Economic Quarterly

Benjamin Strong, first governor of the Federal Reserve Bank of New York (1914–1928), dominated the Federal Reserve System during its formative years. Strong perceived the System as one means whereby the United States could assume a far more substantial international role. Fiercely pro-Ally in outlook during the First World War, Strong pushed successfully for monetary policies that effectively assisted the Allies to raise war finance in the United States. During the 1920s, in close collaboration with Montagu Norman, governor of the Bank of England, Strong played a major part in the restoration of European currency stability. Since the late 1920s, politicians, bankers, and economic historians have debated the extent to which the internationalist nature of Strong’s monetary policies and other flaws in his policy views contributed to the onset and intensification of the Great Depression in the United States and Europe. Close examination of Strong’s intellectual outlook suggests that its shortcomings, notably Strong’s near-unquestioning acceptance of economic orthodoxy and his respect for sterling, characterized the thinking not only of Strong but of most of his contemporaries and reflected the broader limitations of prevailing interwar internationalist thinking in the United States.