Thursday, November 11, 2010

Benjamin Strong on World War I

I ended up cutting an interesting passage about New York Federal Reserve governor Benjamin Strong's views on World War I from my paper on the 1920-21 depression because it added length without contributing much to the discussion. It seems worth posting on Veteran's Day, though. This is the lead in sentence and the quote:

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For Strong, financing World War I took on Manichean dimensions. In an address to Liberty Bond salesmen in 1917, he declared:

"Four hundred years ago the Anglo-Saxon race received the first great bill of rights upon which their personal liberties were founded, when King John of England signed the great Magna Charta at Runnymede. For two hundred and fifty years that race in England has been engaged in building up constitutional government... It was bequeathed to us one hundred and fifty years ago by Great Britain, and for substantially four hundred years we English-speaking people, and those from other countries whom we have adopted, have been developing our institutions based upon that foundation of constitutional law. For forty years, since the war between Prussia and France, a military autocracy in Germany, filled with lust for power, has been building up a great military structure on an entirely different theory of personal or autocratic government, and now they have come into conflict – so the question is, Which is going to win? That is the greatest problem the human race has ever faced – constitutional government against personally organized military government… The subscription to these bonds is simply the beginning of the contest, so far as this country is concerned."

Given these stakes, the prospect of an artificial inflation struck Strong as entirely justified.

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