Benjamin Strong Jr.
| Benjamin Strong Jr. | |
|---|---|
 |
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| 1st President of the Federal Reserve Bank of New York | |
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In office October 5, 1914 – October 16, 1928 |
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| Preceded by | none |
| Succeeded by | George L. Harrison |
| Personal details | |
| Born |
December 22, 1872 Fishkill, New York |
| Died | October 16, 1928 (aged 55) New York City |
| Nationality | American |
Benjamin Strong Jr. (December 22, 1872 – October 16, 1928) was an American banker. He served as Governor of the Federal Reserve Bank of New York for 14 years until his death. Strong exerted great influence over the policy and actions of the entire Federal Reserve System—and indeed over the financial policies of all of the United States and Europe.
Strong was born in Fishkill, a Hudson Valley village in New York, and was raised in the New Jersey suburbs of New York City. His father's family were primarily merchants and bankers descended from a British immigrant who had arrived in Massachusetts in 1630.
Strong had had hopes of attending Princeton University as an older brother had, but his family was experiencing temporary financial difficulties at the point he graduated from high school in Montclair (New Jersey). Thus, Strong opted to go to work and became a clerk at a Wall Street investment and financial management firm associated with his father's employer.
In 1900, Strong joined a trust company to work as an assistant to a corporate officer, eventually succeeding his boss. A trust company is one that primarily administers the financial matters of legal trusts where the trust company acts on behalf of others, including both individuals (living or dead) and corporations. Trusts can be set up for many reasons, including historic and natural site preservation or legal heirs too young to manage their own finances. For large corporations, trust companies can act for the corporation's bondholders, including accepting the corporation's payments on the bonds and distributing them to the bondholders. Trust companies can usually also do most commercial bank activities. At the time, many commercial banks were forbidden by law to administer trusts. However, trust companies could do most commercial bank activities. Commercial banks thus saw trust companies as luring away their customers with the attraction of being able to accomplish both the commercial and trust activities at one company.
In 1904, Strong moved to Bankers Trust. It had been founded the year before by a consortium of commercial banks on the premise that it would not lure commercial bank customers away. In addition to offering the usual trust and commercial banking functions, it also acted as a "bankers' bank" by holding the reserves of other banks and trust companies and loaning them money when they needed additional reserves due to unexpected withdrawals. Bankers Trust quickly grew to be the second largest U.S. trust company and a dominant Wall Street institution. Despite technically having numerous stockholders, the voting power was held by three associates of J.P. Morgan. Thus, it was widely viewed as a Morgan company. During the Panic of 1907, Bankers Trust, including Strong, worked closely with J.P. Morgan to help avoid a general financial collapse by lending money to sound banks.
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