Say you wanted to read a copy of the booklet How to Detect Counterfeits, by Louis Albert Hill, director of the Bureau of Engraving and Printing, published in 1927. Or wanted to examine one of those portly Corliss safes and see why the design was so favored by bankers and bond men at the turn of the century. Or see one of the Signature Co.'s famed signature machines. Or take a look at some Confederate States of America debt, coupons still attached. Where would you go?
The truth is, you'd be pretty much on your own, because there is no single repository of American financial history. But that won't be the case for long.
The Museum of American Financial History -- the brainchchild of John Herzog of Herzog, Heine, Geduld Inc. -- will open within two months at 24 Broadway in New York City.
The museum first made its debut several years ago with an inspired exhibit in two grand rooms of the New York Custom House, which at the time had just reopened after decades of being shuttered. The building now houses, in a sort of nice accident of history, bankruptcy court.
The memory of that show -- unmarred by the usual milk and cookie-scented hordes of nocise schoolchildren -- has stuck with many Wall Streets whose curiosity was piqued as much by what the interior of the Custom House looked like as much a sit was by the handsome banner proclaiming the exhibit inside.
That exhibit was an eyeful. As Mr. Herzog explained to me several months ago, it told the story of who paid for, and who built, the Unites States. It also helped tell the story of "Why did the capital and credit markets become so sophisticated in the U.S.?"
Mr. Herzog, who began collecting scripophily, as they call it, 30 years ago with Revolutionary War debt certificates, knows that "people in the industry do not known where the industry came from, they're so concerned about the next 10 minutes."
If that sounds a little too school-marmish, he elaborates. "There was no need for the recent bank bailout. Week rules led to that gigantic calamity. If this display could be viewed while banking regulation was relaxed, it would have led to some pointed questions being asked. And we could have saved a lot of money."
The opening of the museum is terrific news. It deserves the support of the industry, which -- until now --had no attic.
Financial history, such as it is, is ephemeral stuff, and much of the modern variety winds up in the shredder. Or in collectors' hands. Or in a few places like the Museum of the City of New York, the New York Historical Society, or the Smithsonian. Or, in a few rare instances, in the archives of those firms that actually bother about their own histories.
I write from experience. When it came time to put together our centennial edition this year, I was not a little startled to learn that his newspaper had no archives, beyond what was contained in a morgue of files dating mainly from the 1960s, but which included a pitifully tiny number of items from the 1920s and 1930s: a few letters to the editor, Mr. Hill's booklet, "How to Detect Counterfeits," a copy of Defaulted Debt of the Southern States of the United States of America, Extracts from the Annual Reports of the Corporation of Foreign Bondholders (February 1925). There was not even a photograph of our founder, William F.G. Shanks, and we had to rely on one small picture reprinted, once, glaring out of our weekly edition. There was a rumor of a cache of Shanksiana contained in two boxes in a Quonset hut somewhere in the Everglades, but these have not been substantiated.
Which is why I intend to place some of these resounces with the Museum. And I wish other erstwhile conservators of our past would do the same.
"Indeed, some analysts say that this year is shaping up to be one of the biggest years for new municipal bond issuance since 1985, when cities and states crammed through about $245 billion in tax-exempt bonds to beat changes in the tax laws that took effect the following year." The Wall Street Journal, Dec. 4, 1991.
"If total issuance comes in, as expected, at $165 billion, this will be the biggest year for municipal bond sales since 1985, when cities and states flooded the market with $204 billion of long-term bonds in an effort to beat changes in tax laws that too effect the following year." The Wall Street Journal, Dec. 9, 1991.
If you choose $204 billion, you were right!
Another Trip to the Cleaners
Another batch of municipalities in 13 states apparently stand to lose $75 million because they were chasing the honey pot of yield.
From An Elected Official's Guide a Government Finance, by Girard Miller, published by the Government Finance Officers Association in 1984:
"Policy: The security of public deposits should be assured through measures such as proper collateralization, credit analysis and professional evaluation of the risk-return relationship embodied in each investment. Public investment officers must act prudently when selecting securities and maturities.
"Discussion: The responsibility of the governing body is to provide a framework for the safe investment of public funds. As with fiduciary investments, the primary goal of public investments is to obtain market rates of return while preserving capital. Risk-free, short-term U.S. Treasury bills can be used as a benchmark for all other investment transactions. Higher returns can be obtained in other investment sectors from time to time, but before public funds are so placed, investment managers should take positive steps to protect capital. Collateralization practices should reflect the current state of the art. Likewise, credit analysis should be conducted for every depository, particularly if collateral is not provided under a statewide collateral system. The investment policy should require that the investing officer document the riskreward decision made each time that funds are invested."