Murray Rothbard Makes Much of the Importance of the "Morgan Club" in the Federal Reserve; the Main Counterweight to the Morgan Empire within the Fed Was Paul Warburg of Warburg and Kuhn Loeb

Benjamin Strong stemmed from the Morgan empire, having been the right-hand man of J.P. Morgan during the 1907 financial panic. Morgan later put him at the head of Bankers Trust. Murray Rothbard makes much of the importance of the "Morgan club" as a factor in understanding Federal Reserve policy in its early years. Strong, in taking the position as head of the New York Federal Reserve, had confidently expected that in this role he would be the most powerful official in the new system, although there were some ambiguities about how power would be divided between New York and the board in Washington. At the head of the board was Charles Hamlin, also in the Morgan sphere, as was the Treasury Secretary McAdoo, whose railroad company had been bailed out personally by J.P. Morgan.

Under the initial organization of the Federal Reserve, the Treasury Secretary was an ex-officio member of its board, and McAdoo (now son-in-law of President Wilson) regularly attended its meetings. The main counterweight to the Morgan empire within the Federal Reserve was Paul Warburg, who stemmed from the German banking family of that name and was close to, having married into, the New York banking house of Kuhn Loeb. Warburg has been seen by many historians as "the father of the Fed" in the light of his powerful intellectual and political advocacy of a US central bank, derived from his experience and admiration of banking arrangements in the German Empire and his dismay at the "primitive state" of monetary arrangements which he perceived on arrival in the USA. Strong himself described the Federal Reserve as Warburg's "baby."

--Brendan Brown, A Global Monetary Plague: Asset Price Inflation and Federal Reserve Quantitative Easing (Houndmills, UK: Palgrave Macmillan, 2015), Kobo e-book.