Beyond the Founders’ Vision: Benjamin Strong as Decisive Leader or Figurehead?

Mark Toma

Chapter Chapter 3 in Monetary Policy and the Onset of the Great Depression, 2013, pp 23-39 from Palgrave Macmillan

Abstract: Abstract It is one thing to argue, as I did in chapter 2, that on paper the founders of the Federal Reserve solved the fundamental defect of the National Banking System, an inability to accommodate seasonal increases in the demand for currency, by creating a decentralized self-regulated network of competitive Reserve banks. The critical issue, though, requires that we move off the cushy armchair of thoughtful speculation and get our hands dirty with some practical considerations. We need to address the question: Did the founders’ vision prove out once the Reserve banking system was up and running? The consensus answer seems to be a resounding, no. There were cracks in the founders’ design plan that provided an opportunity for a decisive leader to emerge. Monetary historians tend to agree that after WWI, the Reserve banks coalesced into a centralized, unitary system, with policy activism sup-planting self-regulation.

Keywords: Monetary Policy; Federal Reserve; Government Security; Executive Branch; Reserve Bank (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-37162-1_3

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DOI: 10.1057/9781137371621_3

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