The Essential Rothbard - Ludwig von Mises Institute

54 The Essential Rothbard
and France.” 131 Further, “Benjamin Strong obligingly doubled the
money supply to finance America’s role in the war effort.” 132
Rothbard’s last point serves to introduce a story within the
larger story of Morgan influence. Benjamin Strong, the Governor
of the New York Federal Reserve Bank, was by far the most influential
figure in the entire Federal Reserve System from its inception
until his death in 1928. He entered into close association with
Montagu Norman, Governor of the Bank of England. Both men
had enlisted in the Morgan camp.
While the close personal relations between Strong and Norman
were of course highly important for the collaboration
that formed the international monetary world of the 1920s, it
should not be overlooked that both were intimately bound to
the House of Morgan. 133
At Norman’s behest, Strong during the 1920s inflated the U.S.
monetary supply, in order to enable Britain to maintain in operation
the gold-exchange standard. By doing so, Rothbard claims,
Strong bears heavy responsibility for the onset of the 1929 stock
market crash and the ensuing depression.
The United States inflated its money and credit in order to
prevent inflationary Britain from losing gold to the United
States, a loss which would endanger the new, jerry-built “gold
standard” structure. The result, however, was eventual collapse
of money and credit in the U.S. and abroad, and a
worldwide depression. Benjamin Strong was the Morgans’
architect of a disastrous policy of inflationary boom that led
inevitably to bust. 134
131 Ibid., p. 16.
132 A History of Money and Banking in the United States, p. 270.
133 Ibid., p. 374.
134 Ibid., p. 271.