always on a majority vote or constitutional means. we are suspending free speech and due process. this is not the democratic party that we once knew. >> thank you for joining us for this event starring financial expert as a member of the finance faculty and

director of the center of the global security analysis i have the task of reading a short welcoming remark and in 2020 we celebrated 100 years of education and since that inception we believe and as we continue our mission it is with our honor we continue to present these discussions of our new academic year i very much like to think the center of global security analysis and are wonderful partners from the cfa society of new york this serious was designed to shine light on the important trends. today's session features a keynote discussion with s

historian and former financial executive of inside money offering a frank look against a the backdrop of american history i would like to inject a personal anecdote and note that my father got his first job on wall street in 1927 and it does go back a long way but maybe it goes back further before that. it goes in three parts first president and ceo of american finance went reduce our speakers. then zachary will introduce his add on —- introduce and then we will facilitate audience questions which we ask you type into the q&a section at the bottom of your

screen. our speakers will be but then we also be distributing by lottery his new book and you'll be notified within one week. before i turn it over to david, what you to ask her on —- ask you to consider to making a donation to the centennial fund which supports emergencies with the covid-19 public health crisis. to quicklys and security on —- accurately in the chat and now i turn it over to david. >> it's always great to be back as we continue that amazing partnership but what strikes me zachary looking

into his background not just the endeavors he is involved in but the incredible depth of the various sectors his entrepreneurial spirit and optimism is prevalent which i suggest all of you check out and the progress that they are looking at things that can move society in a more positive direction to hopes and aspirations and not just the fears and the constant fear mongering that seem so prevalent and education from oxford and harvard were he received his phd is a global strategy of investment as an active contributor on places

like cnbc and foxbusiness and like "the wall street p journal" the "washington post" but none more important than the upcoming history of her own magazine financial history this book from harry truman won the 40 election or china american relations now shunning the limelight and zachary has turned on the lights to the culture and the people to use his words into the story of the united states so let's turn it over and welcome zach. >> thank you so much and welcome for>> the introduction thank you for putting this together and also for the

introduction i see this from the upper west side and with the business school campus i walk past with frequency so it has a neighborhood feel to it thank you for all joining this mid dayul in july i think we are getting to the tail end of our zoom world although i'm sure that will continue through one form or another and having this conversation as we have been through the last 18 months so i wrote this book first with the question how does money shape the united states that ist a broad question and how many in the 19h

century was not necessarily a unique commodity but the proliferation of money and the prevalence of paper money, compd to most parts of the world through human history and most human history wealth is tied up as a liquid asset and in the united states with an explosion of capital that is chaotic and messy when it irrigates the capital system and i wanted to write how many in the 19th century

transforms into american power and how a group begins to exercisee the heart of the american government during world war ii and the cold war and to transpose a system and then how almost all men are heavily white male history made the world of the 20th century and how we are still living in that world and the aftermath and the effects. in that sense that is how it became the topic so in those partners that go from wall street into the halls of government in a very central way but then the family firms

merger from brown brothers that plays into the narrative i just talked about and then then they serve the new deal become ambassador to moscow and one of the reasons for the dissemination of the cold war and then become secretary of commerce and the distributor of all marshall plans and then finally the architect of vietnam policy and in addition there is a major figure was assisted secretary for during

world war ii to become undersecretary of state to george marshall which is the precursor to the wto and then undersecretary of defense and then secretary of defense during the korean war. i knew about that and i wanted to write how brown brothers became the perfect aperture the ideas that i just laid out but as i wrote the book and not was aware of it took me a while is the degree to which brown brothers is a quiet mover and shaker of many of the most pivotal moments in american history son in finance and the financial

system. and more importantly how their story including the contemporary evolution says how we come to define capitalism. and their story offers the alternate pathway in the future i find much more admirable. and i will conclude with that. . . . . which was the essential

english port throughout this period of time. you could do a transatlantic trading business without having a presence and agent in liverpool. philadelphia and then new york city that becomes the dominant house of these four branches. so, there's no firm that has survived through 2021 and longevity isn't in and of itself something to write about or necessarily an interesting life or does it provide any lessons. it's also overly tempting to try

to describe qualities and characteristics in retrospect to say this is why the firm did why it did. there's always loc and contingency and others plenty of family partnerships throughout the t first 50 years of the 19th century and the second 50 years ofnd the 19th century that look like they are solid, stable and we are going to stand the test of time and didn't for one reason or another. the next generation is neither interested nor and adapt, whatever the reason. so accepting the fact that there's a t certain amount of lk and contingency and it's not all determined by culture and attitude. there are some qualities that hiare unique in its 200 years ad explains in many ways they are embedded in the dna of the firm by alexander brown over about 20

years that are unbelievably full of clichés that sound like the almanac and ben franklin on the one hand and lecturing to his children things like never a borrower or lender be but alexander brown has his own variance of things like trust is rnhard to earn and easy to lose. of those with whom you do business it is better to be safe than to venture everything and lose it. pounding these guiding principles into his children and theys then pounded into their children and even after the 1930s stops being essential to the governing of the business and moves into other partners but still embodies the evo's.

that and it's time wasn't necessarily remarkable. what is remarkable is in retrospect how the financial world evolved because the idea of risk as the thing that you should hold front f and center n your assessment of how you do business is a very different mantra than try to shoot for the moon everybody is trying to be uniform how to become a billion-dollar company and how are investors going to get the return on capital. and that was so antithetical because there certainly were a lot of speculators 1907 and then finally the last great massive

crisis of the depression starting in 1929. and what they learned through that is every day when you go to sleep, you t had better be prepared to make up for a completely changed world in a negative way w that you can take nothing for granted. that there's no way you can predict the fate and what's going to happen on the other side. sall you can do is be prepared and be mindful that things can happen and if it was a guiding principle. on the one hand that prevents them from ever becoming massively large. in fact they largely stay on the sidelines of the 1890s but those that invest in the railroads and those periods even though it was massive fortunes made from j.p. morgan to leland

stanford but we don't remember the fact that for all of those who get rich and the ironing of the fortunes of the gambler who becomes one of those important railroad barons at the turn of the 20th century as a source of teddy roosevelt's northern trust to try to corner the entire railroad system. they are saying no wayfo we are not getting involvedin in that because the risk doesn't work for us and it doesn't work for them because it is a partnership and it is a family partnership and it was their money. every deal they do from the time in memorial to the present because it is a partnership, they are venturing their own hard-earned capital which means they could lose it all. the only people that really made money were not the people that built the railroads were the

first bombs but the secondary, the financiers who bought the bonds for pennies. though he did invest heavily as did his son which became as we know one of the dominant estate lines in the united states. so this idea of being mindful of the downside not just the upside was a guiding principle that workeded for them and again it didn't prevent them from becoming rich. it meant greed by definition was bounded by risk. you contrast that with today's world where by virtue of these partnerships all going public in the 80sic and 90s the risk and reward ratio changed. the massive risks were offloaded either to the balance sheet of shareholders or taxpayers if the

government failed and what that means is if you are in a financial firm or dc or private equity today, you might make individually $10 million or more. you are highly unlikely to lose $10 million individually. you might lose reputation, you might lose your job or some money but you're not going to lose theou kind of money you're going to make. there's a partnership structure those two things were much more evenly balanced. the other thing that was part of the culture that i think explains some of the success is the acute awareness that you can see in alexander brown private gain and private company gain cannot be detached from the public good and definitely or infinitely but there is a close and acute relationship between my individual gain and whether or not it is thriving. what this meant it as it was a

front that even before the 1880s and 1890s when it was a self-conscious elite begins to coalesce and is a founding card carrying member of that loft delete which is why they were kind of part of the story. they were educated, that whole nexuslt circle of wealth, willpower and privilege. at the school when they found it in the 1870s, which was to rain with great power comes great responsibility called the spider-man theory of elite history. i believe they really and body into this and you can see this early on when in 1828, alexander brown who is one of the richest

men in baltimore realizes baltimore has fallen behind new york and philadelphia as a trading center because new york and the erie canal to connect to the hinterlands and to the thriving ohio valley. philadelphia is also so they spend money on the first passenger locomotive line in the world which was a moonshot at the time. they had to go above mountains, they didn't know the steam engine would work or blow up. they invest their own money and they do this because they know if they don't baltimore will fall behind in alexander determined to see his community thrive. this makes them no money at baltimore and ohio and

essentially it yields some return over time but it is hardly a good investment if it is purely in terms of the return to shareholders. it's a great investment in terms ofre return to society because y doing this it ushers in a whole period throughout the united states and europe that is fundamentally central to the industrial revolution and the growth of the power and prosperity and that of the world and that continues so by the time you get this group of partners in the 1930s, 40s and 50s by the time they enter government, it is this culture the public service is a requirement of privilege. globally with the dollar as the central axis of the global

economics which meant they were going to thrive and they created a u.s. dominated the system systemperpetrated in the cold wl true. it seems that human beings are messy and so is history. if you are looking for purity of spirit andnd heart, you're going to be hard-pressed to find it in anyone. they are the same individuals and collective that you can be of service and self-serving. you can be selfless and selfish and both can be a true simultaneously and i thinknk in many ways our desire, our collective narrative for simplicity of morality gets in the way of the complexity of human nature and the messiness ofof history. while they and nobody and body to the cfos that's trusted more than the dollar they are also

deeply complicit with the largest cotton merchant. they are literally embedded in the system and simultaneously opposed to slavery as were many northern merchants that recognized if you are wearing a cotton shirt or thriving on the basis of american trade just as many of the emergence of liverpool recognized it became antislavery liverpool itself was thriving almost entirely because the labor of the enslaved people for cotton in the united states into sugarcane and other products in the caribbean's, soo they were in bed with the system but they often also hated and dealing with that was trying to get out by the 1840s but even that was complicated. if they could become a paper

merchant that facilitated others they could scale much more than a purveyor of physical goods and so they move away from a physicaltrade and the paper trad become hardened founding supporters of the republican party. but in no way can that be sugarcoated for much of the northern economy in the 1830s and 40s and one of the reasons i think lincoln talked about the un- attainability of the nation that is half slave and half free is by virtue you were essentially all slaves meaning there's no such thing as half and that's one of the driving realities of the civil war. it b also becomes part of the drivers of early american imperialism if they extend loans in the 1900s and into the 19 tens to the government of

nicaragua and more to the point to buy cheap labor loans and then expect the government to pay them back and when they fall into its own kind of civil chaos in this period of what we call dollar diplomacy with loans to cuba and others, el salvador, honduras become the proximate excuse to take more control of these governments when the governments seem to be unable to meet their financial obligation and at the urging of the grandchildren of alexander brown, the taft administration says more or less for the next seven or eight years. to the point the nation magazine which oddly enough they could help fund becomes a critic and

calls nicaragua. they were also as i just said incredibly exclusive. they were a closed believe in the early 20th century and understood the privileges being lot troubled by that or particularly democraticha about that. what's interesting is the system that's an outgrowth by the 1950s is a much more balanced one. the reality is it was a much more egalitarian economic system that was constructed by much more elite captains of industry

and finance and i think part of that was that intuitive sense that it's kind of an organic hold. part of what i come to in this is this idea that the partnership model and the culture was in part a model of the sustainable capitalism to.

a wealth management business. it merges with morgan stanley that is in philadelphia. the king of the certain kind of finance in the 1980s that was epitomized byis the film wall street and all of her stones michael douglas character. it was a criticism of the culture but of course becomes in its own way a celebration. the film becomes for generations from the 1980s a sort of

that's who we want to be and in many ways it is replicated by the scorsese film wolf of wall street where leonardo dicaprio plays a sleazy unit in his own way heroic figure and that was so antitheticalit to the culture because their attitude was we are not trying to just help and rich, we are going to serve our clients and create a meaningful culture and financial benefit for our employees and yes return our partners considerable wealth. but to do so in a way that is never systemically a problem and never, we are going to go for the returns nono matter what the risk. the way i and the book is you don't want a world where the mentality is the only mentality in the financial world. evthis never would have underwritten elon musk refunded

the moonshot although they did a little bit in the 20s with the railroad. you do want that in a dynamic system and american capitalist system where hopes and dreams can get fueled by capital. the way in which the ratio between that and more prudent awareness that it's like theve quick silver powder that can create and destroy and you've got to be mindful not just of its potential. that's where i think brown brothers is in ultimate version of what capitalism can be and the balance has become skewed between this version and i'm not being pejorative about either. i'm being critical of the ratio of where that exists and we can do more with brown brothers and less of the other shifting the mix and that we should honor the

story of the firm. brown brothers still exists today and find simple use of $2 billion in revenue, 500 million in profit and they were publicly traded they would be around the 20 billion-dollar company. we don't respect that reality the way that we demonize the players that come to close to the sun or not. there's going to be no trilogy about thegy rise and fall of brn brothers because the story isn't dramatic enough and it doesn't satisfy the craving for heroes and villains but in many ways if you don't want them to be the ones driving the financial system, you want people who are client dedicated, serving society and are flawed and

complicated and need to be looking themselves in the mirror and be self-aware but nonetheless in many ways that is the lesson ile took from this tt that relationship between the elites in society if you've got a lot you need to give a lot and to be mindful of the risk. mindful of the power of what you're doing not just to enrich and create but not create disturbances in the forest and we would be a more balanced capitalism that over 220 years epitomizes, represents and in many ways at the end of this i came to very much log. so i think that will be my formal presentation in terms of questions. >> before we beginea the questions, let me ask everybody to please ask a question in the chat box. we've already received some good ones and i would encourage you

to ask your own questions now. the first here's a good one. are there any other examples? >> those are two good ones. i suppose some degree. one of the best answers to that question. a what i am saying is by virtue of that culture where our name is not in the public papers, every day that we are not in the story

is a good day and that's probably why there's been no book about them and my joke for a while to people because you may not have heard of brown brothers if you are not in the financial world. you may not even know that it's still around if you're not in the financial world. that precludes some of the attention paid and it's the same thing within the financial advisory world. and my point is we should find a sway to tell the stories and yhonor them even if they lack te drama of other stories because those we tell shape what is possible and what we should aspire to.

it is a fascinating story in and of itself. several questions about the relationship with the other household names, rockefellers, vanderbilt. do they shun the jewish financiers of the day and what is the constant relationship or not. >> there's a lot of interaction but even though brown brothers themselves it's not a leading railroad financier. they joined a lot of the syndicate deals so most of these when you are recapitalizing it's being led by j.p. morgan with others joining on. it's a central moment in the

change of the role of the united states relative to the world where the united states goes from being a debtorst nation toa creditor nation to europe. and brown brothersot has a role with morgan and lamont and all these other names that are a nlittle more familiar but they juste are not leading. they are joining. so they are always in the room and invited and going to the metropolitan club. they tingle with vanderbilt and one of the more speculative ventures across the atlantic to compete and that and quite badly because one of the ships sinks

and they get some government underwriting for this. vanderbilt was like i made my own money by myself and i will not take second fiddle to anybody that gets government money and he was outraged at this particular steamship line and got government money so always interacting with these groups and much like a load of wall street i would say in some sense there was a cultural neanti-semitism. i cite one moment in the book where the widow she buys in her house in new jersey and a jewish businessman approaches the sons to buy the property and they say we don't want to sell to that sword and they say of course

not. at the same time when they opened the golf club in long island some of the founding partners of the club. it's not like they were unwilling to do business deals and that is true with a lot of the interaction between the jewish bankers and lehman and goldman's. anti-semitism on the one hand but not to the degree we won't do deals. that plays too but i was saying before if you are looking for simplicity and easy heroes and villains, i am not a big fan of that. i'm not going to write a glowing

look at hitler but i think a lot of history is much more nuanced. >> cindy macleod asks the question what influence did the first and second national banks shave? >> the second bank i think is much more crucial and jackson's bank wore about not renewing the charter of the second bank and even more important the intense animosity to paper money which of course was the lifeblood for most of jackson's supporters. the relationships that exist around american history where the heartland and before that the jeffersonian world is consistently antagonistic to the money with the northeast, the banks and that scene in american history of animosity towards the

creators of money as a way of stealing the hard earned work was a powerful fuel for the jacksonian movement and to steal the wealth of his supporters and the people of kentucky and the ohio valley and all of those areas that are growing but of course they needed the money of these banks for opening farms and settling the frontier that was into this open space. it was other people that were there first. the animosity w towards banks tt you are starving the people and creating these violent financial crises and when the second bank isn't renewed and then jackson leaving office issues a speech that forces the banks to call in allks their paper helps create e

panic of 1837 which is the one kind of existential crisis moment for brown brothers where they turn to the bank of england. i didn't get into this but it's huge in england and by way of brown shipley and the bank of england as the governors. part of that risk culture is framed by that moment and the panic of 1837. >> you mentioned school and bones and it comes up in the book a lot. what lessons did they learn from their experience? >> if you talk to people in that world, these societies which were called secret societies and in yale called senior societies

was this place where once you were selected it was one of the places you could totally be yourself because you were in a trusted cone of silence. later on in the 60s when there was a backlash against the elite culture people were seen as r leading the united states down the dark path into the vietnam war and therefore were in this act of what was seen then as stupidity plus they led everyone to question maybe the cold war was just a way for establishment elites to enrich themselves and the fact that there were all these societies meant clearly behind closed doors there were secret truths and paths being cemented which is why in that world of conspiracy theories the believers of history had been pulled behind the scenes by small confident elites and the brown brothers were quietly there and there were all these

theories was he in bed with nazi germany and did they find the industrial machine prior to the rise of hitler. but i think in reality it really was a world where young the privileged men could let down their guard and to be honest with one another because they knew that their secrets were safe with one another and yes those relationships like most of us carriedug through over the years and yes they then intermarried and yes they did favors and sat on the boards where one hand shook the other hand watched all that reality was partly true where you benefit your friends and connections and class but i do

think it is cemented of these bonds but i'm not a big fan of the conspiracy part. >> were they involved in financing the civil war given its location to baltimore did that complicate matters with new york city and philadelphia? >> it certainly did, but by that point, the baltimore office was the least significant. so the businesses that had already moved to new york and liverpool and the baltimore of a was kind clearinghouse for the new york. john brown also cashed out. those houses while they were led

by cousins and nephews were not as important even though they survived individually gets renamed and has that future history as well but there was a moment in the beginning of the civil war at the new york house that orders the baltimore house. as most people know it ends up being occupied. in terms of the business dynamic it wasn't important enough to be the overall business by that point. >> they want to know did you get corroboration and write in the book how did you conduct your research? >> they commissioned an

anniversary book that took the individual about five years from the early 60s he collates the record and after thatan and agan it's not that important but all of that research material is deposited at the new york historical society with about 140 archival boxes that for those of you that have done research is a lot of boxes and then the histories at yale that were done by the truman library and there are some materials but not huge amounts, so there's no lack of publicly available documentation. it's possible there's something. i saw no evidence that that was theid case but it doesn't mean t is the case. i wasn't that interested in trying to figure that out.

there was a lot that could have been said in the 1980s and into the present, but frankly a lot of the business custody work, custody for asset managers, traded stocks in u.s. exchanges. all of that is vital to the functioning of the system but it's not the stuff of the grand narrative. i will leave it to you to judge even the stuff that i write but certainly that is not and i didn't really need to get into it with the partners today largely because i didn't really want to write about their business today. i wanted to write about the business model as a contrast to what i talked about before, the kind of too big to fail. so i wrote about it in that

respect, but i did talk to some of the partners. i did want them to feel comfortable with the book as it is theirk story. i certainly didn't give them any veto power and they were not overly thrilled about stories of slavery and moments of anti-semitism and all this and i think they were worried that that would be the thing that people focused on when they read the bookat as opposed to being part and not the focus of it. but i certainly wanted them to feel like i was writing an honest and honorable history of a firm and i didn't have an agenda per se. >> where does this influence stand today?

>> it is relatively modest. i don't get the sense that today they have any interest in whatever we call influence. that's not their motivating desire. they still prefer culturally to be behind-the-scenes. whenever there are things that might touch on the businesslike custodial regulations or things like the occ, they will engage the regulatorshe for sure but probably no differently than any other firm. i think they are proud of their legacy. they are not interested in the public service part of it. >> they cover the massive management. >> a lot of this harmonization they do a good bit of direct

asset management as well. >> you've written on politics as well. when people talk about money and politics and finance or lobbying, how does it become intertwined in our d culture? for the most part, people with huge amounts of money were not interested because the government was sort of a small back order so most of these titans believed they could exercise much more power by shaping government were paying for a senator or finding an acolyte to a point that being in office themselves. that begins toms change at the dawn of the 20th century. andrew mellon and the secretary

of treasury. i think it is the product of a new deal and beyond where you have this revolving door between finance in washington and the picture -- pejorative reference. you don't t see that into the early part of the 20th century you see a little bit in the 1920s and certainly during world war ii and into thee cold war. >> was there any degree of luck in the right place at the right time? >> for sure. i think if you looked at the who's who you would have found a whole bunch and would have predicted it would be around for generations and probably have

some of the same values and even those that the brown brothers did. one thing that set them apart they were meticulous. they would score them one to three and make sure they were not doing business with the enones. let's say the bank of england hadn't given them a modest bridge loan and the argument was this is cascading and rolling we don't have the capital and given the 50% of credit flowing

through brown brothers they broy would say if we fail, the whole thing is coming down so d it's better to prop us up. it's better to prop up brown brothers. if that hadn't happened i don't know. there may have been a story. they might not have found that next-generation. the children of sir william brown whose children are not interested but he manages to bring the partners to the business who are unbelievably confident. but that culture remains whichul

is fascinating. separate questions will they be the lastt to embrace it and have you seen the family and what are the impressions? >> i am not sure which painting that refers to. there's one that's pretty well known by eastman. i'm pretty sure i know which one that capture that banker always wearing black.oo they look like bankers and their families look like what ever rmoment of time.

if it becomes an embedded part of the financial system they are likely to develop custody tools and technologies that are safe and secure and reliable. >> was there any connection between brown and graham? >> i can't say for sure whether they knew each other but certainly the mantra the asset management called scattered wealth talks about how every ten years the world changes stocks and bonds to reassess your

portfolio and you can't make assumptions thatsu what worked then will work now so that you those of how you invest in value and make sure your portfolio is well constructed. >> a final question before i come back and wrap it up. thank you for the exhilarating talk you mentioned it may be better positioned to achieve the public good. why is that the case and do we see the same principle today engaged with and more successful with impact investment? >> part of the point i am trying to make is where it exists and the hedge funds for that matter are sole proprietorship's the

way they deploy capital as they are essentially deploying other people's capital even if they are private. it was always there capital in every deal and therefore it was a huge amount of individual risk that you took on when considering where you were going to deploy capital which doesn't necessarily pertain to a private equity firm. it's like the primary funding vehicle. i'm not saying that it should be structured. you do not want a financial system composed solely to aware of risk it's about the balance into the ratio that's become

unbalanced and which one ionizes the risk part focused on the outside rewards as opposed to striving for a sustainable balance of how to deploy capital and if there's any lesson from how we concluded it's that sustainable capitalism has to be aware of the entire lattice of society and every huge gain is huge risk and loss and potential destruction. it means be aware of it, be mindful and balanced. >> we had a huge case in the list last hour. one point about the book if you are interested there's no biography and there is a two-for-one because he covers him in such rich detail it's almost like a biography.

i want to thanki our friends, te school and the phenomenal engaging our a discussion with prominent ukrainian riders and former u.s. ambassador to russia on russia's invasion of ukraine and the fate of the country. here is a portion. >> there's lots of ways one can help their country. the most important is done by the army and people mobilized to die for the country but there

are lots of ways other volunteers are working and though i am not there she should be taken back. there's nobody to take her. they would bring her to her apartment and help get her to the apartment. there are many people who cannot work or make it and they

shouldn't be forgotten. >> glenn will be talking about his newest book securing democracy. l the freedom festival in las vegas you are here is there an oddity? >> there is an