541 In the searchforproperty, it’s Saperston Real Estate M Serving The Industrial & Commercial Real Estate arkets. 716-847-1100 In thepursuit ofbetter business it's . Saperston Management For Tax Assistance, Payroll Services, Bookkeeping & Financial Reporting. Life Insurance and Structured Settlements 716-854-7541 “The Dollar Doctor’ Listen to the A74V 1)011AR DOCTOR RADIO SHOW with a call-in format each Saturday 10 am to 1 1 am on WWKB 1520 AM archived at www.saperston.com aperston -800-879-7541 1 172 LAKE STREET • HAMBURG Visit Our Website: www.saperston.com WWW.MOAF.ORG Financial History - Winter 201 1 1 Financial History Financial HISTORY The magazine ofthe Museum ofAmerican Finance in association with the Smithsonian Institution Features Issue 99 ~Winter 201 (ISSN 15ZO-47Z3) 15 Bruce and Wendy Wasserstein Kristin Aguilera and the Revival of New York City Editor in the Late 20th and Early 21st Centuries EditorialAdvisory Board Bruce and Wendy Wasserstein were among the most HHoowwaarrddBAa.keBrakAesrs,ocEisaqt.es accomplished and famous New Yorkers oftheir time. Both died suddenly and somewhat prematurely, but Brian Grinder Eastern Washington University not before t—hey had reached the pinnacle oftheir chosen Gregory DL Morris professions Bruce in finance and Wendy in the theater. FreelanceJournalist By James S. Kaplan Arthur W. Samansky The Samansky Group 20 The Antibubble: Thomas Willing Bob Shabazian and Early American Financial Stability American Stock Exchange (ret.) Biographical profile ofthe man who was perhaps Robert E. Wright Augustana College the most important ofAmerica’s lesser-known Jason Zweig financial founding fathers. The Wall StreetJournal By Robert E. Wright EditorEmeritae 24 Nothing Ventured, Nothing Gained Diana E. Herzog The rise of Canada’s unique capital market for start-ups. ArtDirection Alan Barnett Design By Gregory DL Morris Museum Staff 28 The Bank Panic of 1907 David Cowen, President/CEO Kristin JA.guilera, Deputy Director From a Speculator’s Point of View Jeanne Driscoll, Director ofDevelopment Charles W. Morse and his friend, Fritz Fieinze, Linda Rapacki, Managing Director were two of the speculators whose activities ofVisitor Services and Operations Leena Akhtar, Exhibits & Archives Director led to the Panic of 1907. Drew Pascarella, Director ofEducation By Philip H. Woods Arturo Gomez, Business Manager 32 The Forgotten Currency: Copyright 2011 by the Museum of Federal Reserve Bank Notes American Finance, publisher, 48 Wall Street, New York, NY 10005. Telephone: During currency crises, the Federal Reserve System 212-908-4110; fax: 212-908-4601. All rights has periodically issued a second, lesser-known reserved. Financial History is the official member- form ofcurrency. ship magazine of the Museum of American By Franklin Noll Finance. Annual individual membership is $55. Payment must be made in dollars, by O credit card or check payable to the Museum -sV*) of American Finance. <R3 THE B B02241606 A Letters to the Editor are welcome. Please FEDERALRESERVEBANK send them to Financial History at the above address or e-mail [email protected]. There is no implied endorsement of any TONIK)I.I.VHS advertiser in this magazine. B02241G06 A i DOLLARS TI2V www.MoAF.org Financial History ~ Winter 2011 2 WWW.MOAF.ORG Trustees Charlotte B. Beyer Founder and CEO Institute For Private Investors Stephen A. Cooper On Cauez the President Nemco Brokerage, Inc., A Company ofNational Financial Partners This 18-karat gold jewel David Cowen encrusted Monopoly game, J. President/CEO created by world renowned Museum ofAmerican Finance jeweler Sidney Mobell, is on David N. Deutsch, Vice Chairman loan to the Museum from President the Smithsonian National David N. Deutsch & Company EEC Museum of Natural History Niall Ferguson through October 2012. n: Laurence A. Tisch ProfessorofHistory Harvard University Michael S. Gcltzeiler Group EVPand CFO NYSE Euronext Departments John E. Herzog, Chairman Emeritus Chairman 4 Members’ News Herzog &: Co., Inc. Museum partners with eight other cultural institutions in Myron Kandel Lower Manhattan to create the Downtown Culture Pass Founding Financial Editor CNN and hosts Finance Park with Junior Achievement. Wilbur L. Ross,Jr. 4 Message to Members Chairman and CEO W1 Ross & Co., ELC CEO By David Cowen, President and Richard M. Schaeffer FormerChairman 5 Founder’s Letter NYMEX Holdings Inc. Bv John E. Herzog, Founder and Chairman Emeritus Timothy R. Schantz Director 12 Educators’ Perspective Mountbatten Institute in NA The American Whale Fishery Mark Shenkman By Brian Grinder and Dan Cooper Founder and CEO Shenkman Capital Management, Inc. 36 Book Reviews David L. Shuler More Money Than Cod: Hedge Funds Managing Director Allianceand Venture Management and the Making of a New FJite, by Sebastian Mallaby. CME Group Reviewed by Michael A. Martorelli Richard Sylla, Ph.D., Chairman Henry Kaufman Professorofthe History This Time is Different: Flight Centuries of Financial Folly, ofFinancial Institutions and Markets, by Carmen M. Reinhart and Kenneth S. Rogoff. StNerenwScYhooroklUonfivBeurssiinteyss Reviewed by James P. Prout Kenneth G. Winans, Treasurer President Banktown, by Rick Rothacker, Winans International and The Company Town, by Hardy Green. Reviewed by Gregory DL Morris Martin E. Zweig, Ph.D. Chairman The Zweig Funds 39 Trivia Quiz WWW.MOAF.ORG 3 Financial History - Wintfr zoi i Message Members to By David Cowen, J. President and CEO The Museum has always recognized the power of partnerships. In the past we have partnered with our friends at NYSE Euronext, the CME Group, Bloomberg, the SEC, Consolidated Edison, the Sierra Club, and numer- ous other museums, organizations and universities. And we are pleased to announce our latest partnerships. The first is a recognized leader in the field of financial literacy, Junior Achievement. In conjunction with Junior Achievement and their spon- sor, Capital One Bank, the Museum will host a Finance Park from Decem- ber 13 through February 11. Thou- sands of middle and high school students will participate in the program, which teaches budgeting and savings skills in a real world environment. Junior Achievement’s economic education programs and experiences are world-class, and Capital One shares our vision of improving the lives of students through financial education. From the Museum’s perspective, this is a perfect match. We are pleased to Museum President David Cowen in theJunior Achievement Finance Park at the Museum. host the Finance Park, and there are possibilities that this initial run of the park can become a longer run. Our second partnership in 2011 is with the American Scottish Foun- from our collection. We will also dis- tion to honor the first Secretary of the dation. Every year the foundation play Hamilton’s Society of Cincinnati Treasury with our Scottish friends. celebrates Tartan Week, and here in medal, on loan from the Hamilton Hamilton is not the only thing we New York City there is a parade along family, and expect for the first time will be celebrating in 2011. The next with city-wide programs and festivi- to bring together Hamilton’s Scot- issue of Financial History will be our ties. This year, the celebration will tish and American descendants. This 100th edition, and to mark this mile- be held the week of April 4th, and important meeting, as well as an eve- stone we will publish a full-color we will honor the legacy of Alexan- ning program dedicated to Hamilton, double issue. There is so much to look der Hamilton’s Scottish roots at the will take place at the Museum. We forward to. Please continue to join Museum by exhibiting Hamilton gems look forward to this new collabora- with us in 2011. oa Financial History ~ Winter 2011 D WWW.MOAF.ORG Founder’s Letter ByJohn Herzog, As vou read this, the Museum will rent events, and the poster set of that Founder and Chairman Emeritus he celebrating its third anniversary at exhibit has outsold every other item 48 Wall Street. At our fourth annual in the Museum Shop. We are all feel- gala on January 10, we honored ing we have done well accomplishing Peter G. Peterson, who received the our mission, and also see a number of Museum's John C. Whitehead Award exciting opportunities on the horizon. for Distinguished Public Service and Anniversaries offer us a chance to Financial Leadership. It seems like look back as well as forward, roads only yesterday we were announcing traveled and not yet ventured upon. the creation of this award as we We are very busy working on new opened the Museum in our new space. initiatives to bring finance closer to These years have gone hv quickly, a multi-generational audiences in 2011, reminder of the need we all have to including our recent partnership with balance our experience of the past Junior Achievement, as well as with our aspirations for the future. expanded programming in our Kauf- Our permanent exhibits have man, Young Professionals and Lunch earned great praise, and the tempo- and Learn series. Come to visit, bring — rary exhibits from "Women ofWall your children, bring their children, — Street” to “Scandal!” have also and join us as we look forward to been very popular. Our “Tracking enhancing our collective understand- Barnett the Credit Crisis” display has enabled ing of finance and financial history. Alan us to blend financial history with cur- We welcome you. Ed Corporate and Foundation Support The Museum is most grateful for the • The Guardian Life Insurance • Saybrook Capital support of the following corporations Company of America • Security Traders Association and foundations who have generously • Henry N: Elaine Kaufman • Securities Industry and provided funding for the Museum in Foundation Financial Markets Assn. the past year. • Herzog N: Co., Inc. • Shenkman Capital Management • IGS Energy • Standard iK Poor’s A&E • Television Networks • INIC. Americas • Muriel Siebert N: Co., Inc. • American Express • Institute for Private Investors • UBS • BlackRock, I c. • KCG C apital Advisors • Wells Fargo & Company • Bloomberg • Makovskv + Company Inc. • Winans International • Broadridge Financial Solutions, Inc. • I he McGraw-Hill Companies • Wreyford Family Foundation • Carter, Ledyard iK Milburn, 1 LP • Morgan Stanley • The Charles Schwab Corporation • National Madison Group • CME Group • NEMCO Brokerage, Inc. • Consolidated Edison Co. • he Northern Trust Company For information about I of New York • NYSE Euronext participating in the Museum's • The Curtain Foundation • NYSE Euronext Foundation corporate membership program • Donaldson Enterprises • Peter G. Peterson Foundation please contact Jeanne Baker • Fagenson &: Co. • Peter Jay Sharp Foundation Driscoll Director of • FLAG Capital Management • R.W. Pressprich Develop,ment, at 212 908-4694 • Goldman Sachs &: Co. • Saber Partners, LLC or [email protected]. www.moaf.org 5 Financial History ~ Winter zoi i Now Showing: 18-Karat Gold Jeweled Monopoly Set By Kristin Aguilera, Deputy Director Clockwisefrom top left: Artist andjeweler Sidney Mobell; 18-karatgoldjeweled On October 15, the Museum Monopoly set; Middle schoolstudents play in Monopoly tournamentfollowing unveiled the display of an 18-karat the Monopoly display unveiling ceremony. solid gold Monopoly set covered with hundreds of precious gemstones, on loan from the Smithsonian Institution National Museum of Natural History. The Smithsonian received the game as one of 20 jeweled art objects from the personal collection ofworld-renowned artist and jeweler Sidney Mobell. A long-time resident of San Francisco, Mobell is known for his fanciful and innovative employment of everyday household items as works of art. Mobell and Museum President David Cowen spoke at the unveiling ceremony and press conference, and the Museum received its best press coverage to date with more than 80 television appearances and 150 arti- cles running worldwide. “We are thrilled to have this one- of-a-kind item here,” said Cowen. “The game is symbolic to America and was popularized during the difficult economic times of the depres- sion. We again face difficult economic times, and this incredibly valuable item will bring joy to our many visitors. We thank the Smithsonian for the object loan and Sidney Mobell for his inspiration.” The unveiling ceremony was fol- lowed by Monopoly tournaments for children and adults. More than 60 middle school students participated in the first tournament, with prizes awarded to winners at each table. Appropriately, Mobell was one of the winners of the adult tournament. The gold Monopoly game will be on display at the Museum through October 2012. HD Photos: Alan Barnett Financial History - Winter 2011 6 WWW.MOAF.ORG New Downtown Culture Pass Lures Visitors with Three Days of Unlimited Museums Lower Manhattan Access to in In an effort to highlight the mul- tiple cultural attractions located within convenient walking distance of each other, the Museum of American Finance has partnered with several other downtown museums to create — the Downtown Culture Pass a ticket, good for three days, that provides admission, shop discounts or other benefits at eight downtown museums plus a tour company, all located south of Chambers Street. Elizabeth H. Berger, president of the Downtown Alliance, said the Downtown Culture Pass makes it easy to explore Lower Manhattan’s impres- sive array of cultural institutions. “Lower Manhattan is rich in history, culture and the arts. We’re delighted that our world-class museums and other attractions can show- case all that our district has to offer,” Berger said. For the single price of $25 for adults (18+), $15 for youths (Id- 17) and $5 for children (6-12), the Downtown Culture Pass will grant each ticket holder unlimited admission and/or other discounted benefits for three full days to any and all participating museums, plus discounted tours conducted by VC'all Street Walks. I he pass may be purchased online at wivw.downtowmulturepass.org or in , person at the Museum of American and may subsequently be extended or the Holocaust, National Museum of Finance, the Museum of Jewish Heri- expanded. the American Indian, 911 Memorial tage or the 9/1 1 Memorial Preview Participating organizations include Preview Site, The Skyscraper Museum, Site. The Downtown Culture Pass Fraunces Tavern Museum, Museum Tribute WTC Visitors Center and program will run from November of American Finance, Museum ofJew- Wall Street Walks, no — 4, 2010 through February 28, 2011 ish Heritage A Living Memorial to WWW.MOAF.ORG Financial History - Winter ioi i Museum Partners with Augustana College to Create Financial History Institute The Museum and Augustana Col- Family endowment and the Museum an important supporter of the nascent lege announced on December 14 the of American Finance. marine and life insurance industries launch of the Thomas Willing Institute The Institute is named in honor (see article, page 20). for the Study of Financial Markets, of Thomas Willing (1731-1821), a “It is appropriate at long last to Institutions and Regulations, an initia- Philadelphia merchant and politician honor and bring alive the legacy of tive that will fund and support student who became America’s first commer- Thomas Willing,” said Cowen. (3D research fellowships and educational cial banker, its first central banker and outreach programs. The Institute will include an online resource and will feature public and Internet speaking engagements by the Institute’s director, Dr. Robert E. Wright, the Nef Family Chair of Political Economy at Augustana College who is also one of the Museum’s guest curators. “We’re very pleased to cement our long-time relationship with Bob in this manner,” said Museum President David Cowen. “He has helped the J. Museum in several capacities in the past, and the Institute will allow us to work even more closely together in our efforts to spread the benefits & of financial education throughout this Enterprise Industry great country of ours.” The Institute’s website, www.augie Historic Research .edu/thomaswilling, features an exten- sive glossary ofbusiness, economic and Rigorous research and resonant writing for company financial history terms and includes links to important research websites. histories, web sites, and custom publishing In addition, research fellowships will Customized media training courses be offered to two Augustana students in the summer of 2011. Projects ofany size undertaken worldwide “Student research is a very impor- on a fixed-fee, hourly, or per-word basis. tant part of what we do here,” said Augustana President Rob Oliver. Work independently, or in conjunction with “We’re thrilled that the Thomas Will- in-house or outside communications teams. ing Institute will allow students to Free Initial Consultation conduct research in the crucial but underappreciated topic of financial www.enterpriseandindustry.com history and to share their findings with the world.” office: 212-866-1141 • mobile: 646-256-4486 Funding for the Institute is provided by Augustana College, the Nef Financial History ~ Winter zoti WWW.MOAF.ORG