A Trip to the Museum of American Finance

It was just the kind of clear, crisp October morning that puts one in the mood for financial history as I strolled down Wall Street from Trinity Church to number 48, part of the former headquarters of the Bank of New York, where the Museum of American Finance is housed.

My expectations were high. New York is the nucleus of the global capital markets. The city is home not only to the largest stock exchange in the world, but also, for good measure, the second largest. If there is going to be a world class museum of finance anywhere, it would be here.

But I would have been more hard pressed to say exactly what I expected.

A copy of the cheque for Ford's 1956 IPO proceeds

There were certain things I was prepared for. The name of the museum struck me as oddly parochial. Why the focus on American finance specifically? Why not the American Museum of Finance? But I had resigned myself to the fact that there would not be any artifacts from the Dutch tulip bubble of 1637.

The museum met that expectation, at least. It is resolutely American. It has a permanent exhibition in one room dedicated to Alexander Hamilton. For the Museum of American Finance, the story begins decidedly with the founding of a nation.

On reflection, I wonder what pre-Columbian systems of finance there may have been in the Americas. How did the Incas finance the construction of their cities? While potentially interesting, this is not a question that is addressed by the museum. The ‘American’ in the name refers to the United States.

Ticker tape from 1929

Given its laser focus, not to mention real estate costs in Manhattan, it is perhaps unsurprising that the museum is relatively small.

There are some cool items on display—and I realise that I’m stretching the meaning of the word ‘cool’ to its absolute limit here—such as a treasury bond that was issued to George Washington when the United States government assumed the debt of individual states in the 1790s,  a roll of ticker tape from the Wall Street crash of 1929 and a copy of the cheque for $642 million given to the Ford Foundation by the underwriters of the Ford Motor Company’s initial public offering in 1956.

Statue formerly outside the NYSE Luncheon Club

Besides pieces of paper, the exhibition on the financial markets also features more physically imposing objects, such as the bronze statue of a bull fighting a bear that once stood outside the New York Stock Exchange Luncheon Club, although this handsome work of art is inexplicably tucked away in a corner.

The history of financial journalism and information technology is quite well represented. A reprint of the first ever front page of the Wall Street Journal features some interesting news items. Another display consists of a series of increasingly sophisticated machines used to find out the prices of various securities, from the first stock tickers to the Bloomberg terminal. The passage of time has not been kind to the venerable Quotron.

The Quotron

While interesting, the displays are somewhat staid and unimaginative. How much more exciting it would be, for example, if the stock tickers were still at work, churning out reams of stock prices as they once did. Imagine hearing the ticking sound that gives this machine, which played such a crucial role in the crash of 1929, its very name.

The commodity futures display case is particularly uninspiring, and shows signs of neglect. It is not clear that one shiny grey block is meant to represent platinum until you see its label lying forlornly on the bottom of the showcase, having fallen off its shelf. Several other labels have similarly given up the ghost. Uranium meanwhile is portrayed as a kryptonite-like green substance, despite not having that appearance in real life.

Another error which casts doubt on the diligence with which the displays have been produced is to be found in the description of a Vogue Instruments Corporation share certificate once owned by Bernie Madoff. The text describes the fraudster’s Ponzi scheme as a trick which “entices investors with the promise of high, consistent and short-term returns, but pays them with money gathered from previous investors.” I’m no expert, but shouldn’t that be “subsequent investors”?

Sugar futures are down

A visitor to the museum today will also be disappointed if he or she is hoping to learn more about the subprime mortgage crisis that resulted in a financial meltdown, the bankruptcy of Lehman Brothers and a global recession whose effects are still being felt around the world. A chart that illustrates the ups and downs of the stock market stops abruptly at 2007, and no mention is made of events after that date.

This blind spot is all the more puzzling because the museum was able to produce a temporary exhibit on the credit crisis in 2009, which was on display and frequently updated for several years. A pdf version of the museum’s timeline of the crisis, last updated in April 2014, is available on its website.

While the museum dutifully records the misdeeds of unscrupulous financiers and investors, and even dedicated an entire exhibition to financial scandal in 2010, greater emphasis is given to the “heroism” of figures such as Hamilton and John Pierpont Morgan. No space is reserved for criticism of capitalism itself.

This is not massively surprising, as the museum is largely funded by donations from trading and investment firms, banks and other financial service companies.

The way an introductory information panel attempts to justify the inherent risks of capitalism reminds me vaguely of how the devout explain the existence of suffering. Mammon’s plans are as inscrutable as Jehovah’s, it seems to say, but it is inevitable that all things will ultimately be resolved in accordance with His benevolent will.

After every crash, the market has recovered and surpassed its previous highs, says the plaque. But as every connoisseur of small print knows, past performance is not necessarily indicative of future results.