Henry B. R. Brown

Henry Bedinger Rust Brown (February 13, 1926 – August 11, 2008) was an American financial consultant known for inventing the world's first money market fund, the Reserve Fund, with Bruce R. Bent in 1970. Early career Brown was born on February 13, 1926, in Pittsburgh, where his father worked as an executive for a company that manufactured blast furnaces. After secondary education at Choate, he attended Harvard University, where he was a cartoonist for the Harvard Lampoon. After graduating from college he worked for Chemical Bank in the early 1950s and later worked for a company that would later become part of Citibank. In 1963 he joined Teachers Insurance and Annuity Association in a position where he managed the firm's securities investments. Inventing the money market fund Until it was phased out in 1986, a United States banking law known as Regulation Q, which was enacted by Congress during the Great depression as part of the Glass–Steagall Act, prohibited banks from paying interest on demand deposit checking accounts. While well-heeled investors could earn high yields by purchasing certificates of deposit or commercial paper, investments that required investments that could reach hundreds of thousands of dollars, typical consumers were effectively frozen out of this market. Banks in the United States were able to gather substantial funds that they were able to lend out with interest without paying any returns on the funds they had received from depositors. Sitting around their office in August 1969 and brainstorming, Bent suggested that a mutual fund could be created that would allow small investors to combine their resources and gain access to the higher yields available from purchasing a pool of CDs and commercial paper. Neither of them knew anything about the intricacies and legalities of opening a mutual fund, but research by Brown confirmed that the type of money market mutual fund that they had conceived of would be legal in all 50 states. They established the Reserve Fund to implement their idea, which languished in its first several years, building up $250,000 in debts. Early on, individuals and corporations could invest in the fund by putting in as little as $1,000. Shares in the fund were $100 each, with "dividends" paid as additional fractional shares in the account, keeping the value of each fund share at a constant price. The fund charged a management fee of 50 basis points.