REGION A – NORTH / CENTRAL AMERICA

THE SINKING OF THE TITANIC

(April 14-15, 1912 – North Atlantic Ocean)

Federal Reserve Bank
of New York

(United States)

ROTHSCHILD OWNED & CONTROLLED CENTRAL BANK

The Official Story

FEDERAL RESERVE BANK OF NEW YORK
(United States)

The Federal Reserve Bank of New York is one of the 12 Federal Reserve Banks of the United States. It is responsible for the Second District of the Federal Reserve System, which encompasses New York State, the 12 northern counties of New Jersey, Fairfield County in Connecticut, Puerto Rico, and the U.S. Virgin Islands. Located at 33 Liberty Street in Lower Manhattan, it is by far the largest (by assets), the most active (by volume), and the most influential of the Reserve Banks.

The Federal Reserve Bank of New York acts as the market agent of the Federal Reserve System (as it houses the Open Market Trading Desk and manages System Open Market Account), the sole fiscal agent of the U.S. Department of the Treasury, the bearer of the Treasury’s General Account, and the custodian of the world’s largest gold storage reserve. Aside from these distinct functions, the New York Fed also performs the same responsibilities and tasks as the other Reserve Banks do.

Given its central role within the Federal Reserve System, the New York Fed and its president are therefore considered first among equals among the other regional Reserve banks. Its current president is John C. Williams.

Establishment

The Federal Reserve Bank of New York opened for business on November 16, 1914, under the leadership of Benjamin Strong Jr., who had previously been president of the Bankers Trust Company. He led the Bank until his death in 1928. Strong became the executive officer (then called the “governor”—today, the term would be “president”). As the leader of the Federal Reserve’s largest and most powerful district bank, Strong became a dominant force in U.S. monetary and banking affairs. One biographer has termed him the “de facto leader of the entire Federal Reserve System”. This was not only because of Strong’s abilities, but also because the central board’s powers were ambiguous and, for the most part, limited to supervisory and regulatory functions under the 1913 Federal Reserve Act because many Americans were antagonistic to centralized control.

When the United States entered World War I, Strong was a major force behind the campaigns to fund the war effort via bonds owned primarily by U.S. citizens. This enabled the United States to avoid many of the post-war financial problems of the European belligerents. Strong gradually recognized the importance of open market operation, or purchases and sales of government securities, as a means of managing the quantity of money in the U.S. economy and thus affecting interest rates. This was particularly important at the time because gold had flooded into the United States during and after World War I. Thus, its gold-backed currency was well-protected, but prices had been pushed up substantially by the currency expansion due to the gold standard-imposed expansion of currency. In 1922, Strong unofficially scrapped the gold standard and instead began aggressively pursuing open market operations as a means of stabilizing domestic prices and thus internal economic stability. Thus, he began the Federal Reserve’s practice of buying and selling government securities as monetary policy. John Maynard Keynes, a prominent British economist who had previously not questioned the gold standard, used Strong’s activities as an example of how a central bank could manage a nation’s economy without the gold standard in his book “A Tract on Monetary Reform” (1923). To quote one authority:

It was Strong more than anyone else who invented the modern central banker. When we watch … [central bankers of today] describe how they are seeking to strike the right balance between economic growth and price stability, it is the ghost of Benjamin Strong who hovers above him. It all sounds quite prosaically obvious now, but in 1922 it was a radical departure from more than two hundred years of central banking history.

Strong’s policy of maintaining price levels during the 1920s through open market operation and his willingness to maintain the liquidity of banks during panics have been praised by monetarists and harshly criticized by Austrian economists.

With the European economic turmoil of the 1920s, Strong’s influence became worldwide. He was a strong supporter of European efforts to return to the gold standard and economic stability. Strong’s new monetary policies not only stabilized U.S. prices, they encouraged both U.S. and world trade by helping to stabilize European currencies and finances. However, with virtually no inflation, interest rates were low and the U.S. economy and corporate profits surged, fueling the stock market increases of the late 1920s. This worried him, but he also felt he had no choice because the low interest rates were helping Europeans (particularly Great Britain) in their effort to return to the gold standard.

Economic historian Charles P. Kindleberger states that Strong was one of the few U.S. policymakers interested in the troubled financial affairs of Europe in the 1920s, and that had he not died in 1928, just a year before the Great Depression, he might have been able to maintain stability in the international financial system.

A public competition for the design of the building was held and the architectural firm of York and Sawyer submitted the winning design. The Bank moved to the new Federal Reserve Bank of New York Building in 1924.

Source: Wikipedia