Benjamin Strong Jr

Benjamin Strong Jr

American banker
Date of Birth: 22.12.1872
Country: USA

Content:
  1. Biography of Benjamin Strong Jr.
  2. Strong's Involvement in the Creation of the Federal Reserve System

Biography of Benjamin Strong Jr.

Benjamin Strong Jr. was an American banker who served as the first president of the Federal Reserve Bank of New York for 14 years until his death. He had a significant influence on the policies and actions of the entire Federal Reserve System. Strong was born on December 22, 1872, in Fishkill, New York. He began his career in finance in 1891 at Cuyler, Morgan and Co., an investment firm that also handled financial management. He later held the position of assistant secretary at Atlantic Trust Co., and after several major mergers, he became the head of Bankers Trust Co. in 1904.

Benjamin Strong Jr

In 1909, he became the vice president and, finally, on October 5, 1914, at the first board meeting, he was elected the leader of the Federal Reserve Bank of New York, just six weeks after its opening. He was 41 years old at the time. Over the next 14 years, Strong's deep knowledge of U.S. banking history combined with his unwavering interest in the international situation turned the New York Federal Reserve Bank into the most influential force in American currency and banking policy. During the 1920s, Benjamin Strong worked on improving the cooperation between central banks worldwide and frequently traveled the world to achieve his goal.

Benjamin Strong Jr. passed away on October 16, 1928, at the age of 55, in New York. His policy of maintaining price levels during the 1920s through open market operations or buying and selling government securities, and his willingness to support bank liquidity during times of panic, received high praise from monetarist supporters but faced sharp criticism from Austrian school economists.

Strong's Involvement in the Creation of the Federal Reserve System

Strong was also involved in the creation of the Federal Reserve System. After the panic of 1907, leading bankers believed that a private central bank should be established for money issuance. However, the public strongly opposed the creation of a central bank. Strong, who was then the vice president of Banker's Trust of New York, became the emissary of banker John Morgan during a secret ten-day conference held in November 1910 at the luxurious Jekyll Island hunting club in Georgia. The conference was also attended by Senator Nelson Aldrich, A. Piatt Andrew, an assistant secretary of the Treasury and special assistant to the National Monetary Commission, and other influential bankers.

During the conference, a program known later as the Aldrich Plan was developed. It was kept secret because the public would never have approved legislation written by bankers. While the proposals were presented to the U.S. Congress, they were never voted on or passed, and the Glass-Owen Bill was adopted instead. However, the Aldrich Plan served as a model that was used to create the Federal Reserve System, albeit with significant changes in control and management. The name "Federal Reserve System" was a tactic, as experienced bankers knew that the name "Central Bank" would never gain congressional approval. The hearings and debates took several years, but finally, on December 23, 1913, the bill was approved by President Wilson.

Economic historian Charles P. Kindleberger claims that Benjamin Strong was one of the few American policymakers interested in the financial issues in Europe in the 1920s. If he had not died in 1928, just a year before the Great Depression, he might have been able to support stability in the international financial system.

© BIOGRAPHS