Financial History, Spring 2015

2015·6.4 MB·English

by  Museum of American Finance

Financial
history
The magazine of the Museum of American Finance
Remembering John Whitehead
Monopoly’s Lost Female Inventor
Early Wall Street, 1830–1940
ISSUE 113 | SPRING 2015 | $4.00

Financial
IN THIS ISSUE FEATURES
history
The magazine of the
Museum of American Finance
in association with 12 Monopoly’s Lost Female Inventor
the Smithsonian Institution
The little-known story of Monopoly’s true origins.
Issue 113 • Spring 2015
(ISSN 1520-4723)
By Mary Pilon
Kristin Aguilera
Editor
EDITORIAL ADVISORY BOARD
Howard A. Baker, Esq.
16 From Disagreements to the First Divide
Howard Baker Associates
Brian Grinder Founding fathers debate economic issues.
Eastern Washington University
Gregory DL Morris By Thomas Fleming
Freelance Journalist
Arthur W. Samansky
The Samansky Group
Bob Shabazian
20 John Whitehead: Wall Street Leader,
American Stock Exchange (ret.)
Myles Thompson Cold Warrior, Friend to Thousands
Columbia Business School Publishing
Robert E. Wright Tribute to a champion of ethics and integrity on Wall Street.
Augustana College
By Gregory DL Morris
Jason Zweig
The Wall Street Journal
EDITOR EMERITAE
Diana E. Herzog
24 Early Wall Street
ART DIRECTION
Alan Barnett Design
A visual history of New York’s Financial District, from 1830 to 1940.
MUSEUM STAFF
By Jay Hoster
David J. Cowen, President/CEO
Kristin Aguilera, Deputy Director
Sarah Buonacore, Collections Manager
Jeanne Driscoll, Director of Development
Maura Ferguson, Director of Exhibits 28 The Pingree Plan
Arturo Gomez, Business Manager
Chris Meyers, Director of Education New York’s response to unemployment in the 1890s.
Linda Rapacki, Managing Director
By Julia Bricklin
of Visitor Services and Operations
Mindy Ross, Director, External Relations
Copyright 2015 by the
Museum of American Finance, publisher,
48 Wall Street, New York, NY 10005. Telephone: 32 Healthy Finances
212-908-4110; fax: [phone]. All rights reserved.
Financial History is the official membership Investor ownership in medical products companies.
magazine of the Museum of American Finance.
Annual individual membership is $55. Payment must By Michael A. Martorelli
be made in dollars, by credit card or check payable
to the Museum of American Finance.
There is no implied endorsement
of any advertiser in this magazine.
www.MoAF.org
2 FINANCIAL HISTORY | Spring 2015 | www.MoAF.org
IN THIS ISSUE DEPARTMENTS
TRUSTEES
Richard Sylla, Ph.D., Chairman
4 The Ticker Robert Muccilo, Treasurer
Museum honors David Rubenstein with 2015 Whitehead Award Alvi Abuaf
and opens two new exhibits.
Gregory W. Bauer
David J. Cowen, President
4 Message to Members Sanford F. Crystal
By David Cowen, President and CEO Andrea de Cholnoky
Randolph DelFranco
Charles M. Elson
10 Educators’ Perspective
Niall Ferguson
Financing the American Dream: A History of the Fully-Amortized
30-Year Mortgage Adam Goldstein
By Brian Grinder and Dan Cooper Martha Clark Goss
Robert Hotz
Alfred F. Hurley, Jr.
39 Trivia Quiz
Myron Kandel
Glenn Kaufman
Bradford Kopp
Kirkpatrick MacDonald
Consuelo Mack
Richard B. Payne, Jr.
Edward J. Rappa
Richard M. Schaeffer
Verne Sedlacek
Mark Shenkman
ON THE COVER
Kevin Shine
John C. Whitehead, former David Shuler
co-chairman of Goldman Sachs and
Andrew D. Soussloff
Deputy Secretary of State, passed
away in February. He had been Ewout Steenbergen
the co-chair of the Museum of
Susan Stupin
American Finance’s Advisory Board.
See article, page 20. Peter Vidor Charles V. Wait
©2007 John E. Herzog,
Chairman and Trustee Emeritus
www.MoAF.org | Spring 2015 | FINANCIAL HISTORY 3
THE TICKER MUSEUM NEWS
Remembering My Friend and Advisor, John Whitehead
By almost every measure, the Muse- know how well the evening went. It was II and his time as Deputy Secretary of
um’s 2015 Gala was our finest ever. We the last time we spoke, as he passed away State. He had a good sense of humor,
smashed all records in both fundraising a few weeks later. which added to the enjoyment. When he
and attendance. The Events Committee, The Museum had already established a was once unable to line up a phone call for
led by Susan Stupin, created a memorable close relationship with John by the time I the Museum, he was exasperated and said,
evening, and my thanks go out to our staff became president in 2009. He was influ- “David, after all even the Communists
and Board for all of their hard work and ential in the LMDC’s decision to assist take my phone call!”
effort. I would also like to extend a per- with $1 million in capital to enable the While formal in the sense that he always
sonal thank you to Lin-Manuel Miranda Museum’s expansion and move to Wall had a jacket on, he was warm and had that
Street. The Advisory Board twinkle in his eye. I liked how he handled
was in formation when I problems, never getting ruffled, working
Message to Members joined the Museum, and I on a path forward towards resolution. One
consider myself fortunate to phone call from John got my attention
David J. Cowen | President and CEO have led our interaction with right away. It had to do with a gala issue,
John for the past 5½ years. and John started with “we have a prob-
Spending time with some- lem.” I had never heard John use those
for taking time out of his now hit musical, one who had such unparalleled integrity words. But in short order we resolved it
“Hamilton,” to sing a number from his and respect, and with so much wisdom the way we always had, without drama,
show. And heartfelt thanks to our honoree to share, was unquestionably one of my without ego and staying focused on the
David Rubenstein, who greatly assisted in favorite things to do. While initially my problem. That was the Whitehead way.
making the night a terrific one. interactions with John were purely busi- John’s passing leaves a void in our
In his remarks, David created a witty ness, over time we began to discuss other Museum’s heart, and he will be missed by
letter from Alexander Hamilton, which things, like his experiences in World War all. Especially me.
spoke to the importance of giving back to
one’s country, as Hamilton so often did. He
asked attendees to “remember the Museum
of American Finance in your thoughts
about how to help your country. Remind-
ing our fellow citizens of the importance
of finance — and the mistakes it can cre-
ate — is a real (in a word I have learned
here) mitzvah.” That evening, David dem-
onstrated his giving pledge leadership and
reinforced why he is deserving of our high-
est honor, the Whitehead Award.
There was only one thing missing that
evening, and that was John Whitehead.
John had attended all of our previous
galas, but he was unable to attend this one
due to illness. I read a statement from him
to the crowd, and I called him the next uiz
R
day to update him on the gala. He was his Elsa
usual optimistic self and was pleased to Left to right: Lin-Manuel Miranda, David Rubenstein and David Cowen at the 2015 Gala.
The earliest known discussion of
Northern Pacific railway stock hits $96 a
APR 1 APR 9 securities analysis is published in The
share as E.H. Harriman and J.P. Morgan fight
London Flying-Post, as several authors
1901 for control of the railroad. The stock goes up 1720
debate how to calculate the value of
942% to $1,000 per share before it collapses.
South Sea Company shares.
4 FINANCIAL HISTORY | Spring 2015 | www.MoAF.org
MUSEUM NEWS THE TICKER
David Rubenstein Receives Whitehead Award
at 2015 Museum Gala
More than 300 guests turned out to largest and most successful private equity
support the Museum and honor David M. firms, as well as chairman of the Board of
Rubenstein on January 13, as he received Trustees of the John F. Kennedy Center for
the Whitehead Award for Distinguished the Performing Arts and Duke University,
Public Service and Financial Leadership a regent of the Smithsonian Institution,
at the Museum’s 2015 Gala. Named after co-chairman of the Brookings Institution,
John C. Whitehead, the award is presented vice chairman of the Council on Foreign
annually to a person who has demonstrated Relations and president of the Economic
a high order of achievement and leadership Club of Washington.
3
in the field of finance, and also served with The 2015 Gala was the Museum’s largest
notable distinction in the public sector. to date and raised more than $1 million to
Rubenstein is co-founder and co-CEO support its programs and further its mis-
of The Carlyle Group, one of the world’s sion of financial education.
1. David M. Rubenstein (right), pictured with
Museum President David Cowen (left) and
Chairman Richard Sylla (center), receives the
2015 Whitehead Award.
4
2. Grammy and Tony Award-winning artist
Lin-Manuel Miranda performs a selection from 1
his new “Hamilton” musical prior to dinner at
Cipriani Wall Street.
3. David Rubenstein delivers humorous remarks,
including the reading of a letter reportedly
penned by Alexander Hamilton.
4. Former Secretary of the Treasury Robert Rubin
introduces David Rubenstein. Ruiz
5. Museum Trustees Consuelo Mack, David Shuler, os: Elsa
Martha Clark Goss and Andrea de Cholnoky. 2 5 hot
P
MUSEUM OF AMERICAN FINANCE BENEFACTORS (2014–2015)
The Museum is most grateful for Gold • Citi • U.S. Bancorp
the financial support of these • Bank of America Merrill Lynch • Consolidated Edison • Wells Fargo
major donors to help advance • Andrea de Cholnoky • Crystal & Company • Willis
our commitment to preserving, • Sidney Mobell • Dalio Foundation • Voya Financial
exhibiting and teaching the power • Richard Sylla • Houlihan Lokey
and value of American finance. • TCW Group, Inc. • Moody’s
• Tishman Speyer • New York Life For information about the
Platinum
• Steve Wozniak • Philidor RX Services, LLC Museum’s benefactor program,
• Herzog & Co.
• Protiviti please contact Mindy S. Ross at
• New York Stock Exchange Silver
• R.W. Presspich 646-833-2755 or [email protected].
• Royce & Associates • The Adirondack Trust Company
• Sullivan & Cromwell
• David M. Rubenstein • American Express
• Richard Sylla
• Shenkman Capital Management • Capco
The Leningrad Commodity and Stock
APR 10 APR 20 President Ronald Reagan signs the Social Security
Exchange (now the St. Petersburg Stock
Amendments of 1983, delaying cost-of-living adjustments
1991 Exchange) re-opens for trading after decades 1983
and making 50% of Social Security benefits taxable.
of closure under Communism.
www.MoAF.org | Spring 2015 | FINANCIAL HISTORY 5
THE TICKER MUSEUM NEWS
Museum Launches Book and MoAF Bitcoin
Website Tracing the “Family Trees” Event Draws
of the 50 Largest US Banks Record Crowd
the nation’s political, social and economic More than 300 people attended the
growth. A story that spans more than two Museum’s February 11 event on “Bitcoin
centuries of war, crisis and opportunity, and the Future of Payments Technology.”
it reminds readers that American bank- The program featured a fireside chat with
ing was never a fixed enterprise but has former US Treasury Secretary and Presi-
evolved in tandem with the country. dent Emeritus of Harvard University Law-
“This project sheds tremendous light rence H. Summers conducted by Michael
into the dynamic nature of our nation’s Casey, senior columnist for global finance
financial history,” said Charles M. Royce, at The Wall Street Journal, followed by a
CEO of The Royce Funds who is also the panel discussion. Participants included
underwriter of the project. “One can never Jeremy Allaire, founder and CEO of Circle;
completely understand the future without Charles Cascarilla, CEO and co-founder
a comprehension of the past. In an easy- of itBit; Lawrence Goodman, president of
to-read and understandable manner, this the Center for Financial Stability; and Paul
book gives a narrative history that is acces- Vigna, reporter and “Money Beat” host at
sible by all — from the newcomer working The Wall Street Journal.
at a bank to the finance professional, from The event was sponsored by Voya
the student to the scholar, from the prac- Financial and coincided with the launch
titioner to the regulator.” of Casey and Vigna’s new book, The Age of
David Cowen, President and CEO of Cryptocurrency: How Bitcoin and Digital
On March 10, the Museum and Colum- the Museum, said, “The histories of US Money are Challenging the Global Eco-
bia Business School Publishing launched financial institutions are complex with nomic Order.
Genealogy of American Finance, a new implications that have greatly influenced
book featuring the genealogical “family the way we all work and live today. We
trees” of the nation’s 50 largest banks are proud and excited to be a part of this
alongside beautifully illustrated narrative project, as our goal as a Museum is to
histories of each bank. continually be an educator about the his-
Authored by renowned financial his- tory of American finance — past, present
torians Dr. Robert E. Wright and Dr. and future.”
Richard Sylla, the book explores how 50 A companion website featuring the
financial companies came to dominate the un abridged family trees of each bank is uiz
R
US banking system and their impact on available at www.moaf.org/newbook. Elsa
Former US Treasury Secretary Lawrence H.
Summers spoke at the Museum’s
Bitcoin panel in February.
One of the first IPOs in US history is Amadeo Peter Giannini is born in California.
MAY 1 launched, as the Western and Northern MAY 6 Thirty-four years later, he founds the Bank
Inland Lock Navigation Companies go of Italy in San Francisco. Today, as Bank
1792 1870
public at the Tontine Coffee House in of America, it is one of the world’s largest
New York City and Lewis’ Tavern in Albany. financial institutions.
6 FINANCIAL HISTORY | Spring 2015 | www.MoAF.org
MUSEUM NEWS THE TICKER
“America in Circulation: A History of US Currency
Featuring the Collection of Mark R. Shenkman”
Exhibit Opens
On April 15, the Museum opened “Amer- drove constant advances in design. renowned for being the most beautiful paper
ica in Circulation: A History of US Cur- “Today, there are only seven notes in money in American history; and uncom-
rency Featuring the Collection of Mark R. circulation. Yet most Americans don’t mon examples of high denomination notes
Shenkman.” The exhibit provides visitors realize that both the banks and the gov- including $5,000 and $10,000 bills.
with the opportunity to view hundreds ernment were issuing many different types “I am excited and honored to showcase
of beautiful and rare examples of Ameri- of currency for most of our nation’s first my collection of American currency at
can paper money and to explore them in 150 years,” said Museum President David the Museum of American Finance,” said
more depth through large interactive touch Cowen. “The notes in this exhibit tell the Mark Shenkman. “Visitors of all ages will
screen displays. story of the development of America, and now be able to enjoy the beautiful engrav-
From Colonial times, American money their striking beauty makes them pieces of ings of hundreds of notes spanning three
has told a fascinating and detailed story art in and of themselves.” centuries, and to view and explore them
of the country’s struggles and successes. The exhibition features approximately as never before through an engaging use
Pivotal moments in history have led to 250 notes spanning from the Colonial era of technology.”
changes in the nation’s money, as crises to the present day. Highlights include rare “America in Circulation” will be on
have brought about innovation. Often examples of currency bearing the signatures view through March 2018 in the Museum’s
local and national currencies competed of signers of the US Constitution and Dec- money gallery. An online version of the
and coexisted with each other, while eco- laration of Independence; a complete set of exhibition is available at www.moaf.org/
nomic depression, war and counterfeiting notes from the Educational Series of 1896, money.
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Mark
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Clockwise from top left: $50 Continental Note, 1779; $20 Gold Certificate, series of 1905;
$2 Educational Series Silver Certificate, 1896; $5 Legal Tender Note, 1869.
The Supreme Court upholds the US
MAY 15 MAY 20 President Abraham Lincoln signs the Homestead Act into
government’s decision to break up John D.
law, enabling anyone who had farmed public land for five
1911 Rockefeller’s Standard Oil Company on the 1862
years or more to acquire title to 160 free acres.
grounds that it is a monopoly.
www.MoAF.org | Spring 2015 | FINANCIAL HISTORY 7
THE TICKER MUSEUM NEWS
Museum Displays “Legal Tender” Exhibition
Featuring Currency Flag Paintings of Artist Emily Erb
On April 1, the Museum opened “Legal
Tender,” an exhibition featuring the work
of Philadelphia-based artist Emily Erb.
The solo exhibition consists of large-scale
flag paintings depicting US paper currency
produced from 1862 through the present.
In 2012, Erb began to examine the sub-
ject of money through her painting prac-
tice. Pulling a dollar out of her pocket
and photocopying the front and back at
18 times its original size, the artist then
layered silk fabric over the enlarged photo-
copy and trace-painted the two sides of the
giant bill. The result was an enlarged rep-
lica that the artist hung like a flag in vari-
ous public spaces throughout Philadelphia.
In “Legal Tender,” Erb ironically offers
up 12 representations of metaphorically
counterfeit money as a luxurious cre-
ative medium of exchange in silk paint-
ings installed from flagpoles. Conflating
American currency with patriotic symbols
of national identity, the artist initiates a
dialogue on what constitutes the nation’s
collective value system.
“Legal Tender” was curated by the Del-
aware Center for the Contemporary Arts’
Gretchen Hupfel Curator of Contempo-
rary Art, Maiza Hixson. It will be on view
through August 31, 2015.
Artist Emily Erb employs the ancient Indian
technique of silk painting to reflect a global
perspective on the history of American money.
Shown here are the fronts of three of the
12 flags in the “Legal Tender” exhibition.
President Reagan taps an economic The Securities Exchange Act — which
JUN 2 JUN 6
consultant named Alan Greenspan to created the US Securities & Exchange
1987 replace the renowned Paul Volcker as 1964 Commission (SEC) — is signed into law
chairman of the Federal Reserve. by President Franklin D. Roosevelt.
8 FINANCIAL HISTORY | Spring 2015 | www.MoAF.org