tv Zachary Karabell Inside Money CSPAN August 21, 2021 6:01pm-7:03pm EDT
>> thank you for joining us for this event with the claimed author and financial expert and founder of the progress network cesar torres. my name is gene kelly -- and i'm director of the cavalli center. before we hear from zachary i have the task of reading a short book. in 2020 we celebrated 100 years of education. since its inception we believed in the power of her ships to lead to change but as we continued our mission of innovation and business it is with either we continue to present these discussions in an elected -- academic unit like to thank the center and their
wonderful partners in the cfa society of new york for sponsoring today's conversation. the series was designed to shine light on the important trends. today's session presented kia -- tdap session with zachary karabell the former financial executive and author of "inside money" the book that offers a first frank look inside of brown versus harriman in the back drop of american history. you'd like to inject a personal anecdote at this point. my father had his first job on wall street in 1927. that goes back a long way. our session will take place in three parts. first the present ceo of the
museum of american -- will introduce their speakers. then zachary will deliver his address for about 30 minutes. following the talk david and i will facilitate questions and we would ask that you type it in the q&a section at the bottom of your zoom screen. for speakers will address as many as possible. also please note that we will be distributing by lottery 100 copies of zachary's new book and you'll be notified as to whether you won one of the books. before i turn it over to david to introduce their speakers i want to ask you to consider making a donation to the center of global finance which addresses student emergencies connect with covid-19 public health crises.
you can make a tax-exempt gifts quickly and securely on line at the link provided in the chat. now let me turn it over to david. c thanks jim. it's always great to be back and continued this wonderful partnership with gabelli. what strikes me about zachary and his bat round is not just the incredible endeavor he is involved in but also those various sectors. some generic -- entrepreneurial spirit of optimism is travel and at zachary karabell.com were tested just all of you check out and does what can go right podcast and as you mentioned his progress network. zachary and his friends are looking at our society in a more positive reaction to some of her hopes and aspirations and not just fear-mongering this seems so prevalent today.
his education is from columbia oxford and harvard the latter of which he received his ph.d.. his grit wall street includes investment president of fred alger and president of -- and capital. he's been an active contributor in places like is cnbc "msnbc" and "fox business" and it's been many places like "the wall street journal" by "washington post" and time but none more important in an upcoming issue of her own magazine financial history. in his latest book "inside money" his 13th in the wide-ranging topics like how harry truman won the 1948 election or china american relation. he is one that is shunned the limelight but with this book he talks about it the firm and its culture and people using in his
words the big story of the united states. let's turn it over to the big story of round brothers harriman zachary karabell. >> thank you very much and thank you for that introduction. and of course the gabelli school and jim kelly for that introduction. i'm near the business school campus was i walk past with some frequency so little but of a neighborhood feel to it. and i want to thank you all for joining me this mid-day in july. i think we are probably getting the tail end of our zoom world we are doing this and i'm sure they'll that will continue one form another through the fall. i'm sorry we can't be together having this conversation but will have to be together
virtually. i wrote this book first as a question and that question was how the money shape the united states. certainly not one that others haven't dealt with but i was very fascinated by rick particularly how money in the 19th century was not necessarily a unique american commodity but unique in the proliferation of money the prevalence of it. the prevalence of paper money that floods the planes and coast in the united states compared to the relative illiquidity of most parts of the world and history. most human history wealth is tied up in the liquid assets, land and people and stuff and in the united states and 19th century there's an explosion of
capital which is very messy and chaotic and usually destructive when it -- and constructive when it aired dates. then i wanted to write about how money in the 19th century transformed this american power in the 20th and particularly how a group of financial -- in particular begin to exercise extraordinary political power at the heart of the american government during world war ii and the cold war and then to transpose an american system onto a global system. so we will start with how almost all men a heavily white male history how they then made the world of the 20th century and how we are still living in that world and the aftermath and what the effect of it is in the 21st in that sense that's how
it became my topic. i was aware the fact that there was a cautery of round brothers partners in the middle of the 20th century who go from wall street into washington in a very central way. i'll get to that and those partners were averell harriman who was of the avril harrison dynasty inherited the -- which plays into the narrative. the partners in addition to averell harriman serves in the new deal and becomes a nasiter to moscow and one of the reasons for george kennan's -- george kennan's attitude about the cold war. he becomes secretary of commerce. he becomes distributor paul marshall planning in europe and
all american governor of new york and then finally the architect of the vietnam policy. in addition to him there is robert lubitz whose name was forgotten but was a major figure in the american air force and assistant secretary of war and henry stimson during world war ii becomes under secretary of state to george marshall one of the architects of the precursor to the wto in one of the architectures of national security state and then becomes undersecretary and secretary of defense during the waning period of the korean war. i wanted to write about how that all came to be. he became the perfect aperture of the story. the ideas that i displayed out but what was much more
interesting to me as i wrote the book anonymously and what i was not as aware of and to me a while to actually become sensitive to is the degree which brown brothers are a quiet mover and shaker many of the most pivotal moments in american history and certainly in american finance and the chief architecture of the american financial system and more importantly how their story including their contemporary evolution says a lot about how we come to define capitalism and not all of it very and how the story offers an alternate pathway of capitalism in the future that i ended up finding much more admirable honestly and i will conclude with that. in many ways and the firm could have told the story because they are the longest surviving asset management private investment
firm in the united states. the date it from 1818 i think they are wrong about the founding dates as far as the firm begins with the patriarch alexander brown who was in irish merchant in belfast in the 1790s and he goes from being an exporter to 11 importer he brings it into the family business, brown brothers. brown brothers are the four sons of alexander brown and important in the brown trading empire. liverpool which was the essential english port throughout this period of time a transatlantic trading business with agents in liverpool philadelphia and the new york city which eventually becomes
the dominant house of these four branches. there's no firm that has survived from 1800 to 2021. longevity is not the only reason to write. it's not necessarily an interesting life nor does it necessarily provide any lessons it is also tempting to try to ascribe policies in characteristics in retrospect to say this is the way to survive. there's always look in their size contingency and there are plenty of family partnerships throughout the years of the 19th century and the second 50 years of the 19th century all of them look like they were solid stable and could withstand the test of time and didn't for one reason or another. subject to the next generation not as interested or adapter whatever the reason. accepting the fact there's a certain amount of luck and it's
not all determined by culture and attitude. they are qualities that make round brothers i think unique in its 200 years and explain why and these two things in many ways are embedded in the dna of the firm by alexander brown in a series of letters that he writes to his four children that are unbelievably full of homilies in cliches had sounds like a crib of ben franklin on the one hand and felonious lecturing to his children things like never a borrower or lender but alexander brown has his own variant of things like trust is hard to earn an easy to lose. be careful of those with whom you do business. it's better to be safe than to venture everything in lose it
pounding these guiding principles into his children and his children pound of those risible is a placenta their children to pound them into their children and even after the 1930s when the last of the brown family stops being essential to the governing of the business and moves into the other partners not related by blood but still embody that eat those. that at its time was not necessarily remarkable. what's remarkable is how remarkable that is in retrospect in terms of how the financial world evolves and the idea of risk as the thing you should hold front and center in your assessment of how you do business there's a very different mantra than the contemporary mantra of wager at all and try to shoot for the moon and how are we going to become a billion-dollar company and get return on capital? that was so antithetical to
brown brothers because there were lots of speculators in the early and late 19th century. it was kind of a metronomic pattern since 1819, 1837 come 1857 come 57 comedians and they become 1893, 1907 and finally the last great massive crisis was the depression starting in 1929. and what round brothers and his children learn through that is everyday when you go to sleep you had better be prepared to wake up to completely change the world in a negative way. take nothing for granted. there are no ways to predict the vicissitudes of what's going to happen on the other side but all you can do is be prepared and be mindful that things can happen and that was the guiding principle. now on the one hand that
prevents brown brothers from ever becoming massively large. largely they stay on the sidelines of the railroad boom of the 1880s and 1890s but most people invest in the real road even though that's where massive fortunes were made in we remember huntington to leland stanford but we don't remember all those robber baron to get rich including b.a. chairman and the harriman fortune to gambler who becomes one of those important were a red errands at the turn of the 20th century and the result trust busting with the northern trust which is what harriman tries to create for the entire realm wrote system. brown brown says we are getting involved in that. doesn't work for us and it was a partnership. it was their money.
every deal brown brothers does because it's a partnership they are venturing their own hard-earned capital which means they could lose it all and frankly the only people who really made money in the real road and were not the people who built the road roads are issued the first bonds they were the secondary financiers who bought the bond when all they lines went bankrupt and that's what determined that although he did invest in the pacific rover which ended at a coming one of the dominant freight lines in the united states. but this idea of being mindful of the downside was the guiding principle at work for them and to prevent them from becoming rich and doesn't mean that they weren't -- it meant that their greed was by definition bounded
by risk and buy what they would lose and you contrast that with today's world whereby virtue of the partnerships all going public in the 80s and 90s they were rich rashad change. the risks were offloaded either onto the sheet of shareholders or the balance sheet of taxpayers as the government album out fewer financial turn or a tax firm today you might make individually $10 million or more than that. it's highly unlikely you will lose $10 million. you may lose your reputation you may lose your job and you may lose the money but you're going to lose the kind of money you're going to make. in a partnership structure those two things were much more evenly balanced for. the other thing that was part of their culture that plays into some of the success is an acute awareness that you can see in
alexander brown that private gains and private company gains cannot be detached from the public good indefinitely but there is a close an acute relationship between my individual game gain and whether or not the community around me is -- and what this meant is it was affirmed that even before the 1880s and 1890s when it begins to coalesce and brown brothers is a parliamentarian member which is why they were kind of part of the story of the 60s as the backlash against all of that. they were educated yale men, that whole clubby intermingling close circle of wealth power and privilege. but with that was the motto that
peabody and the school that he founded in 1870s which is to serve and with great power comes great responsibility also spiderman's theory of the league history. i believe they really embody desperate you can see this even early on when in 1820 ballots in the brown was one of the richest men in baltimore realizes they were falling behind new york and philadelphia as a trade investor because new york had the erie canal connected to the hinterlands in the thriving ohio valley and baltimore has its advantage. on the first passenger the locomotive rail line really was a moon shot at the time. he didn't know that the steam engine would work or if it would
blow up and they raise money publicly. they do this because they know if they don't alexander is determined to see his community thrive necessary for his own self-interest and the collective price as well. it loses money initially any gets returns over time but it's hardly a good investment and a good investment is a return to shareholders. it's a great investment in terms of return to society. a whole period of road roads built throughout the united states and through europe that is fundamentally essential to the revolution and the growth of american power and prosperity in that and the world and that continues. by the time you get this group of partners in the 1930s, 40s and these galeb men by the
time they entered government it's a sculpture that public service is a requirement of privilege. they created a system globally with the dollar as the central action of economics which meant that they were going to to thrive and they created a u.s. dominated system that perpetrated the cold war and one of my guiding scenes is that human beings are messy. if you're looking for purity of spirit and heart you are going to be hard-pressed to find it in any one. they are saints and sinners but they are usually the same individual must same collective that you can be of service and self-serving. you can be so was and selfish and both can be true simultaneously. i think in many ways our desire
our collective narrative desire is simplicity and morality and gets and morality and gets in the way of the complexity of human nature to the messiness of history. the brown brothers while they embodied and helped. a financial system is paper promises in the 19th century it facilitates this incredible growth and incredible effervescence of growth it's the largest cotton merchant and 1830s and 1840s. there literally embedded and they are simultaneously opposed to. and many people who recognize if you're wearing a cotton shirt and thriving on the basis of american trade as the merchants of liverpool recognized they were becoming increasingly antislavery it was thriving almost entirely because of the labor of people in the united
states and for sugarcane and other products. they were in bed with the system and part of the way of dealing with that is trying to get out of the cotton trade by the 1840s but even that was complicated reader wasn't just because they didn't like but that unlike the paper merchant that facilitated it as a purveyor of physical goods. so they move away from the paper trade detaching themselves from the. and becoming founding supporters of the republican party. in no way can that be sugarcoated nor can it be sugarcoated for much of the earth and economy in 1830s, 40s and 50's and one of the reasons i think lincoln talks about a nation that is half and have free by virtue of being half you were essentially all.
and that was one of the driving realities of the war. it's become part of the driver of early american imperialism. they give loans to the government of nicaragua and by the lots of other descendents and they expect the government of nicaragua to pay them back. it was cat civil chaos in this period of what we call dollar diplomacy when loans to cuba and dominica and other countries el salvador honduras and nicaragua become the excuse for the united states to take more control of the government when the government seemed to be unable to meet their financial obligations. on the urging of the grandchildren, the great-grandchildren of alexander
brown who was the managing partner of the brown brothers the captive administration occupies nicaragua where they stay for the next seven or eight years. and to the point where the "nation magazine" which of the enough brown brothers helped fund become a critic of brown brothers and call nicaragua the republic of brown brothers but they were also incredibly exclusive. they understood their cribbage and were not troubled by that and were not -- what's interesting is the system that is an outgrowth of that insular culture by the 1950s is a much more balanced one that our system today where we have a supposedly more democratic meaning the elite world of which they were the establishment by
the 1950s is one where the average ceo and worker in a large american corporation -- today it's close to 300 to one. the reality is it was a much more egalitarian economic system that was partly constructed by much more elitist industry and finance. part of was due to a sense of the individuals and the individual companies as thriving. those are in our organic poll paul and that's why by the end of the book part of why i come to this idea of the partnership model and the culture brown brothers is a culture of a sustainable capitalism and that's different from sustainability that is used as a for environmental awareness.
the state of capitalism is a capitalism that can be sustained over generations. it doesn't koro too much from the future and doesn't go far out on a limb. one of the real ironies of the story is that because of glass-steagall in 1933 brown brothers harriman like all banks had to make a choice about whether they want to be a commercial or investment bank. most at that time were commercial banking including one that they helped. they decide their identity will be a commercial bank which is what they are today. it's offshoot merges with the offshoot of morgan stanley which after several other merges become -- one of the icons in the late 70s is michael milken who becomes the king of the finance in the 1980s that was
at the demise by wall street and the albert stone and the michael beckwith's character which at the time was not at criticism of the culture but becomes in its own way a celebration. that film becomes for generations from the 1980s this order that's who we want to be and in many ways is replicated by the film the wealth of wall street where leonardo dicaprio plays a heroic figure. that was so antithetical to the brown culture. their attitude was we are not trying to just help enrich but it serve our clients. we are going to create a financial benefit for our employees and return our partners considerable wealth. but to do so in a way that will never.
a problem and will never -- we are going to go for the return no matter what the risk and away and the book is with the nation -- a world where brown brothers mentality is the only mentality brown brothers never would have under britain elon musk. they never would have funded the mugshot although they did little but in the 1820s. and you do want that. you want that in an american capitalism system where -- can be fueled like capital but the problem with the relationship between that and more prudent awareness capital is like the quicksilver power created and destroyed. you have to be mindful if you are their purveyor of the power and not just of its potential. that's why i think brown brothers is is an alternate version of what capitalism can be in the alex has become too
skewed between the elon musk version versus the brown version and nothing pejorative about the ratio of four that is and we can do with a little less of the other and shift things it and we should honor the story of the firm. round brothers has 5000 employees with $2 million of revenue. they have got 500 million in profits and if they were publicly. they'd be around a 20 billion-dollar company. why do we not respect that reality the way we lionize or demonize the huge players who either like icarus or not. there is no lehman trilogy about the rise and fall of lehman and brown brothers.
their story isn't dramatic enough enough and it doesn't satisfy the craving for heroes and villains but in many ways you want heroes and villains to constantly be the ones driving the financial system brady white ones who are client dedicated honorable people who are serving society and serving themselves and serving their clients and it's complicated and constantly needs to be looking at themselves in the mirror and be self-aware but nonetheless in many ways that is the lesson i get from this to that relation ship and when you've got a lot to give a lot and to be mindful of risk and mindful of the power of what you are doing not just in phrase but also to create great disturbances in the force and we would all be better served by a more balanced capitalism that brown brothers overturn 20 years epitomizes recommends and at the end of the
site came to laud. i think that will be my formal presentation and i'm ready for questions. >> before we take questions that they ask everyone ask your question in the chat box. we'd like to encourage you to ask questions and we are taking them now. the first question is forward jim. on everest base is what companies are like -- today. are there many other examples? >> those are two good ones. will berg is a little bit like that are brown brothers is one of the best answers chiefly to that question is brown brothers
brothers -- there are good companies and they do exist. i guess part of what i'm saying is by virtue of that culture a culture where a musingly brown brothers has the culture that everyday her name is on the public papers every day that we are not the story of the day and that's probably probably why there has been no book about them and why it's part of the story and my joke was you may not avert a brown brothers if you aren't in the financial world but there is always a brown brothers banker in the second row of every bank in american history that's probably not wanting to be the story but without them there is no story and that quality might preclude some of the attention paid.
my point is we should find a way to tell those stories and honor them even if they lack the drama of other stories. the stories we tell shape our sense of what's possible and what we should aspire to and it is a fascinating story. we would be better served by paying a little more attention. >> there are several questions about the relationship of the other household names the rockefellers the vanderbilt and added on to that did they shun the jewish financiers of the day? is their relationship with the bigger names are not? even the brown brothers was not a leading railroad financier. they join a lot of the deals. most of these deals a recap
collecting an entire rail line like the northern pacific or central annoy you name it. it's not being done by one banker. led by jpmorgan with 20 others joining on basically providing loans to gripping governments from world war i. i talk about it in a prepared remarks by the central moment of the change of the role of the united states was the united states goes from being a debtor nation to europe to a creditor nation to europe and brown brothers have a real role in that along with all these names that are more familiar but they are just not leading, they are joining the. they are invited to the metropolitan club and the knickerbocker club and they are doing the deals. they are just not the front and center dealmaker.
they tangle with vanderbilt 18 50's and one of the mars that data ventures on the first steamship passenger steamship. that is quite badly not because of the business but because one of the ships sphinx before the titanic 50 years later. vanderbilt really was like i made my own money by myself and i'll be if i'm going to play second fiddle to anyone who gets government funds and he was outraged that this steamship line got government money. brown is always interacting with these groups and much like a lot on wall street brown brothers in some sense had a cultural anti-semitism. i cite one moment in the book where the widow of one of the
grandchildren of alexander brown who also runs the firm in the 1870s to the 1890s she dies that her house and her house goes up for sale. a jewish businessman approaches the sun to buy the property and they clearly say we don't want to sell to that store. why would we ever? and averell harriman opens the golf club in long island some of the founding partners marshall field and harriman helped fund bill haley. it's not that they were unwilling to do business deals and i think that's true of a lot of the interactions and the jewish banker ship with the lehman's and the goldmans and the banking groups.
it's a very complicated mix of anti-semitism on the one hand but not that we won't occasionally go golfing. if you're looking for simplicity and you are looking for easy heroes and easy villains i'm not a big fan of that. they exist and i'm not going to write a complicated sympathetic book but a lot of history is. >> zachary wyatt influenced the first and second national banks? >> the second bank is i think must -- much more crucial and jackson does not renew the charter the second bank in even more partly jackson has intense animosity to paper money which was the lifeblood for most of jackson's supporters.
this bizarre relationship that exists in america which the heartland of jacksonian world and before that the jeffersonian world is consistently antagonistic to the money at least to the northeast the hamiltonian's and that scene in american history of animosity toward the creators of money and money is a way of feeling the hard-earned work the farmers and laborers was a powerful fuel to the jacksonian movement jackson really railed against banks as did jefferson and seas at is a way for the lead of the northeast to deal the wealth of his supporters and the people of kentucky and the ohio valley. of course they needed the money for opening farms and fighting the native americans. it was filled with lots of other
people who were there first and the animosity towards banks and banking comes with the people who needed capital facing financial crises and then when jackson while leaving office issues the d.c. circular which forces banks to call in all their paper helps. the panic of 1837 which is the one existential crisis for the brown brothers where they have to turn to the bank of england and it's huge in england and the liverpool -- becomes brown shipley and montagu norman. part of that risk culture is framed by that moment and framed by the panic of 1987. 1887. >> todd asks you mention -- what
lessons at harriman lebec and others learn from their experience? >> if you talk to people in that world these societies which were called secret societies but it yelled called senior society was this place where once you were selected in one of these rare places where you could clearly be yourself whether you are a trusted zone of silence later on in the 60s where there was his backlash against the elite and establishment culture hair men in lubbock were seen as leading the united states down to the garden path of vietnam more and what was seen dennis duke divinity led everyone to question the cold war was just a way for the establishment elites to rich themselves in the fact that they were all in part of
the society meant clearly behind closed doors there were secret past of being cemented by the cobol and partly why brothers harriman and that world that's conspiracy theories were pulled behind the scenes by a small number of elite in the brown brothers are quietly bear. was prescott bush in bed with germany and the industrial machine and it deals with the industrial machine inspires the rise of. in reality it was a world where young privilege men could let down their guard and be honest with one another because they knew their secrets were safe with one another. and yes those relationships carried through over the years and yes they intermarried and yes they do each other favors
and they had a board where one -- all of that reality was partly true. you tend to benefit your friends and your connections. but i do think i'm not a big fan of the conspiracy theory. >> tim romanowski asked -- was involved in financing the civil war given his location baltimore did that complicate matters especially in new york city and philadelphia? >> it certainly did although by that point bulk of brown brothers was the least significant in philadelphia the second least significant. the baltimore house was a
clearinghouse and in agent for the new york house at that point. the two sons of alexander had george brown cashed out by the 1830s and john brown also cashed out when they died and those houses while they were led by cousins and nephews were not as important. even though the baltimore house provides is essentially becomes alex. brown and sons which is bought by -- and has that future history as well. he orders the baltimore house to fly union jack in the middle of the city that was confederate and baltimore is being occupied.
it was definitely a tense period but as the business side all-timer was not at important enough to be in business with the brown brothers at that point. >> did you get cooperation from brown brothers and how did you conduct your research? >> i did get cooperate in but i didn't need cooperation. brown brothers commissioned a 150 anniversary book and wrote about five years from the early 60s until 1967 collates all of the firm's historical records and after that and again i don't put enough skin into it because it's not that important all of that research material by the new york historical society where it resides and for those of you who have done research barrel oral histories of love it at yale and the chairman library
there's no lack of publicly available documentation. their something buried somewhere in the firm's archive that didn't get into the historical society. i saw no evidence of that was the case and frankly i wasn't that interested in trying to figure that out. i felt there was enough there so a lot could have been said about the business of brown brothers harriman but frankly a lot of the business was yanked a bank custody work in custody for asset managers and clearing four and. stocks. all of that smooth functioning of the financial system that's not the stuff of grand narrative. i'll leave them to judge it even what i write is the grand
narrative which it most certainly is not that i didn't really need to get into it with the partners today. i didn't want to write about business today. i wanted to write about what i talked about before which -- so i wrote about it in that respect. i did talk to some of the partners but i didn't -- i didn't want him to feel comfortable about the book because it was their story. i didn't give them any veto power and they were not overly thrilled about the story of and anti-semitism in all of this and i think that they were worried that would be the thing that people focused on when they read the book as opposed to it ain't part of a lattice and not the focus of it. but i certainly wanted them to feel like i was writing an
honest and honorable history of the firm and i didn't have an agenda. >> herman plays an important part in our countries history where does this his influence candidate? i don't get the sense that partners have a real interest in in -- it's not their motivating desire. they still want to be in the news and they still prefer culturally to the behind the scenes. regulatory lee when they are freida might touch on their business like regulations were things like the oc cr finra they engaged regulators for sure but probably differently than any
other sized firm. they are proud of their legacy but not interested in the public service part of it. >> most of their revenues come from asset management or banking? >> a lot of that is foreign exchange commoditization and direct asset management as well. >> you have written on policies as well. and people talk about -- or lobbying how did it become intertwined in our culture? were they always married like this? >> i don't think they were married like this. by the 1890s you had for the most part people with huge amounts of money were uninterested in government or government was a small -- well until the 20th century. most of these titans of
industries believe rightly that they could provide much more power by shaping government or finding an acolyte to be in office themselves. that begins to change at the dawn of the 20th century. andrew mellon is the secretary of the treasury but it's really a product of the new deal and beyond where you have this revolving door between finance and washington which certainly continues through the 90s and is the pejorative reference to massive government as a latter-day iteration of that and you don't see that in the same way in the 19th century and the early part of the 20th. you see it a little bit in the 1920s and certainly during world war ii and into the cold war.
>> was there any degree of luck for brown brothers being in the right place at the right time? >> if you look at the who's who of merchant houses in 1830s he would have found a whole bunch and you may have predicted they would have been around for generations and probably at some of the same values and ethos that the brown brothers did. one thing is that the brown brothers apart as they were rigidly systematic and very meticulous quantitatively. they would score their clients on a one to three and making sure they were doing business with the ones. they were unusually meticulous and how they did stuff even if their culture was similar but let's say the bank of england and the 1830s had not given them aim bridge loan a modest bridge loan which is enough to
cover the outstanding observations and the argument in liverpool was the done nothing particularly wrong. we have manager russ pretty well and if you force us to redeem our note that part i do want to get too wonky about it other than what the where trading it given 30 to 50% of all liverpool credit -- they said if we fail the whole thing is coming down. you had better prop us up for a few months and the bank of england said yes it's better to prop up the brown brothers. if that hadn't happen i don't know. the new york house may have survived in liverpool may have gone under, i don't know. so they might not have found that next-generation. not all the kids were interested one of the suns dies.
in liverpool the children of sir william brown he manages to bring on family partners into the business who are unbelievably competent. that could have gone awry and it doesn't but that culture remains. it certainly doesn't remain in lamer brothers in the 1930s because there are no more lehman's left. >> a separate question that may be a quick one we will see, what would brown brothers think of crypto and would they be the first one to brazen the site one have you ever seen the painting of the brown family baltimore and if so what were your impressions? >> i'm not sure which painting that refers to. there's one in the 18 50's of the families done by eastman.
the all of them capture that kind of banker always wearing black. they always look like they are bankers and their families look like models of whatever moment in time there and whether it's victorian or edwardian or the present. crypto brown brothers is not -- atf anytime soon although they are likely to develop custody tools and technologies that are safe and secure and reliable. >> was there any connection between brown and graham? >> not really and i'm not sure whether they knew each other or not. but certainly been graham's
mantra in the 1930s the firm writes a brochure about asset management called shattered -- scattered wealth that talks about how every 10 years the world changes in stocks and bonds and you have to reassess your portfolio and you can't make any presumptions that what worked then will work now. so to these doses how you invest -- ethos is investing would be banned grandma she even if they weren't following his specific mantra. >> a final question thank you for an exhilarating talk mentioned a partnership might be better for the public good. why is that and do we see this same principle when we serve private equity firms to be more
successful and the impact of that? >> obviously this is a much longer conversation and part of what i'm trying to say is where the risk exists within the firm's culture and private equity firms and hedge funds for that matter our sole proprietorships. the way they -- a. state applying other people's capital even if they are private. the brown brothers it was always there o. embedded in every deal and a huge amount of the individual risk considered where you would deploy capital which doesn't necessarily retain to a private equity firm. it raises other people's money and earns fees on that coolest money that is raised. it's not like it's the partners money even if there's a little bit of partners money in it reads like a partnership as the primary or the hands funding
vehicle. and they do want to repeat as we and i don't think that the empire structure -- entire should be the brown brothers torture. you don't want a partnership that's aware for the balance of the ratio is in a world which it could become unbalanced and lionizes the risk that is so focused as opposed to stride is for sustainable balance on foreign capital. if there's any lesson to conclude from brown brothers its sustainable capital has to beware of the entire lattice of society and every huge gain is usually counterparty huge risk in a huge lost and every construction is potential destruction.