As we noted in our "Link of the Day" and "People" news yesterday, the co-inventor of the money market mutual fund, Henry "Harry" Brown, passed away recently at the age of 82. Brown and co-founder Bruce Bent launched The Reserve Fund in 1972, which pioneered the way for the $3.5 trillion money market mutual fund business, which brought small investors hundreds of billions of dollars in interest income over the past 35 years. Money fund accounts are held by almost 40 million individuals and businesses, and the sector brings in more revenue a year that Hollywood does at the box office, approximately $14 billion.
Today's Wall Street Journal writes in its "Remembrances" obituaries, "Co-Inventor of Money-Market Account Helped Serve Small Investors' Interest", Henry B.R. Brown co-invented the money-market mutual fund, a high-interest financial instrument taken up by millions of small investors starting during the long bear market of the 1970s. But when Mr. Brown, who died Aug. 11 at age 82, and his business partner, Bruce Bent, dangled their prospectus in front of Wall Street investment houses, they were quickly shown the door. Too expensive, complained brokers used to sitting on their clients' money without paying interest. Too complicated, complained bankers accustomed to calculating interest quarterly. Possibly illegal, sniffed the Securities and Exchange Commission, which sat on Brown & Bent's registry application for months."
The Journal quotes Peter Lynch in his book "One Up on Wall Street," "There ought to be a monument to Bruce Bent and Harry Brown, who dreamed up the money-market account and dared to lead the great exodus out of the Scroogian thrifts."
It adds, "Reserve Fund opened in 1972 to a less-than-resounding response, leaving the two founders with second mortgages they had used to fund their enterprise and no clue whether it would pan out.... Help came in the form of a laudatory January 1973 article in the Sunday New York Times, in which the founders said they were mostly aiming at corporate investors and investment counselors, but were also open to individuals. The next day brought a hundred callers, says Mr. Bent. By the end of 1973, the partners had $100 million under management and investors in the second half of the year received a 9% yield."
We extend our deepest condolences to the Brown family and friends of Brown.
