Benjamin Strong (1872–1928)
Who They Were
Benjamin Strong (1872-1928) was an American banker who, as the first Governor of the Federal Reserve Bank of New York, became the dominant figure in the young Federal Reserve System during the 1920s. In an institution still learning what a central bank does, his forceful leadership often overshadowed the Federal Reserve Board in Washington, and he effectively directed much of U.S. monetary policy until his death in 1928. He cultivated close cooperation with fellow central bankers abroad, working alongside figures such as Montagu Norman of the Bank of England and Hjalmar Schacht of the Reichsbank in the early experiments in central-bank diplomacy. His death shortly before the 1929 crash removed the system's most experienced hand at a critical moment.
Key Contributions
Strong is remembered as a pioneer of the tools and institutions of modern monetary policy.
- He grasped earlier than most that buying and selling government securities could be used deliberately to influence credit conditions, rather than merely to earn income for the Reserve Banks, the essence of open market operations.
- He pushed for the coordination among Reserve Banks that produced the first informal open market committee in the early 1920s, a forerunner of today's Federal Open Market Committee.
- He helped establish cooperation among the world's central banks, an early form of international monetary coordination.
As the leading American central banker of his era, Strong shaped how the Federal Reserve came to conduct policy through the securities market, an approach that remains central to its operations.
On EconRecall
First Governor of the New York Fed and the dominant force in 1920s U. Play the games that feature Benjamin Strong: