Summary

  • WHAT: On-the-Record Wall Street Briefing Series
  • WHEN: Wednesday, February 19, 2020; 1:00 p.m.
  • WHERE: 799 UN Plaza, 10th Floor, NY, NY 10017 (SW Corner of East 45th Street and 1st Avenue)
  • BACKGROUND: This briefing is part of a series organized annually by the New York Foreign Press Center to give the foreign media access to Wall Street experts.  There are several briefings scheduled in this series and we ask that interested journalists RSVP to each briefing once the media advisory announcing each event is released.  Dr. Sylla, Chairman of the Board of the Museum of American Finance, is a leading expert on American financial history and the influence of financial institutions and capital markets on the U.S. and global economies. He explained how New York City became a leading national and world financial center and why it is likely to remain one.

NEW YORK FOREIGN PRESS CENTER, 799 UNITED NATIONS PLAZA, 10TH FLOOR

MODERATOR:  Good afternoon, everyone, and welcome to the New York Foreign Press Center.  Very pleased to have Dr. Richard Sylla here with us today.  He’s the Chairman of the Board of the Museum of American Finance and Professor Emeritus of Economics at NYU’s Stern School of Business.

Just I have a few housekeeping items before I begin.  Please take a moment to silence your cell phones.  At the conclusion of his remarks, wait for the microphone and state your name and your media affiliation as soon as you receive the microphone.  And as a reminder, today’s briefing is on the record.  And with that, the floor is yours, Dr. Sylla.

MR SYLLA:  So just the spacebar moves from slide to slide?  The spacebar moves from slide to slide?

MODERATOR:  Yes, it does.

MR SYLLA:  Okay, good.  Well, it’s a pleasure to be here, do my duty for my country.  (Laughter.)  And just I should probably say a few words about me.  I’m an economist who’s a economic and particularly a financial historian.  And for 25 years before I went out to pasture a few years ago, for 25 years I taught at the NYU Stern School of Business where I was the Henry Kaufman Professor of the History of Financial Institutions and Markets, and professor of economics.  And now I just have a much simpler title.  I’m just professor emeritus of economics at NYU’s Stern School.

One of the things I taught to my students was how – we’re in New York City, it’s a great financial center.  How did it get to be that way?  And that’s what I wanted to talk a little bit about today.  But I would – later on in my slides, it says that for the last three to four centuries, there have been only three leading international financial centers.  So it’s not easy to become a leading financial center, but it’s also not guaranteed that once you become one, you will continue to be one.  The three I would mention offhand would be from the – say from the late 17th century through the 18th century: Amsterdam was the world’s leading financial center.  And then the Napoleonic Wars and Britain’s victory in those wars basically transferred the main international financial center from Amsterdam to London.  And before that happened, there were Englishmen in the Amsterdam market, and vice versa.

And then – so England had a reign of about a century, from the 19th century basically or up to World War I, and then in World War I – I’m anticipating my slides, though.  But we’re not supposed to speak very long, because I’m supposed to take a lot of questions from you.  We can come back to talk about these things.  In World War I the U.S. went from being the world’s largest debtor nation in 1914 – I put “debtor” in quotation marks because it’s not quite – it’s evocative, but it’s not quite right.  I mean, we were a debtor nation because foreign countries like to invest their money here, and so they owned a lot of American assets.  And so in some sense we had to pay the bonds back and pay the dividends on the stocks that the foreigners had bought.  So in that sense it was a good thing to be a debtor nation.  It was a mark that other people like to invest here.

But then – but at the end of World War I, the U.S. went from being the world’s largest debtor nation to the world’s largest creditor nation.  So we might want to come back and talk about how could such a big flip-flop happen in four or five years’ time, going from being the world’s largest debtor to be the world’s largest creditor.  And as a result of that transformation, New York became the leading international financial center.  And it’s basically been that for a long time.  We can argue – I brought a book along with me; we had a conference in Oxford a couple years ago, and this book is called “International Financial Centres After the Global Financial Crisis and Brexit,” and I wrote a chapter.  The editors are Youssef Cassis and Dariusz Wojcik.  These are European professors; they organize this.  They wanted to know how the financial crisis and Brexit and, frankly, President Trump’s election was going to affect international financial centers.  So I wrote a paper on the U.S. for this volume, on the outlook for the future.

Let’s see now.  Now I’m hitting – oh, okay.

MODERATOR:  (Off-mike.)

MR SYLLA:  Can I go back?  Yeah, there.  Okay.

I just have – it’s about eight slides.  I’d be perfectly happy to leave them with Daphne, and if you would like copies, you can send them out by email or whatever, since this is on the record.

So this is my second slide, and I think what’s interesting about this slide is – the point I want to make about it is that this is a chart – you can’t really read the description up here, but it says “real GDP per capita in the United States from 1790 to 2006.”  I haven’t updated it since then, but we actually do have pretty good estimates.  Later is better than earlier, but we have some pretty good estimates.  And this is a logarithmic chart – or semi-log chart.  So if something is moving up, it means it’s increasing.  And what you see here is that the United States has basically been growing like a modern economy.  We economists define that as real GDP per capita growing at around 1 percent a year or more.

The U.S. has been a modern economy right from the beginning, because there’s no flat period there.  If you didn’t ever see a chart like this, you might say well, GDP didn’t do much, but somewhere in the last 200 years there was an industrial revolution, and then it went up fast.  But know when we actually look at the data, we find that our country, the U.S., has been growing at modern rates virtually from the beginning.  And there’s probably a good reason for that.  This is some great change that happened in American history right around the time that the American constitution was written.  And basically the U.S. went from having primitive finances in 1788 – that was the year the Constitution was ratified; the Constitution was written in 1787, 1788; the states ratify it; 1789, the new government comes in, George Washington is the first president.  This is Presidents Day week.  And he appoints Alexander Hamilton to be the secretary of the treasury.

And so this is a huge change.  I should say that in the left column over here, what you see is sometimes these tables have a little – oh, this one has a little bit of a thing to hold papers on it.  Yeah, I didn’t – you couldn’t put it very thick back there.

What you see in the left is what I call the key components of a modern financial system.  And I – if we had a lot of time, I could tell you that the Dutch in the Amsterdam – the Dutch economy had sort of this in the early 17th century.  And the English economy in the 18th and 19th century.  Basically, the six key components of modern financial systems are strong public finances – the government has to be able to have a revenue, taxes people to get a revenue, spends its money on whatever governments spend money on, and they incur debt.  They issue bonds.  And so countries have national debts.  A second key thing is a country – a modern financial system should have a stable currency.  The third thing is a modern financial system ought to have a banking system.  The fourth thing is a modern financial system ought to have a central bank.  The fifth thing is most modern economies have securities markets.  The Dutch had a – the Bourse in Amsterdam, and still there I guess is – the Dutch still have active securities markets.  England, of course, has the London securities market.  And the sixth thing that part of a modern financial system – this may surprise you a little bit, but corporations.  Because corporations are legal entities.  They need to – they have revenues, they need to pay people, they borrow money from banks, they issue securities in security markets.  So I view corporations as part of a modern financial system.

And the point of this slide is to say in 1788, the U.S. had none of these things.  The U.S. in 1788, the government was bankrupt, the – didn’t have its own currency.  There was no such thing as a U.S. dollar.  There were only three banks: one in New York, one in Boston, and one in Philadelphia, and they weren’t really connected as a system.  They were just local institutions.  There was no central bank.  The securities markets, there were unpaid debts from the American Revolution that were floating around, trading at 10 or 15 cents on the dollar, in the hope that someday maybe we’ll get a good government.  And there were very few corporations.

Then if look forward to 1795, everything is changed.  Suddenly you have government bond markets; the treasury bond market is a going concern at that time.  There are 6 percent bonds and 3 percent bonds, and something called a 6 percent deferred bond that the government has issued under its restructuring.  I would call it restructuring the Revolutionary War debts.  We have a new currency in the world, the U.S. dollar.  It’s convertible into gold and silver.  We have – now there are 20 state banks, and five branches of the central bank, the Bank of the United States.  And there are securities markets in several cities.  We’re here in New York now, so I’ll tell you right in the middle of this period, 1792, under the Buttonwood Tree in Wall Street, the New York Stock Exchange traces its origin to an agreement of brokers to form a club to trade securities.  That’s 1792, the origins of the New York Stock Exchange.  Why did that happen then?  Because there were all these new securities to trade.  And there were very few corporations, and by – in the 1790s there were many more corporations.  There were – I think there were maybe – business corporations I’m talking about.  Banks would be examples of them.  They – in the 1780s, there was a handful of them, and 300 new corporations are formed in the 1790s.

So that’s the origins.  And because the U.S. has modern finances, I’ve always tried to connect having modern finances with economic growth.  It really helps an economy to grow if it has a really good financial system that finances innovation.  We all know financial systems can get into trouble, but nonetheless, they are a – it’s very advantageous.

Well, that was the work of Alexander Hamilton.  I put this picture up, that’s Hamilton.  We had a birthday party for him at the Museum of American Finance back in 2007 I think it was, and this was sort of your invitation to come to Hamilton’s birthday party.  That was his 250th birthday party, we think.

There’s some question that’s risen lately about exactly when Hamilton was born, so that’s some of those – of course, he was an immigrant to the United States; he was not born here.  There were six great Founding Fathers of the United States.  In order of their birth, it would be Benjamin Franklin, then George Washington, then John Adams, then Thomas Jefferson, then James Madison, and the youngest of the six was Alexander Hamilton.  The first five were born and raised in the United States.  Hamilton was an immigrant from the West Indies who didn’t come in until he was a teenager, but a very brilliant statesman, and we put him on the 10-dollar bill.

All right.  What are the high points now of New York becoming a world financial center?  In the early decades, Philadelphia was probably a bigger financial center than New York.  The story of the United States was in 1790 they made an agreement to move the capital of the United States from Wall Street where it was.  The first Congress met on Wall Street on the site of what’s now called Federal Hall, right across the street from the New York Stock Exchange.  But that was only for 1789 and ’90.

At the end of 1790, the U.S. capital moved to Philadelphia for 10 years, and during those 10 years, they laid out and built Washington, D.C.  And so New York – Philadelphia, being the capital when the central bank was formed, the Bank of the United States in 1792, its headquarters, of course, were Philadelphia, the capital.  And that made Philadelphia a leading financial center because of home base of the first and second banks of the United States.

I mentioned that – but by the 1830s, New York passed Philadelphia as a financial center of the United States, and it became the leading financial center.  And my second bullet point here relates that to New York having a superior harbor to Philadelphia, but it was also innovations of the New York financial community, the New York commercial community did some things that – in New York State did some things that made New York into a great – it had a great natural port, but then the business community of New York did several things that was very important.  And one was packet shipping lines.

In 1818, the New Yorkers started having a regularly scheduled shipping service from the United States to Britain.  In the old days before that, you waited for a ship to come.  And then if it said – you’re in New York and the ship might say I’m going to go to England, so if you had some cargo you would say, “Okay, take this to England for me.”

The packet shipping lines were regularly scheduled.  They said on Tuesday, March 14th, this ship will be leaving for London, and so if you have things to send, you can do it.  And then, of course, a week later another ship would go, and a week later another ship would go.  So regularly scheduled shipping lines – actually, that idea was born here in New York, and the first line was called the Black Ball Line, I think.

Then New York State constructed the Erie Canal.  The Hudson River is navigable all the way up to Albany, about 150 miles north, and then they built a canal across New York State, which meant that the hinterland, the agricultural areas, could grow things upstate, put them on the Erie Canal.  They would come over to the Hudson River and down to New York City.  So New York had a connection to the agricultural surpluses of the hinterland.  And so – and that was – they hoped that the national government would construct the canal, but the national government didn’t do it so New York State did it on its own.

Then they had auction market reforms.  If you’re a commercial center, New York has this great port, ships come here, unload their goods.  Then how do the goods get to the consumers?  Well, in those days, the way you did it was you auctioned the goods off at the – on the streets of New York – lower Manhattan – and the people would bid on them and – but sometimes in the auctions that were taking place in various cities, somebody would say, “Well, I don’t like that price.  I’m trying to sell this stuff, but I don’t like the high bid that comes in so you can’t get the goods.”

What they did in New York, they decided to do something that seems a little counterintuitive.  They said:  Whatever the price is, whoever has the high bid gets the goods, which is great for the buyers but maybe not so great for the sellers.  But it turned out to be great for the sellers because they could – got a lot more business.  People would come to New York over Philadelphia or Boston or Baltimore to get goods, because they knew if they came to New York they would always get the goods.  They wouldn’t be subject to a reservation price where I don’t like your bid, so I’m not going to sell you what it was being auctioned.  So New York helped itself that way.

Then New York – the biggest export of the United States by this time was cotton grown in the American south primarily.  And for some reason, New York got control of the import and export and financing of the trade in cotton.  There was a cotton exchange here in New York – the cotton would be shipped here.  New York would finance its movement mostly to London, Europe, England, because England is going through the Industrial Revolution, and one of the great industries is the cotton textile industry.   So New York capturing the cotton trade, that was important.

It’s fading out, so I have to kind of hit the buttons to keep it looking good.

And all right, so now you’ve got New York having all these commercial innovations.  And because so much business activity was done in New York, banks all around the United States – and there were several hundred banks by the early 19th century – banks around the country would want to keep balances in New York City.  Because think about somebody in Cincinnati, Ohio wants to buy some goods imported from England, they come to New York.  So the guy in Cincinnati wants to be able to have money to buy the goods in New York, so the Cincinnati bank that’s his local bank keeps a deposit in New York City on which the Cincinnati merchant can draw when he goes to the New York market to buy the goods that he’s going to sell ultimately in Cincinnati.

And so banks from all around the country start putting their money in New York.  And the New York banks pay interest on these bank balances that are coming in from all over the country, and the New Yorkers can pay interest on these bank balances because they have the securities market.  The biggest securities market by this time is New York.  And securities markets run on credit.  We see that today all the time.  But the brokers have to borrow money to carry their inventory, so securities and people who trade stocks and bonds need to borrow money, they buy it on margin and things like that.  So the synergy between the banking system funneling funds to New York City and the securities markets being in New York City was very powerful synergy in turning New York into the nation’s financial center.  And that was all pretty much set by the 1830s or ‘40s.  So by the middle of the 19th century, New York is already the American financial center.

Now we go ahead from national to world financial center.  By the late 19th century, the U.S. in 100 years has become the largest economy basically in the world through that rapid growth that we saw in the first slide.  The steady upward growth of the U.S. economy, plus the immigrants coming in from foreign countries.  So the population is growing rapidly, and the income per capita is growing rapidly.  Put those two together, and you have a rapidly growing – I like to say the U.S. was – if China’s the greatest emerging market today, and maybe Japan was the greatest emerging market 100 years ago, if you look at the last two centuries, the United States was the greatest emerging market.

And so – but the New York financial center by the late 19th, early 20th century was not as important as London and Paris and Berlin in Europe because New York was basically financing the United States’ expansion.  It wasn’t dealing internationally so much.  Plus, the U.S., for political reasons, didn’t have a central bank from the 1830s until 1914 when the Federal Reserve comes in.

We had a first and second bank of the United States early in U.S. history, and I call the Federal Reserve the third bank in the United States, which came in a little over 100 years ago in 1914.

So from national to world financial center.  World War I becomes absolutely crucial.  As I mentioned already, the U.S. went into World War I as the world’s largest debtor nation, and it comes out of it as the world largest creditor nation.  That happened because, first, the Europeans who held a lot of securities, particularly British and French investors, sold their securities during World War I, their American securities, back to the United States in order to get money to fight the war.  And so that’s one way Europe financed World War I.

The second way was to borrow from the United States.  There were big loans from the United States to Britain and France in World War I.  So they first returned their American securities to the United States, liquidated them to get money to fight the war, then they borrowed money from Americans to fight the war.  And in the end, they shipped a lot of their gold to the United States.

So by 1918, the largest debtor has become the largest creditor mostly because of the war.  And then people find it easier to borrow in New York than other places.  London sort of goes on for a while as a financial center.  But the British economy has a lot of problems in the 1920s and ’30s, so the world starts coming to New York to borrow money.  And I would say New York has been that since the 1920s, the leading financial center after Amsterdam and London were earlier.  Will that continue?  It’s not easy to become a financial center.  There have only been three in the last 3- to 400 years.

London – today, London has rivaled New York in some areas of finance and, of course, New York City and U.S. banks have a strong presence in London because we have globalization, world finances now.  So it – it doesn’t really – it’s not like the old days where you went to London or you went to Amsterdam; today, the big international financial institutions are in all of the markets so there’s a strong U.S. banking presence in London and other international financial centers.  My own view – and that’s part of this book project – is that Brexit is going to weaken the London financial center and so it’ll be less of a rival to New York in the years ahead.

So there are new financial centers coming up, particularly in Asia.  Shanghai is important, Singapore, of course Tokyo has been a financial center for a while.  But none of these, in my view, look to be an imminent threat to New York.  And for my last slide, New York’s advantages go all the way back to Hamilton, who put in this modern financial system.  If you look at those key components of a financial system, what I would say is that the U.S. – I sometimes worry about the size of the U.S. national debt now and the huge budget deficits we’re having.  But in fact, that Treasury bond market that Hamilton started in 1790 is now the largest financial market in the history of the world in the issues of a single issuer.  It’s a $22 trillion debt.  It seems to be growing up at about a trillion a year.  That’s what bothers me a little bit that nobody seems to care that it’s going up that fast.

But in fact, when the world gets worried about finances, it gets – when it worries more about risk than return, people put their money into the U.S. Treasury debt because it’s considered very safe and the interest rates are very low because the world is buying up this huge amount of Treasury debt.  We know the Japanese and the Chinese own huge amounts of the U.S. Treasury debt, and other investors around the world do.  The dollar – it’s the main reserve currency of the world today and I don’t see that being threatened.  The euro has a lot of problems.  The Chinese – I know because I’ve had people come and talk to me about how China would like to turn the currency there into a major reserve currency – it’s becoming more important but it’s still – the amount of reserves other countries hold in Chinese currency is only about a tenth of what they hold in dollars.

The U.S. central bank, the Federal Reserve, seems now to be almost like a world central bank, and the financial crisis taught us that the U.S. central bank lent money to European governments and financial institutions, even to European corporations.  The U.S. has a large, dynamic banking system.  American banks today, the leading ones like JPMorgan Chase – I guess you’re going to hear from somebody later today – and Bank of America and of course Citibank and Wells Fargo, those are the four big U.S. banks – they’re – not all of them are equally strong, but I’d say JPMorgan Chase is probably maybe the largest bank in the world today and certainly one of the most profitable.  The American banks seem to be stronger than banks in other countries.  Our securities markets – I mean, the New York Stock Exchange by market capitalization is by far the largest securities market in the world.  The Nasdaq is the second largest.  They’re both American markets.  And the American corporations are still the cutting-edge corporations.  I mean, we’re looking at Microsoft and Apple and Facebook and Google.  I mean, these are the prominent American corporations we read a lot about today, but there’s a much larger group of leading corporations.

And so I would say just from the point of view of today, the outlook for New York is quite strong I think in the world, because of these strengths that were put in place under Hamilton more than 200 years ago, and they built the United States and now they’re helping to build the world.

I’ve talked too long, but now it’s time for the journalists to get in there.

MODERATOR:  So please raise your hand and wait for the microphone if you have a question.

QUESTION:  Good afternoon, professor.  I’m Niki from the Indo-Asian News Service from India.  My question is:  After having absorbed all that you talked about, when there are trade deals between the U.S. and other countries, for instance, more recently, the U.S. and China had a trade deal, the U.S. with Canada and Mexico, now there’s talk about a trade deal between U.S. and India —

MR SYLLA:  Right, isn’t President Trump going to India next week —

QUESTION:  That’s right, he is.

MR SYLLA:  — to ink a trade deal?

QUESTION:  So when those kind of – when that kind of news trickles in, what is the reaction from the New York financial market?  What are the signals it sends?  How are those signals received?  What does it mean for the New York market when trade deals are inked between the U.S. and other countries, in this case with India?

MR SYLLA:  Well, I think in general they – they’re viewed positively by the New York market, basically because if there’s more trade, there’s more trade to be financed, and New York for a long time has been financing trade going back to the cotton trade in the early 19th century, financing international trade.  Britain was much bigger in financing that trade, but New York had a part of it.  So I would say that the more trade, the better from the point of view of – and I mentioned how New York got to be a major financial center, partly because its harbor was so good and so it was a leading port of the United States.  So more trade, the better for the financial markets.  And I would say that the stock market, which I think is more elevated than it should be, seems to react very positively when news of these trade deals come up.

And you had a second part of your question.

QUESTION:  I can follow up.  So sometimes trade deals, when they – when the government starts talking about it, it’s a big gold standard trade deal, but then eventually it gets whittled down and politics, the way it is, they tend to become smaller and smaller, the trade deals; they become limited trade deals.  Either way, how does – how does that affect the system?  How do traders, brokers, the entire system, how do they react to these deals?  Are they looking at specifics?  Are they looking at sentiment?  What have you seen over the years?

MR SYLLA:  Well, sentiment is important.  I think that basically people like freer trade.  The financial markets like freer trade.  It’s not only financing the trade moving back and forth in the short term, but it’s also the more trade and the more interactions country have – countries have, the more international investments take place, and of course New York specializes in issuing stocks and bonds.  Wall Street serves large American corporations; large American corporations have strong presences in many countries overseas and they would – in a place like India that you’re from, they would like to have even a greater presence there because after all, India is – it’s almost as big as China in population now.  Some people say it’s going to pass China, and the Indian economic development hasn’t quite equaled China’s yet but there’s a great potential there.  And so the American corporations that are financed by the American financial system are looking to do more business in places like India and that’s good for the New York market as well.

Now, in terms of the trade deals, I think there’s been a change under the current administration.  I mean, the old idea was to have kind of like NAFTA, a trade agreement for all of North America, and the European Union, of course, had its own view of trade and it was a kind of free trade within Europe but barriers to outside stuff.  So that led a lot of American corporations to establish beachheads in Europe.  I would say that Wall Street didn’t like the current administration’s policies when – and frankly, as an economist, I have to say that in some sense it doesn’t make much sense that President Trump is terribly worried about our trade deficits.  I view our trade deficits as a sign of strength, that as one reason – there are two ways of looking at it.  A lot of economists look at trade, the goods – the ships going back and forth carrying the cars and the TV sets and the grain and things like that, the soybeans – and they say, well, that’s what’s really important and the trade deficit is just a spinoff of that.  But you can look at it another way.  This is what my history of watching foreign investment come to the United States – that maybe the finance is more important than the trade.  And if we like our big companies like Microsoft, Apple, Google and so on, the Tesla – we mentioned that – very innovative companies, foreign investors like them too.  So maybe we Americans have to run a trade deficit in order to allow people in other countries to get the dollars to buy our stocks, which after all – our stocks and bonds, which are priced in dollars.

So maybe – maybe it’s not economic trade is the dog and finance is the tail.  It might be in our modern world where finance is very important that finance is the dog and trade is the tail.  Now, I would say that our President doesn’t quite understand that, and so he thinks that trade should be balanced between all – bilateral trade should be balanced.  Like, part of the deal is he doesn’t like India having a trade surplus with the United States.  Of course, China’s trade surplus is much greater and so is Japan’s.  But if you – from the point of view I just mentioned, maybe that’s not so bad for us.  I used to say in the days we used to worry a lot about Japanese trade – we were getting all these Toyotas and Lexuses and that, Sony TVs coming in from Japan, and how are we paying for them?  Well, the Japanese are buying things like Treasury bills and Treasury bonds, so they’re holdings of the U.S. Government that go up.  And I say to myself, who’s getting the better part of this deal?  The Americans are getting Sony TVs and Toyota cars and we’re giving Japan pieces of paper.  Does this show you how much Japan is exploiting the United States?  No, if you think about it, it’s really a pretty good deal for Americans.  Of course, we have to pay the debts back someday.  We don’t want to forget that.

QUESTION:  Thank you.

QUESTION:  Hello, sir.  My question is:  As the U.S. dollar is one of the bedrocks of U.S. financial system, so how do you see cryptocurrency will change the landscape and maybe the status of U.S. dollars?  And what could be done to maintain this kind of dominance?  Thank you.

MR SYLLA:  Well, I think – I’m not a great fan.  I appreciate the innovative aspects of cryptocurrencies.  People are innovating; they’ve got a new idea, a new blockchain technology, a lot of – I don’t quite understand it.  Maybe some of you do and can explain it to me, but I understand the basics of it.  But what I notice is that there’s a lot of different cryptocurrencies. There’s – Bitcoin is the famous one, but there’s one called Ethereum, and different people are innovating different cryptocurrencies all the time.

This reminds me of the United States back in the period from the 1830s to the 1860s, where we had lots of different states and a lot of different banks in states and every one of those banks issued its own currency.  They were all called U.S. dollars and the banks were supposed to convert them into gold and silver, but there were 15, 16 hundred banks.  Each bank issued, like, five or six denominations of currency.  So you multiply five times 50 – 75, maybe 8,000 different pieces of paper all called U.S. dollars, and it was so confusing that the paper was only good at the bank.  You had to take it to the bank.  If you’re in Chicago, it’s not easy to take a bank note from Georgia back to the state of Georgia to get it redeemed in gold and silver.  And so discounts appeared.  The banks – if a Chicago bank held a Georgia bank note, maybe it bought for, oh, 95 cents on the dollar, not full value.  This was a kind of chaotic system which we remedied in the Civil War era and basically made the dollar a true national currency backed by the U.S. Government.

Looking at today’s cryptocurrencies, my view of what’s going to happen is if makes sense to use this technology to have money, we shouldn’t have 25 or 50 or 150 different cryptocurrencies.  The central banks will move in and they will take over the issuance of cryptocurrency, and believe you me, they’re studying it very hard.  The Federal Reserve is studying it, the Europeans are even ahead of the U.S. in studying.  The central bank will issue the cryptocurrency.  So I would assume that what’s going to happen is that if it makes a lot of sense to have cryptocurrencies, the central banks of the world will take it over and do that.  And so the Federal Reserve will probably issue crypto-dollars.  Not Bitcoins, but crypto-dollars.  And that might be competition for Bitcoin that Bitcoin can’t really handle.  That’s my guess, anyway, the way we’re moving.

QUESTION:  Hello.  Toby Burns with NHK.  Thank you very much for speaking with us today.  I have two questions for you.  The first is:  It seemed to me and a mission in your argument there about the centrality of the U.S. financial system for the global financial system, that petroleum, arguably the world’s most valuable commodity, is almost exclusively traded in dollars and that that is – would constitute a pillar of influence around the world.  But it didn’t appear to be a part of your argument.  I’m wondering why that is.

And then the second question I have is that we’re hearing from the international economic community, at least at the UN these days, about a lack of investment globally and a overreliance on monetary policy fixes as opposed to investment, things like quantitative easing which are sort of superficial approaches to much bigger systemic economic issues that advanced economies are facing right now.  I think one Federal Reserve governor – I forget which fed it was – but he said this is – we should be thinking of this as the new normal.  And the UN international economic community – I won’t say they scoffed at it, but they were very critical of that characterization and they thought that these sorts of fixes were not appropriate, and I’m wondering if you agree with that assessment or if you think it’s – if it’s flawed.  Thank you very much.

MR SYLLA:  All right, that’s two questions really.  One about oil and – yeah, I think oil is like cotton in the early 19th, middle of the 19th century – a huge export, internationally traded commodity, much of which was produced in the southern United States.  And – but then a lot of that trade was financed in British pounds, not U.S. dollars.

Today, oil is – I suppose it’s really a big trade and it is priced in dollars, although the Russians and maybe the Chinese are trying to do deals now or pricing oil in other currencies.  It’s not hard to displace an established financial – I mean, it’s not easy to displace an established financial center, nor is it easy to displace a reserve currency.  Along with Amsterdam and London, the Dutch guilder was the – an important international currency when the Dutch – the capital market in Amsterdam was on top of the world.  And in fact, in the early days of the United States, Alexander Hamilton himself borrowed a lot of money in the Amsterdam capital market and that was – the debt – the U.S. debt was sold in guilders, but they were defined in – both in terms of silver so you could convert guilders into dollars pretty easily.

What I would say is that oil is important.  Now, the U.S. is a major producer of oil today and exporting a lot of oil.  In fact, the Indian trade agreement – the U.S. wants India to buy more U.S. petroleum products and natural gas and so on.  So I didn’t mention it, but, I mean, I’m not sure that oil compared to all other trade and all other goods stands out as maybe the single biggest one, like cotton was in the old days, but it’s not crucial to international trade.

But the dollar is strong.  I mean, it’s used in international trade because it’s very liquid.  You can buy and sell dollars easily and there’s a lot of them.  I mean, one disadvantage the Dutch had was they had a small economy, so the same disadvantage the Swiss have today.  They have a very strong currency, but it’s such a small economy, that they can’t – the world can’t use Swiss francs even though a lot of people invest in them because Switzerland is so stable.

But the dollar, I think the key point is not so much that the oil is important in international trade, it’s that the U.S. has a very large, strong economy and so there are a lot of dollars available.  If you actually take the amount of U.S. currency – I’m talking about bills, the kind of things in my pocket – $20 bills with Andrew Jackson’s picture and Benjamins, $100 bills with Benjamin Franklin on them – that if you divide the total amount of these pieces of paper by the American population, every one of us – man, woman, and child – in the United States should have $3,000 or $4,000 or something.  But hardly anyone – Daphne, do you have three, $4,000 in your pocket right now?

So where is – this money is being held around the world.  I mean, we know this that apparently in Russia, at the end of the day you convert your rubles into dollars because that’s a safe place to have it, and Russian people convert their rubles into dollars and buy fancy apartments here in New York City.  So I would say as long as the U.S. maintains a very strong, large economy and doesn’t cause any loss of confidence in the dollar, the oil trade is there, but I think it’s – what’s important for the dollar being an international reserve currency is not any particular trade financed in that price, but the fact that the U.S. economy is strong and there’s – the dollar is a fairly stable currency and the rest of the world wants to hold it.  And that seems to be true now and I don’t see that going away any time soon.

The other question about the QEs – my reaction to that is that, I mean, it is – we do live in a strange world where it seems most economic policy now is done by central banks.  When I started studying economics, we talked a lot about fiscal policy, changing tax rates and changing government spending in order to influence, stabilize the economy.  But nobody seems to talk about that much anymore.  It’s just the Democrats and the Republicans agree to spend more money, they don’t think about the overall economic effects.

The Federal Reserve does, so it’s the only game in town.  And when we had the financial crisis, they came up with these seemingly unprecedented expansions of the balance sheet, although if you look back over the history of central banking, these expansions of the balance sheet happened at previous periods as well.  Large expansions in the Depression of the 1930s and various other times.  So I would say that the quantitative easings are what you do when the fiscal people aren’t really paying much attention to fiscal policy as a stabilization device.  We’re relying on monetary policy for most of our stabilization now and that is wrong, I think.  I mean, that is a danger because the central banks may run out of firepower one of these days.  They won’t be able to solve all economic and financial stability problems just by buying up assets.

They’ve done a pretty decent job of it so far, but I think the danger is it’s led to these very low interest rates and I live on Roosevelt Island across the way there, and when I look out my window toward Manhattan, I see cranes.  There are cranes everywhere.  That’s what happens when you have very low interest rates.  Then people build buildings that will be around for 100 years and it may be they’re building places now that nobody really wants to move into.  But just because money is so cheap, they’re hoping that there will be people moving into those buildings.  I think that’s one of the dangers of the QE policy, that by suppressing interest rates to such unprecedently low levels, we’re maybe misallocating capital.  Maybe we shouldn’t be building 100-story skyscrapers in New York, maybe we should be building or improving auto assembly lines or something else, that there may be a distortion of our markets because of this QE policy.

QUESTION:  Hello, Arnaud Leparmentier, French daily Le Monde.  First question:  Much more company go private until you have much private debt, private equity, but does it change for the New York City financial place?

And second, the United States are using the dollar as a political tool as far as embargo are concerned, as far as cheating is concerned, as far as corruption is concerned.  Do you feel that in the end, it would be a problem for the dollar and then the financial place of United States?  You’ve seen – we’ve seen Aramco didn’t get quoted in Wall Street maybe because of regulatory problems.

MR SYLLA:  Because of regulatory problems?

QUESTION:  Yeah.

MR SYLLA:  Yeah.  Well, I think we do have maybe stronger financial regulations than some other countries do, but in my view, that’s good.  Not to say that every aspect of regulation is good, but I would hark back to the 1930s and say that a lot of our modern financial regulation came up in the 1930s in the New Deal financial reforms.  That’s when the Federal Reserve was reconstituted in the Banking Act of 1935.  The Banking Act of 1933 gave us Glass-Steagall and Deposit Insurance.  Then in 1934, we got the SEC and the FDIC to insure our bank deposits.

And at the time, Wall Street said, “Oh, no, that’s terrible.  You’re just going to – the sky is falling, the world is coming to an end, capitalism is being replaced by socialism.”  Thirty years later when Americans’ confidence in Wall Street came back, then the same people who were saying, “Oh, it was terrible” in the 1930s were saying, “That was really the best thing that ever happened to us,” because it increased the confidence in markets, and so then more and more Americans and people from around the world put their money into the American markets.  So some financial regulation can actually be a positive.  That’s where I – my reaction to that.

Then your – the first part of your question was about private equity.  Now, one of the effects of private equity:  Not so many years ago or decades ago, there were 8- or 9,000 corporate stocks traded in the United States because private – there’s been a lot of mergers and private equity has taken a lot of public companies private.  Now I think we’re somewhere down between 3- and 4,000 stocks that are regularly traded in our markets, the amounts – dollar amounts being traded.

So in some sense, I understand private equity, but in another sense, I think it’s reducing the ability of smaller investors to participate in parts of the economy.  It’s sort of – private equity is sort of between rich bankers and rich companies, and every time a company is taken private, that reduces the options available to the wider range of investors, and so – whether they’re doing it directly by buying stocks or through asset managers like BlackRock and Vanguard and so on.  So I think that that’s one – companies do it because they think that they aren’t so heavily regulated if they’re not public companies, and the bankers like it because they can buy up a company on the cheap and then maybe reform it a little bit and sell it at a profit.  So I’m not a huge fan of private equity, but I understand what’s going on there.

Somebody else asked a question that I don’t think I really got to.  Maybe it was you.  What are they using the – instead of building factories and that, they’re buying back their stock.  That’s another aspect of QE —

QUESTION:  Buybacks, yeah.

MR SYLLA:  — stock buybacks that I would say – I mean, companies should return cash to investors.  That’s part of why we invest in them.  But the QE has pushed interest rates so low that companies are borrowing to buy back their own stock, and that reduces the amount of stock available to investors as well.  So I worry a bit about, from the long-run point of view, of the shrinking of the public equity markets in the United States as companies reduce their – as private equity reduces the number of companies and stock buybacks reduce the number of shares there.  I understand why it happens.  It can have a positive effect.  But it seems to me it may not be the healthiest thing for an economy to reduce the public participation in the markets.

MODERATOR:  Barbara, you had a question?

QUESTION:  Oh, yeah.  Barbara from Sun TV in Hong Kong.  I have a question about sustainable financing and investing market.  It seems like right now, London Stock Exchange has already become the global hub for sustainable financing.

MR SYLLA:  Which – sustainable?

QUESTION:  Yeah, sustainable financing as part of global efforts to build up the resilience against climate change and going to the low-carbon economy.  I’m just curious.  How soon do you assume that the New York Stock Exchange will be able to have a big move – a step for more on that trend?  Do we have to wait for a – kind of a big change in terms of political atmosphere in order to go into this new trend of investing and financing the future or —

MR SYLLA:  I would – I think we might have to have some political change because the current administration doesn’t seem to be that worried about sustainability.  In fact, the – I think our President I’ve seen sometimes talked about the worries about this as – it’s a hoax.  He has vivid language to describe these things.  So – but I can tell you that there are a lot of companies interested in sustainability.  It’s a growing thing.  And the stock exchange itself, that’s just a place where people trade back and forth.  I don’t think it by itself can do a lot to change this.  It requires the companies that are traded on the stock exchange to be more interested in sustainability.

And I have a grandson who’s, like, a senior in college now and he was an intern at BNP Paribas here in New York last summer, and he’s going to take a full-time employment with BNP Paribas this summer.  And one thing he learned, just as an intern, is that BNP Paribas is very interested in sustainability, and they think that this is – will be a good way to go in the future.

Now, that’s BNP Paribas here in New York.  I suppose it’s – the same philosophy is true in Paris and in Europe, but there are – this is much discussed.  It hasn’t had a big impact.  I actually wasn’t aware that the London Stock Exchange was doing a lot on this, but it doesn’t surprise me because other countries in general seem to be more concerned than the United States through our government – through our current government seems to – not to worry about these things so much.  But I see, apart from our government, a lot of companies are talking about this now, so I think that – and people, a lot of Americans, are saying “I want to have a portfolio of stocks that’s clean – clean and green, not oily and releasing a lot of carbon.”

So those kinds of pressures will – if that’s what people want and – the companies will deliver it.  That’s one thing about capitalism, one nice thing about it, it delivers what people want whether it’s good for them or not.  (Laughter.)  I mean, that’s one of the good things about it.  And if people want to have greener companies and greener investments, capitalism will provide them.

QUESTION:  Thank you.  Astrid Doerner with Germany’s business daily Handelsblatt.  Can you speculate a bit about potential risks for New York as a financial center?  Like, what could happen for some other city to take over?

MR SYLLA:  Well, I think we suffered in the financial – the financial – odd financial crisis that basically started here in the United States, and the New York institutions were heavily involved in it by securitizing all those shady mortgages, taking a bunch of not-so-good mortgages and somehow putting them into a security and giving it a triple-A rating.  So that was – the investment bankers were doing that, the credit ratings agencies were doing that, and things got a little bit out of hand.

And so the crisis started here and it caused some real problems, but afterward – then it spread around the world and it seemed to have worse effects strung out in places like Europe and – so the new – the U.S. actually recovered fairly quickly from that.  And so I mentioned earlier that some of our banks are among the strongest in the world right now, certainly the most profitable, and – but I do think another financial crisis coming not so long – we’re only, like, a little more than a decade past the previous one.

If we had another one, that would – and its epicenter was here, that could – then people would say, “Well, the American markets” – which are pretty much respected around the world now – although we lost some respect in the crisis, but it seems to have come back rather quickly.  But another financial crisis anytime soon, let’s say in the next five or ten years, that would do a lot to damage New York’s future and would help other financial centers.  I know some cities on the continent of Europe now are wanting to build up because people are leaving London and moving to Paris or Berlin.  And then you have these Asian centers that – and China avoided the worst effects of the crisis so that gives them a little more respect.

And so I think that my main guess that the biggest threat to New York would be to start another financial crisis sometime soon.  We need a period of stability to maintain the confidence that people seem to have.  And after it was shaken a bit a decade ago, it’s come back, and – but to maintain it, you have to avoid another financial crisis.

QUESTION:  Hi, I’m Ken Moriyasu from the Nikkei Asian Review based in Japan.  I think one characteristic of Wall Street is the exorbitant salaries of the Wall Street bankers and hedge fund managers.  Looking back at history, has it always been like that, or has it taken off for some reason?  And what do you think of the future?

MR SYLLA:  There’s been a big change in my lifetime, and that’s – Wall Street, when I was young, say, up to the 1970s – most of the firms were partnerships and they were much smaller.  And a partnership meant that the people in the firms had their own money at stake, and this – that tended to make thinking longer-term.  I mean, they did pretty well.  They were partnerships and they did a lot of deals and there’s – weren’t always, the firms weren’t always that big, so at the end of the year there might have been a lot of profits to divide up among the partners.  And the people who ran these firms, like J.P. Morgan, J.P. Morgan Jr., they were pretty well-paid, but they were conservative because they were – a lot of their own money was at risk.

The big change that happened, and it began like 50 years ago when one of the New York firms called Donaldson, Luftkin & Jenrette applied to become a public company.  And the argument they made was it was a partnership – it was a 10-year-old partnership at the time.  It was formed around 1959.  1969, they were very – innovators in the sense they went to the New York Stock Exchange, which had a rule that everybody had to be a partnership, not a corporation, that the Wall Street firms – they would finance American corporations but the investment banks of Wall Street, the members of the stock exchange had to be partnerships.  Donaldson, Luftkin & Jenrette challenged that and said, “We’re going to have an IPO,” and basically the New York Stock Exchange didn’t like it at first, but they backed off, and in 1971 Merrill Lynch became a public company.  In 1986, Morgan Stanley became a public company.  And what you had there was a change in the incentives that the bankers had.

Now we – you mentioned the high salaries and so on – now we live in the bonus culture.  If I had gone into an investment banking partnership out of college back in the 1960s, I would have thought I want to see what the older partners are doing and learn from them, and then be like them and have a long career at the same place, eventually become a partner and divide up those profits at the end of the year.  But now, somebody who goes to Wall Street, a college grad thinks:  Now I’m working not with the firm’s own money, I’m working with other people’s money – because we borrow money from banks and everyone else – and what I want to do, I’m using other people’s money and I want to use it to make as much money as I can with short-term trades because now what matters to me is not my long-term career but my annual bonus, the bonus I get.  And bonuses are tied to the amount of money that individuals bring in, and there are trading operations for the firm, and what this has done is changed what used to be a long-term view of the world into a very short-term view.

And it also, by using a lot of other people’s money – that’s what going public meant, that you had access, you had stockholders, and you could borrow more money from banks as a corporation.  The argument was made at the time that they needed to do it.   This happened during what was called the “back-office crisis” on Wall Street when – the sudden rise of the amount of trading, which would seem trivial today but you went from 10 million shares a day to 20 million shares a day, and under the old system they couldn’t keep up with clearing the trades.

So they wanted to raise capital to buy computers and things like that, and so there was a good argument for the Wall Street firms becoming public corporations instead of private partnerships, but it changed the incentives.  It changed the incentives on Wall Street, and that is a problem, I think.  I mean, the firms, the big banks now are very well-capitalized and have all the latest computer equipment, but the incentives the people have that work for them – what you need to have is managers who can stay on top of that.  Because the incentives, a particular person – my grandson will have when he becomes a trader next summer – I want to take a chance and make a good deal and bring in a lot of profits for the firm, because then I will get a big bonus at the end of the year.  He’s not thinking about his long-term career, which he would if he were in a partnership.

MODERATOR:  Dr. Sylla, I’m seeing two more hands.  Do you have time for two more questions?

MR SYLLA:  Sure, sure.

MODERATOR:  Okay.

QUESTION:  Thank you.  Kemi Osukoya from The Africa Bazaar.  Speaking of trade deal and monetary policy, given that the global economic is now interwoven, there’s a lot of uncertainties, including Brexit.  Can you talk about a little bit about some of the long-term impacts?  What do you think those will be on the global economic and Wall Street in particular?

MR SYLLA:  You mean things like Brexit?

QUESTION:  Yeah.

MR SYLLA:  Yeah, are there any others you have?  (Laughter.)

QUESTION:  (Laughter.)

MR SYLLA:  Well, Brexit, I mean, the English person who contributed to this book on the outlook for financial centers after the crisis, he was very optimistic.  He thought the English market had – it hadn’t really suffered much at the time Brexit happened.  Since that time, since he wrote that, the – more and more firms have said, well, we’re going to take some of our jobs in London and move them to places like Paris or Berlin or Frankfurt, I guess, is a popular place as well.  And – because that’s where the European Central Bank and – is headquartered, and wounded Deutsche Bank is there too.  I was going to say, Deutsche Bank, how the mighty have fallen.  It was once one of the world’s leading banks, and now it’s kind of really struggling.  So I think that it’s going to have a negative impact on London.  It’s already showing some signs of that, that London will not be as big as it used to be, but it’s – it’s got a really good location for – in Europe, that’s —

QUESTION:  What about on Wall Street.  Will there be any long —

MR SYLLA:  Wall Street?  I believe that —

QUESTION:  Do you see any long-term impacts?

MR SYLLA:  Wall Street is present – we may not appreciate it but Wall Street has a big presence in all the leading financial centers.  So if London becomes slightly less attractive, Wall Street can increase its presence – not establish a presence in Paris or Berlin or Frankfurt or Singapore or China.  I mean, my very first trip to China was about an – apart from Hong Kong, which I went to back in the 1960s – I went to Shanghai, I taught a couple of years at – I mean, just short courses, at CEIBS, the China Europe International Business School in Pudong by Shanghai.  And the first thing I noticed when I came off the airplane and was walking through the Shanghai airport was a big sign that says Citibank.  Citibank, right there, the first thing you see.  And so Citibank was right there in Shanghai, and they’re everywhere in the world.  They’re – they’ve always been the – probably the most international of American banks, for good or ill, or at least since the early 20th century.  They had the misfortune of establishing a Moscow branch a couple weeks before the Russian Revolution in 1917.  That didn’t work out so well for them, and then they lost the money in – a lot of money in Cuban sugar.  But anyway, I would say that the American – the Wall Street firms are – they’re not just here.  They’re – the big ones are everywhere.  There’s a lot of small firms that just operate in New York, but the firms we always hear about – Morgan Stanleys, the Goldman Sachses, the Citibanks, the J.P. Morgan Chase – they are – and Vanguard and BlackRock and Blackstone – these firms which we think of as New York firms are actually present in all these places.  So for them, it’s the easiest thing in the world to adjust.  If London is slightly less attractive, well, we can bring some of our people back to New York or we can put them into Frankfurt or Paris.

QUESTION:  So it’s an advantage for them?

MR SYLLA:  Yeah, I don’t see any – the way the system is working now, because it is so globalized, I think the Wall Street firms are in a kind of catbird seat that they can take advantage of whatever’s going on elsewhere – Brexit is no problem for them because they’ll go anywhere where they can make a buck.

QUESTION:  Thank you.

MODERATOR:  Let’s go to the last question.

QUESTION:  Daniel Hoffman from news agency Agence France-Presse.  I wanted to ask you more of a question of definition of Wall Street since it seems like there’s been a shift between Wall Street as a physical place to Wall Street as more of an abstract idea.  And I mean – by that I mean that most of daily, like, stock trading happens to be not at the New York Stock Exchange but more digitally behind a computer.  And I was wondering, since most of the trade is not taking place at NYC today, if it still makes sense to consider New York as the financial center of the world when trading can happen basically anywhere in the world.

MR SYLLA:  That’s right.  I mean, what I think of as Wall Street – it is – it’s a little street in Lower Manhattan, but that – it’s really much more of an idea.  I tend to think of it, from my perspective as a financial historian, as Wall Street is a shorthand for the overall U.S. financial system, which includes Vanguard in Pennsylvania and T. Rowe Price in Baltimore and State Street Bank in Boston.  But it also includes other – these other international firms have a presence here.  I mentioned BNP Paribas – so my grandson is going to work for a French bank.  And so Wall Street, I used to say – I mean, I would say don’t think of it as an area.  In fact, most of the old Wall Street banks – Citibank and J.P. Morgan Chase – are located up in Midtown now, not down on Wall Street.

So Wall Street is like an idea, it’s a shorthand, and what it represents is the U.S. financial system as a whole.  But it may represent even more than that because people in Scotland, as we speak here, are putting in orders and trading.  Scottish investment trusts and that are buying Apple and Google and Microsoft and other American companies.  And the American equity market is something like 50 percent of the world equity market in terms of its capitalization.  There’s America, half of the world’s equities, and then there’s the rest of the world, which, in the rest of the world – as I mentioned when I talked about finance may be the dog and international trade and goods would be the tail – the rest of the world likes these American companies just as much as we do here.

And so maybe now we can – we – Wall Street, we might even think of it as a – in a sense, the world international financial system.  I mean, the individual countries of Europe still have their own banking systems and so on, but in the United States we’ve – we reformed a lot.  We didn’t have interstate banking until the 1990s.  I had to get into my – be in my 50s before we had nationwide banking, and Europe was much better.  European countries were much better than that with big branch systems.  But now, when I – there’s like a reversal.  A hundred years ago, the U.S. had 30,000 banks, and most of them had one office, and it was a very odd banking system, whereas Europe had these big branch banks, universal banks they were called.  And now today, the U.S. got rid of its restrictions on banking mostly in the 1990s, sometimes for good, sometimes for ill.  And so the U.S. looks more like Europe a hundred years ago, whereas I look at Europe now, where they’re trying to have what they call the European Union, but each country still has its own little – like the French banking system, the German banking system, the Italian banking system.  So Europe today looks to me like America did a long time ago when you had a New York banking system and a Pennsylvania banking system and an Alabama banking system.

And so there’s kind of a reversal of roles in a hundred years, but I think – I said Wall Street is not really making a lot of consumer loans inside of Germany, but probably in Frankfurt and Berlin there’s some Wall Street firms that are doing business with corporations there.  And so Wall Street was once a little location in Lower Manhattan, then it became like the U.S. financial system, and in today’s globalized economy I think Wall Street is like spread out to the world.  So there’s a Wall Street presence in just about every major financial market in the world.

MODERATOR:  So I think that concludes today’s briefing.  I want to thank Dr. Sylla today for coming and speaking and kicking off our 2020 Wall Street series.  I would say that his views are his own and don’t represent those of the U.S. Government.  Keep your eyes open for more briefings, announcements in this series.  I will be sending them out.  We are going to be having briefings with – two briefings with J.P. Morgan, one starting today at 3 o’clock; Citibank; Keefe, Bruyette & Woods; the New York Fed; and BlackRock.

So thank you again for coming.

MR SYLLA:  Thank you.  (Applause.)

U.S. Department of State

The Lessons of 1989: Freedom and Our Future