The Clash of Factions, 1921-1924
The Continent of Europe has made remarkable progress in recuperation from the war in every direction except one. That is the continued fiscal degeneration of practically all of the former combatant states and this degeneration now threatens not only their entire future but affects world commerce as a whole.
American economic activity began to show a marked degree of improvement during the second half of 1921. Yet bankers, economists, and government officials remained concerned about European difficulties and their potential impact on continued recovery. In Herbert Hoover's eyes the United States could not isolate itself and hope to maintain economic stability at home. Such problems as militated against European recovery would "react upon us."2
This chapter will examine Federal Reserve policy in the context of American efforts to bring about European economic stabilization. It will focus initially on efforts to gain a role in foreign loan supervision, on Strong's rejection of the scheme as "paternalistic," and on how this affected the relationship between the two men. It will then look at the participation of the United States in settling the reparations question and especially at efforts by the FRBNY to participate in the____________________